CUPPY’S COFFEE: Ochsenreiter Sues Medina & FranSynergy for $132M
October 10, 2008
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(FranchisePick.Com)- 7 months ago Ochsenreiter was excited about all that Medina had accomplished, all it was going to accomplish, and its contribution to the local business economy.
A lot sure can change in 7 months.
In that amount of time, Medina was purchased by Dale Nabors’ Fransynergy, Ochsenreiter was reportedly let go, the staff was cut, the company is beseiged with lawsuits, and Medina’s final contribution to the local economy was renting the trucks to move the Home Office to Muscle Shoals, AL.
Oh, and Donald Ochsenreiter sued Medina & FranSynergy for $132,306,000.
Today, jd reports:
Well, it looks like a new lawsuit has been filed in federal court, this time with Medina and Fransynergy named as defendants:
http://dockets.justia.com/docket/court-flndce/case_no-3:2008cv00457/case_id-51868/
Doing a quick search on the name, it appears that this is the former CFO and Exec VP of the company. Also looks like he is demanding quite a bit of money. No documents have been filed at this time.
Looks like troubles continue to mount for Medina & its owner Fransynergy:
OCHSENREITER v. MEDINA ENTERPRISES, INC. et al
Plaintiff: DONALD C. OCHSENREITER
Defendant: MEDINA ENTERPRISES, INC. and FRANSYNERGY, INC.
Case Number: 3:2008cv00457
Filed: October 9, 2008
Court: Florida Northern District Court
Office: Pensacola Office [ Court Info ]
County: Okaloosa
Nature of Suit: Contract - Other Contract
Cause: 28:1332 Diversity-Breach of Contract
Amount Demanded: $132,306,000.00
The details of the suit are not yet clear, but one thing is: you can never anticipate the next twist or turn in the ongoing saga of Cuppy’s Coffee.
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
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CUPPY’S COFFEE: Attorney Rudy Harper & Assistant Desiree (Reportedly) Resign
September 11, 2008
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It’s been reported that Cuppy’s Coffee in-house attorney Rudy Harper and Desiree Kahn, the Cuppy’s Coffee legal assistant in charge of handling refunds, resigned Wednesday, September 10th.
Harper and Kahn reportedly stayed behind in Ft. Walton Beach after a limited number of employees were invited to relocate to the new home office in Muscle Shoals, AL. Not receiving a paycheck and a lawsuit from the landlord over nonpayment of rent are likely factors in their abrupt departure.
One commenter on Blue Mau Mau wrote:
The last attorney left is Lou. Is he even allowed to practice law in the state of Florida or Alabama?
With all of the legal issues Cuppy’s is facing, perhaps it should have been high on Cuppy’s priority list to at least pay their attorney his paycheck.
What do you think? Are there any Corporate employees left in Florida? Did the Alabama “Dream Team” get paid? Share a comment below.
CUPPY’S COFFEE: Interview With Franchisee Rick Noem
September 4, 2008
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Interview with Cuppy’s Coffee Franchisee Rick Noem, Ft. Collins, CO
Franchisees Krista and Rick Noem paid $125,000 to for the Fort Collins, Colorado Cuppy’s Coffee franchise and as a downpayment for construction of their Cafe from (essentially) Cuppy’s construction arm, Elite Manufacturing. Their American dream quickly turned into a nightmare. To date, they have lost more than $200,000 and are in a financial crisis.
UF: What’s your background? What were you doing prior to owning your franchise?
Rick: Krista has been in the fast casual restaurant management field for 21 years. I have managed Pizza Hut, Einstein Bros Bagels, Long John Silvers, Jack in the Box and Wendy’s. I was looking for an opportunity that would allow me to work for myself to benefit our family rather than give it to another company. Rick is an analyst for IBM with an MBA in Technology Management.
UF: When did you decide you wanted to own your own business? Describe the process you went through to determine which franchise to buy.
Rick: We decided two years ago to start looking into the world of franchising. We actually signed with a company called Saint Cinnamon out of Toronto in September of 2007. In January of 2008, we severed our relationship with that franchise due to Saint Cinnamon making significant changes to our contract that would have crippled us right out of the gate (so we have a really bad track record on picking franchises). We had to find another concept that would work in our 2000 square foot space. (Lease was signed in October of 2007). In February of 2008, I was contacted by Ken Massie (no longer with Cuppy’s) about their concept. I flew to Florida on February 10, 2008, to see the operation. I was impressed with the product and knew it could surpass Starbucks and some of the other major coffee brands out there. It took us about a month to do our homework. There were two locations in Colorado open or soon to be open. We spoke to both franchisees (who both had a few minor construction delays) but who were overall thrilled with the concept and the product they were serving. We did see all the negative blogs, but really thought this was due to Java Joz’, and that Cuppy’s was/is going to be a great up-and-coming company.
