If You Like Amy’s Baking Co., You’ll LOVE This CEO.
May 22, 2013
If You Like Amy’s Baking Co, You’ll LOVE This CEO by Sean Kelly, Publisher, UnhappyFranchisee.Com
[Warning: Offensive Language]
When I read the Huffington Post story about the social media meltdown of Amy Bouzaglo, the now-infamous owner of Amy’s Baking Company, I wondered if CEO David Rutkauskas might be her twin brother.
When Yelper Joel L. criticized Amy’s Baking Company, owner Amy Bouzaglo replied: It is blatantly obvious to me why you were ALONE on a Saturday night!
When I criticized Beautiful Brands International (BBI), CEO David Rutkauskas tweeted: when was the last time u had a women hit on you . HaHa. or u had a women Sean Fuck Fat Face…
When Joel L. said he thought Amy’s Baking Co owners were indifferent to their customers, Amy Bouzaglo wrote: Do US a favor and keep your ugly face and you ugly opinions to yourself…
When I wrote that BBI was indifferent to their franchisees’ needs, CEO Rutkauskas tweeted: fat fuck ugly shit face SK… Sean Fuck Fat Face… Dickface ugly mother fucker who is Sean Kelly
Amy’s Baking co-owner Samy Bouzaglo allegedly* wrote on FaceBook: To all of the Yelpers and Reddits: Bring it on. you are just pussies. come to arizona… come to my business. say it to my face. man to man… you are just trash…
David Rutkauskas tweeted to me: hey there Sean Kelly, why don’t u travel to Tulsa and say all this Bull Shit to my face ? … I dare you tell me to my face all your fucked up lies and bull shit. u coming 2nite pussy ?
BBI CEO David Rutkauskas also challenged me to square off with his 81 year old father (who was an amateur boxer, I guess, years before I was born) and his high school age son.
Unfortunately for David, I’m a blogger, not a fighter.
Instead, I’ll let CEO David Rutkauskas’ tweets speak for themselves:
| CEO DAVID RUTKAUSKAS TWEETS (a sampling) | TWITTER SCREENSHOTS |
| David Rutkauskas @davidrutkauskas fat fuck ugly shit face SK when was the last time u had a women hit on you . HaHa. or u had a women Sean Fuck Fat Face
David Rutkauskas @davidrutkauskas thx Dickface ugly mother fucker who is Sean Kelly thx 4 our press Fathead &your 700 followers #bbitweets #davidrutkauskas |
04/05/13 (Click to enlarge) |
| David Rutkauskas @davidrutkauskas fuck off. Come see me in tulsa… let’s settle like men
David Rutkauskas @davidrutkauskas deleting my tweets ? you punk… I will be waiting for u in Tulsa to spew your lies to my face. FUCK YOU David Rutkauskas @davidrutkauskas all lies U need help. Made up crap from a low life fuck off Sean. Or travel to Tulsa & confront me like a real man David Rutkauskas @davidrutkauskas I dare you to spew your lies and bull shit to my Dads face , my face , my sons face David Rutkauskas @davidrutkauskas my 81 year old father would like to see u Come on down to Tulsa. My treat… would love to see David Rutkauskas @davidrutkauskas FUCK OFF… I will spread media hate about you forever… U started this shit… I will keep the fight against u 4ever David Rutkauskas @davidrutkauskas fuck you kids & family r against u. u need a punch in the mouth. u seriously need help… good boxing gyms in Tulsa I dare u David Rutkauskas @davidrutkauskas hey franchise dick… We have our own media alerts going out targeting U… I’m not scared… not embarrassed David Rutkauskas @davidrutkauskas u will LOVE this.. BBI did deals from OK-CA this week.. David Rutkauskas = $765,000 richer… Sean Kelly = 0 richer. #Funny Shit David Rutkauskas @davidrutkauskas Bring it franchise dick.. I dare you tell me to my face all your fucked up lies and bull shit. u coming 2nite pussy ? David Rutkauskas @davidrutkauskas hey franchise terrorist when u grow the balls 2 show up in Tulsa to tell your lies to my face..bring that punk GayJon with u David Rutkauskas @davidrutkauskas ... Bring your pussy ass 2 OK..I will pay one way to Tulsa.I want to see you spew your LIES to my face…#WUSS David Rutkauskas @davidrutkauskas @JonFortman. come 2 OK this week & call me a Cry Baby 2 my face? easy drive 4 u JonBoy @franchisepick #settlelikemen |
 (Click to enlarge) |
| Jonathan E. Fortman @JonFortman I have 70+ former Contours Express franchisees who would take a bullet for Sean Kelly
David Rutkauskas @davidrutkauskas @JonFortman @FranchisePick that’s very impressive Fartman .. Bullets, huh? R u a Jew ? |
 (Click to enlarge) |
| David Rutkauskas @davidrutkauskas @claudiarobbins @unhappyz r u a Jew 2 ?
David Rutkauskas @davidrutkauskas@claudiarobbins who the fuck r you ? Cat woman… R u in love with Sean Kelly ? Is he your lover David Rutkauskas @davidrutkauskas JonFortman @FranchisePick so.. Are u a Jew or not ? |
 (Click to enlarge) |
| mr. truth @FuckOffLiars** @FranchisePick .. We are watching U and your lies… we know where u live.&.HaHaHa… #SeanKelly #FranchisePickGay #GunsAreLegal |  (Click to enlarge) |
In a fine bit of irony, David Rutkauskas and his Beautiful Brands International is suing ME for defamation(!)
I’ve suggested, in a related post, that Mr. Rutkauskas instead sue himself for defamation.
After all, no one can sink a brand faster than a hot tempered business owner with a laptop and a faulty moral compass.
* The Bouzaglos claim hackers posted many of their most-criticized comments.
Related Reading:
Why DAVID RUTKAUSKAS & ROBERT SARTIN Should Sue Themselves (Part 1) by Sean Kelly
How Franchisors Should – And Shouldn’t – Respond to Internet Criticism
BEAUTIFUL BRANDS INTERNATIONAL (BBI): Behind the Hype
CAMILLE’S SIDEWALK CAFE Franchise Complaints
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
Tags: Amy Bouzaglo, Samy Bouzaglo, Amy’s Baking Company, Amy’s Baking Co, David Rutkauskas, Beautiful Brands International, BBI, Unhappy Franchisee, UnhappyFranchisee.Com
Why DAVID RUTKAUSKAS & ROBERT SARTIN Should Sue Themselves (Part 1) by Sean Kelly
May 22, 2013
Why DAVID RUTKAUSKAS & ROBERT SARTIN Should Sue Themselves (Part 1) by Sean Kelly
I am being sued by two bullies from Tulsa, OK: David Rutkauskas, CEO of Beautiful Brands International (BBI), and his “muscle,” respected attorney Robert Sartin of Barrow & Grimm, PC*.
According to an article in The Journal Record, the bullies claim that I made comments that “implied that BBI intimidates and threatens its franchisees, lies about the financial strength and fails to support its franchisees once the agreements have been executed.”
The lawsuit (attached below) alleges that I made comments “with an intent to cause disrepute, public hatred, contempt, ridicule and embarrassment to BBI, to deprive BBI of public confidence, and to injure BBI,” and that I “willfully and maliciously engaged in improper, systematic, concerted and deliberate efforts to destroy the good will and business relationships between BBI and its clients.”
In this regard, respected attorney Robert Sartin gives me WAY too much credit.
Even if I tried my very best, I could never have caused the disrepute, contempt, ridicule, embarrassment, or deprivation of public confidence that David Rutkauskas has brought to himself and BBI through his public rants on Twitter (some posted below) and through the bullying email and text messages he has sent to a female ex-client (not posted here. Yet.).
In fact, I believe that David Rutkauskas should sue himself for the willful, malicious, & irreparable harm he continues to do to his own reputation and to the BBI brand.
I hereby offer my services to serve as an expert witness pro bono in the proposed case of Sartin, Rutkauskas & BBI v. Sartin & Rutkauskas.
I believe respected Tulsa attorney Robert Sartin should name himself as a defendant in this proposed lawsuit for encouraging his arguably unstable client into a volatile, public & unwinnable lawsuit, despite the fact that David Rutkauskas has demonstrated a propensity for public self-destruction via social media.
Additionally, I offer the exhibits below (from my vast gallery of screenshots), to support the proposed contention that CEO David Rutkauskas has systematically and maliciously portrayed himself as an unprofessional and foul-mouthed bully with a gift for antisemitism, homophobia, misogyny and even ailurophobia (hatred of cats).
