Why DAVID RUTKAUSKAS & ROBERT SARTIN Should Sue Themselves (Part 1) by Sean Kelly

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.

Contact UnhappyFranchisee.com

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

TROPICAL SMOOTHIE CAFÉ Franchise Loan Defaults Overstated, Says Report

Tropical Smoothie Café franchise loans guaranteed by the Small Business Administration have a 23.58% failure rate, according to an SBA report released September 30, 2011.

UnhappyFranchisee.Com included those initial results in two posts:  WORST FRANCHISES IN AMERICA (by SBA loan defaults), and TROPICAL SMOOTHIE CAFE Franchise Complaints.

However, a report compiled by franchise research firm FranData for Tropical Smoothie Café  concludes that the SBA report overstated TSC loan failures, with the actual rate being 15.54%.

In an email to UnhappyFranchisee.com,  Tropical Smoothie VP Franchise Development Charles L. Watson wrote:

“FranData’s SBA Default report calculates a more realistic default rate for our brand.  It is still high, but we are working hard to bring it down through continued focus on franchisee profitability and business practices…

“This report shows we are far from perfect, but not as bad as the SBA data is saying we are.  Our SBA default rate is in reality lower than comparable franchise companies in our sector.”

Tropical Smoothie Café SBA Franchise Loan Default Rate Dropping

According to the Enhanced SBA Loan Loss Analysis for the years 2000 – 2011 on the Tropical Smoothie Franchise Brand prepared by FranData Lead Research Analyst Ritwik Donde:

Between 2000 and 2011, there was a significant increase of 600% in Tropical Smoothie’s SBA loan disbursements, from 3 to 193. The total disbursed was $33.2 million or an average disbursed amount per loan of $172,257.

Out of the 193 loans approved between July 2000 and November 2011.

57 were paid in full 23 were fully cancelled 6 loans were undisbursed 1 loan was closed 68 are open and under regular service 8 loans are open and under liquidation 30 loans failed

During these 11 years, 30 of the 193 loans (15.5%) failed; 68 or 35% are open and performing normally; 8 are open and being resolved. The rest were either paid in full or cancelled before any money was disbursed.

While Tropical Smoothie’s failure rate increased each year until 2007, it has since then declined every year, from 19.73% to 15.54%

According to FranData, the discrepency between the TSC failure rate in the FranData report (15.4%) and the TSC failure rate released by the SBA (23.58%) is the result of internal flaws and inconsistencies in SBA data collection procedures.

FranData claims that these widespread inconsistencies can affect the granting of SBA-guaranteed franchise loans, as “the lending community does rely on [the SBA-supplied] information to a considerable extent, sometimes deciding whether to lend at all to a brand and at other times incorporating it into loan policy decisions about specific brand and industry concentrations.”

Increasing Capitalization Requirements Lowered Failure Rate, Report States

According to the FranData analysis, Tropical Smoothie Café was able to reduce its SBA loan failure rate by increasing the capitalization requirements for prospective franchise owners.

Prior to 2008, Tropical Smoothie required prospective franchisees to have a minimum cash liquidity of $50,000. The franchisor increased this requirement in 2009 to range between $100,000 and $150,000.

Prior to 2008, many new franchisees were undercapitalized.

According to FranData:

… Tropical Smoothie’s number of real business failures steadily increased after 2000 peaking in 2007. The real business failures started declining from 2008 onwards. Tropical Smoothie’s franchised café real business failure rate peaked at 8% in 2007 and declined to 4% in 2010. Based on management provided information, between 2000 and 2011, a total of 105 cafés left the system. The closures peaked at 21 in 2007 and then declined to nine in 2011.

Similarly, the number of failed SBA loans also peaked in 2007, after which no more loans failed. Undercapitalization of franchisees for the period between 2000 and 2007 could be one of the reasons for such high loan failure rate. Management realized issues with franchisee performance and took counter measures.

FranData concluded:  “Undercapitalization of franchisees led to high business failures for Tropical Smoothie franchisees, which in turn was one of the reasons for failure of SBA loans distributed to such franchisees.”

READ THE FULL REPORT (PDF):  Tropical Smoothie Cafe SBA Loan Loss Analysis

Please share a comment (anonymous is fine) or Contact UnhappyFranchisee.com.

ARE YOU FAMILIAR WITH THE TROPICAL SMOOTHIE CAFE FRANCHISE OPPORTUNITY? ARE YOU A CURRENT OR TROPICAL SMOOTHIE CAFE FRANCHISE OWNER? PLEASE SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

Tropical Smoothie Café, Tropical Smoothie Café franchise, Tropical Smoothie franchise, Tropical Smoothie Café franchise complaints, Tropical Smoothie Café failures, Tropical Smoothie Café closed, smoothie franchise, juice franchise, beverage franchise, quickservice franchise, franchise failure rates, SBA franchise loans, worst franchises, unhappy franchisee

CULVER’S Franchise Accused of Racism

Culver’s franchise entity, Culver Franchising System, Inc., is being sued for alleged racial discrimination against two African-American franchise owners who wanted to develop Culver’s franchises in black neighborhoods.

