Make & Take Gourmet, Michele Bellso Accused of Franchise Fraud (AG)

On the heels of a multi franchisee lawsuit and stores defecting and/or closing, Michele Bellso and her ill-fated Make and Take Gourmet meal assembly kitchen franchise chain have taken yet another hit – this time from the Maryland Attorney General.

After conducting a thorough investigation, the Securities Division of the Office of the Attorney General of Maryland “finds grounds  to allege that Respondents Make and Take Holding, LLC and Michele Bellso violated the registration, disclosure, and antifraud provisions of the Maryland Franchise Law, in relation to the offer and sale of a Make and Take Gourmet franchise in Maryland.”  The Maryland AG has issued an Order to Show Cause, giving Bellso and Make & Take Gourmet an opportunity to “show cause” why a final order should not be entered against them.

Make & Take Gourmet Sold Unregistered Franchises

…section 14-228 of the Maryland Franchise Law makes it unlawful for any person to offer or sell a franchise in Maryland or to a Maryland resident unless the offering has been registered with the Commissioner before the person offers to sell, through advertisement or otherwise, or sells the franchise in Maryland…

The Maryland AG alleges that Terri Morgan, a Maryland resident, visited the Take & Bake Gourmet website in January 2007 and requested franchise information.  She was then contacted by Jim Bellso, Michele Bellso’s brother-in-law and a Make and Take employee, and discussed the Make and Take Gourmet franchise opportunity.

Despite the fact that the Make & Take Gourmet franchise was not registered either in Maryland or New York, as required, Dave Menapace, Make and Take’s Franchise Sales Manager, conducted meetings and store tours with Morgan.  Michele and David Bellso also met with Morgan despite not being registered to offer franchises.

Make & Take Gourmet Violated Franchise Disclosure Laws

…section 14-223 of the Maryland Franchise Law makes it unlawful for any person to offer or sell a franchise in Maryland or to a Maryland resident without first giving a prospective franchisee a copy of the offering prospectus and a copy of each proposed agreement that relates to the sale of the franchise at the earlier of: (1) the first personal meeting of the franchisor and the prospective franchisee to discuss the possible sale of the franchise; or (2) 10 business days before the execution of a contract or payment of any consideration that relates to the franchise relationship…

Even though they had not provided the required disclosure documentation and offering prospectus, Make & Take Gourmet personnel aggressively recruited franchisee Terri Morgan;  Michele Bellso discussed with her various details of the Make and Take franchise opportunity, including the business concept, the costs to open a franchise, build-out expenses, using contractors to construct the space, and finding an appropriate location…

On July 7, 2007, Terri Morgan signed a Franchise Agreement to operate a Make and Take Gourmet franchise in Pasadena, Maryland.  The document allegedly left out mandatory language regarding the requirement that Make and Take Gourmet defer receipt of all initial fees and payments from franchisees until Make and Take completed its material pre-opening obligations to the Maryland franchisees.

Make & Take Gourmet Made Illegal Earnings Claims

…section 14-229 of the Maryland Franchise Law and COMAR 02.02.08.16(D) prohibit any person, in connection with the offer or sale of a franchise, directly or indirectly, to make any oral or written statements concerning the potential earnings from operation of a franchise (“Earnings Claim”) if that Earnings Claim has not been included in the franchise disclosure document required to be filed with the Commissioner…

The Maryland AG alleges that Michele Bellso told Terri Morgan that a franchise owner could earn “$400 – $500 a day” just in sales of pre-packaged meals “grab and go” meals.  On February 21, 2007, salesperson Dave Menapace emailed Morgan a document named One Year Revenue Projections for Make and Take Gourmet that includes a column projecting “gross income” of $1,185,740 in one year and an annual net income of $287,596.  In March 2007, a Make and Take representative directed Morgan to an article that appeared in the Central New York Business Journal that quotes David Bellso as stating that the Make and Take Gourmet store in Cicero, New York expected that year to “generate annual revenue of $1.2 million to $1.5 million.”

After operating a year, Morgan has not begun to approach the revenue figures represented in the Revenue Projection nor earned anything close to $400 – $500 a day in sales of grab and go meals at her Make and Take Gourmet franchise.

