STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF AGRICULTURE )

AND CONSUMER SERVICES, )

)

Petitioner, )

)

vs. ) CASE NO. 94-1860

) TIGHT-GRIP INTERNATIONAL, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

On May 26, 1994, a formal administrative hearing was held in this case in Tampa, Florida, before J. Lawrence Johnston, Hearing Officer, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Jay S. Levenstein, Esquire

Department of Agriculture and Consumer Services

515 Mayo Building Tallahassee, Florida 32399

For Respondent: Thomas E. Parnell, Esquire

508 West Fletcher Avenue Tampa, Florida 33612

STATEMENT OF THE ISSUES

The remaining issue in this case is whether the Petitioner, the Department of Agriculture and Consumer Services, should impose an administrative fine on the Respondent, Tight-Grip International, Inc. (Tight-Grip).

PRELIMINARY STATEMENT

On or about March 10, 1994, the Department filed a Complaint against Tight- Grip to require it to cease and desist from allegedly violating the law and seeking to impose an administrative fine for allegedly violating the law.

Without admitting to any violations or waiving any defenses, Tight-Grip filed registration materials with the Department on or about March 8, 1994. On or about March 23, 1994, the Department approved the materials and issued Tight- Grip an advertising identification number.

On or about March 28, 1994, Tight-Grip requested formal administrative proceedings on the Department's Complaint, and the matter was referred to the Division of Administrative Hearings on April 6, 1994. The case was scheduled for final hearing on May 26, 1994.

At the final hearing, acknowledging that Tight-Grip had an advertising identification number and would provide an approved disclosure statement to future prospective buyers, the Department voluntarily dismissed the part of the Complaint seeking a cease and desist order. However, it announced that it was continuing to seek the imposition of an administrative fine.

The Department called one witness and had Petitioner's Exhibits 1 through 5 admitted in evidence. The Respondent called two witnesses.

At the end of the hearing, the Department ordered the preparation of a transcript of the final hearing, and the parties were given ten days from the filing of the transcript in which to file proposed recommended orders. The transcript was filed on June 14, 1994.

Explicit rulings on the proposed findings of fact contained in the parties' proposed recommended orders may be found in the Appendix to Recommended Order, Case No. 94-1860.

FINDINGS OF FACT

1. The Respondent, Tight-Grip International, Inc., sells a chemical designed to prevent hard mineral surfaces from being slippery when wet. Tight- Grip sells the product through distributors. Together with the product itself, it sells kits to enable and help its distributors to sell the product to the ultimate consumers. The kit includes materials needed to install the product, form contracts, brochures, a training video and a training manual. It also includes a license to use the trademark "Tight-Grip," which Tight-Grip had registered with the federal government on or about April 15, 1991.

   
   

2. The training manual is devoted largely to the actual application of the product, but it also includes a section entitled "How To Land Business." It essentially provides instruction and hints to the distributor on how to sell the product to potential customers. It describes "The Flyer Method," "The Curiosity Method," "The Door Prize Method," "The Free Sample Method," and "The Referral Method" for "landing" residential business. It then describes the "strictly confidential" "trade secret secret" "Method #5" for "landing" commercial business, to be used, in conjunction with "rote training cards," only for training "licensed dealers."

   
   

3. Tight-Grip sells its product and solicits distributors in various ways, including participation in trade shows. It utilizes an advertising brochure entitled "There's a Revolution Under Foot 21 Century Technology TODAY." Part of the brochure offers the following answers to "Frequently Asked Questions":

   
   

   Q. How do I market TIGHT-GRIP?

   A. The public already knows that hard mineral surfaces are treacherous when wet. What they don't know is that there is a solution. TIGHT-GRIP has developed a number of successful methods to bring this fact to their attention. Direct mail, cold calling, telemarketing, trade shows, and organizations all work when implemented correctly.

4. When asked by prospective distributors how one markets the Tight-Grip product, Tight-Grip representatives respond that "it sells itself, you just have to demonstrate it." In addition, prospective distributors are told that the company provides marketing training in its training manuals and provides advertising brochures. Prospective distributors are not told that the company provides "a sales program or a marketing program."

   
   

5. It is found that Tight-Grip does not offer its distributors a "sales program" or a "marketing program." Nor is it found that Tight-Grip has a "sales program" or a "marketing program."

   
   

6. Tight-Grip has participated in between four and six trade shows in Florida. One such trade show occurred on January 16, 1994. The usual representations were made to a Department representative. The Department decided that Tight-Grip was representing that it provides "a sales program or a marketing program" and that it was offering to sell business opportunities without an advertising identification number and, in all likelihood, was selling business opportunities although it had no approved disclosure statement to give prospective buyers, in violation of the law.

   
   

7. Having been notified by the Department that it was in violation of the law, Tight-Grip filed registration materials with the Department on or about March 8, 1994, in order to continue to solicit prospective Tight-Grip distributors, and contract with them, without the risk of additional violations. (Tight-Grip always has maintained that it does not sell "business opportunities" and is not required to have an advertising identification number or to provide prospective buyers with an approved disclosure statement.)

   
   

8. On or about March 10, 1994, the Department filed a Complaint to require Tight-Grip to cease and desist from allegedly violating the law by offering to sell business opportunities without an advertising identification number and by selling business opportunities although it had no approved disclosure statement to give prospective buyers. The Complaint also sought to impose an administrative fine.

