CUPPY’S COFFEE: Ochsenreiter Sues Medina & FranSynergy for $132M
October 10, 2008
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(FranchisePick.Com)- 7 months ago Ochsenreiter was excited about all that Medina had accomplished, all it was going to accomplish, and its contribution to the local business economy.
A lot sure can change in 7 months.
In that amount of time, Medina was purchased by Dale Nabors’ Fransynergy, Ochsenreiter was reportedly let go, the staff was cut, the company is beseiged with lawsuits, and Medina’s final contribution to the local economy was renting the trucks to move the Home Office to Muscle Shoals, AL.
Oh, and Donald Ochsenreiter sued Medina & FranSynergy for $132,306,000.
Today, jd reports:
Well, it looks like a new lawsuit has been filed in federal court, this time with Medina and Fransynergy named as defendants:
http://dockets.justia.com/docket/court-flndce/case_no-3:2008cv00457/case_id-51868/
Doing a quick search on the name, it appears that this is the former CFO and Exec VP of the company. Also looks like he is demanding quite a bit of money. No documents have been filed at this time.
Looks like troubles continue to mount for Medina & its owner Fransynergy:
OCHSENREITER v. MEDINA ENTERPRISES, INC. et al
Plaintiff: DONALD C. OCHSENREITER
Defendant: MEDINA ENTERPRISES, INC. and FRANSYNERGY, INC.
Case Number: 3:2008cv00457
Filed: October 9, 2008
Court: Florida Northern District Court
Office: Pensacola Office [ Court Info ]
County: Okaloosa
Nature of Suit: Contract - Other Contract
Cause: 28:1332 Diversity-Breach of Contract
Amount Demanded: $132,306,000.00
The details of the suit are not yet clear, but one thing is: you can never anticipate the next twist or turn in the ongoing saga of Cuppy’s Coffee.
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Photo credit: FranBest.com used by permission
123 FIT: Franchisees Debate Viability of Franchise, 30 Minute Fitness Biz
October 2, 2008
(Franchise Pick) Related reading:
Will the 1-2-3 Fit Franchise be the Quiznos of Health Clubs? Is That a Good Thing?
9,509,657 Reasons to Read Disclosure Documents Before Investing
"Quiznos of Fitness" 1-2-3 Fit in Financial Trouble
"They Lie": 1-2-3 Fit Franchise Owners Sound Off
The 123 FIT organization and franchise concept has taken some heat from commenters on this blog - in part because it is owned and operated by the much maligned (in franchise circles) executives of Quiznos. But 123 FIT is not an isolated target for criticism; the very viability of the women’s 30-Minute circuit training club as a sustainable business model has been called into question. Industry critics and failed franchisees alike complain of high recruitment costs, low retention rates, oversaturation of the market and profit centers that are too limited and too small.
Over at Franchise Pick, commenter Pete (anon) claims to be a successful 123 FIT franchise owner. He contends that the 123 Fit company have been given a bad rap, that the 123 Fit concept is sound and, contrary to what many would have you believe, women’s circuit training is "hot."
Read his defense of 123 Fit and the 30 Minute Circuit Training concept here:
123 FIT: Franchisees Debate Viability of Franchise, 30 Minute Fitness Biz
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
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BUTTERFLY LIFE: Interview With Franchisee Matt Wilson
September 30, 2008
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After attending a well-orchestrated sales seminar, Atlanta-area franchise owner Matt Wilson and his wife joined Butterfly Life with the dream of being their own boss, helping women improve their health, and getting a good return on their investment. Once they opened their club, they claim they received no help or support in overcoming their branding and marketing challenges. Their club closed in less than a year.
UnhappyFranchisee.com asked Matt to share the lessons of his experience, and his advice for prospective franchise owners.
UF: Matt, what was your background prior to joining Butterfly Life? Did you have industry experience?
