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Log In / Register | Oct 17, 2017

California Hits Conner Again with Desist Order, This Time with Tomii Massage Franchise

SACRAMENTO – Franchise consultant Christopher Conner is once again in trouble with California franchise regulators, and is currently bracing for the department's final judgment and penalties. While this is the state's second enforcement action against him and a client, the Commission is now seeking an injunctive order against Conner, stating he is a risk to prospective franchisees.

In her June 17, 2015 desist and refrain order, this time against Conner and client Tomii Massage Franchise, Inc., the Commissioner laid out the facts of the case. She detailed the previous actions against Conner and Franchise Marketing Systems, related to another client, RedRhino epoxy floor covering franchise.

She noted that when Conner filed the franchise registration application on September 15, 2014, Tomii Massage Franchise had only been in existence for one full month. Guanghuo Chen was the sole owner and registered agent of Tomii International, Inc., and was the company's only employee. And Chen had no prior franchise experience, and his company only had $1,000.00 in capitalization.

The Commissioner also explained Conner and his company's role saying, "Conner is not an attorney. Rather, Franchise Marketing Systems markets itself on its website as 'the only full service franchise consulting agency offering marketing and sales support to its clients.'"

While franchisors are required to identify all persons acting as an officer or direct of the company, the order states that neither Conner nor Franchise Marketing Systems was identified in Tomii's registration application. And any person who assists the franchisor in offering and selling franchises must attach the required Franchise Seller Form to its registration. The Commission explains every person involved in selling must answer two questions:

Has an administrative, criminal or material civil action pending against that person alleging a violation of franchise, antitrust or securities law, or alleging fraud, unfair or deceptive practice, or any comparable allegations?    

Yes ____ No ____

Is subject to a currently effective injunction or restrictive order or decree resulting from a pending or concluded action brought by a public agency and relating to the franchise, or a federal, state or Canadian franchise, securities, antitrust, trade regulation or trade practice law?

Yes ____ No ____

Tomii Massage Franchise did not have the Franchise Seller Form attached to its registration application, so neither Conner nor his company were disclosed as sellers of the franchise.

On February 11, 2015, 149 days after Conner filed the franchise registration, he submitted a Franchise Seller Form, and he answered "No" to each of the two questions requiring disclosure of past actions against him and his company. Presently, Conner and Tomii have not updated the seller form.

During the application review process, California DBO requested a copy of all agreements between Tomii and Conner or his consulting company. Tomii, through Conner, submitted at least four different agreements over the course of several months. Each was represented as "final" and "effective."

The Commissioner states that there were material differences between all four and the agreements often contradicted each other. She said the worse of them was that some were pre-dated before the franchisor's existence. "And most importantly, only the last of the four [agreements] submitted . . . disclosed the actual franchise sales role that Conner and Franchise Marketing Systems would play," the Commission asserted. When Conner was confronted with the irregularities, Conner admitted to altering the agreements after the fact.

The desist order states that Conner and Tomii Franchising and its owner Chen "made an untrue statement of a material fact in an application, omitted to state a material fact which is required, or failed to notify the Commissioner of any material change in its application." She ordered them to refrain from further violations of California's Code.

"This order is necessary, in the public interest, for the protection of investors and franchisee and consistent with the purposes, policies and provisions of the Franchise Investment Law," she stated. The Commissioner explained that Conner and his company would be assessed and ordered to pay $15,000 in administrative penalties. And would also pay attorney fees and investigative expenses of $10,000, or whatever is awarded.

Tom Dresslar, spokesperson for California Department of Business Oversight, told Blue MauMau the Tomii Franchising case is still pending. He also said that in the RedRhino desist and refrain order the penalties have been paid and the order has been satisfied.

California issue stop order on Tomii

At the same time the department issued its desist order, it also filed a stop order suspending Tomii's franchise registration because it failed to comply with California codes. And because Christopher Conner was identified in Tomii's registration application he is subject to an injunctive or restrictive order related to the franchise business, stating Conner's involvement in the sale of Tomii franchises "creates an unreasonable risk to prospective franchisees."


Related Article:

IFA Takes No Action for Now against Conner

Tomii Franchise Documents:

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About Janet Sparks

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Janet Sparks is the former publisher of the Continental Franchise Review, an industry newsletter that covered the franchise community for over 30 years. She has also been a columnist for a leading franchise magazine for the past 13 years. Today she is an independent journalist who engages in investigative reporting, tackling complex issues that impact the franchise industry.

Janet can be reached at jsparks@bluemaumau.org or at 303-799-7398.