UF: Describe the company’s sales process and your interaction prior to becoming a franchisee.
Rick: We ended up signing our franchise agreement on March 24, 2008. Ken Massie and other key players were calling me several times a day to check on my progress, answer any questions we had and really made it seem like there was going to be a strong communication network between franchisor and franchisee. While the phone calls were getting old, it comforted us knowing that they would always be there for us.
UF: How was the company’s training and pre-opening support. Was it a positive experience?
Rick: We returned from Cuppy’s Coffee College on August 8, 2008. It was a great experience. Everyone seemed knowledgeable about the product and were very enthusiastic about getting us up and open for business. We felt the training program was sufficient but after training everything ended abruptly (support/communication).
UF: When did things start to go wrong? What was it that made you an unhappy franchisee?
Rick: In May of 2008, I advised Cara (our FSM) and Theresa (Elite) that I was running out of capital to get me through the build-out process. I was advised that if I was approved as a franchisee, I would put 50% down, Elite would in house finance the other 50% as well as obtain an equipment leasing package to come up with working capital. After I put the 50% down, none of the other promises materialized. I made it clear to everyone when I signed that they were getting everything we had and there was no more where it came from. I was assured by Steve Wesolowski (finance department) that it was a done deal. We have gone through many different banks and capital companies trying to obtain additional working capital to no avail. I went to Florida on June 27th and confronted Theresa St Clair, Dale Nabors and the Greg Rynearson (new president of Elite) and told them once again that we were out of funds and rent was to commence on June 28th and that we were not happy with how long it was taking the architect and engineer to complete our plans. Rick and I scraped up enough money to pay our rent and loan payments (totaling $9200 a month) for June, July and part of August. I was assured that we would work something out with Dale. He made many statements to me about talking to my landlord to have rent postponed for three months and tacked on to the back end of the lease. My landlord was not willing to go for that because the delays were not due to him but to Elite and the architect and engineers of the project. In April of 2008, we provided Elite with a full set of plans (we had them completed when we were doing the other concept) and all that needed to be done was the Cuppy’s dress and engineering. It took us until July 11th to receive the first set of plans. They were a joke. The architect added doors and walls where there were no plans for them. It took an additional three weeks to get a set of plans that were good enough for my landlord to get to the city. He still had to redline some changes but they were pretty minor. The final plans arrived to my landlord two days before we left for training.
UF: Have you tried to resolve your issues with the franchisor? What was the outcome?
Rick: All we get from the franchisor are empty promises of phone calls and follow-up. They are great about talking the talk when you are face to face but it is not long before you realize they are just blowing more smoke.
UF: What is your current situation? What would you like to see happen at this point?
Rick: We are broke, can’t pay rent ($6000 a month) or loan payment ($3000 a month). We want our money back so we can stop the bleeding and try to get closer to being able to pay off all the debt occurred at Cuppy’s expense.
UF: Do you think that the franchise concept is a viable? Under what conditions?
Rick: I think Cuppy’s has a great product and could make a name for itself once it has a sound infrastructure in place. I feel Dale started with good intentions but really didn’t know what he was getting himself into when he purchased the company. If Dale can rectify the situation with all the unhappy franchisees, and build up the infrastructure to support new stores, we think he can turn this around. Whether this happens or not is yet to be seen. I would not invest money with this company as it stands now, until its intentions can be ascertained.
UF: What mistakes did you make? Looking back, what would you have done differently?
Rick: We jumped into Cuppy’s after our landlord made it very clear that even after our Saint Cinnamon effort failed he was going to hold us to our lease. We were pressured by our landlord to get something in our space quick. Cuppy’s came along, gave us a great song and dance and we jumped. They were so upbeat, and the interview process with them made it feel like we had to say the right things for them to consider us, like we were interviewing for the right to be a part of this company. This gave them more credibility. Again, I feel strongly that while we are guilty of jumping in too fast, Cuppy’s is guilty of misleading current and potential franchisees. They were making promises to close the deal. The money we gave them is gone. Dale told us on two separate occasions that he is personally responsible to us for that money, and that he will do what it takes to make good on it if he was unable to secure financing for our store. We need him to make good on that so we can attempt to repair the damage done.