MATT: My wife, who owned and operated our BFL franchise, has in excess of 20 years experience in a variety of customer service positions including 10 years with a major cellular communications company. For several years prior to our investment in a BFL franchise she was the office manager for a successful salon. For myself, I have 20 years experience working in a variety of sales, marketing, educational, technical and business management roles. Neither of us had experience in the women’s fitness industry, however, my wife has been a patron of competing club’s and national diet programs having lost 40 lbs as a result.
UF: When did you decide to join Butterfly Life? Describe the process.
MATT: After attending a franchise seminar in August 2006 in Atlanta, GA, conducted by Taylor Golob, Cheryl Hoke and via video conference, Mark Golob. Around the time of the seminar we were actively investigating a Curves franchise and saw a BFL seminar commercial on television. That led us to check out the company web site and sign up for the seminar. Taylor and Cheryl put on a first class, well rehearsed and choreographed sales seminar. Towards the end they incorporated connecting to Mark Golob via video conference, who delivered a rehearsed speech underscoring the points made by Taylor and Cheryl. When all was said and done it appeared the investment was a low risk, high return venture. Especially given that Atlanta was a burgeoning market for the brand and BFL appeared committed to developing the market for the long run.
The appeal for us and we believe with many investors, was with the prospect of being able to help women improve their health while being your own boss. The bonus was there was what seemed to be a good return on the investment. Reality was much different.
UF: How was the company’s training and pre-opening support? Was it a positive experience?
MATT: The short answer is it served its purpose. That is it did a good job to reinforce the sales pitch we had bought into. It did little to prepare the new franchisee for what was in store. Training focused on sales and marketing your club and ways to increase membership, particularly prior to opening. Overall it was a positive experience and left us with the impression that corporate was there to help us in any way all we had to do was ask. That changed very shortly after our first royalty payment.
UF: What marketing and promotional guidance, programs & support were provided? Were they effective? Why or why not?
MATT: Beyond the training conducted at corporate there was a regular direct mail piece published to all clubs and little else. The materials provided by BFL were ineffective at best. Given my background with sales and marketing I conducted a detailed review of our marketplace, competitors, ads, programs and promotions. In one particular case, BFL ran a promotion of “no enrollment fee” and another with three months free. Competing clubs in the area had no enrollment fees, ever and were offering lower monthly rates and more months free. Maybe these were “new” concepts in California, but they were tired ones in Atlanta. As a result we developed marketing pieces that would fit our area better and attempted to have these approved by BFL corporate.
During University training at BFL they had told us getting our own marketing materials approved was not difficult as long as it maintained the brand image. Again reality was much different. BFL consistently stated their materials and programs were working everywhere, except for us, so we must be doing something wrong. They consequently never approved our materials so we were stuck with their tired pieces.
UF: How was your grand opening and your first year as a franchisee?
MATT: Grand opening and that month were great. Signed up 30 members and it looked like we were on our way. Member sales went down from there and the club didn’t last the year.
UF: Was the ongoing support what you expected?
MATT: No. We submitted reports to BFL corporate on a monthly basis reporting on our progress. Marketing efforts, promotions and more importantly new member sales. BFL receives this from all clubs. The fact our membership number were plummeting was in black and white. BFL informed us the clubs around us were doing great and they didn’t know what our problem was. Their district sales manager came to our club on two occasions in our early days of opening to fulfill the obligation of BFL to provide on site support for three days. While she talked a good game, we signed zero new members as a result of her “support”. Ten months after we closed our club, all Georgia clubs (6-8 at peak) are now closed.
UF: Have you tried to resolve your issues with the franchisor? What was the outcome?
MATT: Corporate was unresponsive to input regarding regional marketing programs or materials. Otherwise the “issue” with Butterfly Life was their complete failure to effectively build the brand and ensure the success of the franchise network. Resolving this seemed unlikely.
UF: How has your franchise investment decision affected your life? What is your current situation?
MATT: Strained marriage, emotional distress, depression and financial ruin to name a few. This single decision and the year and a half we were a part of it will take tenfold to recover from. Currently we are pursuing compensation from BFL through our support of the AAFD Butterfly Life Chapter and their arbitration case.
UF: Do you think that the franchise concept is viable? Under what conditions?
