1. The operator of the QG Appliances 4 Less brand never provided a Franchise Disclosure Document (FDD), yet recruited under the term “franchise,” violating FTC Rule 16 CFR §436 and California Corp Code §31110.
2. The so-called “distribution agreement” contains all three essential elements of a franchise: use of a unified brand, a one-time payment, and operational control—thus constituting a de facto illegal franchise.
3. Our store paid an “authorization fee” calculated as local population × $0.015, amounting to nearly $100,000, which in substance was a franchise fee.
4. The franchisor heavily marketed “TOP AIR” as a core exclusive product during recruitment but never delivered a single unit after contract execution.
5. During recruitment, the franchisor used terms such as “franchise” and “exclusive” in WeChat groups and social media platforms, constituting fraudulent inducement.
6. The franchisor intentionally expanded promotion efforts despite knowing they lacked proper licensing and product fulfillment capability, creating serious investor misdirection.
7. Xiangzhen Meng explicitly referred to the payment as a “franchise fee” in emails before and after the contract. Later, WeiJun Jiang denied it, creating clear contradictions and intentional deception.
8. No financials, risk disclosures, or brand structure information were provided before signing, violating mandatory pre-sale disclosure obligations under franchise law.
9. The franchisor never registered as a legal franchisor in California, at the federal level, or in Nevada, yet repeatedly engaged in nationwide recruitment, reflecting a systemic and ongoing violation of franchise regulations.