CEO as Schoolyard Bully: The Rants of David Rutkauskas [WARNING: Offensive Language]
I am confident that the Rutkauskas & Sartin SLAPP lawsuit against me will end in further embarrassment for them, as UnhappyFranchisee.Com mostly provided a forum for the complaints of the many critics of Beautiful Brands. I have been scrupulous in making sure the opinions I share are based on verifiable information from multiple sources. And I am being represented by the formidable, no-nonsense attorney Jonathan Fortman.
However, if David Rutkauskas were to sue himself for defamation, his tweets in the last few months would provide a treasure trove of damaging evidence.
Here are a few of the tweets from a man who holds himself out to be an entrepreneurial business icon, visionary and restaurant industry thought leader:
| CEO DAVID RUTKAUSKAS TWEETS (a sampling) | TWITTER SCREENSHOTS |
| David Rutkauskas @davidrutkauskas fat fuck ugly shit face SK when was the last time u had a women hit on you . HaHa. or u had a women Sean Fuck Fat Face
David Rutkauskas @davidrutkauskas thx Dickface ugly mother fucker who is Sean Kelly thx 4 our press Fathead &your 700 followers #bbitweets #davidrutkauskas |
04/05/13(Click to enlarge) |
| David Rutkauskas @davidrutkauskas fuck off. Come see me in tulsa… let’s settle like men
David Rutkauskas @davidrutkauskas deleting my tweets ? you punk… I will be waiting for u in Tulsa to spew your lies to my face. FUCK YOU David Rutkauskas @davidrutkauskas all lies U need help. Made up crap from a low life fuck off Sean. Or travel to Tulsa & confront me like a real man David Rutkauskas @davidrutkauskas I dare you to spew your lies and bull shit to my Dads face , my face , my sons face David Rutkauskas @davidrutkauskas my 81 year old father would like to see u Come on down to Tulsa. My treat… would love to see David Rutkauskas @davidrutkauskas FUCK OFF… I will spread media hate about you forever… U started this shit… I will keep the fight against u 4ever David Rutkauskas @davidrutkauskas fuck you kids & family r against u. u need a punch in the mouth. u seriously need help… good boxing gyms in Tulsa I dare u David Rutkauskas @davidrutkauskas hey franchise dick… We have our own media alerts going out targeting U… I’m not scared… not embarrassed David Rutkauskas @davidrutkauskas u will LOVE this.. BBI did deals from OK-CA this week.. David Rutkauskas = $765,000 richer… Sean Kelly = 0 richer. #Funny Shit David Rutkauskas @davidrutkauskas Bring it franchise dick.. I dare you tell me to my face all your fucked up lies and bull shit. u coming 2nite pussy ? David Rutkauskas @davidrutkauskas hey franchise terrorist when u grow the balls 2 show up in Tulsa to tell your lies to my face..bring that punk GayJon with u David Rutkauskas @davidrutkauskas ... Bring your pussy ass 2 OK..I will pay one way to Tulsa.I want to see you spew your LIES to my face…#WUSS David Rutkauskas @davidrutkauskas @JonFortman. come 2 OK this week & call me a Cry Baby 2 my face? easy drive 4 u JonBoy @franchisepick #settlelikemen
|
(Click to enlarge) |
| Jonathan E. Fortman @JonFortman I have 70+ former Contours Express franchisees who would take a bullet for Sean Kelly
David Rutkauskas @davidrutkauskas @JonFortman @FranchisePick that’s very impressive Fartman .. Bullets, huh? R u a Jew ? |
(Click to enlarge) |
| David Rutkauskas @davidrutkauskas @claudiarobbins @unhappyz r u a Jew 2 ?
David Rutkauskas @davidrutkauskas@claudiarobbins who the fuck r you ? Cat woman… R u in love with Sean Kelly ? Is he your lover David Rutkauskas @davidrutkauskas JonFortman @FranchisePick so.. Are u a Jew or not ? |
(Click to enlarge) |
| mr. truth @FuckOffLiars** @FranchisePick .. We are watching U and your lies… we know where u live.&.HaHaHa… #SeanKelly #FranchisePickGay #GunsAreLegal | (Click to enlarge) |
CEO David Rutkauskas challenged me to come to Tulsa and fight his 81 year old father.
CEO David Rutkauskas publicly asked my attorney “R u a Jew”? Twice.
CEO David Rutkauskas asked a woman he doesn’t know if she is having an affair with me and asked “R u a Jew?”
Right next to family pictures of his wife, his kids and his parents, CEO David Rutkauskas posted the words “fat fuck ugly shit face SK when was the last time u had a women hit on you . HaHa. or u had a women Sean Fuck Fat Face” and “thx Dickface ugly mother fucker.”
If we do get to court and someone asks me: “Did you damage the reputation of David Rutkauskas?” won’t the answer be obvious?
With CEO Rutkauskas’ social media meltdowns and his respected attorney Sartin holding his coat, goading him to fight all his detractors, why would I need to defame him?
He’s doing a superlative job defaming himself.
Also Read:
Beautiful Brands International, LLC vs. Sean Kelly (Link. Document is clickable mid-page)
BEAUTIFUL BRANDS INTERNATIONAL (BBI): Behind the Hype
DAVID RUTKAUSKAS Are His 500,000 Twitter Followers Fakes?
CAMILLE’S SIDEWALK CAFE Franchise Complaints
* Technically, I’m being sued by Beautiful Brands International (BBI), but the seasoned bully-boy team behind it is the arguably unstable CEO David Rutkauskas and his well-compensated enabler and enforcer Robert Sartin.
** I was also threatened on Twitter by user account @FuckOffLiars & insulted by @MissTroothBeTold. Is @FuckOffLiars is a Rutkauskas pseudonym? Compare writing styles and decide for yourself.
ARE YOU FAMILIAR WITH THE DAVID RUTKAUSKAS, ROBERT SARTIN, BBI OR BARROW & GRIMM PC? SHARE A COMMENT BELOW.
Tags: David Rutkauskas, Beautiful Brands International, BBI, David Rutkauskas Twitter, Robert Sartin, attorney Robert Sartin, Barrow & Grimm PC, Unhappy Franchisee lawsuit, Sean Kelly Lawsuit, David Rutkauskas lawsuit, BBI lawsuit, Beautiful Brands lawsuit, SLAPP lawsuit, Jon Fortman, Jonathan Fortman
How Franchisors Should – And Shouldn’t – Respond to Internet Criticism
May 10, 2013
How Franchisors Should – And Shouldn’t – Respond to Internet Criticism by Sean Kelly, UnhappyFranchisee.Com
No company offering franchise opportunities enjoys having to publicly defend the image that they’ve carefully crafted through their marketing and public relations efforts.
No franchise company wants to air or discuss its dirty laundry in plain sight of customers, employees, shareholders, franchisees and prospective franchisees.
But now, thanks to the Internet, blogs like UnhappyFranchisee.Com and BlueMauMau.com, and social media sites like Facebook and Twitter, public discussion and scrutiny of franchise opportunities is a fact of life… and it’s not going away.
Here’s the story of two franchisors of fast-casual cafes that reacted very differently to similar complaints against them.
The first company reacted with anger, threats and legal action.
The second company reacted by taking the complaints seriously, by publicly addressing factual errors, and by acknowledging and taking steps to correct its shortcomings.
In the end, the way the franchisors chose to react to criticism will have a greater impact on their public images and ability to grow than either the original criticism or their well-crafted marketing/PR personas.
Guess which company is posting steady improvements and growth, and which is stalled out and attracting increasingly bad press?
Camille’s Sidewalk Café: Old School Bullying Backfires
In July, 2012 UnhappyFranchisee.Com posted that, according to a Small Business Administration report, Beautiful Brands International (BBI)’s Camille’s Sidewalk Café had a 58% SBA franchise loan default rate.
In the post CAMILLE’S SIDEWALK CAFE Franchise Complaints, we also published that, according to the company’s own disclosure document, the Camille’s U.S. franchise network has shrunk 60% since 2008.
The post attracted an outpouring of comments from a number of former Camille’s franchisees, who claimed that Camille’s and BBI CEO David Rutkauskas had misrepresented the opportunity, had failed to provide the necessary franchisee support, and was indifferent to whether they succeeded or failed once the initial check cleared.
Camille’s franchisees reported having lost as much as a million dollars, and many recounted the personal financial struggles, including bankruptcy, they endured as a result of investing in the Camille’s franchise.
UnhappyFranchisee.Com contacted David Rutkauskas, CEO of Beautiful Brands International, and offered to publish his response, clarification, or rebuttal to the allegations. We told Mr. Rutkauskas that if there were merit to some of criticism, that we would be happy to report what steps he and Beautiful Brands have taken or were taking to address and correct these problems.