MATT: Yes, clearly there are some franchise concepts that are successful. The key is to have a franchisor that is genuinely committed to the success of the concept and franchise network. That requires more that a fancy web site and polished sales pitch. It requires focus on controlled growth and not losing sight of what got the brand to that point.
UF: What mistakes did you make? Looking back, what would you have done differently?
MATT: Not adequate research and due diligence investigating the company, executives and industry. We performed what we felt was a thorough look into the company and employed various business consultants to help guide us along the way, but that did not turn up anything overly alarming.
UF: What advice would you give to prospective franchise owners?
MATT: Do your due diligence on the franchisor and their management, if you see any red flags, dig deeper. Hire an attorney and use him/her on every decision, signature, document, contract and aspect of your start in the franchise world. Don’t give into the hype. If the opportunity really is as good as it sounds, it will still be there next week, month and year. If it isn’t, do you really want to get into it now? Some signs to look for: too fast growth, rapid expansion of area representative network and lots of new staff at corporate.
UF: Was there a positive aspect of your experience?
MATT: To be completely honest, I can’t think of one.
UF: Thanks for sharing your story, Matt.
MATT: Thank you.
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SMC Specialty Merchandise Corporation: Start a Business for $25?
September 19, 2008
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Have you had any experience with the heavily hyped and infomercialed SMC Specialty Merchandise Corporation business opportunity? The infomercial stars pitchman huckster Tom Bosley, who was the father on Happy Days. They boast that you can start a business for only $25 and make thousands your first week or even day.
What do you think? Leave a comment below.
Here’re a few comments from unhappy SMC investors:
I also fell prey. To this very well orginized scam! This is what they pulled on Me. First SMC withheld the starter kit. Till My electronic check cleared, The transaction was complete and posted in My bank. The follwoing day. I received My kit 27 days later. Called to let them know and schedule thier appointment. Three days later they called. Two days after the scheduled date. Then the following day. Smc took another $39.95 out of My account. So I called them they said, ‘Don’t worry we didn’t set Your start date yet’. I was lied to again right then, They did start it The day they cashed the check!. So even when I did cancel My membership. They called My house to inform Me. I still owe them $400.00. I don’t think so. They aren not getting another penny from Me. Stay away from this scam company!!!!!!. John Round Lake Beach, IL
The 30-day trial is a scam. They start the trial on the date that the ship the membership kit. By the time you get the kit, and finally get your ‘business coach’ on the phone, you already lost 15 days of your trial time. Then if you want to cancel before the trial is up, they make it a TOTAL NIGHTMARE. You even have to send back the promotional literature, and the catalog. They tell you that your free ‘gift card redemption’ site will be automatically cancelled but thats not true either. You have to call up eMerchantClub and cancel it manually because they will contiue to charge you $29.95 a month for the stupid, free cookie-cutter site they give you when you sign up.
SMC’s entire deal is about selling you a $1,500.00 website that only sells to people who either buy gift card from you, or register on the site and receive a ‘free’ $10.00 gift card, that of course you have to buy in advance. Either way, you pay. The kicker is that they refuse to give permission for you to build your own website and host it yourself, because they want to charge you $29.95 a month to host the useless $1,500.00 website.
SMC’s product line is some of the worst junk I’ve seen in any mail order catalog. Its all stuff no one wants. If anyone wanted this crap, SMC wouldn’t have warehouses full of it.
The testimonials on their website are obviously fake. They actually have different people with the exact, same word-for-word testimonials, bragging about the exact same amount of money they supposedly made over the exact, same period of time. Its like they take the same testimonial, paste it all over the page, and just change the picture.
Our coach was annoying and rude. As soon as she realized we weren’t stupid enough to go for the $1,500.00 website, she shut up and wouldn’t go any further with us, even after we told her we wanted to do other, non-internet programs that they offer. She actually tried to have us set up another appointment to talk to her a week later, so that our trial period would expire, and we’d be locked into paying the membership for a year. We began the cancellation process immediately.
