Cuppy’s Coffee Franchisee Fails, Borrows More
June 20, 2008
(Franchise Coffee Guide) In his Richmond Times-Dispatch column, Iris Taylor describes how a failed Cuppy’s Coffee franchisee "was losing money to bigger competitors," so they borrowed $40,000 more to go mobile – and operate their business as a concessionaire.
Mary Patrick and her husband, Joe, of Midlothian recently took out a $40,000 line of credit to finance their Cuppy’s of Richmond mobile cafe concession business.
Just attend a Richmond Kickers game, a NASCAR race, the Richmond Folk Festival or other event and you may see their 7-by-10-foot green-and-clear glass Cuppy’s concession trailer.
They will be inside serving lattes, smoothies, coffee, hot chocolate, mochas and other popular specialty drinks.
The Patricks needed the credit line because their franchised Cuppy’s location in Midlothian was losing money to bigger competitors. So they shuttered it and bought one, then another mobile unit and started driving to where the people are.
It was a good move, Mary Patrick said. "We have turned all of our focus to vending and concession. That is the lucrative side" of the business.
The Patricks were able, despite today’s tight lending environment, to get their credit line from Peoples Bank of Virginia through the U.S. Small Business Administration’s new Patriot Express program.
We wish the Patrick’s the best of luck. Operating a concession trailer and an event-based franchise is a tough endeavor that suits a certain kind of person. It can be tough.
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Cold Stone Creamery Gets Served by Franchisees
June 19, 2008
The Cold Stone Creamery franchise is getting served. Richard Gibson’s stinging WSJ article The Inside Scoop has prompted some scathing comments from former Cold Stone Creamery franchise owners. Here are a few:
"You will lose everything if you get involved with this company"
"…while Cold Stone is sending out emails to franchisees today telling them not to panic… I say panic! You will lose everything if you get involved with this company, and they will shrug their shoulders and say “That’s Business”!." Comment by Former Franchisee – June 16, 2008
"A large number of Cold Stone’s stores are unprofitable and failing. Yet they continue to sell …"
"I owned three stores–two did $500,000 in sales and the other did $400,000. Therefore each of my stores were operating well above the average, yet we were unable to turn a profit… due to a faulty business model and I think Kahala-Cold Stone knows that.
A large number of Cold Stone’s stores are unprofitable and failing. Yet they continue to sell to prospective franchisees on their own website based on statements such as “profit by making people happy” (see: http://www.coldstonecreamery.com/franchises/steps_to_becoming_a_franchisee.html ) and “Cold Stone’s franchise opportunities are about as solid as they come” (see: http://www.coldstonecreamery.com/franchises/franchise_overview.html ). That strikes me as fraudulent… I think Kahala-Cold Stone is a poorly, poorly run company and it’s really starting to show to the public." Comment by Cecil Rolle from Tallahassee, FL – June 16, 2008 at 8:27 pm
"I’ve lost more than 1 million dollars… I still have thoughts of SUICIDE…"
"I too, a former franchisee was financially ruined by Cold Stone Creamery. I’ve lost more than 1 million dollars and will be paying off debts for the next 10 years. I still have thoughts of SUICIDE and hope to God there is a class action suit that I may one day be a part of. Cold Stone Corporate likes to pass the blame along to the Franchisees when a store is not successful!! It is NOT the franchisee. The reality is that Cold Stone Corporate put too many stores close together….
"I feel sorry for the franchisees left with stores. I know many of them, and not ONE of them is making money in our state. But Cold Stone Corporate continues to make a percentage on every cent of gross revenue.
The company will blame the individual franchisees failure citing that they had “no experience,” or “didn’t work hard enough.” …the majority of those forced to close are decent hard working individuals that took a chance on “The American Dream,” A dream for me and my family that turned into a nightmare!
…I now get to retire in a trailer on a fixed social security income…I live with the stress everyday knowing I let down my family and myself by ever investing in a Cold Stone Creamery franchise and for believing their lies!…" Comment by Former Franchisee – June 16, 2008 at 8:28 pm
"These guys are the Enron of franchising…"
"…Cold Stone turned out to be the ultimate scam. These guys are the Enron of franchising & some of these guys should be in jail for the lives that have been ruined because of their greed and arrogance!" Comment by Former Franchisee – June 16, 2008 at 11:43 pm
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Tags: COLD STONE CREAMERY, franchisee, franchising, ice cream franchise, kahala corp
Cork & Olive Co-op: What’s the Story?
June 19, 2008
What’s the story on the Cork & Olive franchisee co-op?
Did all the franchisees join? Are there new franchisees (not yet opened) who will join? Who didn’t?
