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BEAUTIFUL BRANDS David Rutkauskas Admits to Franchise Failures

February 19, 2013

David Rutkauskas, Founder and CEO of Beautiful Brands International (BBI), admitted to his system’s franchise failures in a revealing interview with Tulsa World.

UnhappyFranchisee.Com has been harshly critical, both publicly and privately, of Tulsa World and other media outlets for their publication of (in our estimation) of misleading, corporate-supplied propaganda portraying Beautiful Brands as a vibrant, dynamic success story.

It’s our opinion that BBI and its CEO David Rutkauskas have effectively manipulated the media to regularly report misleading sales growth figures without reporting that the vast majority of the franchises BBI sold either never opened or opened and failed, and that the vast majority of “partner” brands severed their relationship with BBI after seeing little-to-no results.

In past posts, we were especially hard on Beautiful Brands’ hometown publication Tulsa World:

TULSA WORLD: Intentionally Deceptive or Exceedingly Lazy?

Letter to Tulsa World Writer Kyle Arnold

Franchisee Questions for David Rutkauskas

On Sunday, February 17, 2013, Tulsa World responded to our request and published an unprecedentedly forthright article that brought their local franchise success story crashing down from its pedestal.

In Camille’s empire copes with setbacks, reporter Kyle Arnold documented how Rukauskas’ firm managed to sell and open 106 Camille’s Sidewalk Café franchises, most of which subsequently closed.

Arnold recounted the experience of a franchisee who ended up divorced and in bankruptcy after buying a Camille’s franchise, and alluded to the dozens of angry franchisees who blame Rutkauskas and his firm for their financial devastation.

Arnold’s interviews with franchisees revealed the common complaint of lack of franchise support and general neglect of franchise owners by Beautiful Brands (“Once that check had cleared, I couldn’t get anyone to take my calls.”).

And, importantly, Arnold got David Rutkauskas to acknowledge Beautiful Brands’ franchise failures and to even accept a little of the blame for the personal and professional losses that followed.

Camille’s Sidewalk Café is NO Success Story

The Tulsa World article contained information that we have reported all along.  (Read:  BEAUTIFUL BRANDS INTERNATIONAL (BBI): Behind the Hype)

Still, it is significant that it is now being reported in the hometown publication that inadvertently helped perpetuate the myth of Beautiful Brands’ success for so long.

Tulsa World wrote of Camille’s Sidewalk Cafe:

…nearly two-thirds of the chain’s locations have been shuttered since 2008, leaving just 36 nationwide after a high-water mark of 107 in 2009.

Those closures left a string of angry franchisees, many of whom sunk their life savings into a location.

Some former franchise owners have taken to the Internet to air various complaints, blaming Rutkauskas and BBl for the lack of success. Those allegations range from questions about how Rutkauskas represented the financial viability of his restaurant brands to charges that he painted a rosy picture to prospects while other franchise owners were going out of business.

It would not be a BBI story if it didn’t contain some number-fudging.  While Rutkauskas claims there are 36 Camille’s, the website only lists 29.

In addition, Tulsa World neglected to mention that Rutkauskas had reported selling – and collecting money for – more than 1000 Camille’s franchises that never opened.

In addition to the Camille’s closures, Tulsa World also exposed the failure of BBI’s expansion of other brands, and its consulting for companies it call referred to as “partner brands”:

…Rutkauskas began acquiring and creating other concepts, such as the failed Coney Beach restaurant, FreshBerry Frozen Yogurt and Dixie Cream Donuts, a partnership with Tulsa’s Daylight Donuts Co…

Most of the companies that once partnered with BBI have since parted ways, however, including Dixie Cream Donuts, In the Raw Sushi and Ludger’s Bavarian Cakery.