If you want to make some money drop shipping on the internet, there are lots of drop-ship suplliers out there. All you have to do is some research, and stay away from the ones that offer you a website. Eb, New York, New York
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BEAR CREEK COFFEE: Another Cuppy’s Nightmare?
September 15, 2008
A post on Blue Mau Mau by an unhappy licensee of Bear Creek Coffee sounded eerily familiar. Could it be that the Java Jo’z & Cuppy’s Coffee fiascos were just the tip of the iceburg? What is it with these coffee companies?
Here’s an excerpt from the comment by carlisme on Sun, 2008/09/14… enough to send shivers down the spines of those who have followed the Cuppy’s story unfold.
I am a licensee with Bear Creek Coffee….
I contracted with Bear Creek a year ago and was assured by the Sales Director, Pete Lambros, that the average time to open was between 3-6 months. A year later, I just now received my modular building.
All was well until Bear Creek received my final payment. After that, things really went south. My building was to be produced by a manufacturing firm in Oklahoma. I kept tabs on the process by calling the CEO of Bear Creek, Jeremie Johnson. It seemed as if there was one problem after another (parts for the building on back order, ect). After a while when I started getting a bit upset, Jeremie told me that a tornado had hit the manufacturing plant and that had put production behind schedule. A couple of months later after almost daily calls from me to Jeremie, he told me that the manufacturing plant had been deceiving him about the building and that the plant had “money troubles”. He told me that Bear Creek had broken off business relations with them and was moving my building to another firm and another two months would be required for completion.
Well, I spoke with the vice president of that manufacturing plant in OK yesterday, and the “money troubles” are on the side of Bear Creek. In other words, the money I paid Bear Creek was not forwarded to the manufacturer. Where did it go?
* * * * *
The bottom line: in my opinion, this company uses unethical business practices, has no regard for honoring contracts and I question their solvency.
Here I am, a full year after contracting with Bear Creek Coffee and all I have is a building that isn’t even the same size as the one I paid for and a bunch of empty promises and worthless contracts. I have never been a business owner before and did the best due diligence I was able. If I had it to do over, I would have NEVER contracted with them. Future licensees, enter at your own risk!
ARE YOU FAMILIAR WITH BEAR CREEK COFFEE? WHAT DO YOU THINK? SHARE A COMMENT BELOW… OR SUBSCRIBE TO RECEIVE FUTURE COMMENTS.
CURVES FOR WOMEN: Franchisee a Victim of Fraud?
September 14, 2008
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An anonymous commenter wrote that they were induced to buy an existing Curves for Women franchise club with fraudulent member and sales numbers. She claims that the Go figure software prevents her from checking historical member numbers. Curves clubs have been closing in large numbers around her and they are losing money every month. If she closes her club, Curves International will demand a $10,000 fee. She has an interested buyer, but one that’s only willing to pay less than half what she and her husband paid for the Curves franchise.
Anonymous Curves Owner writes:
We bought our club on false pretenses from a previous owner who lied about member numbers.
Curves did not give us the correct figures either.
Go Figure software makes it impossible to go back and look up member numbers. We paid over $90,000.00 for our club and were possibly selling it for less than half that. We have to incur the rest of the business loan via credit cards.
We cannot sell the business or shut it down while the bank still holds the note cause there is a lien on our business assets. Clubs around us have been shutting down everywhere. When we tried to contact our area director, it has been hard to get a response. I have had to write several emails. Lately, since we have been talking about shutting it down, our area director has been telling us that Gary is now letting people out of their agreement and it will be easy to get rid of the equipment.
But Curves wants to charge us 10,000.00 to close our club! Who the hell has that kind of money just lying around? The last two years have been an absolute nightmare. My husband and I have many times made comments about Gary being this "CHRISTIAN" He tell franchisees it’s all on us and before pointing fingers at him, we should point two fingers at ourselves. We have resorted to putting out own personal monies from our full-time jobs into this albatross.
We are VERY interested in this class action suit and would like to know more. There is a sale pending so we would like to know as soon as possible. If we can get involved, then obviously we would back out of the sale. No paperwork has been signed yet.