   
   

9. In order to continue to solicit prospective Tight-Grip distributors, and contract with them, without the risk of additional violations, Tight-Grip filed registration materials with the Department on or about March 8, 1994. (Tight-Grip continues to maintain that it does not sell "business opportunities" and is not required to have an advertising identification number or to provide prospective buyers with an approved disclosure statement.) On or about March 23, 1994, the Department approved the materials and issued Tight-Grip an advertising identification number.

   
   

10. Tight-Grip entered into approximately 100 distributorship agreements before receiving an advertising identification number. It did not provide those distributors with an approved disclosure statement. The evidence was not clear as to how many of the distributors are in Florida.

    
    

    CONCLUSIONS OF LAW

    
    

11. Chapter 559, Part VII, Fla. Stat. (1993), requires persons selling or offering to sell "business opportunities" to obtain an "advertisement identification number" from the Department of Agriculture and Consumer Services and to provide buyers and prospective buyers with a copy of its approved disclosure statement at least three days before the buyer or prospective buyer signs a contract or pays any consideration. Sections 559.803 and 559.805, Fla.

    Stat. (1993). Under Section 559.813, Fla. Stat. (1993), the Department can order violators to ceased and desist their violations and fine them not to exceed $5,000 per violation.

    
    

12. Section 559.801(1)(a), Fla. Stat. (1993), includes the following definition:

    
    

    (1)(a) "Business opportunity" means the sale or lease of any products, equipment, supplies, or services which are sold or

    leased to a purchaser to enable the purchaser to start a business for which the purchaser is required to pay an initial fee or sum of money which exceeds $500 to the seller, and in which the seller represents:

    1. That the seller or person or entity affiliated with or referred by the seller will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases, or other similar devices or currency-operated amusement machines or devices on premises neither owned nor leased by the purchaser or seller;

    2. That the seller will purchase any or all products made, produced, fabricated, grown, bred, or modified by the purchaser using in whole or in part the supplies, services, or chattels sold to the purchaser;

    3. That the seller guarantees in writing that the purchaser will derive income from the business opportunity which exceeds the price paid or rent charged for the business opportunity or that the seller will refund all or part of the price paid or rent

       charged for the business opportunity, or will repurchase any of the products, equipment, supplies, or chattels supplied by the seller, if the purchaser is unsatisfied with the business opportunity; or

    4. That the seller will provide a sales program or marketing program that will enable the purchaser to derive income from the business opportunity, except that this paragraph does not apply to the sale of a sales program or marketing program made in conjunction with the licensing of a trademark or service mark that is registered under the laws of any state or of the United States.

       
       

       (Emphasis added.) The only part of the definition alleged to apply in this case is the one described by subparagraph 4 of the statute--a sale in which the seller represents that the seller will provide a sales program or marketing program that will enable the purchaser to derive income.

       
       

13. It is concluded that, although the kit Tight-Grip sells includes a license to use its federally registered trademark "Tight-Grip," Tight-Grip is

    not selling a sales program or a marketing program in conjunction with the licensing of a trademark or service mark," and the trade mark or service mark exception in Section 559.801(1)(a)4. does not apply.

    
    

14. Based on the findings, it is concluded that Tight-Grip does not represent that it "will provide a sales program or marketing program that will enable the purchaser to derive income." Therefore, it does not sell or offer to sell "business opportunities."

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Agriculture and Consumer Services enter a final order dismissing the Complaint.

RECOMMENDED this 11th day of July, 1994, in Tallahassee, Florida.

J. LAWRENCE JOHNSTON Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 11th day of July, 1994.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-1860

To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact:

Petitioner's Proposed Findings of Fact.

1. Accepted and incorporated.

2. Subordinate to facts contrary to those found.

3. Accepted and incorporated.

4. Rejected as contrary to facts found and as conclusion of law that it was a "business opportunity." Also, rejected as contrary to facts found that Tom represented that "each investment included a sales/marketing training program." (Rather, found that he said training included instruction on how to sell and market the product.) Otherwise, accepted and incorporated to the extent not subordinate or unnecessary.

5.-7. Accepted and incorporated.

1. Conclusion of law. Contrary to facts found.

2. Accepted and incorporated.

3. Accepted but subordinate and unnecessary. 11.-12. Accepted and incorporated.

13. Conclusion of law and contrary to facts found that Florida law required disclosure statements to be provided.

Respondent's Proposed Findings of Fact.

1. Accepted and incorporated.

2. Subordinate and argument.

3. In part, conclusion of law. Rejected that Harris's was "the only credible testimony before the hearing officer." In part, accepted and subordinate to facts found.

4. In part, subordinate to facts found (there is no "sales or marketing program.") In part, subordinate to facts contrary to those found (that Tight- Grip "only provides some demonstration and promotional materials.")

5. Accepted and incorporated.

COPIES FURNISHED:

Jay S. Levenstein, Esquire Department of Agriculture

and Consumer Services

515 Mayo Building

Tallahassee, Florida 32399-0800

Thomas E. Parnell, Esquire

508 W. Fletcher Avenue, Suite #105 Tampa, Florida 33612

Honorable Bob Crawford Commissioner of Agriculture Department of Agriculture and

Consumer Services The Capitol, PL-10

Tallahassee, Florida 32399-0810

Richard Tritschler, General Counsel Department of Agriculture and

Consumer Services The Capitol, PL-10

Tallahassee, Florida 32399-0810

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit to the Department of Agriculture and Consumer Services written exceptions to this Recommended Order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the Department of Agriculture and Consumer Services concerning its rules on the deadline for filing exceptions to this Recommended Order.

Docket for Case No: 94-001860

Orders for Case No: 94-001860