CUPPY’S COFFEE: Interview with Franchisee Daniel Suarez & Jaime Schneider

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Interview with Franchisee Daniel Suarez & Jaime Schneider

October 3, 2008

Overview: In September, 2007 partners Daniel Suarez & Jaime Schneider filled out the applications to become a Cuppy’s franchisee, and sent a $35,900.00 refundable downpayment to Cuppy’s construction affilate (Elite Manufacturing).  Suarez & Schneider claim their application was initially approved and were told to begin searching for a location; shortly thereafter they were told, no, they were not eligible for financing (and were “unapproved”).  They were told that Elite Manufacturing had spent their downpayment, but would pay them a partial refund of $35,000 over 10 months.  After receiving 3 payments totalling $10,500, the payments stopped and their calls were not returned.  According to Suarez & Schneider, Elite Manufacturing still owes them $24,500.00

In this interview with UnhappyFranchisee.com, partner Daniel Suarez shares his story and his due diligence advice for prospective franchisees.

UF:  Thanks for your time, Daniel.  What’s your background? What were you doing prior to seeking a franchise?
Daniel:  I have a computer science background, attended New Jersey Institute of Technology. The last 8 years I have worked in Sales. Currently working for Wachovia soon to be Wells Fargo.

Jaime:  Prior to researching potential franchises, Daniel and I both worked in the automotive industry. We both decided it was time for a change and thought it would be nice to be our own boss.

UF:  When did you decide you wanted to own your own business?
Daniel:  I decided I wanted a franchise after leaving one job and not being happy working for my then present employer. We did lots of research into different industries and come to the conclusion that a Coffee franchise would be with in our budget and would have high probability of success.

Jaime:  We did a lot of research. We decided coffee was the way to go with it being such a popular commodity. After seeing all the accreditations Cuppy’s received we decided to proceed with them.  We were impressed by the awards and accreditations Cuppy’s obtained. They were considered the fairest franchise.

UF:  How did you first learn about the general concept? What did you find appealing about this type of business?
Daniel:  I find the concept of owning a franchise appealing because the difficult part of establishing relationships with distributors, establishing a brand/name recognition, having the startup process established, and having the initial franchise gone though making initial mistakes all done is very appealing. These headaches are a non issue.

UF:  How did you first hear about your specific franchise? What attracted you to Cuppy’s Coffee?
Daniel:  After lots of research and online comparison we selected Cuppy’s because it appeared to have an attractive system that worked. I spoke to present owners and they had good things to say. They advertise awards received. Their prices and cost of ownership were in line with others and the deciding factor was when one of their ‘partners’ (Elite) paid the initial $25,000.00 franchise fee for us if we made an almost immediate commitment.

UF:  Describe the company’s sales process and your interaction prior to becoming a franchisee.
Daniel:  Sales process was smooth and professional. Prompt interaction and great communication. When searching for a franchise location their real state team was very helpful in following thru but sometimes lacking in coming up with locations of their so we did 90% of the searching. No issues with us doing our own looking.

Jaime:  At the beginning Cuppy’s and Elite Manufacturing employees were polite, helpful and energetic. They helped to walk us through each process. After 5 months of working with them, the daily phone calls stopped and when we reached out to them we were told that our financing did not go through after we were already told that we were approved. At that point, we were no longer assisted in any way. They did not care to help us with the refund of our deposit. It was impossible to get a hold of them by phone or email. We went from being the people they spoke to everyday to the people they could not even respond to with an email.

UF:  When did things start to go wrong?
Daniel:  Here is our story in a nutshell: September of 2007 we filled out the applications to become a Cuppy’s franchisee.  We were told we were approved and that we could begin our search for a location.  After 4 months into the process we received a call stating that for some reason we were no longer eligible for financing.
At that time we requested a refund from Elite Manufacturing in the amount of $35,900.00 which was the amount we gave as a deposit for our Cuppy’s drive thru unit. We were told that the process would take anywhere from 4 to 6 weeks.  After the six weeks with no response we again inquired about our refund through Mr. Danny Jones at Elite.
We were offered a payment schedule over a 24 month period to get our money back.  We refused the offer and sought legal advice.  We tried again to make an agreement with Elite and finally decided to sign an agreement that stated we would receive $35,000.00 over a 10 month period.  We did receive 3 payments for a total refund of $10,500.00.  Then the money just stopped coming in.
We made several phone calls to Danny Jones and sent several emails.  I was told by Mr. Jones that they just did not have the money because they were behind with other debts owed.  It has now been 4 months without a payment or response from Elite. We are still owed $24,500.00. Now when we try to contact them there is only a recording you get and no one returns the call.

Jaime:  They were very helpful and positive in the beginning but once they had our money it was as if we did not exist to them.

UF: What is your current situation? What would you like to see happen at this point?

Jaime:  I would like to see the money that is owed to me returned. Daniel and I are out $24,500.00.

UF:  Do you think that the franchise concept is a viable? Under what conditions?
Daniel:  Sure. You need to find the right franchise and ask the right questions. Do a lot of research. It is always a risk but I’m sure with the right franchise it will pay off.

UF:  What mistakes did you make? Looking back, what would you have done differently?
Daniel:  We did a lot of research so I think we did the right thing it that aspect. When doing the research we did fine one (1) posting that was negative about Cuppy’s when it was Java Jo’z. But it was one posting that now has multiplied to scary numbers.

Jaime:  I guess our downfall was not contacting or visiting actual open and running Cuppy’s. We spoke to the references given to us by Cuppy’s…that was pretty silly of us looking back now.

UF:  How has your franchise investment decision affected your life?
Daniel:  Jaime used her entire savings! I took out a 48 month personal loan and refinanced my home prematurely and paid about $6,000.00 (I was only 12 months away from the premature date to expire) in doing so. I am now paying off my loan plus interest and increased my mortgage payment. I know have a ~$700 monthly bill that is towards nothing.

Jaime:  Our lives are affected everyday. My savings of my hard earned money went toward this investment and Daniel took out a loan for the money which he is still paying back. It is unfortunate that Cuppy’s and Elite have gotten away with this. I know that we are not the only ones out there suffering and I just hope that there is a resolution in the future.

UF:  What advice would you give to prospective franchise owners?
Daniel:  Research, research, research! Although, I really do feel that Jaime and I did that and we were still misled. When you read about a franchise receiving awards and accreditations you assume it is a reputable company. That was not the case with Cuppy’s and Elite. I guess you can never be sure but I would definitely tell others to go to the headquarters as well as visit as many of the actual up and running stores and ask questions.

Also, I would strongly suggest a franchise lawyer. We decided not to hire one because our budget was tight. I look back now and highly regret that. However, I also think that a lawyer would have looked over the franchise agreement, taking a look at their reputation as we had done, and given us the go ahead. So, who’s to know what the lawyer would have said.

Jaime:  When you read about a Franchise receiving awards and accreditations you assume it is a reputable company. That was not the case with Cuppy’s and Elite. I guess you can never be sure but I would definitely tell others to go to the headquarters as well as visit as many of the actual up and running stores and ask questions.

UF:  Thanks for sharing your story, Daniel & Jaime.
Daniel:  Thank you.

Jaime:  Thanks for the opportunity.

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