Instead of responding to numerous offers to join the conversation, David Rutkauskas had his attorney send threatening letters to the former franchisees who had shared their experiences and posted comments under their real names.
UnhappyFranchisee.Com did not take down the comments. We once again offered Mr. Rutkauskas a chance to address the criticism.
Beautiful Brands then filed a lawsuit against me (then later dismissed it) for expressing my opinion on another website.
In subsequent interviews, David Rutkauskas tried to maintain the success-story façade he had created for his chain, and, when confronted with the unavoidable facts, he blamed the franchisees themselves, he blamed the economy, he blamed partners for backing out of deals, he blamed misrepresentations on writers printing “off-the-record” comments, and he blamed UnhappyFranchisee.Com for focusing on the 70+ Camille’s franchisees that failed instead of the 28 or so that have survived.
In frustration at not being able to control the story, David Rutkauskas posted dozens of fiery personal Twitter attacks on me that included vulgarities, profanity, threats, homophobic (though I’m not gay) and anti-semitic (though I’m not Jewish) insults and invitations to come to Tulsa to fight him (“settle this like men”).
Instead of expressing concern for the plight of the franchisees who failed, instead of taking some responsibility or at least addressing the concerns that were raised, Beautiful Brands and David Rutkauskas’ responded in such a way that reinforced the franchisees’ claims that BBI is indifferent to their struggles, and will use bullying, threats and intimidation to hide their shortcomings.
Tropical Smoothie Café: Transparency, Concern & Action
Also in July, 2012 UnhappyFranchisee.Com posted that, according to a Small Business Administration report, Tropical Smoothie Cafe had a 23.58% SBA franchise loan default rate.
In the post TROPICAL SMOOTHIE CAFE Franchise Complaints, we also that the 300+ unit chain appeared to have a termination/reaquisition rate of about 18%.
While the Tropical Smoothie Café numbers were not nearly as disturbing as those of Camille’s Sidewalk Café, and while their post did not attract negative comments from franchisees, TSC did not attack us, sue us, or insult us on Twitter.
In contrast to Rutkauskas and BBI, Tropical Smoothie Cafe, LLC VP, Franchise Development Charles L. Watson sent us a report that indicated that they were aware of the problems, and had taken serious steps to reduce their franchise failures.
TSC had already hired franchise research firm FranData to do an analysis of their SBA loan default rate, and to assess the effectiveness of measures they had previously taken to reduce their franchise failure rates.
FranData reported that the SBA had overstated the TSC default rate, which is actually 15.54% (not 23.58%, as previously reported).
Furthermore, FranData reported that measures taken by Tropical Smoothie Café, including the raising of franchisee net worth requirements and adjustments in site selection criteria, had resulted in a reduction of franchise failures every year since 2007.
Even though the SBA loan failure rate of Tropical Smoothie Café is lower than the average for similar franchises (according to FranData), Watson told us they consider it still too high, and that the company “is working hard to bring it down through continued focus on franchisee profitability and business practices.”
Additionally, Mr. Watson reported a number of systemwide improvements, including:
- The addition of protected territories for franchisees,
- A positive ownership change and improving financials,
- The hiring of additional experienced franchise professionals to help support franchisees and build the TSC brand,
- Steadily increasing Average Unit Volume (AUV) which is now over $500,000.
Rather than threatening us with lawsuits and insults, Tropical Smoothie’s Charles Watson wrote to UnhappyFranchisee.Com: “I thank you for your efforts on behalf of prospective franchisees, we use your site to help guide us on what we need to fix / alter / do better with our system – you are providing some great free consulting, for prospective franchisees and franchisors!”
Why Internet Criticism is Good for Good Franchisors… And Franchising
Here’s the difference between good franchisors and bad franchisors when it comes to franchise marketing and franchisee recruitment:
Bad franchisors are on a hunt for the naïve, the trusting, and the inexperienced.
Bad franchisors want prospective franchisees who believe that franchising will give them unlimited freedom and the chance to be their own boss, to call their own shots, to control their destiny.
Bad franchisors want prospective franchisees who believe the bogus statistics that 95% of all franchises are successful, and that the few who failed did so because they didn’t follow the system, or they killed the Success Fairy by asking too many questions and thinking negative thoughts.
Good franchisors want smarter franchisees who have done their homework and have realistic expectations.
Good franchisors want franchisees who understand that every new business venture comes with risk, whether its franchised or independent.
Good franchisors want franchisees who understand that their franchise is not a magic, guaranteed money-machine, and that they will provide the tools but the franchisee must build the business, that the franchisee’s success will depend not only on the brand, the system, and the franchisee’s hard work, but also external factors, such as location, market and competition, that may be out of their control.
Most of all, good franchisors want franchisees who aren’t looking for some mythical perfect franchise system or “hot new concept,” but are looking for an organization that is dedicated to supporting its franchisees, and growing through mutual success with their franchisees.
The truth is there ARE no perfect, complaint-free franchise companies and there ARE no magical short-cuts to small-business success.
Good franchise companies shouldn’t fear online criticism.
As long as they are earnestly working to improve their franchise system and support their franchisees, they should be transparent about the challenges they are facing, and share the steps they are taking to overcome them.
They might lose some franchise prospects who are searching for the magic carpet to guaranteed, effortless success, but they will gain those who have realistic expectations, who know what they are getting into and who are up for the fight.
WHAT DO YOU THINKS? SHARE A COMMENT BELOW.
TAGS: Beautiful Brands, Camille’s Sidewalk Cafe, Tropical Smoothie Cafe, David Rutkauskas, Internet criticism, online criticism, online attacks, franchise public relations, franchise criticism, franchise marketing
BEAUTIFUL BRANDS: QSR Magazine Pulls BBI Articles
May 3, 2013
Responding to an UnhappyFranchisee.Com Media Alert for Beautiful Brands International (BBI), QSR magazine has taken more than a dozen news stories offline.
It’s not clear at this time whether the stories are being reviewed and/or edited, or whether they have been removed permanently.
The media alert issued by UnhappyFranchisee.Com was prompted by our concern that numerous potentially incorrect and/or misleading claims regarding BBI had been submitted via press release to media outlets, which had then been published by respected business and restaurant industry publications.
David Rutkauskas, CEO of Beautiful Brands International, claims his representations to the press are accurate: BEAUTIFUL BRANDS’ David Rutkauskas Defends BBI’s PR Claims
Group Publisher Greg Sanders wrote to UnhappyFranchisee.Com:
Thank you for expressing your viewpoint.
It is the policy of QSR magazine to ensure the complete accuracy of all stories posted and not to post comments made off the record.
We are undergoing a review of stories posted to ensure these goals were met.
Best,
Greg Sanders
Group Publisher
Food News Media
QSR | FSR
We thank Greg Sanders for taking this matter seriously, and applaud QSR magazine for taking steps to ensure that its readers, who may be prospective franchisees or franchise services clients, receive accurate information on which to base their investment decisions.
It appears that QSR has taken more than a dozen BBI articles offline, including:
To Support Global Growth, BBI Opens Three New Offices April 29, 2011 – QSR
BBI Breaks Records in 2011, Preps for Big 2012 November 1, 2011 – QSR
Beautiful Brands Reports Record-Breaking Q1 June 6, 2012 (QSR)
FreshBerry Breaks Sales Records with Store Openings June 25, 2012 (QSR)
FreshBerry Launches its 20th Store in the Middle East November 30, 2012 (QSR)
BBI Reports Record 2012 January 4, 2013 (QSR)
FreshBerry’s Market Share in Middle East Now 53 Percent February 13, 2013 (QSR)
We believe that QSR and other publications that have recently investigated BBI claims (Tulsa World, Franchise Times) are sending a strong message to franchisors who provide questionable claims in their press materials: It might work short term, but it will likely come back to bite you in the end.
Also read:
BEAUTIFUL BRANDS INTERNATIONAL (BBI): Behind the Hype
BEAUTIFUL BRANDS Partner Program: Behind the Hype
ARE YOU FAMILIAR WITH BEAUTIFUL BRANDS INTERNATIONAL (BBI)? SHARE A COMMENT BELOW.
tags: David Rutkauskas, Beautiful Brands International, BBI, Camille’s Sidewalk Cafe, Unhappy Franchisee, QSR, QSR magazine, Greg Sanders,
BEAUTIFUL BRANDS’ David Rutkauskas Defends BBI’s PR Claims
April 30, 2013
Beautiful Brands International (BBI) and its CEO, David Rutkauskas, have faced criticism from UnhappyFranchisee.com for providing what we believe to be inaccurate and misleading representations to the media in recent years.
