Chili’s Franchisee Abruptly Closes Oregon Restaurants

According to The Portland Tribune, Chili’s franchisee Quality Restaurants Northwest (part of the Huntington Restaurant Group Inc., a franchise company with $13.4 million in sales last year) Beaverton, Bethany, Lake Oswego and Wilsonville in Oregon and Bellevue and Issaquah, Wash. are closing, leaving an estimated 200 people out of work. Chili’s restaurants in Clackamas and Eugene, Oregon will remain open and be run by franchisor Brinker International.

According to a spokeswoman for the of Dallas, Texas-based parent company of Chili’s Inc., Brinker International Inc., the decision to close the restaurants was made by the franchise holder, Quality Restaurants Northwest Inc. of Scottsdale, Ariz.

Brinker International operates more than 1,700 restaurants across the nation, including Chili’s Grill and Bar, Chili’s Too, Romano’s Macaroni Grill, On the Border Mexican Grill and Maggiano’s Little Italy.

Could the economy be having this devastating an effect on franchises in general? What do you think?

Dagwood’s Sandwich Franchise: Franchisees Allege Franchise Fraud

(UnhappyFranchisee.com)  Dagwood and Blondie Bumstead are two of the most recognizeable, family friendly and beloved cartoon persona’s in America.  But Dagwood’s Sandwich franchisees are alleging that their flesh and blood half-brother Dean Young, son of Blondie cartoonist Chic Young, used the Bumsteads to help defraud investors out of millions.  According to Courthouse News:

Dagwood’s Is A Fraud, Franchisees Say  Armed with nothing more than the rights to exploit the name "Dagwood," Dagwood’s Sandwich Shoppes, a franchisor, built its entire business upon fraud, 15 plaintiffs claim in Federal Court. "Fraud was the dominant trait for Dagwood’s from the moment it was conceived," the complaint states "… [from] the formation of the company, then to its opening, then to the raising of private funds, then to its sham operation of the system, then to its embezzlement of franchisee payments, then to its shady kickbacks to suppliers, then to its deliberate concealment of wrongdoing, then to the cooking of its books, and ultimately to its final declaration of bankruptcy."

     The complaint continues: "Every penny invested into the fraudulent scheme by Plaintiffs - each of whom was a Dagwood’s ‘Market Partner,’ and each of whom was individually defrauded into funding Dagwood’s fraudulent scheme - has disappeared…. Hundreds of lives have been destroyed by the Defendants. …

Dagwood’s Is A Fraud, Franchisees Say

According to the lawsuit, Dagwood’s never had anything to sell to its Market Partners, its franchisees or its other investors. Only a few stores ever opened, and none of them was profitable.  The Dagwood’s "Market Partners" were "Master Franchisees" who paid for the right to be able to sell franchises to others within their own territories.  The Courthouse News article states that the Market Partners job was "to save Dagwood’s the money, time, effort and research required to create a restaurant franchise system that worked" but that the franchisor was "simultaneously deceiving the Market Partners that such a system existed."

The lawsuit was filed in Florida Middle District Court, Pinellas County, March 24, 2008 Case Number:   8:2008cv00545   Amount Demanded:   $1,000,000.00

Plaintiffs:  Ed Chong, Mark Chambers, Bill Church, David Plevin, Jose Sanchez, Jay Lundblad, MP-CHM, Inc., MI-Way, Inc., USO1, D-Woods, L.L.C., Dagwood’s South Florida L.L.C., Dagwood’s On Pines, L.L.C., S & I Franchise, Inc., Steel City, L.L.C. and 460 Group L.L.C.

Defendants: Dagwood’s Sandwich Shoppes LLC, Dean Young, Lamar Berry, Frank Brown, Dave Pertl, Bob Hartford, Ron Collette, Robert Myers, Bill Ryan, Lance Harris, Dagwood’s Foodservice Group LLC, International Marketing Systems Inc., and Dean Young Enterprises Inc.
Plaintiffs are represented by David Walkowiak of Lutz, Fla., and Jeffrey Goldstein of Leesburg, Va.

Related stories: IS DAGWOOD’S SANDWICH SHOPPE A GREAT FRANCHISE OPPORTUNITY?

ARE YOU FAMILIAR WITH THE DAGWOOD’S SANDWICH SHOPPE FRANCHISE?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW ON DAGWOOD’S OR THE DAGWOOD’S FRANCHISE.

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Graphic:  PR.Com press release.

Forza Coffee Franchise: Franchisee Alleges She Was Set Up To Fail

(UnhappyFranchisee.com)  Forza Coffee franchise owner Sheri Lynn Tanson recently filed a lawsuit against Forza Coffee Company and franchisor Brad Carpenter.  Tanson, whose Forza Coffee franchise was open less than a year before closing down, alleges in her suit not only that Forza Coffee sold the franchise using misleading and incomplete disclosure documents, but did so as part of a scheme known to industry insiders as "churning." 