UF: How has your franchise investment decision affected your life?
Rick: We had hopes of opening several locations. We wanted to make enough money to help put our five children through college and pay off our debt so we could enjoy our retirement years. Now we will be working to replace money taken from our 401K and stock sale so we can set a time for retirement (probably ten years later than previously planned). Once we settle with Cuppy’s, we still have to come up with a plan to help us sever from our lease without having to file bankruptcy or lose our house altogether. We do not know how this is going to turn out. We have contacted people to keep theirs eyes open for anyone looking to rent in this area. Hopefully we can find someone to take over this lease, which is going to be a huge money-maker. I am just sorry that money will not be coming our way. This will haunt us for many years to come.
UF: What advice would you give to prospective franchise owners? What questions should they ask? What warning signs should they look for?
Rick: If someone offers you a “free-franchise”, remember the old saying. “You get what you pay for”. They are great at wining and dining you until you sign and then the honeymoon is over. We paid nothing for the franchise, and that is exactly what we got back from them. Investigate prior lawsuits and blogs. Take these blogs seriously, and contact the writers to get more information, I wish we had. Had we known all of this six months ago we wouldn’t be where we are today. We did our homework. Even though I called the references provided to me by Cuppy’s, I also talked to franchisees who were already open in our area. They were happy with the company.
UF: Have you heard the allegations that Cuppy’s Coffee franchisees may have been paid to give positive references?
Rick: I just recently learned that.
UF: Thanks, Rick
Rick: Thanks for listening.
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CUPPY’S COFFEE: Employees Bid Fond Farewell to Dale Nabors
August 29, 2008
As the trucks carrying what’s left of Cuppy’s Coffee and Elite Manufacturing home offices leave Ft. Walton Beach in their rear view mirror, the Medina, Cuppy’s and Elite employees left behind bid some fond farewells (here and at Blue Mau Mau) to Dale Nabors and their former co-workers who they claim “brown-nosed” their way to Muscle Shoals, AL:
This is our last day… A great company has been destroyed in less than 6 months! As employees we at least cared about the franchisees. WE TALKED WITH THEM AND CRIED WITH THEM - WE WORKED MANY DAYS FROM HOME TRYING TO HELP THEM, BECAUSE YOU WOULD NOT ANSWER THEIR CALLS - YOU TALKED THE TALK BUT DID NOT WALK THE WALK; And now you have stolen all of our futures!
I will continue to think of the franchisee’s and hope they get their real estate and build-outs before they go broke. We believed you and now we are unemployeed and the franchisee’s who were once our friends hate us! Your hiding-out and blaming us for your not doing what you suppose to do is at least finally ending.
BELIEVE AND FAIL
Franchisee’s should pray that someone stops Dale from stealing their money. At least when Elite was run by Brian Hayes, buildings got built, now it’s run by a kid with no construction experience and who brown noses Dale all day.
Brian may have been late but the franchisee’s got built-out. Dale Nabors could care less, he stopped paying SBT and MBM because he wanted to dispute their invoices and expenses.
Before Dale our company had it’s weaknesses just like all new companies, but we had more than 100 dedicated employee’s and managers. When Dale came to the company he acted like he controlled the company and he had Morg’s backing while he acted so confident and all the while ran the operations and the companies into the ground.
We were a great company with great employees, franchisee’s and managers. This is what happens when a person like Dale is left in charge of your future. Dale how do you sleep?
Guest writes:
Dale promised the managers he had the money and a plan to really speed up Elite’s build-outs. He claimed we would have all of them done before the end of the year. He told us Morg and Brian were wasting franchisee’s money and that he could get buildings built at half the cost.
He stopped paying SBT & MBM for buildings and stopped paying the vendors. This caused all hell to break loose.
Every week we would hear about some big deal he was working on with a famous builder which would save the franchisees thousands of dollars and make the company stronger than ever. He told us it was because of Morg’s poor management skills and Brians stealing Elite’s money was the reason why he was being forced to put franchisee’s build-outs on hold. He also said that Morg and Brian were probably partners.