What do you think?  Share a comment below.

MAKE & TAKE GOURMET: Dave Bellso is Perplexed by Meal Prep

According to a story in the Times-Union, “Rarely has a new retail business idea been embraced by entrepreneurs so quickly, only to fail so spectacularly, as did the “meal assembly” concept.”

Dave Bellso, interviewed for the article, sounds perplexed:

“For some reason, the whole concept is just not doing very well,” said Dave Bellso, whose wife owns the Make & Take Gourmet chain, based in Syracuse. The two-year-old company had a store at The Crossing shopping center in Clifton Park, but closed it after a year for lack of business.

“When the industry first started, the research from the early stores showed it was a destination,” he said. “As the industry grew, that changed.”

This is a man who owns an advertising agency that claims to be the leader in meal prep marketing. His analysis is that the research showed that the early stores were destinations, but “as the industry grew,” the stores were no longer destinations?

In other words: “People are no longer coming to our stores and we don’t know why.”

Strangely, the Bellsos sound more certain when they’re selling franchises. In fact, the Take & Bake Gourmet website Dave Bellso’s agency built states “Our taste-tested recipes are so delicious they’ll keep coming back for more.”

It states: “Meal assembly kitchens are one of the hottest trends in the food industry.”

“We are excited to share this exciting, proven concept with you…”

“As seasoned marketing professionals we know how to “brand” and promote the business.”

“We have the pulse on consumer buying trends so that we can grow and change our business model to keep up with those trends faster than our competitors.”

“Our taste-tested recipes are so delicious they’ll keep coming back for more.”

“We will be able to assist you in developing effective, results-oriented marketing plans.”

“There is no limit to how many stores you can own. It all depends upon your desire for growth… It is actually advantageous to own more than one store in a market.”

It will be interesting to see what story the Bellsos will be telling tomorrow. It seems to change from day to day.

WHAT DO YOU THINK? SHARE A COMMENT BELOW.

Related note: Bob Niedt of Syracuse.com wrote: ” Speaking of Towne Center, Make & Take Gourmet did a fast exit. The meal-preparation store announced its closing at the top of the week and by midweek, it was gone.”

Towne Center was one of the two Bellso-owned corporate stores.

MAKE & TAKE GOURMET: New Hartford MTG to Defranchise

Troubles continue for the shrinking Make & Take Gourmet meal assembly kitchen chain. Following news of a franchisee lawsuit and the closing of one of two corporate stores, the New Hartford Make & Take Gourmet franchise is debranding, defranchising and going independent.
According to an Aug 13, 2008 report by WKTV, co-owner Mark Brockett opened the Make & Take Gourmet meal preparation franchise in New Hartford’s “theatery” complex little more than a year ago. While “the store will not close, they likely will not be affiliated with make and take gourmet in the near future. With a new name to be announced at a later date…a change in service will follow. the store co-owner says it will become primarily a ‘pick-up’ food operation, where customers will just call ahead and take their food ‘to-go.’”
The New Hartford Make & Take Gourmet plans to change its name and service approach some time around or after labor day.

MAKE & TAKE GOURMET: 3 Franchisee Groups Reportedly Suing

Unhappy Franchisee has learned that three franchisee groups have joined together to sue franchisor Make & Take Gourmet. The groups include franchisees Shawn & Lisa Tyszka, of Syracuse, NY, owners of the now-closed Camillus, NY Make & Take Gourmet franchise; Eugene & Cheryl Grenga of Liverpool, NY, owners of the now-closed Baldwinsville, NY Make & Take Gourmet franchise; and Brian & Lisa Clark of Clifton Park, NY, owners of the now-closed Clifton Park, NY Make & Take Gourmet franchise.

According to the complaint, “The Tyszka Group, Grenga Group and Clark Group seek damages, punitive damages and rescission of certain licensing, franchise and related agreements, and for attorneys’ fees and costs, related to defendant Make & Take’s sales of franchises in violation of New York General Business Law 683 and 687, and common law fraud pursuant to the laws of the State of New York.”