According to Paige Richmond’s article in the Gateway:

Tanson’s lawsuit alleges that the Carpenters’ actions demonstrate a pattern of setting up their franchises to fail. The lawsuit calls it “a scheme whereby they sell franchises to people, let the franchisees bear the cost of building out the stores, purchasing equipment and developing the market and waiting for the franchisee to fail while providing minimal support.”

Once the franchise fails, the lawsuit alleges, the Carpenters “ ‘re-take’ the store, paying only a small portion of the cost of build-out and equipment, and either operating the store as a company store or re-selling it to a new franchisee and starting the process over again.”

Tanson claims Carpenter offered her this deal when her own franchise began to go under.

Brad Carpenter alleges that this is simply a  case of a franchisee not following the system, and then wanting to blame the franchisor for her own failure:

Carpenter said he attempted to supply all appropriate training and help to Tanson, but she refused it. He also said that Tanson did not complete certain tasks necessary for the business to succeed, such as buying the appropriate Forza signage.

“This is a woman who desired to have a franchise with us and we allowed it, and unfortunately it didn’t work out,” Carpenter said. “A month or so later, she needs someone to blame, so she blames the franchisor.”

The lawsuit also alleges that Carpenter and his wife, Lucinda, who are named in the suit as “Dugout Brothers, Inc.,” provided an expired Franchise Offering Circular disclosure document that left out key, required information, such as the franchisors prior experience with another coffee company, and the number of franchisees leaving the system. 

The case is currently scheduled for trial on Aug. 8, 2008.  Read the full article here: 

Coffee Co. faces lawsuit from former franchisee

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

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Super Suppers Knoxville For Sale

(UnhappyFranchisee.com)  According to Carly Harrington at KnoxNews blog, earlier the Knoxville Super Suppers franchise is up for sale.  Carly writes:

The owners of Super Suppers are reaching out to their customers, offering them an opportunity to buy the Knoxville franchise located at the corner of Cedar Bluff Road and Middlebrook Pike.

"As the owners of Super Suppers Knoxville, we have enjoyed our business and our wonderful customers for over 2 years. At this time, personal concerns present us with the need to consider potential options for our business," owners Steve and Michelle Gibson wrote in an email to customers.

An earlier email suggested a downturn in sales and the possibility of closing the store.

Best wishes to owners Steve and Michelle Gibson;  there seems to be an abundance of "personal concerns" in the Super Suppers chain, and in the meal assembly industry in general.

WHAT DO YOU THINK? SHARE A COMMENT BELOW.
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MN Presto Cuisine & Let’s Dish! Meal Prep Franchises Both Close

(UnhappyFranchisee.com)  The Post-Bulletin reports that two of the three meal assembly kitchen (MAK) franchises have closed up in Rochester, MN.  Then there was one:

Presto Cuisine has went the way of Let’s Dish! in Rochester.

The meal preparation business shut off its stoves for good last week.

Presto, which opened in March of 2006, started out as a meal preparation operation. In November 2007, owner Cindy Stier folded the business into Rochester Produce. She changed the focus to making meals to be sold in the grocery store.

"I think the economy has a lot to do with it. However, these businesses go so well in other cities, but not in Rochester," she said when asked why her business and the recently closed Let’s Dish did not make it. "Why not here is anybody’s guess."

The first such business in the Rochester market — Dish It Up owned by Heather Tlougan — is the last one standing.

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Entree Vous Franchisee Opens First Meal Prep Franchise in Rockland, NY

(UnhappyFranchisee.com)  Despite many closings and growing lawsuits in the meal prep kitchen sector of franchising, The Journal News reports that Rockland, NY is home to one of the newest meal assembly kitchen (MAK) franchises:

Village-resident Carolyn Calabria has opened Rockland’s first food-assembly kitchen… Part of the Entrée Vous chain, the business, which opened April 1, is in a small strip mall just off Exit 13 of the Palisades Interstate Parkway….

Calabria financed the start of the business from savings she accumulated during her 21-year career on Wall Street, most recently as a first vice president at Dean Witter. Calabria decided to go out on her own after surviving the attacks on the World Trade Center towers in 2001.

Entrée Vous is one of several national franchises of meal-assembly kitchens…. The Lexington, Ky.-based company has 49 kitchens in 21 states. Let’s Dish, a similar franchise, opened in Scarsdale about two years ago. Super Suppers, another chain, operates an outlet in New Rochelle….

…Consumer interest in food-prep kitchens has slacked a bit in recent years as the idea has become less novel, said food-industry expert Harry Balzer, vice president of the NPD Group.

Still, there is clearly a need for such businesses, Balzer said.

The concept offers the promise of making life easier for people in charge of household meal-making, he said. Those franchises that offer clear time and cost savings are likely to be more successful.

Added Balzer, "Americans will make the decision about whether they think it’s a great value or a great time-saver."

How is it that "experts" like Balzer feed into the hype despite dozens of meal prep kitchens failing for every new one that opens?

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Super Suppers Franchise Closes in Green, Ohio

(UnhappyFranchisee.com)  Ohio.com recently reported the closing of yet another Super Suppers franchise. 

Also in the closing column is the 6-month-old Super Suppers outlet in Green.

