CUPPY’S COFFEE: AAFD Not Getting Its Share of the Spoils

It looks like the AAFD won’t be getting a share of the blood, sweat or tears of Cuppy’s Coffee franchise owners unless they extract it themselves.

Like many of the Cuppy’s Coffee employees fired after Dale Nabors bought the company, the American Association of Franchisees & Dealers (AAFD) surely misses the good old days when previous owner Morg Morgan cut them in on a share of the plunder.  In 2007, Morg Morgan’s Cuppy’s Coffee paid the AAFD what’s been called a  "considerable sum of money" in exchange for an AAFD fair franchising award, for the ability to be paraded on stage at the AAFD annual franchise fairness-festival, and for AAFD Chairman Bob Purvin’s defense of the organization despite widespread complaints and indications that Cuppy’s Coffee was engaged in fraudulent, unethical and likely illegal franchise practices.

Once it was clear that the new owner was not going to continue to pay the rental fee for the AAFD’s halo of fairness, the AAFD boldly suspended its fair franchising status. 

In Janet Spark’s interview with new owner Dale Nabors, Nabors outlines what it would cost Cuppy’s Coffee to be named a fair franchise once again and for a place in the chorus line on the AAFD stage:

-  The AAFD wants $100 per location the first year and the $300 per unit the second and third years, to run the Cuppy’s Coffee "independent" franchisee advisory council.

-  The AAFD wants to receive 1.5% of all purchases made through a buying co-op that it would form and administer.

-  The AAFD wants the exclusive right to mediate for franchisee disputes… at $350 an hour.

Janet details Dale Nabor’s reaction to Bob Purvin and the AAFD’s demands:

Suspension of AAFD Contract Accreditation:  According to Sparks:  "Nabors said the franchise agreement is as fair today as it was when Purvin’s group approved it. He said nothing had changed there."  The AAFD’s accreditation award was supposedly based solely on the fairness of its franchise contract, but was suspended because Purvin’s calls were not being returned and Nabors was not rendering unto the AAFD that which was the AAFD’s.

AAFD-Run Advisory Councils:  "After doing the math, Nabors said he just didn’t want to commit the franchisees to that expense. Besides, he added, he had already started his own franchisee advisory council to get feedback and share it with other franchisees. "

AAFD-Administered Buying Co-op:  "’To increase the cost of the products to the franchisees so that the AAFD could earn a percent and a half was not what I felt was in the best interest of the franchisees, so I said no.’ Nabors saw no need to have AAFD manage the cooperative."

AAFD Mediation:  "He said they have used [the free mediation program of the International Franchise association] and it worked successfully for them at no cost. He concluded on the subject, ‘So it came back to whether I wanted to commit to $350 an hour for an unknown number of hours to Bob Purvin or AAFD when I could get the same service rendered for less money or no money.’"

AAFD’s Real Interest in Cuppy’s Coffee:  "I understand the AAFD’s business model. I understand that even though it’s a non-profit organization they do have employees who make good money…. Bob Purvin and I had a three hour conversation about a month ago where I was constantly being asked for my support. And the support came down to economic support. I made the decision that at this time it was not the best utilization of the company’s money to pay the AAFD.""

So it looks like Cuppy’s will have muddle through without thier now-discredited award.  It looks like the AAFD won’t be getting a share of the blood, sweat or tears of Cuppy’s Coffee franchise owners unless they extract it themselves.

It looks like Nabors is more interested in running with the big boys at the IFA… who at least are good at what they do.

3 thoughts on “CUPPY’S COFFEE: AAFD Not Getting Its Share of the Spoils

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  • September 8, 2008 at 4:38 pm
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    It is all in your perspective —from where you stand!

    From where I stand, this is all pretty disgusting stuff.

    Hard for me to undestand how Robert Purvin, who wrote the book, Franchise Fraud, and who wrote his public comment #79 to the Federal Trade Commission in 1997, is the same man. In this comment he very clearly indicates that the FTC regulated franchisors to protect them from common law fraud charges from failed franchisees who would not receive true disclosure of the risks involved in the investment from the franchisors or from the government.

    Surely! Robert Purvin understands that a “fair contract” accreditation will be used by the franchisor to sell his franchise to the public. Surely! Robert Purvin understands that the FTC Rule protects franchisors and allows them to sell their franchise to the public at any degree or risk of failure or unprofitability. Surely! Robert Purvin understands that the disclaimer of AAFD and the franchisor is overlooked because the AAFD Accreditation and the SBA Franchise Registry status, and the FDD, all work to legitimize the franchisor and give him credibility in the eyes of the prospective buyer of the franchise.

    If I asked Robert Purvin – What is the good of a fair or fairer pre-sale contract for a franchise that has a high failure rate or low or now profitability? — what would he say? Obviously, franchisees wouldn’t care about a fair contract if their purchase of a franchise resulted in success and profits. The experience of the Cuppy’s franchisees who dealt with the AAFD demonstrates the inability of the AAFD to overcome the “cancer” of selling franchises to the public without disclosing the true risk of the purchase to the new buyers.

    Everyone gets to eat off of the flesh of franchisees, whether successful or failed franchisees, and the AAFD wanted their share. The IFA, of course, has more raw power to protect Dale Nabors and Cuppy’s since they have had so much to do with promulgating the law surrounding franchising. The IFA and the BAR are close partners.

    The public policy that has been developed to protect franchisors and their franchisees who stand from those who fail has worked to produce a great deal of pain and destruction. Probably, the worst destruction has been in the capture of law and process to achieve the “greater good” through immoral means!

    Just what did Robert Purvin feel that he could do for the Cuppy’s franchisees whose deposits were diverted? He knew, with certainty, that he couldn’t help frnchisees who had already failed, but yet he did allow Cuppy’s to use their accreditation to sell new franchises to the public because this was to his advantage.

    Is this the same man who wrote Franchise Fraud and Public Comment #79 to the Federal Trade Commission in 1997?

  • September 8, 2008 at 7:02 pm
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    Is this the same man who wrote Franchise Fraud and Public Comment #79 to the Federal Trade Commission in 1997?
    I think it’s a valid question. And a sad one to ask.
    While the Cuppy’s Coffee debate was raging, he put more energy into song selection and choreography for his convention than he did addressing the mounting crisis Cuppy’s Coffee franchisees were facing.
    These are serious times with serious issues and he’s singing show tunes with Cuppy’s management.
    The AAFD is in crisis itself and reportedly losing money. Purvin, like Morg Morgan did, blames the economy. But do labor unions become irrelevant during tough times? They become more needed than ever. they are valued because they stick up for their members. They advocate, not mediate.
    Unfortunately, the Nabors reaction to the proposed mediation is revealing. The AAFD has become a watered down version of the IFA.

    From Franchise Times
    http://www.franchisetimes.com/content/story.php?article=00924

    “Bob Purvin began the annual meeting of the American Association of Franchisees and Dealers with a phrase nobody ever wants to hear. “This has been a tough year,”

    “Membership and its budget were flat last year for the first time in five years.

    “After five years of 20-percent average annual membership growth the number of members were flat this year, along with the organization’s revenues. And, Purvin said, the association is “not showing positive cash flow.”

    “Purvin blamed the problems on the economy…

    “In particular, Purvin said, the AAFD lost two large associations…. The loss of those two associations offset any increase in the number of association members.

    “‘We’re tertiary organizations,” Purvin said. “We’re not as high (a priority) as the essentials. We’ve had good retention and good growth. We’ve just seen some associations go away.'”

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