Allegations common to the three groups include:

Illegal earnings claims. Franchise companies are prohibited from providing sales or profitability information, or projections of potential sales or profitability, except in a specific, designated format within franchise disclosure documents. The three franchisee groups allege that prior to entering into their agreements, Make & Take Gourmet provided them with oral and written earnings claims as to the levels of revenue and profit that they could expect their franchises to yield.

Sale of unregistered franchises. In order to sell franchises in the state of New York, franchisors must be registered with the New York State Department of Law, Office of the Attorney General. The three franchise groups allege that Make & Take Gourmet sold them unregistered franchises, in violation of New York state law.

Violation of franchise disclosure laws. Franchisors must comply with rules and regulations regarding pre-sale disclosure of certain information furnished in a designated format called a Uniform Franchise Offering Circular (UFOC) which contains required information about the franchisor company, management, rights and obligations of both parties and the specifics of the franchise agreement between the parties. The three franchisee groups allege that they were never furnished with a UFOC prior to purchasing the Make & Take Gourmet franchise.

Also named in the lawsuit is Bond, Shoeneck, & King, PLLC, of Syracuse, NY, Make & Take Gourmet’s law firm.

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MAKE & TAKE GOURMET: Franchisees Sue Meal Prep Franchisor

Franchise attorney Michael Einbinder should send Dave & Michele Bellso a thank you note, and maybe a gift certificate to Dream Dinners, for not only providing seemingly blatant admissions of selling unregistered franchises and making what appear to be blatant earnings claims, but providing them in convenient and public interviews posted online.

No surprise, the early, failed franchisees who bought into the ill-planned and hasty franchise program have filed suit against the MAKE AND TAKE HOLDING LLC; BELLSOHOLDING.

Court: Onondaga Civil Supreme
Index Number: 005064/2008
Case Name: TYSZKA, SHAWN; LISA TYSZKA; LAT HOLDING vs. MAKE AND TAKE HOLDING LLC; BELLSOHOLDING
Case Type: Commercial Div-Other Commercial Cases
Track: Expedited
Upstate RJI Number: 08-5064
RJI Filed: 08/01/2008
Jury Status: Unknown
Justice Name: HON. DEBORAH H. KARALUNAS

Attorney/Firm For Plaintiff:
EINBINDER, MICHAEL Attorney Type: Attorney Of Record Status: Active
104 WEST 40TH ST
NEW YORK, NY 10018
(212)391-9500

Attorney/Firm For Defendant:
FELLOWS, JONATHAN B. Attorney Type: Attorney Of Record Status: Active
ONE LINCOLN CENTER
SYRACUSE, NY 13202
(315)218-8100

COSTELLO COONEY & FEARON Attorney Type: Attorney Of Record Status: Active
205 S. SALINA ST.
SYRACUSE, NY 13202
(315)422-1152

DIBENEDETTO, SHELLY Attorney Type: Attorney Of Record Status: Active
205 S. SALINA ST.
SYRACUSE, NY 13221
(315)422-1152

What do you think? Leave a comment.

MAKE & TAKE GOURMET: Bellsos Closing Company Store, Blame Economy

FranchisePick.com has the story of the Michele and Dave Bellso’s announcement that they’re closing the Make & Take Gourmet company owned Fayetteville store. (Read: “Leading” Meal Assembly Franchisor Make & Take Gourmet Closing Company Store)

When the franchisees closed their stores, it was their unrealistic expectations (greed) and failure to “evolve” that was to blame. When the Bellso’s store closes, it’s due to a number of external factors beyond their control.

Dave Bellso blames the closure on a “troubling convergence of circumstances” that include, in his words:

* “We had good customers out there, just not enough of them.”
* “We just don’t have the business out there,”
* “consumers habits have changed so much in the past three or four months.”
* “Summer months… are typically slow in this business.”
* “…Expenses were way too high out there.”
* “…we had that lease, they wouldn’t change…”

WHAT DO YOU THINK? SHARE A COMMENT BELOW.

MAKE & TAKE GOURMET: $30K Per Month?

Despite numerous shuttered Make & Take Gourmet meal prep kitchens and rumors of franchisee contract buy-out offers and franchisee group lawsuit against the franchisor, Watertown NY franchise owner Jennifer Vail says things are great. In an interview with the Watertown Daily Times, Vail reports that she has 20 employees, several hundred regular customers and an average monthly purchase of approximately $100 per customer.

