KNOXVILLE, Tenn. (WATE) — Dozens of franchise owners are suing Knoxville-based Premier Martial Arts in federal court claiming the company defrauded them for years.
“Our school opened right in the height of COVID, October of 2020,” Katie Baker said.
According to Baker, she her husband had big dreams of helping kids through martial arts.
“My husband is actually retired, 23 years from the military. He suffered a heart failure at age 42 and had to take it easy so went looking for a semi-absentee franchise where he could make a difference, bring in a good income and not have that same stress on his heart that he had,” she said.
However, after spending at least $250,000 just to open their Premier Martial Arts school in Greely, Colo., it’s been nothing but more stress.
“We were told it would be about $150,000,” Baker said. “We did our due diligence. We asked our questions. All of the answers met everything we were looking for only to find out about 18 months later that none of it was real.”
Baker along with more than 50 other franchise owners claim in the lawsuit Premier Martial Arts lied by telling them a franchise could operate by just putting in 10 hours a week or so.
“This model was repeatedly told to us through video, print, and verbal messaging,” Baker said.
But plaintiffs in the lawsuit say the reality of running a studio was a 40 to 60-hour work week.
They also alleged Premier Martial Arts told potential franchise owners they would have profit margins above 40%. Although, Baker reports that was not true at all.
“They were very good at trying to tell owners, ‘Those that are failing are not following the systems. They’re not doing what they’re supposed to,’ when that’s not the case. We were all following it to a ‘T’ and their systems changed regularly,” she said.
Baker told WATE she and her husband have lost about $625,000 by investing in Premier Martial Arts. She added some owners have spent their life saving into opening a franchise and have been left with next to nothing.
“We’re professionals and we’re all well-educated individuals,” Baker said. “I think that it made it that much harder to believe that we have been scammed. We thought we knew the right questions, you can kind of equate it to the Bernie Madoff situation.”
Baker and the plaintiffs in the suit are hoping for $75 million in damages.
No word from Premier Martial Arts at the time of this report.