Arthur Murray, Inc

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF ARTHUR MURRAY, INC., ET AL.

MODIFYING ORDER IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket S. Decisi, July 1960-Modify'f Order, March 10, 1980 This order modifies an order issued on July 26, 1960, 25 FR 9673, 57 F. C. 306, by inserting a Roman numeral one before the preamble of the original order; vacating the It is further ordered paragraph therein; and adding new Part II III, IV and V. The modified order strengthens the 1960 order by giving consumers the right to unilaterally cancel contracts with the company and receive prescribed refunds within 30 days of cancellation. Respondent is additionally required to direct franchisees and sub-franchise€s to comply with the terms of the order, institute a program of continuing surveilance designed to reveal non-conformers, and terminate dealings with such parties. ORDER MODIFYING ORDER TO CEASE AND DESIST The Commission on September 18 , 1979, issued its order to show cause why this proceeding should not be reopened and its order of July , 1960 (hereafter sometimes referred to as "the Commission Order of 1960"), modified.

Respondents having consented to the reopening of this proceeding and the modification of the Commission Order of 1960, as set forth in the show cause order and the Commission having considered the comments fied by interested persons Now, therefore it is hereby ordered That the Commission Order of 1960 be, and it hereby is, modified by inserting a Roman numeral one , before the preamble of the Commission Order of 1960, by vacating the It is further ordered paragraph therein, and by adding new Parts , III, IV, and V so that the Modified Order wil read as follows: ORDER It is ordered That respondent Arthur Murray, Inc., a corporation and its officers, and respondents Arthur Murray, Kathryn Murray and David A. Teichman, individually and as officers of said corporation and respondents' agents, representatives and employees, directly or through any corporate or other device, or through any licensee, in connection with the solicitation, advertising or sale of dancing instruction in commerce, as ucommerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: , :::: , . ,,, , ,, . ,,, , ,,, , , .. ,. ,, ,, .,. , , , ... ,.,;. ..,, ;,..,: .,,, ., ,,,,, ,.,,,,,,, ... ,,,;:.,. ,. , ,\.,,, .. ,,,,,\ , ,..,,,,..::: ,,,# . ,,, ..,.,,.,. ,,,. ,.:,, ,.,,, ,,,,.,,,,,.:::\,, ,,,\\\ .,.. ,.,,, .. . ,\,.,.,,,,.,\;,,,,,,,,,,,,, . ., ., ,,, , , ,.\ ,,,,,,,,, . , \ ,. , .,. ,,,. , ,,,,,, 9" ".'1. 1)';C\S\ot\S \SS\Ot\ o. \0 o lC' ,,';1)';\1"" '1\1,,1)';"",i"1 "g O", '0'1 1\e",1\S",ets, te eV1\o1\e er t "\.\1e';'1 \'\1e . 1\V\"\e",t\01\'eo1\ '0'1 \ e tlse1\e\\ts, o.l eet\'1 o o.",1\e\1\., ",.,,,0" ",1\'1 i o.",1\ee 0 '0 o",o.e"'s' ,w l, 'o" " I" . J, .0,0, ., ,,,,, oP' , t\111\j? 0 W''"' '0' . ee o ,, , d' se:r\ee ' or ",1\'1."&1'1"ee, ,,"". v "";rW' f ",1\'1 '" eo\1 se 0 "ot\1 . ee o,",,0 . o;o1\S o ",1\, o"\O ",0' 00= 0. 1' w", W''' e\\\j? \\\st j?e, '" e\1", \\te". o1\O \ ,o" ,w' co. d, e1\te .o' (e) ot"e, ,w 1\ \\e ",\\'1 q:",o, test o "o\"eo., se0 0' \"e, ot e ffer. (b) '0'1,,\1'L'L\e, eo1\ ,\\1\'L, . S \\0' to l1\"o. 'se\eet\01\'id 1\e\\t '2.. '"\.S\\\j?'"\1 1'o ts vee\"" \\\\0\1 ;"e e\1st01\e ",\1\e"",,,,,,.o :;,r S\1\\\"' t\\,01\ wst o os..ee. " oeo. \\\ t\1e" '" ",\1 \1 .1'\11',;""s,. eo1\1'eV\1'L'L 1e eO\\. \e"'o.s to V o n\1\'L, ' o.\se'oP . obt",\1\ 1\\"0\"\\\" Q''" W" '". 0' "M ::(o"' o.\1ee t .o' ":" M ,, to l1\ o.ese . \\ ",\\'1 S\\\j?f 1\o e t\1"'\\ o\\eo.e"\cfS,. ""e \.S\\\j? \ o to e"",,\1'"SO o.eS\"' \1e\,01\' o.\O ' . st to'': o.eslgneu ot o.\'1 o'1 V . ..eS ., ","".o \1et\0\\' e e1\V' d ,.lflees, ,, ."tests,\11'0rte \1\6t \1\,\\1\" sl,,1\ \1\\eo "'1\",\'ises e\1", t" o.",\\e\1\g f\e\e1\ '1 :ie 1'\1 V\\s 0 '" " o ,,1\'1 0 o.\1ee gress 0' r ' t:, ,,"

