THE Securities and Exchange Commission (SEC) has ordered Easy Franchise Technological Ventures Inc., several officers and an affiliated company to immediately stop offering and selling investment products to the public for alleged violations of securities laws.
In a cease and desist order, the SEC's Enforcement and Investor Protection Department (EIPD) said complaints and reports indicated that Easy Franchise was engaged in unauthorized investment-taking activities through franchise ownership and management programs that promised passive income, profit-sharing arrangements and attractive returns.
Named in the order were Easy Franchise, co-founders Rene Ledesma Jr., Jose Magsaysay Jr. and Charmaine Isabel Lim, as well as several officers and affiliate Sunspark Holdings Inc.
The SEC said the company marketed franchise investment opportunities to the public, particularly overseas Filipino workers (OFWs), through online promotions and social media presentations.
Investors were encouraged to participate in franchise businesses through the company's "Investment Starter" program, which offered shared ownership arrangements and management services.
The program allowed investors to pool funds to acquire franchise outlets while Easy Franchise handled day-to-day operations.
The SEC said complainants identified several franchise businesses allegedly organized through the scheme, including Tapsulit, Poseidon Water Station, Water2Go and Lavada/Lalawash.
Some investors claimed they failed to receive promised returns and payouts while certain franchise outlets either ceased operations or failed to open.
The SEC reviewed partnership agreements and found that investors primarily contributed capital while Easy Franchise retained control over the management, operations, finances and profit distributions of the businesses.
"The agreements and surrounding circumstances strongly indicate that the franchise arrangements functioned as investment contracts where profits were expected to be derived primarily from the managerial and operational efforts of the Respondents," the SEC said.
It also found that while Easy Franchise was registered as a corporation, it did not possess the secondary license required to offer or sell securities or solicit investments from the public.