In our opinion, BBI has been able to create a public perception of robust growth and unfettered success, while hiding such challenges as widespread franchise closures, unsuccessful concept launches, and the apparently high defection rate of its franchise services clients (“brand partners”).
With each post we published, we invited Mr. Rutkauskas and BBI to provide rebuttals, clarifications, or corrections to our opinions, as it is our goal to provide both sides of the issue and let our readers decide.
We are pleased that David Rutkauskas has begun to publicly respond and engage in a dialogue over these important issues.
This post includes Mr. Rutkauskas’ justifications of BBI’s media representations as published in two posts on his blog (Facing the Lies of UNHAPPY FRANCHISEE, and My Response: Crushing the Distortions).
Criticism #1: That Beautiful Brands International (BBI) exaggerates the number of its franchise locations
UnhappyFranchisee.com believes that BBI misrepresents the size and growth of its company, in part by counting its clients’ locations as its own. So while the websites of BBI franchise brands Camille’s Sidewalk Cafe, FreshBerry, and Rex’s Chicken only list a total of only 71 locations open around the world, Rutkauskas claims “BBI has 297 locations open around the world…” (QSR, 3/12/13).
BBI’s Justification: BBI CEO David Rutkauskas states “As long as any brand is under our consulting umbrella it is counted as a Beautiful Brand… If you do business with us, then you are a Beautiful Brand.”1
Why this matters: Potential BBI franchisees and clients should be provided with undistorted information regarding the size and growth of the franchisor. If BBI signs up a 200-unit company for brokerage services, it is deceptive to claim that BBI has grown by 200 units that day. This practice is like a local sign shop claiming it has 30,000 locations worldwide because it makes banners for Subway.
Our recommendation: To avoid misleading its franchise & partner prospects, we recommend that BBI clearly differentiate between the number of locations under its own brands and the number of units its clients control… and never combine the two.
Criticism #2: That BBI promotes unsubstantiated/deceptive growth projections
UnhappyFranchisee.Com has criticized BBI for having made many unrealistic and misleading representations regarding its future growth, such as the 2007 claim that it “holds franchise agreements for another 900 Camille’s to open over the next five years.” Six years later, BBI apparently oversees only 28 Camille’s restaurants. An analysis of the company’s disclosure documents from the time the claim was made did not turn up any evidence that there were ever franchise agreements signed for 900 Camille’s locations.
BBI’s Justification: Mr. Rutkauskas states “I’ll be the first to admit that the economy has smacked us hard. Just like many companies, we anticipated a solid upward trajectory in regards to our brand growth, only to come face to face with the economic realities of the last six years.”1
Why this matters: Distracting readers with optimistic growth projections and plans can be an effective way of misdirecting attention from the much more sobering reality reflected in the company’s Franchise Disclosure Documents (FDD). The FTC requires certain disclosures be provided to franchisees; franchisors should not use the press to end-run FTC protections.
Our recommendation: As Mr. Rutkauskas acknowledges that he does not know what will happen in the coming months or years, we recommend that he stick to promoting what he has accomplished, and report only franchises that actually open, rather than promoting the number he intends to open. Further, we recommend that BBI representations to the media regarding franchises sold, franchises “sold but not open,” and projected store openings match the information disclosed by BBI in Item 20 of its Franchise Disclosure Documents (FDD).
Criticism #3: That BBI & David Rutkauskas disseminate unsupported/prohibited earnings claims
The Federal Trade Commission (FTC) prohibits franchise sellers from providing sales or profitability claims to franchise prospects unless those claims are properly documented in the company’s required disclosure documents. We have pointed out that BBI has made numerous earning representations in the press, including that Camille’s Sidewalk Café franchises average $700,000 to $800,000 in annual sales, and that a Freshberry unit is projected to have $400,00 in sales, and that the now-defunct Coney Beach franchise would average an impressive $1M in unit sales, with a $9.00 average purchase and an exceptionally low 21% food cost.
BBI’s Justification: According to Mr. Rutkauskas, the numerous published earnings claims were the fault of writers printing “off-the-record” comments. Says Rutkauskas: “It is not our policy to publish or document earnings claims. Any past off the record comment was meant to be a personal opinion based off of previous assessments and not meant to be a published fact on behalf of BBI.”1
Why this matters: The FTC prohibits unsubstantiated financial representations because, historically, many franchisees have been hoodwinked by unethical and/or unrealistically optimistic franchise sellers. It’s irresponsible to end-run FTC safeguards and provide unsupported, misleading earnings representations.
Our recommendation: Mr. Rutkauskas and BBI should refrain from providing earnings information or financial representations to the press, either on or off the record.
Criticism #4: BBI claims it makes “brand partners” successful, but former partners are prohibited from sharing their experiences or honest opinions
More than 20 brands have been touted as receiving the franchise development, marketing & sales support of the BBI “partnership” program. All but a very few seem to have severed ties with BBI before the end of their contract terms; those that remain don’t appear to have added franchise units. In fact, we haven’t been able to find a single BBI partner that credits BBI with making them “bigger and better.”
BBI’s Justification: Mr. Rutkauskas insists “BBI has a history of making brands better and securing growth for companies.” He cites a former brand partner he claims to have “generated $884,000” for and “laid the foundations” for their 10 franchise units1. When we contacted BBI brand partners (including the aforementioned partner), most said they weren’t allowed to discuss their experience with BBI because of a gag order type clause in their separation agreements. In fact, those who severed ties are either prohibited from sharing their experiences due to gag orders required by David Rutkauskas and BBI, or because they fear retaliation from BBI. BBI appears to be free to make representations about its former clients, but their former clients are prohibited from refuting those claims.
Why this matters: BBI “partner brands” are small companies who reportedly pay BBI $50,000 up-front, plus a percentage of future franchise fees and royalties. This can be a substantial loss of time and money if they do not get the promised results. Shouldn’t prospective partners be able to hear the experiences and opinions of former brand partners? Prohibiting customers from expressing their opinions is a troubling practice and a potential red flag.
Our recommendation: BBI should nullify the “gag orders” on their clients’ separation agreements and allow former “partner brands” to candidly share their experiences and opinions without fear of repercussions from BBI & David Rutkauskas.
Criticism #5: That BBI misrepresents both its track record and investment appeal
Since at least 2007, David Rutkauskas has regularly claimed that BBI is generating unprecedented growth and breaking its previous sales records.
Despite dozens of excited announcements of new partnerships and huge development deals, BBI’s actual track record does not appear, in our opinion, to be a success story for its franchisees:
- Roughly three times more Camille’s Sidewalk Café franchise owners lost their investments and shuttered their cafes than managed to stay in business.
- The Small Business Administration reports a SBA loan default rate of 58% for Camille’s Sidewalk Café franchises, one of the worst in the nation.
- The highly touted BBI Coney Beach franchise chain folded shortly after its debut, and the Rex’s Chicken concept has failed to grow past a single unit.
- Despite a nationwide frozen yogurt boom and claims of development deals for hundreds of units, FreshBerry appears to have fewer than 20 domestic locations and less than 50 total units worldwide.
- Despite 20+ “partner” brands having entrusted their marketing and sales to BBI, not a single one has credited BBI with successfully recruiting franchisees on their behalf.
BBI’s Justification: David Rutkauskas complains that UnhappyFranchisee.com doesn’t acknowledge BBI’s successes and “doesn’t find having over 28 Camille’s Sidewalk Cafes open around the globe, over 50 FreshBerry’s open and thriving and selling multiple franchises for different brands around the world as being successful.”1
Why this matters: Prospective franchisees are being asked to make significant financial investments, ranging from up to $386,000 for a FreshBerry franchise to more than $600,000 for a Camille’s Sidewalk Café franchise. We believe they deserve to have a realistic idea of the risks involved, and how the franchise brands and concepts performed in the past.
Our recommendation: Beautiful Brands should be transparent about the challenges they’ve faced, the losses they’ve suffered, and the specific programs and practices they’ve implemented to combat their franchise failure rate. Having better-informed franchisees with a realistic understanding of the risks involved will be better for BBI in the long run.
Criticism #6: That BBI bullies and threatens its former franchisees and critics to keep silent
Former Camille’s franchise owners who shared their experiences on UnhappyFranchisee.Com received threatening letters from BBI’s law firm. A female brand partner critical of BBI received a vulgar, insulting email from Mr. Rutkauskas promising to sue her after she expressed her opinions. BBI sued UnhappyFranchisee.com’s Sean Kelly (then dropped the suit), and continues to harrass him by Tweeting profanity-laced insults and invitations to fight (yes, fist-fight) for expressing his opinions.
