Despite rising public consciousness about the health hazards of obesity, the commercial diet industry is wasting away in the 1990s.

Yet the commercial diet industry, featuring high-visibility franchises such as Weight Watchers, Jenny Craig, Nutri/System and Physician's Weight Loss Centers, suffered a 15 percent drop in revenues to $1.7 billion last year. And in recent years, the number of weight-loss clinics has declined by 1,200, to 5,500 nationwide.

The industry brought much of the negativism upon itself by overhyping potential results. The Federal Trade Commission a year and a half ago alleged that five of the largest commercial diet companies engaged in deceptive advertising. While three settled and changed policies, Weight Watchers and Jenny Craig challenged those charges and are awaiting court dates.