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David Morgan, a disabled Vietnam veteran and a former policeman, and his wife Lisa dreamed of owning a business in Pensacola to help fund their retirement years. After researching on the Internet and visiting their home office, they cashed in an annuity and gave Elite Manufacturing a $37,500 refundable deposit toward a Cuppy’s Coffee franchise. They were told that in the highly unlikely event their funding did not come through, their downpayment would be returned to them. Unfortunately, their dream of cafe ownership turned into a nightmare as Elite failed to secure them financing, and has refused to return their $37,500 or even return their calls. The Morgans have been told that their money is gone.
UF: What’s your background, David? What were you doing prior to getting involved with Cuppy’s Coffee?
David: I am a Vietnam veteran working part time as a substitute teacher. A car accident ended my career as a police officer, leaving me 100% disabled. Prior to that, I was in restaurant management. My wife works for a local company.
UF: When did you decide you wanted to own your own business? Describe the process you went through to determine which franchise to buy.
David: My wife and I thought it would be a good retirement investment. We looked at several possibilities, made some phone calls, and Cuppy’s sounded like the best one.
UF: What did you find appealing about this type of business?
David: Coffee shops were going up all over our city and seemed to be doing very well. There is no Cuppy’s in Pensacola, so we thought it would be nice to bring in something new and different.
UF: How did you first hear about your specific franchise? What attracted you to the company?
David: We found the company through a franchise website on the Internet. It was a local company and the people you talked with made it sound like a new, but fast growing business.
UF: Describe the company’s sales process and your interaction prior to becoming a franchisee/ depositor
David: In the beginning, they couldn’t have been more helpful. We went to Ft Walton Beach and were given a tour of the business and everyone was so upbeat and excited about us being there. We were told that they had a “special” going on with Elite and if we gave them $37,500.00 before the end of October, we would not have to pay the franchise fee. We asked what would happen if we couldn’t be financed and were told that the contract we would be signing had a clause that stated we would get our money back if financing was a problem. We went through their pre-approval for a loan and were told that we would have no problem getting a loan. So we gave them the money.
UF: What marketing and promotional guidance, programs & support were provided? Were they effective? Why or why not?
David: We were told that once we gave them the money, we would be contacted by every department within the company. We were not. When we asked why no one was calling, we were told that they would not be in contact with us until after we got our financing, which never happened.
UF: When did things start to go wrong? What was it that made you an unhappy franchisee?
David: Things started going wrong the minute we couldn’t get the financing. Every time we called to talk to them, they were unavailable. We would leave messages or e-mail them. Occasionally, we would get a response, but it would just be another lie.
UF: Have you tried to resolve your issues with the franchisor? What was the outcome?
David: I have been trying to resolve the issue since January 2008. I sent in all the requested paper to prove that I had done everything possible to get financed and failed. I talked to Danny Jones and at first he was trying to say I couldn’t get my money back. After many heated phone calls, he said the company did not have the money, but if I signed a contract, they would pay me back in installments for 3 years. I consulted an attorney and was told that I should sign it. In doing so, I was not allowed to discuss the matter with anyone. I am 100% disabled and cashed in an insurance annuity to give them the down payment so I felt like I had no choice if I wanted to get my money back. The payments were to begin on May 1st. On or around May 15th I received a payment. There was no payment in June, but I did get one in July. I have not received any payments since then and all my calls and e-mails are being ignored. They were the ones to breech the contract on the very first payment, it was late. Since we needed the money back, we played their game hoping for our refund. This didn’t happen. At this time, I have sent in complaints to several government agencies that are investigating the company.
UF: What is your current situation? What would you like to see happen at this point?
David: My family and I are not doing very well financially. We are struggling every month to pay the bills. I would like for the company to admit their wrong doings and give back the money that they owe to myself and the other people that trusted them.
UF: Do you think that the franchise concept is a viable? Under what conditions?
David: I think that if you do a lot of research and have money to invest without putting yourself in financial trouble, there are some companies out there that are worth the investment. Cuppy’s Coffee is not one of them.
UF: What were the positive aspects of your experience?
David: There were NO positive aspects.
UF: What mistakes did you make? Looking back, what would you have done differently?
David: I guess believing in people was our first mistake. They made you feel like “part of the family” until they got your money. After that, nothing mattered to them. It didn’t matter if you called and told them you are losing your home or filing bankruptcy, they ignored your calls or e-mails. If they did answer, you were told another lie. I never thought to look on the Internet and research the company. I had no idea that I was not the only one that had thousands of dollars taken from them by this company.
UF: How has your franchise investment decision affected your life?
David: As I said earlier, I am 100% disabled and I gave these people my life savings to start a business. I have no desire or the funding to try to start another business.
UF: What advice would you give to prospective franchise owners? What questions should they ask? What warning signs should they look for?
David: Do a lot of research. Just because a company can flash a trophy from some place like the AAFD, doesn’t make it a good company. Don’t let them pressure you into giving them any money up front. Take your time. If it is a legitimate company, they’ll wait.
UF: Thanks for sharing your story
David: Thank you.
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