[Image, left: one of numerous bullying tweets directed at UnhappyFranchisee.com's Sean Kelly, who tweets as @FranchisePick. Click to enlarge. Warning: contains profanity]
BBI’s Justification: David Rutkauskas often characterizes opinions he disagrees with as “lies” intended solely to hurt him and his business. He states: “Just like you can’t go into a crowded movie theater and yell ‘fire,’ without cause, you cannot injure someone’s livelihood with baseless lies meant only to destroy his or her reputation.”
Why this matters: The First Amendment protects Americans’ right to express their opinions about BBI or any other company. It protects our right to make statements of fact as long as we can reasonably substantiate the truth of those statements. BBI and David Rutkauskas want their many critics to believe they can successfully sue them for speaking their opinions or the truth. They can’t. That’s why the suit was dismissed against UnhappyFranchisee.Com’s Sean Kelly and why Camille’s franchisee’s negative opinions still remain on UnhappyFranchisee.Com.
UnhappyFranchisee.Com’s intention is not to destroy anyone’s reputation, but to ensure that individuals and their families have solid, factual information on which to base the most important investment decisions of their lives. We are not yelling “fire” inside a crowded theater; we are alerting prospective moviegoers about the smoke coming out of the back door. If they still want to enter the theater, at least they’ve made an informed choice.
Our recommendation: Beautiful Brands and David Rutkauskas should cease all bullying tactics, if only because their bullying and harrassment does much more damage to their reputations than the original criticism. We recommend that Mr. Rutkauskas put that same energy into supporting current franchisees and partners and making them successful. Nothing will offset criticism more effectively than testimonials from successful franchisees and clients. So far, not a single one has spoken out in support of BBI.
1 David Rutkauskas’ rebuttal comments are from his blog post “My Response: Crushing the Distortions,” April 28, 2013 at http://davidrutkauskas.com/index.cfm?id=1&blogId=140. #
Also read:
BEAUTIFUL BRANDS INTERNATIONAL (BBI): Behind the Hype
BEAUTIFUL BRANDS Partner Program: Behind the Hype
ARE YOU FAMILIAR WITH BEAUTIFUL BRANDS INTERNATIONAL OR DAVID RUTKAUSKAS? SHARE A COMMENT BELOW.
tags: David Rutkauskas, Beautiful Brands International, BBI, Camille’s Sidewalk Cafe, Unhappy Franchisee, Sean Kelly, franchise opportunities, franchise bullying
JONATHAN FORTMAN: Corporate Bullying Part 3
April 29, 2013
Attorney Jonathan Fortman contributed this third part of a three-part series on the unsuccessful corporate bullying tactics of Beautiful Brands International (BBI) against UnhappyFranchisee.Com publisher Sean Kelly.
You can read the Parts 1 & 2 here:
BEAUTIFUL BRANDS: Standing Up to Corporate Bullies
JONATHAN FORTMAN: Corporate Bullying Part 2
Corporate Bullying – Part 3 – The Finale
By Jonathan Fortman April 28, 2013
Welcome to Part 3 of my blog series about corporate bullies.
I did not intend on making this into a series. Ongoing events in the underlying case have just naturally led me along the path. In this finale, I’ll talk about how the bully, after being challenged in the legal system, will then revert back to an adolescent playground bully thereby completing the circle.
I have three children. The youngest is my 10 year-old son. He thinks the old man can do no wrong. Everything I say is right and he looks up to me. It’s a very special time in the life of a parent.
My middle child is my 14 year-old daughter. She’s at that stage in life where she thinks she’s always right and her parents are dorks who don’t know anything. Don’t get me wrong, I think she’s a great kid. However, I think our Creator makes us all go through that stage so that we can undergo a few lessons in the school of hard knocks.
My third child is my stepson who will turn 21 in a few weeks. He has matured to the point where he has gone through a few of life’s lessons and is seeing that the old man knows what he’s talking about, at least some of the time. I must admit those moments are very gratifying. In the case I spoke about in Part 1 of this series, I made certain statements concerning the effect of standing up to a bully. As that case has unfolded, everything I said in Part 1 has proven to be true. The old man was right.
Consider yourselves all my children coming of age as I explain to you exactly why the old man was right.
In BEAUTIFUL BRANDS: Standing Up to Corporate Bullies, I talked about the case of Beautiful Brands International (“BBI”) v. John Doe. I told you that if you stand up to a bully, 99% of the time the bully will back down. In the BBI case, my client, Sean Kelly, stood up to that bully. At the time Part 1 was published, we had no idea if the bully would be among the 99% who back down or the 1% who keep coming because they’re too stupid to realize they’ve lost their power.
In JONATHAN FORTMAN: Corporate Bullying Part 2 of the series, I talked about the bully blinking first.
Basically, the bully responded by publicly crying about how it was so mistreated and stating that its victim was really the bully. When Part 2 was published, the case against John Doe was still pending. We disclosed Sean Kelly’s identity and basically dared the bully to replace Sean Kelly for “John Doe.” Since part 2 was published, the case against “John Doe” has been dismissed. There was no substitution of Sean Kelly for Mr. Doe. The bully has backed completely down.
In this finale of the series, I wanted to discuss the way in which these disputes can turn full circle from corporate bullying through perverted use of the courts to simple adolescent playground antics. BBI was founded by a man named David Rutkauskas. I don’t know Mr. Rutkauskas. However, reviewing his twitter account, blog, and the glowing PR materials his company throws out, I get the distinct impression that Mr. Rutkauskas thinks very highly of himself. After all, what kind of business executive sends out a tweet showing off his $100,000 Mercedes?
There’s nothing wrong with thinking highly of yourself or flaunting your material possessions if you are legitimate. The problem is that if your business is based solely on fluff and no real substance, it will eventually bring you down. You might as well put a big, huge red target on yourself.
I contrast Mr. Rutkauskas’ behavior with that of Warren Buffett and Sam Walton, two of the most successful people in history. By all accounts, both men came from humble beginnings, worked hard, and became giants in the business world. However, neither of them ever flaunted their wealth. They stayed true to their core values. Those successful in business can do that because they know that their success never depended on fluff. Rather, their success was directly tied to their work ethic. Their values drive them, not their material possessions or the need for self-promotion.
If there’s any doubt about the difference between Mr. Rutkauskas and the real business tycoons, one need only look at several tweets Mr. Rutkauskas sent after his business practices were questioned. After the case was filed against John Doe, Mr Rutkauskas made a series of tweets directed to Sean Kelly that were, to put it mildly, crude and offensive. This is a family-oriented blog so I won’t set out the contents of the tweets. Interestingly, the day after the tweets were made, Mr. Rutkauskas removed them from his twitter account. However, I had screen shots of the tweets and made sure to include those in my letter to the BBI attorney when I disclosed Sean Kelly’s identity.
(Here’s a side-lesson, my children, never tweet while under the influence of a mood-altering substance).
I thought that dismissal of the case against Mr. Doe would be the end of this saga.
I was wrong.
Yesterday, Mr. Rutkauskas tweeted, and I quote: ”hey there Sean Kelly, why don’t u travel to Tulsa and say all this Bull S@*t to my face?”
The first thing I need to point out to Mr. Rutkauskas is that “bulls@*t” is a single word. If you’re going to act tough in a tweet, try to be grammatically correct. This tweet is comical. It shows that the old man was more right than he even knew.
The corporate bully has now reverted to middle school tactics of daring its victim to a fight on the playground.
We have come full circle to the days of our youth. Would Warren Buffett or Sam Walton had sent such a tweet had Twitter been around during their primes? Obviously not. In my opinion, Mr. Rutkauskas has now shown himself to be nothing more than an egotistical, self-absorbed peddler of fish oil.
As my daughter would say, he now has no relevance.
Thanks for reading the conclusion to this series. Call us if you need help standing up to corporate bullies like this. We’d be happy to help.
Jonathan E. Fortman
For more information on Jonathan Fortman and Fortman Law, visit the Jonathan Fortman profile page in our franchise attorney directory.
This article was originally published at the Fortman Law Blog and is reprinted here by permission of the author.
Related Reading:
Beautiful Brands: Why Franchise Bullying Backfires
BEAUTIFUL BRANDS INTERNATIONAL (BBI): Behind the Hype
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
TAGS: Jonathan Fortman, Attorney Jonathan Fortman, Jon Fortman, Sean Kelly, UnhappyFranchisee.Com, Beautiful Brands, BBI, David Rutkauskas, corporate bullying, bullying, franchise bullying
JONATHAN FORTMAN: Corporate Bullying Part 2
April 29, 2013
Attorney Jonathan Fortman contributed the second part of a three-part series on the unsuccessful corporate bullying tactics of Beautiful Brands International (BBI) against UnhappyFranchisee.Com publisher Sean Kelly.