At 300 customers, that would equate to $30,000 per month, or $360,000 per year. While a respectable amount, that’s quite a bit lower than the Cicero store sales figures the Bellsos fed the press last year:

Make and Take’s Cicero location sells, on average, 3,000 meals per day, Bellso says. In December 2006, during the busy holiday season, sales increased to 6,000 meals per day, she adds.

Make and Take’s Cicero location will generate annual revenue of $1.2 million to $1.5 million, says David Bellso, Make and Take’s franchise-sales manager.

However, Vail, with owns the meal preparation business with her husband, Alan, sounds busy but upbeat:

“It’s like a 24/7 job…. I just wanted something else that would branch off into another direction. And this seemed to be a great fit. And it has been. It’s been phenomenal. I’ve been very lucky.”

“… the great thing about owning this franchise, because they give us all our recipes every month and they give us all the prep instruction and they tell us how to do the station layouts and all of that. It’s pretty easy.”

“We have 4,200 square feet here, which makes us the largest Make and Take Gourmet. It had to be in an area that’s well lit, in a safe location, because we have a lot of women that come here by themselves and we’re open at night.”

“Alan and I also decided we wanted it to be in a high-visibility location. Some of the Make and Takes are in the back of complexes and aren’t as visible. We have a great walk-in clientele, which is very, very important. We also wanted to have one that’s large enough in case we wanted to expand.”

“It’s key to get people in the door. Once we get customers in the door, then we’re golden. It’s kind of a glitch having people not really understand exactly what it’s all about. It’s the convenience. We’re all so busy anymore that most people do not want to go home and cook.”

“IN A MONTH OF BUSINESS, HOW MUCH WOULD THE AVERAGE CUSTOMER SPEND? “Probably, on average, $100.”

“WHAT’S NEXT FOR YOU? “I don’t know. Not another Make and Take right away, that’s for sure. This is time-consuming enough for me…”

WHAT DO YOU THINK? SHARE A COMMENT.

Dream Dinners-Living the Dream Foundation

If you check out the new Dream Dinners UFOC you’ll find something interesting…

Someone has “borrowed” $169,046, from the Living the Dream Foundation, which is a charity that most Dream Dinners owners have at one time or another supported by contributing to with their hard earned money from the product sales in their stores.

” Private Foundation ”

“At December 31,2007, the Company has short-term borowings from the Foundation of $169,046….The Foundation is directed by the majority stockholders of the Parent”

One has to wonder WHO borrowed the money and for what purpose, since it is in the control of Stephanie & Tina.

 

MEAL PREP: Another One Bites the Dish

http://http://www.lohud.com/apps/pbcs.dll/article?AID=2008806290331

Here are some excerpts from an intersting article online about the Meal Assembly Industry and the toll it’s taking on owners . Some have adapted and started a new business out of the ruins of their failed Meal Assembly Store, others have just closed.

The Meal Assembly Industry seems to be going down the drain across the board, Franchised Stores as well as Independents are feeling the burn,

Although the idea spread quickly, the failures followed with 264 meal-prep stores closing last year (207) and another 200 expected to fail this year.

It’s been very hard if not impossible to get accurate numbers on store closures due to spotty and unreliable closure information on the part of most Meal Assembly Franchisors. Their failure to post closed stores and in the instance of Dream Dinners, just lists closed stores as temporarily closed, it would seem to indicate that Dream Dinners doesn’t want potential franchisees to know the real failure rate they have experienced. Other websites that “track” both independent & Franchised operations are just as inaccurate if not down right deceiiving as to the health of the Meal Assembly Industry as a whole.

Let’s Dish, which opened in 2006 in Scarsdale during the height of a nationwide boom in what are known as “meal-assembly” or “meal-prep” stores, is closing its doors for good this weekend. Nine employees will lose their jobs.

It is the last of four meal-assembly stores in Westchester to fail. Super Suppers of New Rochelle closed last month. One … Two… Three … DINNER in Briarcliff Manor and Sip & Supper in Tuckahoe closed more than a year ago.

