‘Learning Centers’ Accused of Fraud

     PHOENIX (CN) – In the latest complaint against for-profit education chains, a Phoenix man claims Huntington Learning Centers sold him a franchise without disclosing that it was “in significant operational and financial decline,” that it “evaluated” students with a fraudulent software program, and that its Arizona franchises were failing.

     Christopher Tozzo and his business, Glenchrist Educational, claim in Federal Court that Huntington Learning Centers made “numerous deceptive, incomplete statements and outright misrepresentations that separately and taken together described the HLC System as a growing, financially healthy franchise system and that its franchisees were financially successful.”
     Tozzo says he had inquired about buying a franchise in Las Vegas, but Huntington persuaded him to buy a franchise in Glendale, in the Phoenix metroplex. He says the pitch came from defendant Russell Miller, Huntington’s vice president of business development.
     Tozzo says Huntington gave him a brochure that “deceptively suggested that HLC franchisees have earned a ‘significant financial return on their investment’ and are ‘earning the kind of return on their investment they initially projected.'”
     But Tozzo says that months before he bought the Glendale franchise, “nearly all if not all of the Arizona HLC franchisees were either no longer able to financially operate their respective HLC Centers or were in financial extremis and on the verge of being unable to continue to operate their respective HLC Centers.”
     He claims Miller also led, or misled him to believe that the Glendale franchise was paying $2,000 a month to the Phoenix Area Franchisee Advertising Cooperative “to be applied toward current and otherwise ongoing marketing expenses.” But Tozzo says the Phoenix Advertising Co-Op had not been buying any ads for its members, that it was “tens of thousands of dollars in debt to advertisers,” and that his franchise’s monthly $2,000 payments were “being used to pay down tens of thousands of dollars in debt for past advertising that had long ago ceased running in advertising media.”
     Tozzo also complains that Huntington required him to license for “several thousands of dollars per year a computer software system entitled Learning Center Operating System,” which allegedly “determined the academic and related needs of the prospective student and the corresponding amount of tutoring.”
     But Tozzo says Huntington did not disclose that the program is “rigged” so that all students, even those with perfect scores on the academic evaluation, “are shown to need tutoring, and otherwise the amount of tutoring a child needs is inflated.”
     Tozzo says Huntington told him, falsely, that “the franchisee would provide in a professional manner individualized instruction to students”; he says he was unaware that he would be “engaging in deceptive and misleading sales practices to the consuming public” by using the software program.
     Huntington Redevelopment, a company “formed to purchase expired and terminated HLC franchise units for the purpose of reselling those units to new or existing franchisees,” and Raymond Huntington and Eileen Huntington, co-founders of Huntington Learning Centers, are also named as defendants in the federal complaint.
     Tozzo seeks rescission of the franchise agreement, restitution, and l damages for breach of contract and fraud.
     He is represented by Peter Greenfeld of Phoenix.

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