You can read the Part 1 here: BEAUTIFUL BRANDS: Standing Up to Corporate Bullies.
The Bully Blinked First
by Jonathan Fortman April 18, 2013
Several days ago I wrote about the case of Beautiful Brands, Inc. v. John Doe.
I used the facts of that case to describe the corporate bullies we confront on a daily basis. I described how standing up to bullies causes them to back down 99% of the time.
My client, John Doe a/k/a Sean Kelly stood up to the bully. Not only has the bully backed down, but is now crying like a baby.
The corporate bully is now trying to portray Sean Kelly as the bully.
Sean Kelly is far from a bully.
He gave the bully every chance to knock off the playground tactics to no avail.
The corporate bully knew that Sean Kelly was exposing the truth and tried to silence him by perverted use of the court system.
However, by taking a stand, Sean Kelly has forced the bully into admitting its mistakes.
Once again, I encourage anyone bullied by corporate thugs to stand up for what they know is right. Fight the fight knowing that truth is behind you. In the end, you will win.
To those companies who think that these tactics are good business practice, I encourage you to consider changing your strategy.
These tactics may work for a short period of time. However, if your goal is to have a viable business long-term, using threats and intimidation is not recommended.
I can guarantee such tactics will ultimately lead to failure.
Thanks for reading.
Jon
For more information on Jonathan Fortman and Fortman Law, visit the Jonathan Fortman profile page in our franchise attorney directory.
This article was originally published at the Fortman Law Blog and is reprinted here by permission of the author.
Related Reading:
Beautiful Brands: Why Franchise Bullying Backfires
BEAUTIFUL BRANDS INTERNATIONAL (BBI): Behind the Hype
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
TAGS: Jonathan Fortman, Attorney Jonathan Fortman, Jon Fortman, Sean Kelly, UnhappyFranchisee.Com, Beautiful Brands, BBI, David Rutkauskas, corporate bullying, bullying, franchise bullying
BEAUTIFUL BRANDS: UnhappyFranchisee.Com Letter to The Journal Record
April 22, 2013
UnhappyFranchisee.Com asked The Journal Record (in February of this year) to stop putting the public relations agenda of Beautiful Brands International (BBI) ahead of the welfare of its readers and the credibility and reputation of its own publication.
We specifically asked Mary Melon and TJR to print corrections to the inflated BBI franchise sales and units counts that it has been printing at BBI’s behest for several years.
Instead of breaking with their role as BBI propagandist, The Journal Record chose to highlight the inane, silly lawsuit BBI filed to try to intimidate its Internet critics, and included the statement that BBI has ““297 locations around the world,” which they know to be false.
We sent this letter to The Journal Record President & Publisher Mary Melon:
April 22, 2013
VIA Email & Registered Mail
Mary Mélon
President & Publisher
The Journal Record Publishing Co.
101 N. Robinson Ave. Suite 101
Oklahoma City, OK 73102
Dear Ms. Melon:
My name is Sean Kelly. I have 24 years of experience in the franchise industry, having been VP of an international franchise consulting firm, an executive with a successful franchise company, founder and President of a franchise advertising agency, an expert witness in franchise litigation, and, currently, as publisher of UnhappyFranchisee.Com. I am frequently quoted in national publications on franchise matters, and am a contributor to trade and industry publications.
On February 13, 2013, I sent you a detailed email (attached) alerting you to what I believe are a large number of inaccurate and misleading statements about Beautiful Brands International (BBI) published by The Journal Record. I pointed out that these misleading statements could be potentially damaging to your readers, some of whom may rely on your articles to make significant franchise investment or partnership decisions.
In my opinion:
- For several years, The Journal Record has consistently misled its readers as to the success of Beautiful Brands International by overstating the number of franchise locations BBI has open.
- For several years, The Journal Record has consistently misled its readers as to the success of Beautiful Brands International by overstating the number of franchise locations BBI has “in development.”
- For several years, The Journal Record published “earnings claims” that franchisors are prohibited from disclosing, bypassing protections put in place by the Federal Trade Commission.
- For several years, The Journal Record has consistently misled its readers as to the success of Beautiful Brands International by printing only positive stories and self-serving announcements provided by the company, and turning a blind eye to the lawsuits, widespread franchise closures, skyrocketing SBA franchise loan default rates and the near-complete failure of the BBI partnership program.
In my email of February 13, 2013, I cited specific examples of inaccuracies and requested that you, at the very least, print corrections or clarifications to ensure that your readers receive accurate information. I copied your senior editorial staff, your business editor, and writer D. Ray Tuttle on the email. You responded by instructing Mr. Tuttle to look into these allegations and to keep you informed as to what he found. Mr. Tuttle sent me an email, saying “Thank you for alerting me to BBI, these practices and the projections. You raise good points and something that needs attention.”
Not only did neither you nor your writer ever follow up with me on this matter, The Journal Record continued its tradition of faithfully serving the public relations interests of BBI by publishing the story “Beautiful Brands sues anonymous Internet critic” on March 12, 2013.
The unfounded lawsuit against the “Internet critic” (me) is, in my humble opinion, BBI’s cynical & transparent attempt to send a public warning to discourage whistleblowers from sharing their experiences with and opinions of Beautiful Brands International. Beautiful Brands International, CEO David Rutkauskas, and/or their attorney Robert Sartin of Barrow & Grimm, obviously hand-fed Ray Tuttle the lawsuit and their quotes.
It seems quite telling that, over the years, The Journal Record did not consider a sexual harassment lawsuit against Camille’s Franchise System, Inc. involving Mr. Rutkauskas (2007), a lawsuit filed by an international Camille’s franchisee (2010), a lawsuit filed by a local Camille’s Sidewalk Café franchisee (2010), or a lawsuit from an international master franchisee (2012) against BBI to be newsworthy, yet considers a frivolous, bullying lawsuit designed to silence a critic of BBI to be priority news. Ray Tuttle’s “Internet Critic” story appeared days after the lawsuit was filed, complete with polished quotes from attorney Sartin and details regarding the potential financial penalties for expressing negative opinions toward BBI.
Remarkably, Mr. Tuttle not only continued to describe the troubled and embattled BBI as if it were a success story, he repeated the false claim that “BBI has 297 locations around the world, including franchised units for CherryBerry Self-Serve Yogurt Bar, Camille’s Sidewalk Café, Rex’s Chicken and FreshBerry Frozen Yogurt Cafe.”
Having read my email, Mr. Tuttle knows that BBI does not have “297 locations around the world” and that BBI has no ownership stake in CherryBerry Self-Serve Yogurt Bar (CherryBerry principals recently told Franchise Times that they only use BBI for “legal work.”) Mr. Tuttle and The Journal Record continue to mislead readers by inflating BBI’s franchise sales and unit counts, and deceptively attributing locations that belong to other companies to BBI.
The Journal Record is not the only publication that has helped to create the illusion that BBI is an international franchise powerhouse with the Midas touch. However, The Journal Record is the only publication that has continued to intentionally deceive its readers about Beautiful Brands International after being informed of the truth. After your counterparts at Tulsa World and Franchise Times read my reporting on BBI at UnhappyFranchisee.Com, they each published excellent articles (Kyle Arnold’s "Camille’s empire copes with setbacks" and Julie Bennett’s "Reality Check," respectively) that provided reality-based overviews of BBI’s recent track record.
Ms. Melon, I hope this letter will help motivate you to accept my offer of assistance in helping you and your writers correct the misinformation and inaccurate impressions you have communicated regarding both the track record and current performance of the Beautiful Brands International franchise ventures and partnership programs. If The Journal Record chooses instead to continue to serve as an unfiltered public relations propagandist for David Rutkauskas, Beautiful Brands and their attorneys, I will continue to do your fact-checking for you and publicly debunk the BBI fairy tale you seem so intent (at least to this point) on communicating.
All the best,
Sean Kelly
President, Relentless, Inc.
Publisher, UnhappyFranchisee.Com
UnhappyFranchisee[at]gmail.com
Attachment: Emails dated February 13, 2013
Also read:
BEAUTIFUL BRANDS: UnhappyFranchisee.Com Email to The Journal Record
BEAUTIFUL BRANDS INTERNATIONAL (BBI): Behind the Hype
BEAUTIFUL BRANDS Partner Program: Behind the Hype
ARE YOU FAMILIAR WITH THE JOURNAL RECORD, THE DOLAN COMPANY OR BEAUTIFUL BRANDS INTERNATIONAL? SHARE A COMMENT BELOW.
