International Law

YTB: MLM Fraud to Franchise Fraud?

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Prior to becoming intimately involved with California's AG, YTB announced it was going to become a franchise.

YTB International, Inc. (OTC Bulletin Board: YTBLA - News; "YTB" or the "Company"), a provider of Internet-based travel booking services for travel agencies and home-based independent representatives in the United States, Bermuda, the Bahamas, and Canada, today announced that the Company is contemplating the replacement of its referring travel agent ("RTA") business model with the implementation of a franchise operating system, potentially in 2009.

The Company expects that a franchising model, if adopted, would facilitate the Company's expansion into additional markets by providing more comprehensive training and a new proprietary e-commerce platform.

Details regarding price, product offerings and the conversion plan are all under consideration, but the Company anticipates that its existing RTA base would be treated favorably under its forthcoming proposal. Scott Tomer, Chief Executive Officer of YTB International, Inc. commented, "We have retained iFranchise of Chicago to consult in the planning and development of the franchise model and are excited about the potential impact on YTB's business."

If a franchising model is adopted, its distribution is expected to be managed by the current marketing arm of the Company, YourTravelBiz.com, also known as YTB.com

This actually makes a lot of sense, if you understand the perverse incentives under Federal Franchising Law.

Currently, as there is no private cause of action for a violaton of the FTC Franchise Rule, any franchisor who wishes to act in a dispicable manner, and there are more than a few, need only announce in his or her disclosure document that "I intend to act in a dispicable manner" and his actions are now sanctioned by law!

Neat trick, eh?

Full post as published by Misleading Advertising Law on August 13, 2008 (boomark / email).