California Department of Corporations Takes Enforcement Action Against Company Selling Illegal Franchise Business to Primarily Korean Americans in the Greater Los Angeles Area.

SACRAMENTO, Calif. -- The California Department of Corporations (DOC) issued a desist-and-refrain order against IBHM, Inc. (IBHM) of Los Angeles, also known as Integrative Bio Health Management, Inc., doing business as 5R Health, and Founder and Chairman Jong Ki Kim, along with Vice President Jong Hag Kim. The order alleges the company was not registered as a franchise business as required by state law. There were eight investors who were mainly Korean Americans that spent an estimated $1.2 million in the health fitness and nutrition franchise.

According to the order issued on September 13, 2006, IBHM and the company officials entered into written agreements with purchasers described as a "Distributorship and License Agreement" to sell 5R Health franchises. The agreement required the purchasers to pay a non-refundable license fee ranging from $25,000-$40,000, find a location site for the 5R Health Center, buy IBHM health products and exercise equipment worth at least $100,000, and thereafter purchase at least $20,000 worth of health products annually.

"Registration of franchises under the Franchise Investment Law provides the best way to assess risk to operators and purchasers of franchises in California," said California Corporations Commissioner Preston DuFauchard. "The state law requires franchisors give prospective buyers of their franchises a disclosure document with such information as the franchisor's litigation history, how much money a franchisee must pay, financial arrangements, and names and contact information of current franchisees."

The order alleges that purchasers were obligated to provide clients and members of the center with the Nano Diet Program developed by IBHM, and to participate in IBHM's marketing, advertisement, training, education, and operating programs.

For more information about state franchising requirements, visit DOC's Web site at http://www.corp.ca.gov/pdf/fguide.pdf or call 1-866-ASK-CORP (1-866-275-2677).

California leads the nation in franchised businesses, encompassing more than 80,000 businesses that provide 2 million jobs and produced economic output worth $187 million, according to a 2004 report by the International Franchise Association Educational Foundation.

Counsel Uche Enenwali is responsible for this case.

The Department of Corporations (DOC) is California's investment and financing authority and is responsible for the regulation, enforcement, and licensing of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending, residential mortgage lending, payday lenders, check sellers, bill payers, and debt reduction services. Consumers should contact the department to check on the status of the companies, investments or other services they are considering and the licensing status of the person. Contact DOC's toll-free Consumer Resource Center at 1-866-ASK-CORP (1-866-275-2677) or visit DOC's Web site at www.corp.ca.gov.