Tags: The Journal Record, The Dolan Company, Mary Melon, Ray Tuttle, Kirby Lee Davis, Beautiful Brands International, BBI, David Rutkauskas, Robert Sartin, Barrow & Grimm
BEAUTIFUL BRANDS: UnhappyFranchisee.Com Email to The Journal Record
April 20, 2013
For the past several years, Beautiful Brands International (BBI) persuaded several media outlets to portray it as a vibrant, growing international “franchise powerhouse,” even as it became increasingly obvious that BBI’s franchise efforts and franchise partner program are anything but an entrepreneurial success story.
Once they were confronted with the truth by UnhappyFranchisee.Com, both Tulsa World and Franchise Times reported on BBI’s woes. However, The Journal Record continues to communicate misleading information on BBI despite having had the truth delivered to them on a silver platter.
UnhappyFranchisee.Com sent a detailed email to The Journal Record President & Publisher Mary Melon on February 13, 2013 (see below).
Melon instructed TJR writer Ray Tuttle (author of some of the most gushing BBI fiction) to look into the allegations.
Mr. Tuttle emailed UnhappyFranchisee.Com: “Thank you for alerting me to BBI, these practices and the projections. You raise good points and something that needs attention. After reviewing the website, I’d be interested in speaking with you.”
Not only did Ray Tuttle not get in touch with UnhappyFranchisee.Com, he demonstrated his dedication to faithfully serving the public relations interests of BBI by publishing some of the same false statements in “Beautiful Brands sues anonymous Internet critic” even after we informed him of their inaccuracy.
For example, Tuttle he repeated the false claim that “BBI has 297 locations around the world, including franchised units for CherryBerry Self-Serve Yogurt Bar, Camille’s Sidewalk Café, Rex’s Chicken and FreshBerry Frozen Yogurt Cafe.”
Having read my email, Mr. Tuttle knows that BBI does not have “297 locations around the world” and that BBI has no ownership stake in CherryBerry Self-Serve Yogurt Bar. Mr. Tuttle and The Journal Record continue to mislead readers by inflating BBI’s franchise sales and unit counts, and deceptively attributing locations that belong to other companies to BBI.
Here’s the email that we sent to The Journal Record, which Mary Melon and Ray Tuttle apparently have chosen to disregard.
Date: Wed, Feb 13, 2013 at 11:50 AM
Subject: Your coverage of Beautiful Brands, corrections and criticism
To: mary.melon@journalrecord.com
Cc: ted.streuli@journalrecord.com, kirby.davis@journalrecord.com, ray.tuttle@journalrecord.com
Ms. Melon:
Since 2007, The Journal Record has published approximately 67 positive articles and news items about Beautiful Brands International (BBI) and its CEO David Rutkauskas. Over time, this one-sided portrayal of BBI has likely communicated to your readers that BBI is both an inspirational success story, and a company that they can feel comfortable investing with either as a franchise owners or as one of their “partner” brands.
In recent investigations, I have found a wide disparity between the facts about Beautiful Brands International, and the statements made in your numerous articles and news items. I believe that The Journal Record may have been provided with inaccurate and misleading information regarding BBI, which you have then passed along to your readers as verified fact. I believe that BBI may, in turn, use the reprints of your articles as a 3rd party endorsement and a way to obfuscate the troubled and, IMHO, possibly dubious nature of their enterprise.
I believe TJR’s coverage of Beautiful Brands does damage to your publication’s credibility and journalistic ethics, and may even be creating legal liability. I am writing to request not that you take my word for it, but that you have your executive or editorial staff look into this matter and decide for yourselves, that you issue corrections and clarifications for your most recent story, and that, in the future, you provide more balanced and accurate coverage of BBI and the purported “success story” of David Rutkauskas.
Here are a few examples of misleading and/or downright incorrect representations made about BBI in your recent article “It’s a Beautiful Brands world: Franchiser crossing borders and breaking records” by Heidi Brandes:
1/21/13, The Journal Record reported: “Beautiful Brands has 297 locations in Arizona, Arkansas, California, Kansas, Florida, North Carolina, Minnesota, Colorado, Missouri, Texas, South Carolina, Nebraska, Iowa and Oklahoma.”
Beautiful Brands “has” three franchise brands: Camille’s Sidewalk Café (29 US locations), FreshBerry frozen yogurt (16 US locations), and Rex’s Chicken (2 US locations). If you add the U.S. locations on the three websites, you will see that BBI has 47 domestic locations, not 297 as you claim.
1/21/13, The Journal Record reported: “In 2012 alone, BBI opened 114 stores and has 79 new stores under construction. It has a total of 297 locations around the world, including franchised units for CherryBerry Self-Serve Yogurt Bar, Camille’s Sidewalk Café, Rex’s Chicken, and FreshBerry Frozen Yogurt Cafe.”
BBI does not own CherryBerry. The CherryBerry Franchise Disclosure Document (FDD) prospectus does not have any mention of any ownership by BBI, and does not list Rutkauskas among its management team. It seems that BBI is solely a service-provider to CherryBerry, a vendor of sales-support services, a franchise broker. It would be inaccurate and misleading for a franchise broker to refer to its client’s locations as part of his/her company.
As far as I can tell, Camille’s is a chain in decline (only 137 or so ever opened and most of those have closed), FreshBerry’s domestic growth is flat, and Rex’s Chicken has gone nowhere. Adding in a growing outside company to the mix might give the illusion that the company is growing, but is not accurate. Additionally, Ms. Brandes uses the same number for global locations as domestic locations (297).
“Now 12 brands and growing…”
I don’t believe BBI “has” 12 brands. August 30, 2012, The Journal Record stated: “Beautiful Brands International’s franchised brands also includes Camille’s Sidewalk Cafe, FreshBerry Frozen Yogurt Cafe, Rex’s Chicken, Caz’s Chowhouse, Dixie Cream Donut Co., Ludger’s Bavarian Cakery, Sushi Freak, Top That! Pizza, Roxberry Juice Co., Smallcakes A Cupcakery, MyCamille’s and Fresco Wood Fired Italian Kitchen.”
Of those 12 brands, half are no longer BBI partners (Caz’s Chowhouse, Dixie Cream Donut Co., Ludger’s Bavarian Cakery, Sushi Freak, Top That! Pizza, Smallcakes A Cupcakery) and two appear to be concepts that were never developed (MyCamille’s, Fresco Wood Fired Italian Kitchen).
Why does The Journal Record keep publishing BBI “projections” and promoting the BBI success story?
Last March, Ray Tuttle elevated David Rutkauskas to business legend status, portraying Mr. Rutkauskas as a sports hero who went on to build BBI into a global powerhouse. But Mr. Tuttle’s hero worship was based (again, my opinion) on misleading and/or incorrect information.
Ray Tuttle’s article in March 2012 borders on idol-worship, and contains many misleading statements. He claims that BBI employs “20 people at each location, for a total of 4,160 employees.” He is counting employees from companies that BBI does not own. Yet the impression is that BBI employs 4.000+ people worldwide.
Ray Tuttle praises David Rutkauskas’ social media savvy and enormous Twitter following, yet there is strong evidence that Rutkauskas’ purported 500,000+ Twitter followers are fake (See http://www.unhappyfranchisee.com/david-rutkauskas-twitter-followers-fakes/)
What is most mind-boggling is Mr. Tuttle’s acceptance of David Rutkauskas record-breaking sales figures and his projections of BBI having 500 franchises in the next few when the BBI projections previously reported by TJR have not proven accurate.
All Mr. Tuttle and his editors need to do is look back in the Journal Record archives to see that your publication has been promoting projections that never happened, partnerships that soon failed, and the signing of thousands of franchises that would never open.
As a somewhat random example, here are claims TJR made in the article “Franchisee opens five Camille’s in Middle East” January 23, 2009:
1/23/09, The Journal Record reported: “…That brought Camille’s to 137 units at the end of 2008, up six from 2007. BBI President and Chief Executive David Rutkauskas said his Tulsa firm has more than 900 locations in development.”
There are currently 29 Camille’s locations listed on the Camille’s website. What happened to the 108 cafes that are no longer open? Did 108 franchisees lose the hundreds of thousands of dollars they invested in Camille’s franchises?
What of the franchisees who paid BBI franchise fees for the 900+ cafes that never opened? Did they also lose their money?
Why does Ray Tuttle tell the story of the Camille’s franchise as a success story, when it appears that well over 1000 franchise investors may have lost money, and only 29 stores have survived?
1/23/09, The Journal Record reported: “The gourmet hamburger and hot dog concept Coney Beach added its first franchised unit last year, a November opening in El Paso by Milap Maniar.
Rutkauskas said BBI has more than 30 Coney Beach restaurants in development across the country and portions of the Middle East.”