,,,,,, '70"' ;"0" osV ..e "\1V1\s "b\e 0\\ V 0' V"'1 " to V\1V\\S oV OSy:. ",gree1\e1\' t\1\ '" ..e's o . .. ,,\11'\' ,\1\1\ ",ets o o\11\t o.\1e o ese e\\", elf eo1\t ",S\11"\\'" . 1\ r"'\, . o " t\O eo\\ee 1\\ster,,"''1'"\)\e." to- it' 0' n1ee1\e\\ts,, \1e ese\\t\1\"r 1\st\1et\o t\1e' \1VcP ' 1 to s",\es osve et\"e tov S o o.",\\e\1\", r 9"" ,,) 0.0f \11'1\ o "" '" "e\\ eo\1 o."' \1\\\eS6 , ' t\1",t '" W . "e" st",1\ . ' .o d "" 1\ or V ;:tl01\ '0'1 s\1e \1et\01\ 1'o.lt\O\\"'\ \ t11e "V ",e . t Co\\t :b)eeti\\j? S\1 . t to e"'"",.o' ' t iI"'\\ se o :i",se P' t\1o\1t e",\1S , f t\1e \11\\ts o.Q.tio""'\ \esso . eo\1V\etl01\ 0 fto~t",eto",,, \1v1\, ''It\1 :\1:\ o"t ",tte OSV' " o\\e",ee"K 1\e\\1u , ARTHUR MURRAY, INC., ET AL.

347 Modifying Order instruction previously contracted for, without cost or obligation, except that a charge may be made for not in excess of two additional lessons furnished during such week and (b) all of such units previously contracted for shall be used or completed prior to the commencement of the additional lessons.

9. Using any technique or practice similar to those set out in paragraphs 4 through 8 hereof to mislead, coerce, or induce by other unfair or deceptive means the purchase of dance instruction. II.

For purposes of this part the following definitions shall be applicable:

Total contract price" shall mean the total cash price paid or to be paid by the pupil or prospective pupil for the dance instruction or dance instruction services which are the subject of the contract or written agreement.

Notice of cancellation" shall be deemed to have been provided by a pupil or prospective pupil by mailing or delivering written notification to cancel the contract or written agreement or by failing to attend instructional facilities for a period of five consecutive appointment days on which classes or the provision of services which are the subject of the contract or written agreement were prearranged with the pupil or prospective pupil.

Reasonable and fair service fee" shah mean no more than 10% of the total contract price for contracts of $1 000 and under. For contracts over $1 000 reasonable and fair service fee" shall mean no more than $100 plus an amount equal to 5% of the total contract price over $1 000 (not to exceed $250 in total).