We always thought there was a case against Curves but did not know how to go about it. Since we bought Curves two years ago, we have lost over $40,000.00.
WHAT DO YOU THINK? ARE YOU A CURVES FRANCHISE OWNER, EMPLOYEE OR MEMBER? SHARE A COMMENT BELOW.
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CUPPY’S COFFEE: Attorney Rudy Harper & Assistant Desiree (Reportedly) Resign
September 11, 2008
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It’s been reported that Cuppy’s Coffee in-house attorney Rudy Harper and Desiree Kahn, the Cuppy’s Coffee legal assistant in charge of handling refunds, resigned Wednesday, September 10th.
Harper and Kahn reportedly stayed behind in Ft. Walton Beach after a limited number of employees were invited to relocate to the new home office in Muscle Shoals, AL. Not receiving a paycheck and a lawsuit from the landlord over nonpayment of rent are likely factors in their abrupt departure.
One commenter on Blue Mau Mau wrote:
The last attorney left is Lou. Is he even allowed to practice law in the state of Florida or Alabama?
With all of the legal issues Cuppy’s is facing, perhaps it should have been high on Cuppy’s priority list to at least pay their attorney his paycheck.
What do you think? Are there any Corporate employees left in Florida? Did the Alabama “Dream Team” get paid? Share a comment below.
LA WEIGHT LOSS: Widespread Closures, TX Centers Closing 9/26
September 9, 2008
(Source: FranchisePick.Com) Also read: LA WEIGHT LOSS: Widespread Closures Reported Across the Nation, LA WEIGHT LOSS: The Closings Begin, LA Weight Loss Rumors: What Have YOU Heard?
Over at WEIGHT LOSS COMPLAINTS, Suzy reports:
Just another FYI - The Temple, TX center closed last month and the Waco, Killeen, and College Station, TX Centers are due to close on September 26th.
Thanks, Suzy It’s been added to the list of LA WEIGHT LOSS closings.
See the unofficial*, updated LA Weight Loss store closing list here: LA WEIGHT LOSS CLOSING
* LA Weight Loss chooses not to comment on store closings, past present or future
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QUIZNOS: Saratoga Franchisees Call it Quits
September 8, 2008
According to the Saratogian, multiple factors prompted the owners of a the Saratoga Springs Quiznos to close the store’s doors, from competition to nearby roadwork to Quiznos corporate’s mark-up of required purchases. The franchise had been open for about 2-1/2 years, but locked up Friday, posting the dreaded sign: ""Thank you to our valued customers, but due to economic hardships beyond our control we are now closed." According to the Saratogian:
"We tried to make it through the track season," said Dan Warren of Saratoga Springs, part of a four-person ownership group. "September is one of the slowest months of the year, so it was time." Other owners are Rob Tecler of Saratoga Springs, Mike Beshara of South Glens Falls and Neil Rinehimer of Jupiter, Fla.* * * * *
"It’s probably everything," Warren said about the reason for the store’s closing. "There’s a lot of competition in Saratoga Springs. Plus, our location was a poor location. They’ve been doing road work out front for the past six months. That cut our sales in half."
* * * * *
Warren said that store owners are required to buy products from Quiznos at above-average prices. Similar complaints were made in a Wisconsin lawsuit that says Quiznos licensing agreements compel franchisees to buy all their supplies - from sandwich meat to paper towels - from Quiznos-owned vendors that charge higher prices than those of independent suppliers. The New York Times reported the corporation receives millions of dollars in rebates from these vendors. Quiznos has been the target of several lawsuits related to its treatment of franchisees, according to the Web site Wikipedia.org. A New Jersey lawsuit relates to the $25,000 in licensing fees Quiznos charges its franchisees. The lawsuit contends that Quiznos often collects and pockets this fee without fulfilling its obligation to find store locations.
* * * * *
Warren said that he and partners also purchased rights to open a Wilton Quiznos, but didn’t pursue it because the Saratoga Springs store didn’t perform as well as they had hoped. Last year, a Quiznos store owned by Steve Baker on Route 50 in Ballston Spa closed. That site is now occupied by Russell’s Deli.