Coney Beach appears to have been a dismal failure. The original franchise closed and it doesn’t appear that the 30 Rutkauskas said were in development ever opened.
1/23/09, The Journal Record reported: “Last year BBI opened its first FreshBerry Frozen Yogurt Café, a company-owned shop placed alongside the original Coney Beach in Bixby. Lee and Vanessa Kellough and Anthony and Jacqueline Taylor opened the first franchised FreshBerry last week in Houston.
“We have six cafes opening by the end of the first quarter,” said Rutkauskas. “FreshBerry will continue to be a major growth vehicle for BBI, with over 200 projected FreshBerry cafes open in 36 months.”
There is no longer a Coney Beach in Bixby and no FreshBerry listed in Houston. The 200 projected FreshBerry’s never happened and, four years later, there are only 42 FreshBerry locations worldwide. Yet TJR continues to publish BBI “projections” as credible.
1/23/09, The Journal Record reported: “Rutkauskas, who would not provide revenue figures, expressed targets for two other concepts yet to debut. He projects 15 Rex’s Chicken restaurants will open by 2010, while Dixie Cream Donuts franchisees open 300 of those pastry shops by 2012.”
There are currently 2 Rex’s Chicken locations (co-branded) listed on the website and it doesn’t look like BBI got ANY of the 300 Dixie Cream Donuts franchises open it said it would have by 2012. In fact, Rutkauskas, BBI & Dixie Cream are being sued by their Middle East master franchisee EABG.
You can learn much more about BBI here:
http://www.unhappyfranchisee.com/beautiful-brands-ugly-shams/
I hope that you will look into these matters, print corrections as you deem appropriate, provide more balanced reporting on BBI with more thorough due diligence in the future.
Thanks for your consideration,
ADMIN
Also read:
BEAUTIFUL BRANDS INTERNATIONAL (BBI): Behind the Hype
BEAUTIFUL BRANDS Partner Program: Behind the Hype
ARE YOU FAMILIAR WITH THE JOURNAL RECORD, THE DOLAN COMPANY OR BEAUTIFUL BRANDS INTERNATIONAL? SHARE A COMMENT BELOW.
Tags: The Journal Record, The Dolan Company, Mary Melon, Ray Tuttle, Kirby Lee Davis, Beautiful Brands International, BBI, David Rutkauskas, Robert Sartin, Barrow & Grimm
BEAUTIFUL BRANDS: THE SOUP KITCHEN Franchise Warning
April 15, 2013
The Soup Kitchen, a three-unit quickservice concept based in Tennessee, is the latest “partner brand” to be hyped by Beautiful Brands International (BBI) as the next potential international franchise phenomenon.
Three red flags indicate that this franchise might not be as souper a deal as the hype suggests.
by Sean Kelly
The Soup Kitchen, a TN mom & pop soup restaurant chain that has opened 3 units in 30 years, is the latest “partner brand” to be hyped by Beautiful Brands International (BBI) as the next potential international franchise phenomenon.
BBI CEO David Rutkauskas is quoted on QSRmagazine.com expressing his customary excitement: “There’s really nothing like it in the industry today. I believe The Soup Kitchen concept is ready to explode in the U.S., and we’re fully poised and prepared to make sure it does.”
According to Fast Casual, The Soup Kitchen is “fast tracking development of its restaurant with a worldwide franchise deal with Beautiful Brands International to market and franchise the concept on a global scale… As part of the agreement, BBI will take the lead in marketing The Soup Kitchen brand and selling its franchises.”
As I read the news items, online reviews and the The Soup Kitchen website, three red flags flapped furiously.
Red Flag #1: Beautiful Brands
The first is The Soup Kitchen’s reliance on Beautiful Brands. I have read numerous dramatic announcements of Beautiful Brands adding a new “partner brand” to its portfolio in recent years.
The stories usually include the pronouncement that a small pizza, salad, BBQ or bakery concept is going international through a BBI partnership.
The announcements are accompanied by bold quotes from BBI CEO David Rutkauskas about how wonderful the concept and the founders are, and how unlimited the potential is for this soon-to-be global brand.
The partner brands I’ve followed were included in the BBI list of brands in subsequent partnership announcements, then seem to quietly disappear from the BBI portfolio without explanation or any apparent franchise growth. (See BEAUTIFUL BRANDS Partner Program: Behind the Hype).
I hope The Soup Kitchen and other recent addition The Big Salad are exceptions to this pattern.
Red Flag #2: Global Focus
The second red flag is the apparent rush to become a global brand when The Soup Kitchen hasn’t even established a track record as a statewide or regional, much less a national, franchise brand.
Online reviews give The Soup Kitchen high marks for the quality of its soups, but so-so ratings for décor and service. There’s a big difference between being able to make good soup and being able to train, support and supervise franchise owners in remote markets. Failed franchisees of Beautiful Brands’ Camille’s Sidewalk Café have cited lack of infrastructure, product distribution, support and quality control in remote markets as important factors in the failure of nearly three-quarters of that chains franchise locations.
Should The Soup Kitchen even be considering international expansion when they haven’t even expanded more than a couple hundred miles from home?
Shouldn’t The Soup Kitchen be focused on expanding to, say, Nashville before considering Saudi Arabia or Bahrain?
Red Flag #3: Earnings Representations
The third, and most serious, red flag (in my humble, non-lawyer opinion) is what I believe is the improper earnings claim (also known as a Financial Performance Representation) being used in the marketing of The Soup Kitchen franchise opportunity.
The Federal Trade Commission (FTC) prohibits franchisors from making any financial performance representation unless it is done so in a specifically designated and substantiated format, and is included in Item 19 of the company’s Franchise Disclosure Document (FDD).
The FTC website states:
It is an unfair or deceptive act or practice in violation of Section 5 of the Federal Trade Commission Act for any franchise seller [to]… Disseminate any financial performance representations to prospective franchisees unless the franchisor has a reasonable basis and written substantiation for the representation at the time the representation is made, and the representation is included in Item 19 (§ 436.5(s)) of the franchisor’s disclosure document. In conjunction with any such financial performance representation, the franchise seller shall also…Include a clear and conspicuous admonition that a new franchisee’s individual financial results may differ from the result stated in the financial performance representation.
At the time of this writing, The Soup Kitchen franchise page refers to some vague, undated and unnamed Entrepreneur magazine article about the famous guy who was the inspiration for the Soup Nazi character on the Seinfeld TV show, and the sales his franchisees supposedly believe they will achieve at some unnamed point in time (no, I’m not kidding).
The implication seems to be that prospective The Soup Kitchen franchisees can expect sales of $500,000 to $1.4 million because an article about a famous competitor mentions those sales amounts. The Soup Kitchen franchise page states:
That’s why our franchise agreement can make it very attractive for you to join our family. And, according to the magazine, one owner’s five eateries are expected to hit the $7 million mark, and another owner projects its four restaurants should gross between $500,000 and $1 million each.
Yes, quickly. Because The Soup Kitchen, established in 1980, is now one of a growing number of soup kitchen chains. What Bob and Jean Bardorf began, we want to see grow into a national dining tradition.
I have not seen the FDD from The Soup Kitchen, but would be surprised if its Item 19 Financial Performance Representations section discloses the actual sales of its “Three very prosperous owners of The Soup Kitchen locations.”
It is more likely that The Soup Kitchen uses the generic disclaimer that BBI employs in its FDDs: “We do not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing.”
Beware of Illegal Franchise Earnings Claims
When prospective franchisees encounter improper “earnings claims” in the franchise marketing or sales process, whether they appear on a cocktail napkin or on the pages of a website, they should ask themselves:
Is this franchisor ignorant of FTC franchise regulations (in which case they are clueless)?
Or
Do they know the franchise laws, and choose to break them anyway (in which case they are dishonest)?
In any case, any time prospective franchisees are told they should gamble their financial futures based on what sales some unnamed franchisees of a competitor projected they might achieve at some undetermined point in time, those prospective franchisees would be well advised to place their hands on their checkbooks and back slowly toward the exit.
Also read:
BEAUTIFUL BRANDS INTERNATIONAL (BBI): Behind the Hype
BEAUTIFUL BRANDS Partner Program: Behind the Hype
ARE YOU FAMILIAR WITH THE SOUP KITCHEN OR BEAUTIFUL BRANDS INTERNATIONAL? SHARE A COMMENT BELOW.
Tags: The Soup Kitchen, The Soup Kitchen franchise, soup franchise, Bob Bardorf, Jean Bardorf, Rick Ford, Roger Burnett, David Rutkauskas, Beautiful Brands International, BBI, franchise earnings claims, franchise financial performance representations, franchise item 19, FDD item 19