What is the structure/entity? How does it work? Is there a Chairman/President? Who’s in charge?
Who owns the trademark? Are franchisees just licensed to use it under their 10-year franchise agreement, or has Probst given up ownership?
Does Probst still have the right to use the name and graphics?
Will the Co-op continue to recruit new members and license the name to stores? Will it be a franchise?
The Bradenton story created more questions than answers. What’s the real story?
Cork & Olive Franchisees Band Together to Brand Together
June 19, 2008
(FranchisePick.Com) According to the Bradenton Herald, the owners of the fledgling Cork & Olive franchised wine shops left stranded by their bankrupt franchisor are taking matters into their own hands.
A consortium of nine franchise owners around the Tampa Bay area are exercising their trademark rights to the Cork & Olive name and will continue to grow the brand. The abandoned franchisees have reportedly formed a wine-buying cooperative they believe will enable them to maintain their moderately priced wines that average $13 to $16 a bottle.
According to the Sarasota franchise managing partner Rick Munroe, four Orlando-area Cork & Olive franchisees plan to open stores. He anticipates growth from nine to 14 units within the next 12 months.
Franchisor Michael Probst had a stated goal of selling between 100 and 150 franchises by the end of 2009. On June 5, Probst unexpectedly closed the Cork & Olive franchise company’s headquarters and laid off 40 workers. Four days later, Probst filed for Chapter 11 bankruptcy. Court records and insider sources posting on franchise website Unhappy Franchisee report that Probst owes creditors more than $2.5 million.
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Was Michael Probst Buying Golden Corks & Diamond Olives?
June 16, 2008
(Unhappy Franchisee) How did the Cork & Olive franchisor amass $2.5 million in debt in 4 years… especially when 9 franchisees ponied up nearly hald a million in $60K franchise fees… and paid for their store buildouts?
Why would he close the company stores rather than selling them as franchises?
Where’s the $2.5 million in golden corks and diamond-encrusted olives he must have purchased?
According to the Orlando Business Journal:
Cork & Olive store closures blamed on financing issues
The bloom is gone at Estate Wine Group Inc., known as Cork & Olive: Company executives shuttered its seven corporate stores last week.
The retailer was founded in 2004 and grew to 16 stores from Clearwater to Orlando, including franchisees. Now, they are left to fend for themselves.
Cork & Olive President Mike Probst, who told the Business Journal in 2005 he wanted to be the Starbucks of wine, says his funding fell through. "I had too much belief in only one source," he says.
Estate Wine has nearly $500,000 of operational debt and $2 million of internal debt, the latter owed to the franchise corporation. Without an infusion of $3 million, its future is bleak, Probst says.
Commenter James Wilson adds: "In addition to the 2 million of internal debt, the $500,000 of operational debt, Probst also is in debt for the surly dissociation of partnership with [CEO & Investor Tom] Ronzino. Ronzino never received liquidation of the original partnership intentionally ignored by Probst…. Probst commented ‘I had too much belief in only one source,".One source, is that code word for "the hundreds of individuals you screwed royally?’"
Related stories: Cork & Olive Wine Franchisor Folds; Franchisees Scramble to Survive, Cork & Olive Franchise Corp. Collapse: What’s the REAL Story?, What REALLY Uncorked Cork & Olive Franchise Corp? (Unhappy Franchisee), Cork & Olive Wine Shop Franchise Owners Left High & Dry (Unhappy Franchisee)
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Mrs. Fields’ Cookie Crumbles, Stops Selling Franchises
June 16, 2008
(FranchisePick.com Franchise Blog) Related Story: Mrs. Fields Courts Mr. Bankruptcy
Franchise portal Blue Mau Mau reports that franchisor Mrs. Fields Brands has decided to let its state franchise registrations lapse, and to halt franchise sales until it completes its financial restructuring:
As of March Mrs. Fields Brands has elected to not renew its franchise registration. And with a lapse in
registration by the company, registration states will not allow Mrs. Fields to solicit or sell a franchises until a new registration is complete.
The company already has disclosure documents in the new format that the federal government will require beginning July 1. “These are sitting on my office shelf waiting to be submitted,” states Ward.
Ward declares. “For whatever good it is, this was a well thought out plan that the company is executing against.” He continues, “The Company voluntarily chose when state registrations expired not to re-register and to halt franchising until the refinancing issue is settled. There’s no question that we will be back out there in the market sometime this year. We will have good clean financials and operating structures in the market this year.”
“This is a plan we have been executing against for some time,” emphasizes Ward. “This will be a stronger, more focused company when this deal is completed.”