The filing of the lawsuit was reported by Mary Mitchell in the Chicago Sun Times (Former franchise owners’ lawsuit accuses Culver’s of racial bias)

In a federal lawsuit filed last week, the first black franchisees in the Culver’s system… accuse Culver’s of refusing to expand its brand into black communities because of racial bias.

Michael L. Jones and Michael G. Wilbern allege that they were thwarted in their efforts to open franchises in predominantly black neighborhoods in Chicago and Indiana.

The lawsuit alleges that Wilbern tried to open restaurants at 95th and Stony Island; 83rd and Stewart, and 119th & Marshfield on the far South Side. All three locations were turned down, even though Wilbern claims he notified Culver’s there was the potential to obtain tax-increment financing.”

The Sun Times article reports that refused to approve another South Side Chicago site for Wilbern, despite the fact the city had was willing to provide the lot for $1.00.

Culver’s headquarters is in the Village of Prairie du Sac, WI.

The lawsuit maintains that the company is “owned and managed entirely by white citizens,” and the “overwhelming majority” of Culver’s restaurants are located in areas where African Americans are in the minority.

A quick check of Culver’s home town at City-Data reveals that it’s not exactly a bastion of ethnic diversity, with black residents comprising just .6% of the population:

Ethnic Make-Up of Prairie du Sac, WI

• White alone – 3,677 (92.6%)
• Hispanic – 190 (4.8%)
• Two or more races – 41 (1.0%)
• Black alone – 24 (0.6%)
• Asian alone – 24 (0.6%)
• American Indian alone – 8 (0.2%)
• Other race alone – 7 (0.2%)
• Native Hawaiian and Other Pacific Islander alone – 1 (0.03%)

What do you think?

Are Culver’s franchising and site selection policies discriminatory?

Or do franchise companies like Culver’s have the right to determine their own site-selection criteria, and no obligation to expand into locations they don’t feel will succeed?

ARE YOU FAMILIAR WITH CULVER’S & THE CULVER’S FRANCHISE OPPORTUNITY?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

tags: Culver’s, Culver’s franchise, Culver Franchising System Inc., Culver’s franchise cost, Culver’s franchising, opening a Culver’s franchise, Culver’s racist, Culver’s racism, Culver’s discrimination

BEAUTIFUL BRANDS: QSR Magazine Pulls BBI Articles

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.

Contact UnhappyFranchisee.com

tags: David Rutkauskas, Beautiful Brands International, BBI, Camille’s Sidewalk Cafe, Unhappy Franchisee, QSR, QSR magazine, Greg Sanders,

7-ELEVEN: Is 7-Eleven a Good Franchise to Own?

Is 7-Eleven a good franchise to own?

We don’t know.  In fact, we don’t even understand how their unique franchise arrangement works.

So we’re asking 7-Eleven franchisees to explain how the franchise works, and whether they think it’s a good franchise opportunity.

7-Eleven franchise owners, please answer some or all of these questions by leaving a comment or comment below:

• What is the financial arrangement franchisees have with 7-Eleven, Inc. (SEI)?
• What do franchisees pay for?  What does SEI pay for?
• What are the advantages of this arrangement?
• What are the disadvantages?
• What are your greatest frustrations with SEI?
• If you had it to do over again, would you become a 7-Eleven franchise owner?
• Why or why not?
• What should every prospective 7-Eleven franchisee know before signing up?

Thanks for your comments!

Are 7-Eleven franchisees really business OWNERS?

Some of the increasing numbers of unhappy 7-Eleven owners say the 7-Eleven franchise is like buying a low-paying job.

Others say it’s worse.

Alex wrote:

This is how it works they split 50% percent of everything you make.  So pretty much after the split, payroll expenses, maintenance fees, taxes and the list goes on and on… you only make the hours you put in, so say you work 50 hours a week multiply $10 an hr x 50 = 500 x 4 weeks you could make only that 2k a month and if your lucky and 7 eleven decides to give u a good month profit then you can make a couple more g’s or else u can also go negative.

I realized with this company it’s all about luck not how hard you work or how smart you are. They don’t know shit and don’t do shit to help you make money but waste money.  It’s bad enough we deal with the store 24/7 but dealing with the consultant who comes every week to help to supposedly help improve sales is the worst part of the week and If you don’t get along with them too bad bc his boss is just like him/her.

If you complain all they say is to sell your store.  That’s the worst thing someone can tell u after u invested over 250k with them…

Roti Kapda Makan wrote:

I wouldn’t recommend buying a 7-Eleven franchise.

My reasoning is that they do not allow a franchisee to grow within the system, regardless of having money. the typical ROI is almost 7 years on brand new stores, vs Goodwill stores (running stores) it is almost 4-5 years depends on what kind of premium you pay.

Back to the growth. I had one store for almost 2 years now. I am now approved to buy one more stores, but what sucks is, what if I want 3 stores or more, too bad so bad, 7-Eleven will not approve that. The approval rate to buy more stores is they say 6 months, but it ends up being 1.5 years. And brand new stores are bad investment, because of unknown sales and the Roi.