Before Dale and when he first came on as a consultant the management team would discuss each franchisee problems at a weekly meeting. Getting the right real estate was always a big factor and the company really had a hard time getting good locations during the first year I was there. The next problem we faced as managers was dealing with the people that we thought would qualify for their loans - we would spend hundreds of hours helping them get a good location only to be told they can’t get a loan, I know that many of the people did not get their franchise fee’s paid back to them.
It seemed that the company was always trying to figure out how to pay refunds from Elite, because of financing problems and people getting second thoughts about moving forward. I know a lot of time monthly payments were being made from the accounting department to people that had lost their financing, because they would call if they were a day late. Now the calls are not being paid at all.
I am not bitter, but it is hard to see so many people’s hopes destroyed. We once had a vision of this company being the best company in Florida - WHAT HAPPENED???? - I am hurt to see what this company has become - how did we get here? It is hard for me to say, but Dale lied to us and now he is moving on, while the rest of the employees and franchisees are left to wonder what will happen to us next.
CUPPY’S COFFEE: Question for Cuppy’s Coffee “Depositers”
August 29, 2008
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Are you a Cuppy’s Coffee franchise “depositer” who is or was being repaid some or all of your refundable deposit to Cuppy’s Coffee or Elite Manufacturing?
Did you receive - or are you receiving - the promised payments in accordance with the schedule set forth by the company?
Please share your payment status with us - either by leaving a comment or sending a confidential email to unhappyfranchisee[at]gmail.com. How much is the original amount they owe you, and how much was the settlement plan you agreed to? You don’t have to use your real name or other identifying info if you don’t want to.
I have heard from several people that they signed a settlement agreement with as little as hundreds of dollars upfront. They received a few payments totalling a couple thousand dollars and the payments stopped. I am interested to know if they stopped paying because of the cash flow issues, or whether they simply make 4 payments and then stop… never having intended to pay back the whole amount.
The agreements they offer could, in essence, transform $35K - $45K debts into a form of contract that can be wiped away in the event of bankruptcy, and they buy the silence of those that cheated for $2K… and the Internet goes silent, paving the way for more unsuspecting “depositers” who don’t know what’s about to hit them…
WHAT DO YOU THINK? SHARE A COMMENT BELOW OR EMAIL IN CONFIDENCE TO UNHAPPYFRANCHISEE[AT]GMAIL.COM
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Cuppy’s Coffee Overview
August 29, 2008
CUPPY’S COFFEE: Lawsuits Filed v. Cuppy’s, Elite Manufacturing
August 28, 2008
Visit http://www.clerkofcourts.cc/court/courtsearch.htm.
Do a search for “Cuppys” or “Elite: at this site, you’ll see the listings for a growing number of lawsuits, including these two:
Defendant CUPPYS COFFEE & MORE INC ELITE MANUFACTURING LLC
Plaintiff: RICHARD KYLE Attorney: H WESLEY REEDER
Case Number: 2008 CA 003401 S File Date: 6/18/2008
SUMMONS ISSUED TO: ELITE MANUFACTURING LLC 6/18/2008
SUMMONS ISSUED TO: CUPPYS COFFEE & MORE INC 6/18/2008
SUMMONS ISSUED AMENDED COMPLAINT TO: ELITE MANUFACTURING LLC Receipt: 95453 Date: 08/11/2008
SUMMONS ISSUED AMENDED COMPLAINT TO: CUPPY’S COFFEE & MORE INC Receipt: 95453 Date: 08/11/2008
SUMMONS SERVED AMENDED COMPLAINT: ELITE MANUFACTURING LLC 08/19/08
Defendant CUPPYS COFFEE & MORE INC MEDINA MANAGEMENT STRATEGIES LLC
Plaintiff ROBERT Z KNOX Attorney: MICHAEL T HARPER
CIRCUIT CIVIL FILING FEE Receipt: 95375 Date: 08/08/2008
SUMMONS SERVED: CUPPYS COFFEE & MORE INC 08/14/08 8/15/2008
SUMMONS SERVED: MEDINA MANAGEMENT STRATEGIES LLC 08/14/08 8/15/2008
SUMMONS ISSUED TO: MEDINA MANAGEMENT STRATEGIES LLC Receipt: 95375 Date: 08/08/2008
SUMMONS ISSUED TO: CUPPYS COFFEE & MORE INC Receipt: 95375 Date: 08/08/2008
Additionally, there are rumors of a suit being filed against Cuppy’s Coffee in connection with the franchising of San Gelato Cafes.