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Photo credit: J. Good. License: Creative Commons. Closed Mrs. Fields store in Summit Place Mall, MI
Mrs. Fields May Go Bankrupt
June 16, 2008
(Unhappy Franchisee) Franchise portal Blue Mau Mau reports that Mrs. Fields may be on the verge of bankruptcy:
Mrs. Fields Famous Brands LLC warns that it will file Chapter 11 within the next two months if it cannot persuade note holders to cut $145 million in debt by the end of June. The Salt Lake City-based franchisor of both Mrs. Fields cookies and frozen yogurt retailer, TCBY, has a high interest debt-load of over $200 million.
The firm has struggled for years to pay just the interest expense, never mind the principal of their outstanding debts. Despite selling its most profitable brands Pretzelmaker and Pretzel Time last year and The Great American Cookie to NexCen Brands earlier this year in order to receive much needed cash, the company still finds itself not able to pay $10.25 million in interest that comes due in September.
In an interview with Blue MauMau, Michael Ward, Chief Legal Officer and Executive Vice President for Mrs. Fields Cookies, says that the company has been cooking up a recipe for some time to reduce what it owes in high-interest debt. “We are executing a strategic plan that we went through a year ago,” Ward declares. “Mrs. Fields was always a highly leveraged company. There always needed to be in the whole history of the company an event that would bring down the company’s high debt.”
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Photo credit: J. Good. License: Creative Commons. Closed Mrs. Fields store in Summit Place Mall, MI
Pure Weight Loss Victims Strike Back With New Website
June 14, 2008
Attention Victims of Pure Weight Loss: Don’t get mad… Get even!
DEAR VAHAN is new website where former members and employees of Pure weight loss (formerly LA Weight Loss) can write a message to be delivered to Pure Weight Loss CEO Vahan Karian (aka Vahan Karabajakian). Share your experience, feelings and opinions of Pure Weight Loss’ business tactics with Mr. Karian, state & federal officials, and the world. (You can also comment on L.A. Weight Loss)
He’s got a chunk of your money. Why not give him a piece of your mind, too? Visit DEAR VAHAN.
Another Curves Shuts Down Abruptly
June 14, 2008
Another unhappy franchisee reported by Susan Barr in California’s Kern Valley Sun:
"Curves abruptly closes its doors Susan Barr – Kern Valley Sun
The parking lot of Curves in Lake Isabella would normally be busy on a weekday morning with ladies bustling in and out to get a workout. But on Wednesday last week, that scene was replaced by one of members arriving only to find the doors locked and a sign posted telling them that the business was closed for good. There was no warning that the gym, owned by Cathy Sokoloff, was going to close its’ doors so abruptly."
As usual, Curves Corporate office had no clue, and put it all on the franchise owner:
"As of last Thursday, the Curves Corporate office located in Waco Texas, said that it was unaware of the business’s closure. Supporting that statement was the fact that company website was still referring interested women to join Curves at the Lake Isabella location. When asked about the situation, Becky Frusher, with the company’s Communications Department, said she was surprised to hear about the closing. When asked about members and what recourse they have with regards to getting reimbursement of any money owed to them, she reiterated ‘Each franchise is independently operated and owned. This is an unfortunate situation, but it isn’t the responsibility of Curves. Members will need to take it up with the owner.’"
Curves franchise owner Cathy Sokoloff overwhelmed by the stress level:
"Sokoloff did contact the Sun to offer an explanation to the community and especially those who were members of her gym. After owning the business for four and one-half years, she was faced with an ever shrinking number of active members and continually rising operating costs. ‘To make a go of it realistically, I needed at least 200 regularly attending members. When I made the decision to close the doors, I had only 60 to 70,’ she said. In hindsight, she wished that she had not closed the business in the manner she did, but cites her stress level as ‘overwhelming’ and that it caused her to make a snap decision. Sokolff says that she is committed to repaying any monies that are owed to members and stated this in a postcard that was sent out to the ladies last week. On a final note, she added that she was very grateful to all of the women who had attended her gym over the years. ‘They were a wonderful group of ladies and they taught me a great deal. I wish that it hadn’t to come to this.’"
Please join UnhappyFranchisee.com in offering some words of encouragement to Curves ex-Franchisee Cathy Sokoloff. All she’ll get from Curves Corporate will be a bill for the $10,000 Failure Fee.
Comic Relief for Meal Prep Kitchen Owners
June 13, 2008
First Meal Assembly & Cosmetic Surgery Kitchen Franchise Debuts
Can Botox Parties Save the Meal Prep Franchises? (Part 1)
Can Botox Parties Save the Meal Prep Franchises? (Part 2)