* * * * *
Roger Sharp of Saratoga Springs owns Quiznos stores in downtown Glens Falls… "Both of my stores are making money," he said. "The season in Lake George, considering the weather, wasn’t that bad. We had so much rain this year." Despite their profitability, Sharp said that his stores are for sale… With more than 5,000 U.S. shops, Quiznos is the country’s second-largest submarine sandwich shop, but still much smaller than industry leader Subway.
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CUPPY’S COFFEE: Interview With Franchisee Rick Noem
September 4, 2008
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Interview with Cuppy’s Coffee Franchisee Rick Noem, Ft. Collins, CO
Franchisees Krista and Rick Noem paid $125,000 to for the Fort Collins, Colorado Cuppy’s Coffee franchise and as a downpayment for construction of their Cafe from (essentially) Cuppy’s construction arm, Elite Manufacturing. Their American dream quickly turned into a nightmare. To date, they have lost more than $200,000 and are in a financial crisis.
UF: What’s your background? What were you doing prior to owning your franchise?
Rick: Krista has been in the fast casual restaurant management field for 21 years. I have managed Pizza Hut, Einstein Bros Bagels, Long John Silvers, Jack in the Box and Wendy’s. I was looking for an opportunity that would allow me to work for myself to benefit our family rather than give it to another company. Rick is an analyst for IBM with an MBA in Technology Management.
UF: When did you decide you wanted to own your own business? Describe the process you went through to determine which franchise to buy.
Rick: We decided two years ago to start looking into the world of franchising. We actually signed with a company called Saint Cinnamon out of Toronto in September of 2007. In January of 2008, we severed our relationship with that franchise due to Saint Cinnamon making significant changes to our contract that would have crippled us right out of the gate (so we have a really bad track record on picking franchises). We had to find another concept that would work in our 2000 square foot space. (Lease was signed in October of 2007). In February of 2008, I was contacted by Ken Massie (no longer with Cuppy’s) about their concept. I flew to Florida on February 10, 2008, to see the operation. I was impressed with the product and knew it could surpass Starbucks and some of the other major coffee brands out there. It took us about a month to do our homework. There were two locations in Colorado open or soon to be open. We spoke to both franchisees (who both had a few minor construction delays) but who were overall thrilled with the concept and the product they were serving. We did see all the negative blogs, but really thought this was due to Java Joz’, and that Cuppy’s was/is going to be a great up-and-coming company.
UF: Describe the company’s sales process and your interaction prior to becoming a franchisee.
Rick: We ended up signing our franchise agreement on March 24, 2008. Ken Massie and other key players were calling me several times a day to check on my progress, answer any questions we had and really made it seem like there was going to be a strong communication network between franchisor and franchisee. While the phone calls were getting old, it comforted us knowing that they would always be there for us.
UF: How was the company’s training and pre-opening support. Was it a positive experience?
Rick: We returned from Cuppy’s Coffee College on August 8, 2008. It was a great experience. Everyone seemed knowledgeable about the product and were very enthusiastic about getting us up and open for business. We felt the training program was sufficient but after training everything ended abruptly (support/communication).
UF: When did things start to go wrong? What was it that made you an unhappy franchisee?
Rick: In May of 2008, I advised Cara (our FSM) and Theresa (Elite) that I was running out of capital to get me through the build-out process. I was advised that if I was approved as a franchisee, I would put 50% down, Elite would in house finance the other 50% as well as obtain an equipment leasing package to come up with working capital. After I put the 50% down, none of the other promises materialized. I made it clear to everyone when I signed that they were getting everything we had and there was no more where it came from. I was assured by Steve Wesolowski (finance department) that it was a done deal. We have gone through many different banks and capital companies trying to obtain additional working capital to no avail. I went to Florida on June 27th and confronted Theresa St Clair, Dale Nabors and the Greg Rynearson (new president of Elite) and told them once again that we were out of funds and rent was to commence on June 28th and that we were not happy with how long it was taking the architect and engineer to complete our plans. Rick and I scraped up enough money to pay our rent and loan payments (totaling $9200 a month) for June, July and part of August. I was assured that we would work something out with Dale. He made many statements to me about talking to my landlord to have rent postponed for three months and tacked on to the back end of the lease. My landlord was not willing to go for that because the delays were not due to him but to Elite and the architect and engineers of the project. In April of 2008, we provided Elite with a full set of plans (we had them completed when we were doing the other concept) and all that needed to be done was the Cuppy’s dress and engineering. It took us until July 11th to receive the first set of plans. They were a joke. The architect added doors and walls where there were no plans for them. It took an additional three weeks to get a set of plans that were good enough for my landlord to get to the city. He still had to redline some changes but they were pretty minor. The final plans arrived to my landlord two days before we left for training.