In addition to Dixie Cream Donut Co., In The Raw Sushi, and Ludger’s Bavarian Cakery, other BBI “partner” brands no longer associated with the company include The Crusty Croissant, Greenz Salads, Caz’s Chowhouse, Sonny Bryan’s BBQ, Café Ole, The Bread & Butter Bistro, St. Michael’s Alley, Le Beau Rouleau Crepes and Croissants, Top That Pizza,  Blazing Onion Burger Company, Smallcakes A Cupcakery, and Sushi Freak.

“…It’s just the way that business goes sometimes.”  David Rutkauskas on Camille’s Franchisee Closures

As we reported in BEAUTIFUL BRANDS Franchise Complaints, dozens of Camille’s franchisees lost their savings, their retirement accounts, went bankrupt or saw their marriages crumble under the stress of the traumatic business failures.

The Small Business Administration reports that 58% of the SBA-backed loans ended in default… leaving the American taxpayers to pick up the tab and repay the banks.

To a limited extent, David Rutkauskas does acknowledge that he failed his franchisees:

Rutkauskas said he may have oversold the Camille’s franchise…

Rutkauskas takes some blame for the closure of many of the locations. He said the company should have done more to make sure that potential franchisees were prepared to run a restaurant.

Rutkauskas also blames the economy, the banks, and the franchisees themselves.

Despite the fact that significantly more of his franchises met with financial ruin than success, Rutkauskas (who reportedly lives in a $1M mansion and drives a new $100K Mercedes), is unapologetic.

Says Rutkauskas:

“Those restaurants that didn’t make it are just looking for someone to blame.”

ARE YOU FAMILIAR WITH CAMILLE’S SIDEWALK CAFE OR OTHER BEAUTIFUL BRANDS VENTURES?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: Beautiful Brands, BBI, Beautiful Brands International, David Rutkauskas, FreshBerry, Camille’s Sidewalk Cafe, Rex’s Chicken, franchise scam, franchise fraud, Tulsa World, franchise failures, Kyle Arnold, John Stancavage

Comments

One Response to “BEAUTIFUL BRANDS David Rutkauskas Admits to Franchise Failures”

  1. Carolyn says:

    I am a former franchisee that was driven to bankruptcy because of David Rutkauskas. When we were going thru the sales process, we were directed to a “franchisee” to learn more about the financials for a Camille’s store. Little did we know, the P&L we were shown was fiction and produced by a former employee of Camille’s corporate office. It showed a 25% profit margin which never happened and never could happen because of the high labor and food costs. Any and all “rebates” from the food vendors were sent directly to Camille’s corporate.

    With regards to marketing support, there was none. I was told by Camille’s corporate to spend $25,000 for opening marketing with a local agency. This was in addition to the marketing funds and franchisee royalties being pulled directly from my bank account weekly.

    When confronted about the high, unprofitable costs of doing business with Camille’s, I was told to monitor food waste more closely. When I installed a different soda vendor, I received a phone call from corporate that I was to move back to Coke products immediately because, “Camille hates Pepsi”. Nevermind the fact that by not going thru the corporate contracts, I was able to shave 15% off my beverage costs.

    I attempted to work with food providers other than US Foods (the corporate contracted vendor) and once they learned I was a Camille’s franchisee, they would not return my calls. It was not uncommon to have to “special order” the majority of Camille’s proprietary food items because the sales volumes were so low, US Foods would not keep them in stock. This resulted in higher costs and delays in receiving the core food items needed for the menu.

    I received one site visit from Camille’s Corporate in time of being in business. The representative that came to my store was sent there by David to see if a lawsuit was being pulled together by the franchises. The representative was being texted by David the entire time he was onsite wanting to know what I was saying. When I asked the question of, “What is corporate doing to keep Camille’s from closing?”. The response was, “If this is the way this conversation is going to go, I will go back to Tulsa!”. I was sold territories that could never support a Camille’s but David was quick to take my money.

    He would send an attorney letter to communicate rather than pick up the phone. It was common knowledge that he had sexual harassment lawsuits against him which reflects on his character. He has an ego that is huge and his comments in the above story don’t surprise me. He needs to held accountable for his actions and unfair business practices.

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