Buying a Martial Arts Franchise? What to Verify Before You Sign
On October 5 the Federal Trade Commission announced proposed settlements totaling $1.85 million with the Premier Martial Arts franchisor and its former franchise sales organization. We covered the case itself here. This article is for the next buyer: the instructor thinking about a franchise, the investor told a studio can run semi-absentee, the owner weighing a conversion offer. The case is a map of exactly where to look.
Short answer
Read the Franchise Disclosure Document yourself, with a franchise attorney, before you pay or sign anything. Any earnings figure you are shown must appear in Item 19, so compare the studios behind those numbers with the studio you are being told to build. Call franchisees who left the system, whose contact details are in Item 20. Ask who the salesperson works for and how they are paid. And test every claim about owner hours against how a martial arts school actually operates.
What the FTC alleged, in four lessons
| What the FTC alleged | What to verify |
|---|---|
| Buyers were told people with no martial arts background could profitably run one or more studios in under 15 hours a week | Who teaches, who enrolls, who renews, and at what hours. Children’s programs run in the late afternoon and evening, six days a week |
| Earnings shown in the 2020–2022 disclosure documents came from existing studios without a reasonable basis to think new studios would match them | The size, age, location and owner experience of every studio behind an earnings figure |
| Existing studios ran 2,000 to 7,000 square feet; new buyers were steered to 1,200 to 1,600 | Whether the model you are buying matches the model that produced the numbers |
| Management roles held by the sales organization’s personnel were not disclosed | Who is selling you the franchise, who employs them, and how they are paid |
These are allegations. The proposed orders take effect only when a federal judge in the Eastern District of Tennessee approves them, and the sales organization, Franchise Fastlane, neither admits nor denies the claims.
The disclosure document items that matter most
Under the FTC Franchise Rule, a franchisor must give you its Franchise Disclosure Document at least 14 calendar days before you sign a binding agreement or pay any money. Use all 14 days.
| Item | What it covers | What to look for |
|---|---|---|
| 2 | Business experience of executives | Has anyone running the system owned and operated a martial arts school? |
| 3 and 4 | Litigation and bankruptcy | Franchisee lawsuits, regulatory actions, and a pattern rather than a single case |
| 5, 6 and 7 | Initial fee, ongoing fees, estimated initial investment | Whether Item 7’s build-out range fits the square footage you are being told to lease, plus working capital for the months before you break even |
| 11 | Franchisor’s obligations, including training | How much instructor and enrollment training you actually receive, and who delivers it |
| 12 | Territory | Whether another unit, or the franchisor itself, can open near you |
| 17 | Renewal, termination and transfer | What happens if you want to leave, sell or convert |
| 19 | Financial performance representations | Which studios, how many, what size, how long open, and whether owners were experienced martial artists |
| 20 | Outlets and franchisee information | Openings, transfers, terminations and closures by year, plus contact details for franchisees who left in the last fiscal year |
| 21 | Financial statements | Whether the franchisor earns its money from royalties paid by successful franchisees or from selling new franchises |
If a salesperson shows you a revenue figure, a profit figure or a “typical owner makes” number that is not in Item 19, that is the conversation the Franchise Rule is designed to stop. Write it down, with the date and the person’s name.
Who is selling you the franchise?
The Premier case is the first FTC Franchise Rule action against a third-party franchise sales organization, according to the International Franchise Association, which publicly supported the FTC’s action. Outside brokers and sales organizations are often paid by the franchisor when a deal closes, which gives them a reason to put a buyer into whichever brand pays.
Regulation is catching up. California’s franchise broker registration law takes effect July 1, 2027, requiring brokers to register annually and provide a disclosure document that covers their litigation history and how they are paid. The North American Securities Administrators Association adopted a model franchise broker registration act on May 4, 2026. You do not need to wait for either. Ask every broker, in writing, who pays them and how much.
Twelve questions to ask former franchisees
- How many hours a week did you actually work in your first year?
- Who taught the classes, and what did that person cost?
- How long did it take to reach break-even, if you did?
- How did your studio’s size and location compare with the studios in Item 19?
- What did your build-out actually cost compared with Item 7?
- How many students did you have at six, twelve and twenty-four months?
- Where did your enrollments come from, and what did each cost?
- What training did you receive, and was it enough to run the floor?
- What did you borrow, and against what?
- Why did you leave, and what did leaving cost you?
- What were you told during the sales process that turned out not to be true?
- Would you buy this franchise again?
Ask current franchisees the same questions. Then compare the two sets of answers.
The operating reality no document will show you
A martial arts school is a relationship business. Families enroll with an instructor and renew because of one. Most children’s classes run between about four and eight in the evening, which is also when enrollment and renewal conversations happen. Any model that promises meaningful profit on a few hours a week has to explain who is doing that work, what they are paid, and why they will stay. If the answer is vague, so are the projections.
Disclosure: Martial Arts Professional is published by Stephen Oliver, who also operates Martial Arts Wealth Mastery, a paid coaching program for martial arts school owners. It is not a franchise. The same advice applies to any program you buy in this industry, including that one: ask what you are paying for and how the seller is paid.
Frequently asked questions
How long must a franchisor wait after giving me the disclosure document?
Under the FTC Franchise Rule, at least 14 calendar days before you sign a binding agreement or pay any money.
Where do I find earnings information for a martial arts franchise?
In Item 19 of the Franchise Disclosure Document. Franchisors are not required to provide one, but any earnings claim made to you must have a reasonable basis and appear in Item 19.
How do I contact franchisees who left the system?
Item 20 must list contact information for franchisees who left the system in the last fiscal year, subject to limited exceptions.
Can a martial arts school really be run semi-absentee?
The FTC alleged that claims that non-martial artists could profitably run studios in under 15 hours a week were deceptive. Verify any hours claim with former and current franchisees before relying on it.
Sources
- Federal Trade Commission, “Premier Martial Arts Franchisor and Its Former Franchise Sales Organization Settle FTC Charges,” October 5, 2026, and the complaint.
- International Franchise Association, “IFA Statement on FTC Settlement,” October 5, 2026.
- Union Bridge Group Law, “California Franchise Broker Registration Law Takes Effect July 1, 2027.”
- NASAA, “NASAA Adopts New Model Act to Close Regulatory Gaps in Franchise Industry.”
- FTC, Franchise Rule Compliance Guide.
This article is general information, not legal advice. Have a franchise attorney review any disclosure document and agreement before you sign.