In conclusion a person does make money, but it is very hard to grow with this business in CA. Dallas, and Florida, however has better opportunity. One would pay anywhere from 400K to 700K in So. Cal for a Store vs in TX or FL one would pay 100K -300K for a very good store.

fukifuki wrote:

Oh well, my friends do not think about buying a 7-Eleven franchise. I am with them and had a really bad time through the years. We work hard and bring the business up but sorry man we did not get paid accordingly.

Their share is fix, their accounting system the worst i ever experienced.  Sorry to say but just do your own job, if you are getting 9.00 an hour please do not think about buying this franchise.

7-Eleven Franchisee wrote:

I first started with 7 Eleven as a corporate employee, supporting franchise and corporate stores…

I always heard franchisees complain about SEI [Seven Eleven, Inc.]. Saying they stole money from franchisees, they were paying more for product and the list goes on. Then I became a franchisee. Boy were they not kidding. SEI is a big scam. They take 50% of your gross profit dollars. Yes you do not pay rent, you do not pay electricity, heat and ac. But boy you loose your life! Believe me I did…

If you are truly considering a SEI franchise, just look at the franchise agreement it is over 300 pages long. Every thing is covered you can not beat them. They will fight you every step of the way. Just be careful. I am trying to help you!

Also read:

7-Eleven Franchise Complaints

ARE YOU A 7-ELEVEN FRANCHISE OWNER OR EMPLOYEE?  PLEASE SHARE YOUR OPINION OF THE 7-ELEVEN FRANCHISE BELOW.

Contact UnhappyFranchisee.com

TAGS: 7-Eleven, SEI, 7-Eleven franchise, 7-Eleven franchise complaints, 7-11 franchise, 7-11 franchise complaints, Seven Eleven franchise, franchise complaints, 7-Eleven franchise cost, 7-Eleven complaints, 7-11 complaints

McDONALD’S Franchise Complaints

McDonald’s franchise owners are getting increasingly frustrated, according to a relatively small but telling franchisee survey by Janney Capital Markets.

Are you a McDonald’s franchise owner or McDonald’s employee?  Please share your thoughts with a comment below.

According to Crain’s Chicago Business, The McDonald’s franchisee survey respondents “characterized their relationship with corporate as 1.93 on a scale where 5 would be excellent and 0 awful.”

A chief complaint among McDonald’s franchisees continues to be continuing emphasis on the Dollar Menu and price promotions.

The Chicago Tribune cites one complaint of “couponing like there’s no tomorrow.”

Another respondent complained:  "Every quarter we sell a smaller percentage of our menu at a full (and profitable) price."

Another McDonald’s franchisee complaint is new product introductions that have caused an “operational nightmare.”

According to a franchisee quoted in Crain’s:

"We have more complicated items, with more elements coming from the (distribution center), more equipment coming from suppliers so everyone else is making more money sending us more ‘stuff’ and we are expected to deliver a product that takes 55 seconds on the best day in less than that, do it consistently and with a smile on our face…There’s little to smile about."

The battle between McDonald’s franchisees and corporate is one that is inherent in the franchise relationship, especially with publicly traded franchisor’s.

The franchisor is concerned with increasing sales and driving its stock price.

The franchisee is most concerned with profitability, not sales, as well as operational efficiency.

…because McDonald’s is beholden to its investors, monthly sales performance is key, said John Gordon, founder and principal of Pacific Management Consulting Group, a San Diego, Calif.-based chain restaurant consulting group.

"That’s where the real rub comes in with franchisees — same-store sales," he said.

After nine years of ever-higher sales at restaurants open for at least a year, the traditional measure of retail success, the streak snapped in October.

"The good news is that the chain has had a lot of success in the last four to five years," said Jack Russo, an analyst at Edward Jones & Co. in St. Louis. "Unfortunately for owner-operators, it is bad news because the bar has been raised. (Corporate) is trying to do everything it can to get sales up."

When the priorities of franchisees and franchisors diverge, sparks fly and the the franchise industry’s characterization of franchisees being “in business for themselves but not by themselves” seems debatable, at best.

ARE YOU A McDONALD’S FRANCHISE OWNER, EMPLOYEE OR SUPPLIER?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: McDonald’s Corp, McDonald’s franchise owners, McDonald’s franchisees, McDonald’s Corp., McDonald’s complaints, McDonald’s franchise complaints, McDonald’s franchisee complaints, McDonald’s Dollar Menu

BEAUTIFUL BRANDS’ David Rutkauskas Defends BBI’s PR Claims

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.

Contact UnhappyFranchisee.com

tags: David Rutkauskas, Beautiful Brands International, BBI, Camille’s Sidewalk Cafe, Unhappy Franchisee, Sean Kelly, franchise opportunities, franchise bullying

BEAUTIFUL BRANDS: UnhappyFranchisee.Com Letter to The Journal Record

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.

Contact UnhappyFranchisee.com

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

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 3^rd 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

UnhappyFranchisee.Com

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.

Contact UnhappyFranchisee.com

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

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.

Contact UnhappyFranchisee.com

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

Next Page »