Although Let’s Dish is a smaller franchisor and has not been one of the Big Girls (Super Suppers and Dream Dinners), it seemed to be golden on the east coast-but that, it would seem, is not really the case.

This story seems to be the the same in every market across the country.

Terese Hunerson of Scarsdale, who was so optimistic when she opened Let’s Dish in 2006 that she was planning to expand in northern Westchester and the Sound Shore, said she was done in by a combination of rising food and gas prices, as well as the challenge of selling consumers on the unfamiliar idea of assembling meals at her store and taking them home to cook.

“This concept is meant to help a busy person, but people found themselves so busy that they didn’t know how to incorporate this into their lives,” Hunerson said.

The self-proclaimed expert in the Meal Assembly Industry says:

Industry consultantBert Vermeulen, who founded a Meal Prep association in 2005, said the idea was too new to support the number of stores that opened.

Mr. B opined in this same article that:

“This is a concept where the stores got ahead of the market. The majority of the target market is not aware of this concept and why it works,” he said.

And yet; here’s an example of Vermulen’s Meal Assembly BAD fortune-telling, it reminds one of the late Johnny Carson’s -”the Great Carnak” Schtick

In 2006, Vermeulen predicted the number of meal-prep outlets would reach 3,000 by 2010 with $1 billion in revenues. Today, the association forecasts just 1,935 stores with $650 million in sales in 2010.

In reality, if you read his website carefully you will find that a few more than 1250 Meal Assembly Stores exist in the US, the remainder are on Canada. Even that number is in dispute as per the observation at the beginning of this article.

And those outlets will be very different from the original stores that struggled to find customers. In 2004, 90 percent of meals were assembled by the customer. Vermeulen said more store owners are adopting a “grab-and-go” model where they assemble meals for time-pressed consumers reluctant to spend up to two hours crafting a pack of meals themselves.

He predicts that by 2010, 80 percent of the meal-prep industry’s revenue will come from grab-and-go meals.

I predict they’ll find out that he is full of hot air, and if I’m not mistaken his descriptions are already in operation, and doing a brisk business- they’re called Grocery stores and Take Out Restaurants.

He likened it to the failure of pioneering online grocery store Webvan, which went bankrupt in the dot-com bust. Today, Fresh Direct is making a success at online grocery delivery because the concept has had enough time to percolate into consumers’ consciousness, Vermeulen said.

It has “percolated” into the “consumers consciousness” as he so eloquently puts, because of the very same economic down-turn, the skyrocketing food and fuel costs that have caught most Meal Assembly Store owners in between a rock and a hard place. Those same factors have made services like Fresh Direct more economical for some people.

It needs to be pointed out that the one of the reasons that Meal Assembly Stores are getting “out-dished”, is because Grocery Stores and by extension services like Fresh Direct, have stepped up to the plate and are pretty good at getting a large piece of the tummy pie. One stop for Mom or Dad after work equals time and money saved in today’s hard economic times.

Rolling out a new concept requires a deep commitment in marketingfrom the franchiser, Vermeulen said, something that Let’s Dish and others didn’t provide.

“Many of the franchisers thought it was easier than it was. They sold franchises without thinking through the marketing program they were going to run,” he said.

Mr. Vermulen is also in the business of selling Independent Meal Assembly store owners everything from soup recipes to the nuts & bolts needed to open a Meal Assembly operation. ALthough he has never owned or operated a Meal Assembly store he only provides services and products to run one. He also operates several self-promotional websites to funnel Meal Assembly owner-wannabes into his plethora of services and products. He also runs an for profit organization for Independent Meal Assembly Store owners.

He likens the Meal Assembly business to the Papa Murphy’s Take & Bake Pizza organization, he feels that they did it correctly.

” Pappa (sic) Murphy’s wouldn’t go into a particular metro area unless they went in big so they could establish awareness of their concept. Their concept is pizzas you pick up uncooked that you cook at home. It’s not that different from meal prep, but the roll-out was very different,” he said.

EXCEPT: It’s like comparing the perverbial apples to oranges- it’s proven that kids LOVE pizza of almost any kind (re-Little Caesars Pizza), not so with Meal Assembly Meals. Those little rug rats are harder to please than the average bear; which means the meal that Mom bought at the local Meal Assembly store for dinner will have to be supplemented with PBJ or Chicken Nuggets from Mickey D’s for the little ones.