CAN ANYONE SHED SOME LIGHT ON THESE COMPLAINTS? SHARE A COMMENT BELOW.
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CUPPY’S COFFEE & Funding Solutions LLC
August 28, 2008
On a discussion thread on Blue Mau Mau, Attorney Paul Steinberg posted this disturbing comment:
[Regarding Elite & Cuppy's]…there are unanswered questions which are indicative of fraud:
- There are persons who claim to have obtained funding from various sources, including loans brokered by Funding Solutions LLC .
- According to their website, that company placed over 90 loans at an average of $300,000.
- That equals $27,000,000 of loans, most if not all of that being government-guaranteed.
- Normally, build-out loans are disbursed as the work progresses, and the contractor tenders invoices evidencing progress.
- The contractor so tendering appears to have been Elite.
- Some borrowers allege that their bank fully disbursed the loan monies, but the work was not performed by Elite and/or SBT.
- All of a sudden, Funding Solutions removed any mention of Cuppy’s from their website after a certain Canadian attorney and a certain Pennsylvania bank began asking uncomfortable questions.
- Any person who borrowed money to fund their Cuppy’s should find out if all of the money was disbursed yet, and if the money was all disbursed but the construction not completed, the borrower should have their attorney get involved immediately.
“Wait and see” has not worked.
With the prospect of a investigation of Funding Solutions LLC and Cuppy’s Coffee by the Inspector General of the cognizant federal agency, certain people may be working overtime burning out the motor in the paper shredders even as they counsel others to “wait and see.”
WHAT DO YOU THINK? DID YOU DEAL WITH FUNDING SOLUTIONS? LEAVE A COMMENT BELOW.
CUPPY’S COFFEE: Contact Info for New Alabama Home Office
August 26, 2008
Cuppy’s Coffee is moving! Here’s the address below so you can send a Congratulations on Your New Office! card or an office-warming present to Dale Nabors and the newly relocated elite “super scooper” team of employees who “made the cut” and were awarded the opportunity to move to Alabama!
Cuppy’s Coffee New Corporate Address:
Cuppy’s Coffee and More
919 Avalon Ave
Muscle Shoals, AL 35661
Tel: 256-381-6336 Alt tel: 256-381-6077
Fax: 256-381-6461
FEEL FREE TO WISH THE CUPPY’S ELITE TEAM BEST WISHES AT THEIR NEW HOME!
Congratulations to the Cuppy’s Coffee Super Scoopers who were given the chance to relocate, including Robyn, Rudy, Troy, Desiree, Greg, Jessica, Amy, Ted, Frankie, Lou and of course, Dale. May you grow, prosper and quickly repay all of the “involuntary investors” and franchisees awaiting return of their money.
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CUPPY’S COFFEE: Federal Charges, Lawsuit & Other Rumors
August 26, 2008
Lots of rumors and conjecture about Dale Nabors, Elite Manufacturing, the Supreme Building Technologies lawsuit & poor treatment of employees. I’ll toss them out there… please share what you know with a comment below.
Federal criminal complaint filed against Dale Nabors?
I’ve received some vague but credible emails that Dale Nabors was served with Federal Charges yesterday in connection with Cuppy’s Coffee. This comment was also posted anonymously online:
“I was told that Federal charges were served to Dale Nabors yesterday. Does anyone know the particulars? Does this mean we will be getting our money back? Did it have anything to do with him not paying his employees and stealing from them? I understand there have been numerous resignations because of his dishonesty, and cowardly way of meeting with and following up with franchisees. Would be very interested in what happened yesterday when he was served with the Federal charges.”
Others have said that there are charges filed, but they have to do with franchising, not employment infractions.
SBT lawsuit against Elite settled?
Dale has reportedly stated that the SBT lawsuit against Elite Manufacturing has been settled amicably and is no longer an issue. Can anyone confirm or deny this?
Cuppy’s Employees sent packing
This week Cuppy’s HQ employees and soon-to-be-ex-employees are packing up the office for the big move from Ft. Walton Beach to Muscle Shoals, AL. Reportedly, laid-off employees were required to help pack if they wanted their unemployment compensation claims to go uncontested.
Additionally, several key employees have resigned as recently as yesterday. This means that there are many out there with lots and lots of inside information who no longer have any vested interest in protecting their higher-ups. If you’ve got a story to share, feel free to email us in confidence at unhappyfranchisee[at]gmail.com.
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
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