Franchise fraud is defined by the United States Federal Bureau of Investigation as a pyramid scheme.
Under the FTC Rule and State Franchise Disclosure Documents, franchisors do not seem to be obligated to share system UNIT Performance Statistics with new buyers.
It is also important to recognize that, legally, current and ex-franchisees are not required to provide details about their businesses to potential franchisees.
Nor does failure to disclose on the part of a franchisor a pending civil lawsuit at the time of making a franchise agreement constitute franchise fraud, so long as any such representations as to legal action are not relied upon by either party as part of their decision-making process.
[16] Generally, Texas courts uphold voluntary forum selection clauses unless they are affected by fraud, overreach, or are considered unreasonable and unjust.
Regardless of legal liability theories, Texas courts are required to honor forum selection clauses.
Any person who shall knowingly and willfully make, or cause to be made, any false statement in any book of account or other paper of any person subject to the provisions of this chapter, or knowingly and willfully exhibit any false paper to the Commission, or who shall knowingly and willfully commit any act declared unlawful by this chapter with the intent to defraud any franchisee or with intent to deceive the Commission as to any material fact for the purpose of inducing the Commission to take any action or refrain from taking any action pursuant to this chapter, shall be guilty of a Class 4 felony.
Any person who shall knowingly make or cause to be made any false statement in any book of account or other paper of any person subject to the provisions of this chapter or exhibit any false paper to the Commission or who shall commit any act declared unlawful by this chapter shall be guilty of a misdemeanor, and on conviction, be punished by a fine of not less than $100 nor more than $5,000, or by confinement in jail for not less than thirty days nor more than one year, or by both such fine and imprisonment.
C. Prosecutions under this section shall be instituted by indictments in the courts of record having jurisdiction of felonies within three years from the date of the offense.