It 'is further ordered That respondent Arthur Murray, Inc. , a corporation, and its officers, and respondent's agents, representatives and employees, directly or through any corporate or other device, or through any licensee, in connection with the solicitation, advertising or sale of dance instruction or dance instruction services which are the subject of a contract or written agreement, do forthwith cease and desist from:

1. Entering into any contract or written agreement for dance instruction or dance instruction services which are the subject of the contract or written agreement unless it clearly and conspicuously discloses in the exact language below that: This agreement is subject to cancellation at any time during the term of the agrment upon notification by the student. If this agrment is cancelled within thre busines days, the studio wil refund an payments made under the agreement. After three EDERAL TRADE COMMISSION DECISIONS Modifying Order 95 F.

business days, the studio wil only charge you for the dance instruction and dance instruction services actually furnished under the agreement plus a reasnable and fair service fee.

2. Failing to refund to a pupil or prospective pupil who cancels any contract or written agreement within three business days from the alldate on which the contract or written agreement was executed, payments made by the pupil or prospcctive pupil. Such refunds shall be provided, and any evidence of indebtedness cancelled and returned within 30 days after receiving notice of cancellation. 3. Receiving, demanding, or retaining more than a pro rata portion of the total contract price plus a reasonable and fair service fee where a pupil or prospective pupil cancels any contract or written agreement after three business days from the date on which the contract or written agreement was executed and within the term of the said contract or written agreement. Seller must, within thirty (30) days of notice of cancellation, provide any refund payment due to the pupil or prospective pupil or must cancel that portion or the pupil's or prospective pupil's indebtedness that exceeds the amount due. The pro rata portion shall be calculated in the following manner: (a) For the time period preceding notice of cancellation, there must be calculated the number of hours or lessons of dance instruction or dance instruction services received or attended by the pupil pursuant to the contract or written agreement.

(b) This number must be divided by the total number of hours or lessons of dance instruction or dance instruction services which are the subject of the contract or written agreement. (c) The resulting number shall be multiplied by the total contract price.

(d) For contracts combining a course of dance instruction with dance instruction services, separate prices for the dance instruction and the dance instruction service portions must be designated and the pro rata portion of the total contract price shall be the sum of the separate pro rata obligations for the dance instruction portion and the dance instruction service portion.

4. Misrepresenting in any manner to any pupil or prospective pupil ny of the provisions of this order.

III.

It is further ordered That nothing contained in thc Modified Order cease and desist shall be construed to relieve respondent from mplying with any provision of any federal, state, or loeallaw, rule (ulation, or order which affords greater protection to pupils or ,.

ARTHUR MURRAY, INC., ET AL. 351 347 Modifying .Order prospective pupils than the comparable provision of the Commission order or to waive any legal rights the pupil or prospective pupil may have uriderthe various jurisdictions;

It is further ardered That:

1. Respondent corporation deliver a copy of this order to each of its present and future franchisees or sub-franchisees, with directions that such persons promulgate and enforce same.

2. Respondent obtain from each person described in sub-paragraph 1 above a signed statement setting forth his/her intention to conform his/her business practices to the requirements of this order; if respondent is unable to obtain such signed statements, respondent shah notify the Federal Trade Commission of the name of the franchisee or sub-franchisee which wih not sign such a statement and report the reason therefore to the Federal Trade Commission. 3. Respondent institute a program of continuing surveilance adequate to reveal whether the business operation of each person described in subparagtaph 1 above conforms to the requirements of this order; and 4. Respondent discontinue dealing with or terminate the use or engagement of any person described in subparagraph 1 above who continues afternotice to ' engage in acoritinuOlis cOllTse of conduct involving acts or practices prohibited by this order as revealed by the aforesaid program of surveilance. Respondent is permitted to effect such termination in accordance with applicable state laws in those states which have statutes governing franchise termination. It is further ordered That:

1. Respondent corporation forthwith distribute a copy of this order to each of its operating divisions.

2. Respondent corporation notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the crea,tiollqrdissolution of subsiqiariesorany other change in the corporation which may affect compliance obligations arising out of the order.

3. Respondent corporation, within one hundred fifty (150) days after service upon it of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order.

352 FEDERAL TRAm; COMMISSION DECISIONS Interlocutory Order 95 F.