Here’s another difference-Papa Murphy’s vetted their prospects and if they didn’t meet the criteria, they didn’t get the location. Not so in Meal Assembly Land where anyone with a valid check can own a franchise.

Every Meal Assembly Franchisor disregards even THEIR OWN specifications for ownership, and in fact a couple are on the second round of “finding” just the “right” franchisee, since the first round of franchisees were forced into bankruptcy when their dreams turned sour.

Some ex-owners have been able to land on their feet after their Meal Assembly business went bust.

Melanie Heim of Super Suppers in New Rochelle said she and business partner Beth Dexter of Bronxville put in a lot of hard work on a failing concept.

“It was a huge disappointment. In retrospect, I don’t know if we did enough research. I don’t know what other research I should have done, but I should have done something. The franchiser won’t tell you much except that it’s fantastic,” she said.

Making their own meals just didn’t resonate with people in Westchester, Heim said.

“I would hear, ‘This is great. I love this. It’s so easy,’ but I’d never see them again,” she said. “It never moved from novelty to habit.”

Heim and Dexter, along with Larchmont chef Liv Grey, have converted their Super Suppers location into a new catering business called The Pantry. “We’ve adapted and moved on,” Heim said.

This is hardly the position ANY one who has spent hundreds of thousands of dollars and man hours invested in a Franchise to find themselves in. Luckily they were fortunate enough to be able to move on to another venture and survive the loss. Others are not so lucky. Some folks who still beleive that the “idea” is a good one are willing to finance a “re-sale” store, some of the bigger franchises like Dream Dinners and Super Suppers are willing to re-sell a failed location to a new owner. But Buyer Beware!

Ryan Knoll, an attorney who runs the FranchisePundit.com Web site, said it is hard to distinguish between a gimmick franchise and one that will be around for decades.

“Franchisers less than 5 years old are much higher risk because they have not fully tested their systems nor have they created brand recognition and loyalty,” he said.

This describes every single Meal Assembly Franchise selling franchises today-NONE are more than 5 years old and NONE have corporate stores still in operation.

As the meal-prep business falters, franchisees are venting on sites like Meal Assembly Watch (www.mealassemblywatch), on which a recent poll asked visitors to vote on whether the concept would survive beyond this year. Sixty-one percent said yes while 39 percent said no.

The ode to Franchisepicks own Sean Kelly:

There’s even gallows humor on some sites, including a mock story that suggests meal-prep stores should diversify to offer Botox or plastic surgery as a side business with a motto like, “Nip, Tuck & Peking Duck.”

My advice to Carolyn is to please wake-up and smell the coffee.

Carolyn Calabria, owner of Entrée Vous in Pomona, said the failure of four meal-prep stores across the river has her concerned, but not defeated.

“It’s a little alarming, but I have to take it as a positive that although it didn’t work there, everyone has to judge their failures and successes as an individual. I hope that when people come and enjoy their culinary experience, they’ll come back,” Calabria said.

Practical experience has not proven this to be the case. Retention is very hard to come by in this industry. It’s more than “a little alarming”, it’s like the understatement of the century!

The story of the ever changing/evolving model is another problem that most newbies can’t understand. They thought they were buying a proven model and in reality they were the guinea pigs as Franchisors were making it up as they went along They soon realize that it is not the concept they bought and sunk hundreds of thousands of dollars into.

As a franchisee, Let’s Dish’s Hunerson blames her parent company for being too rigid and failing to adapt as it became clear the concept wasn’t working as originally designed.

With the economy turing against their best efforts, owners are being forced to make the hard decisons to close their doors for good. Most have drawn an line in the sand and refuse to sink more good money after bad into a business that has proven to be unproductive economically for them.

Comic Relief for Meal Prep Kitchen Owners

First Meal Assembly & Cosmetic Surgery Kitchen Franchise Debuts

Can Botox Parties Save the Meal Prep Franchises? (Part 1)

Can Botox Parties Save the Meal Prep Franchises? (Part 2)

Can Botox Parties Save the Meal Prep Franchises? (Part 3)

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