UF: Have you tried to resolve your issues with the franchisor? What was the outcome?
Rick: All we get from the franchisor are empty promises of phone calls and follow-up. They are great about talking the talk when you are face to face but it is not long before you realize they are just blowing more smoke.
UF: What is your current situation? What would you like to see happen at this point?
Rick: We are broke, can’t pay rent ($6000 a month) or loan payment ($3000 a month). We want our money back so we can stop the bleeding and try to get closer to being able to pay off all the debt occurred at Cuppy’s expense.
UF: Do you think that the franchise concept is a viable? Under what conditions?
Rick: I think Cuppy’s has a great product and could make a name for itself once it has a sound infrastructure in place. I feel Dale started with good intentions but really didn’t know what he was getting himself into when he purchased the company. If Dale can rectify the situation with all the unhappy franchisees, and build up the infrastructure to support new stores, we think he can turn this around. Whether this happens or not is yet to be seen. I would not invest money with this company as it stands now, until its intentions can be ascertained.
UF: What mistakes did you make? Looking back, what would you have done differently?
Rick: We jumped into Cuppy’s after our landlord made it very clear that even after our Saint Cinnamon effort failed he was going to hold us to our lease. We were pressured by our landlord to get something in our space quick. Cuppy’s came along, gave us a great song and dance and we jumped. They were so upbeat, and the interview process with them made it feel like we had to say the right things for them to consider us, like we were interviewing for the right to be a part of this company. This gave them more credibility. Again, I feel strongly that while we are guilty of jumping in too fast, Cuppy’s is guilty of misleading current and potential franchisees. They were making promises to close the deal. The money we gave them is gone. Dale told us on two separate occasions that he is personally responsible to us for that money, and that he will do what it takes to make good on it if he was unable to secure financing for our store. We need him to make good on that so we can attempt to repair the damage done.
UF: How has your franchise investment decision affected your life?
Rick: We had hopes of opening several locations. We wanted to make enough money to help put our five children through college and pay off our debt so we could enjoy our retirement years. Now we will be working to replace money taken from our 401K and stock sale so we can set a time for retirement (probably ten years later than previously planned). Once we settle with Cuppy’s, we still have to come up with a plan to help us sever from our lease without having to file bankruptcy or lose our house altogether. We do not know how this is going to turn out. We have contacted people to keep theirs eyes open for anyone looking to rent in this area. Hopefully we can find someone to take over this lease, which is going to be a huge money-maker. I am just sorry that money will not be coming our way. This will haunt us for many years to come.
UF: What advice would you give to prospective franchise owners? What questions should they ask? What warning signs should they look for?
Rick: If someone offers you a “free-franchise”, remember the old saying. “You get what you pay for”. They are great at wining and dining you until you sign and then the honeymoon is over. We paid nothing for the franchise, and that is exactly what we got back from them. Investigate prior lawsuits and blogs. Take these blogs seriously, and contact the writers to get more information, I wish we had. Had we known all of this six months ago we wouldn’t be where we are today. We did our homework. Even though I called the references provided to me by Cuppy’s, I also talked to franchisees who were already open in our area. They were happy with the company.
UF: Have you heard the allegations that Cuppy’s Coffee franchisees may have been paid to give positive references?
Rick: I just recently learned that.
UF: Thanks, Rick
Rick: Thanks for listening.
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