The meal-preparation franchise at 3651 Massillon Road had just opened in November and is auctioning off all of its fixtures.

Our condolences go out to the owners.

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Dream Dinners Franchise Owners Focus on Fund Raisers

(UnhappyFranchisee.com) Franchise owners in the controversial meal preparation segment continue to seek creative ways to build business. According an article in The Capistrano Dispatch, San Juan Capistrano franchise owners of the local Dream Dinners “a lot of school fund-raisers.” Stacy Wagner and Chad Douglass purchased the franchise as a resale last year.

Every month Dream Dinners—a company that provides everything patrons need to assemble dinners to take home and even freeze—offers 17 new menu items complete with instructions and fresh pre-cut ingredients, including beef skewers with sweet garlic mustard glaze, Thai fusion shrimp, sweet cider barbecue chicken, red skin mashed potatoes and cheesecake. Dream Dinners takes orders online, by phone, fax or e-mail, and then customers can come in to pre-prepare either in the morning or at night. Each meal takes about 10 minutes to prepare. “It’s a great way to serve people; it’s time and cost effective for families,” said owner Stacy Wagner.
She and her business partner, Chad Douglass, purchased the three-and-a-half-year-old business about a year ago and do a lot of school fund-raisers where a portion of the proceeds go to the respective school. 31734 Rancho Viejo Road, Suite D, 949.481.5700

WHAT DO YOU THINK? CAN CREATIVE MARKETING SAVE DREAM DINNERS? CAN FRANCHISE RESALES PROSPER WHERE FIRST OWNERS COULDN’T? SHARE A COMMENT BELOW.

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Dream Dinners Franchise Closes in Salt Lake City

(UnhappyFranchisee.com) The Salt Lake City Tribune has reported that the Dream Dinners franchise in the Brickyard Plaza closed last week:

Dream Dinners closes at Brickyard Plaza
The Dream Dinners meal-preparation store in Salt Lake City’s Brickyard Plaza closed last week. The national franchise still has locations in Sandy, Kaysville, Orem, North Logan and St. George.

The Dream Dinners website lists the Brickyard Plaza Dream Dinners franchise owner as Julie Kelso. Our best wishes go out to Ms. Kelso, her family and staff.

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The Problem of Lack of Rightful Services for Franchisee from HQ

One of most vital and important things franchisees pay for through their initial licensing fee and monthly royalties is services and support from their respective Franchisor HQ. Franchisor HQ support is vital to the success of any franchisee, by way of marketing material, training both initial and on-going, positive press coverage, guidance to franchisees when an operational problem arises, problems with food purveyors, recipes development, recipe problems/question, product questions, additional product & service development, website support & development, the list goes on.

What started to happen in the Meal Assembly industry is, as the store-owners closed their doors, due to lack of business, royalties decreased to HQ. Lay-offs at the corporate office of key positions resulted, positions such as, recipe development, trainers/mentors, liaison positions that serve as a vital human link between the HQ leadership and the store-owner and marketing positions. They just ceased to exist. In my franchisor’s HQ (Supper Thyme USA) the staff count went from 7 down to 2 in a matter of months. This was due to massive store closures in a short amount of time. This cut back has happened in Dream Dinners and other Meal Assembly companies as well.

Store-owners are left in the unenviable position of handling many problems, including vital operational problems themselves, problems that traditionally are best handled by trained corporate employees. When this happens, how is it possible for an HQ to fulfill its contractual obligation of support to its franchisee/store owners? It isn’t…although; to date no Meal Assembly HQ has seen it necessary to decrease the required royalty payments extracted from franchisee as a “give-back” to its franchisees even though the services and support available to franchisees have been drastically cut. When asked by franchisees, the Franchisors decline the request of a reduction or cessation of royalty payments until the store owners can reach a ‘break even” position, as several Supper Thyme franchisees found out. Are franchisees getting their money’s worth? Ask any franchisee and you will hear a resounding NO!

When corporate lay-offs occur, communication between storeowners and HQ breaks down. Two-way communication between a frantic franchisee and HQ becomes very difficult to non-existent as the remaining HQ staff members scramble to try to fill vacant jobs and answer questions that they are not trained to handle. Phone calls and emails about urgent matters from franchisees to HQ go left unanswered.

What makes this difficult aside from the fact that franchisees were promised and pay for that support through their royalty payments, is that it leaves the franchisees out in the marketplace with no support from HQ staff that has been trained to handle their day- to day-operational problems. This places unnecessary stress on storeowners who are already balls to the wall stressed to the max. Storeowners are left to solve problems that can only be taken care of, in most cases, by a corporate staff member that has been trained to help solve that particular problem when it arises. It also makes it nearly impossible to get an issue taken care of in a timely fashion for the storeowners. Customer service at the local level begins to suffer, sales in turn suffer and in the end, many stores have to close.

However, more important and rarely talked about is the Franchisors failure to its main consumer-the franchisee. The consumers in the Franchisor/franchisee relationship are getting much less than what they paid for with no means of redress.

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