CUPPY’S COFFEE: Interview with Franchisee Mike Herber

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Name: Mike Herber

Location: Richland, WA

Franchise: Cuppy’s Coffee & More

Summary:  Mike Heber decided to open a Cuppy’s Coffee franchise in Richland, WA.  He paid a $32,000 refundable deposit to Elite Manufacturing (the construction affiliate of Cuppy’s Coffee).  The deposit was to be returned if Elite’s lenders were not able to secure financing for the rest of the investment.  When Heber was unable to obtain funding, Elite refused to return $15,000 saying they had paid the $15K franchise fee to sister company Cuppy’s Coffee.  Elite agreed to pay $1690 per month for 10 months, but made fewer than half the payments before cutting off communication with Heber.

In this interview with Unhappy Franchisee, Mike Heber describes the process he went through in investing with Cuppy’s Coffee and the unfortunate outcome of that decision.  Mike Heber also offers advice to help prospective franchise owners avoid the same mistakes he made.

Unhappy Franchisee:  What’s your background, Mike? What were you doing prior to owning your franchise?

Mike Heber:  Prior to this mistake, I worked in retail for 25 years as an Operations/Expense/HR regional manager.

Unhappy Franchisee: When did you decide you wanted to own your own business? How’d you learn about the Cuppy’s Coffee franchise?

Mike Heber:  I’ve always thought about having my own business. My father’s family was in business for themselves and it always was attractive to me. I was just waiting for the right time and opportunity. I looked at several different opportunities after I got out of retail. Many were so expensive though.

I believe I found out about the opportunity from an ad I saw in a franchise information site. It listed all types of franchises and their investment, etc. I was immediately drawn in by their attentiveness toward my contact them, promptly returned calls, VERY friendly staff and fellow franchise holders, lots of information from corporate. Cuppy’s seemed like a more reasonable investment. They were just getting off the ground, so it seemed that the time was right.

Unhappy Franchisee: What really sold you on Cuppy’s Coffee?

Mike Heber:  I was attracted by their openness and willingness to communicate and pass along information. Everyone was very friendly and went out of their way to help and answer questions.  I  began talking with a tenured franchisee who was very nice. Welcomed my questions and had a very favorable answer to every inquiry. I talked with Theresa St. Claire at Elite several times as well; again very nice…at first.

They seemed very approachable and helpful; all this BEFORE they got my money. Everything changed after that.

Unhappy Franchisee: So when – and how much – did you pay them?

Mike Heber:  I paid $32,000 in October 2006; this was stated to be an advance deposit for my Elite build-out of a Cuppy’s Café.   By making this deposit, my $15,000 franchise fee would be "waived" and paid for by Elite.

Unhappy Franchisee: Did things change once they had your deposit?

Mike Heber:  Everything was positive, until my project went to Funding Solutions for credit approval. Soon after I sent in my deposit and my project went to Funding Solutions things started to go downhill. No calls returned, no information, things slowed way down, more “problems” and “challenges” appeared.

My credit and funds available never changed from the time I first started communications with Elite/Cuppy’s. Soon however, they wanted more down than my P.O. stated and it went downhill from there. They admitted mistakes were made in my paperwork, and things just unraveled.

Unhappy Franchisee: So then you asked for you "refundable" deposit to be refunded, as agreed?

Mike Heber:   Yes.  Originally, Elite had said that with that the $15,000 Cuppy’s franchise fee would be "waived" and paid for me by Elite.   However, when my “deal” fell through, they said $15,000 of the $32,000 was paid to Cuppy’s as the franchise fee and was not refundable under any conditions. Beginning in May 2007, they agreed to pay me $1690 a month for 10 months.

As part of that agreement, I had to agree not to say or write anything negative about Cuppy’s Coffee, Elite Manufacturing, or any of the people involved.

Unhappy Franchisee: Did Elite Manufacturing honor their agreement?

Mike Heber:  It has now been 16 months and I have only received a little under half my money back.

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

Mike Heber:  I want the rest of my money back; this, as with many other investors, was my life’s savings. All I want at this point is to get my money and for the business to dissolve.

Unhappy Franchisee: How has your franchise investment decision affected your life?

Mike Heber:  I’m frustrated, very angry, and now totally disillusioned with the American Dream, government’s ability to protect innocent people from these scams and what a contract means (basically nothing, if from a business).  I never expected to get ripped off and taken advantage of such as I did with Elite. Why they have been able to continue this scam and deceit is beyond me.

Unlike some, I haven’t lost my home. I have however suffered a separation and divorce through the ordeal and my son has been unable to go to college because the balance has not been returned to me. The decision to join the Cuppy’s/Elite family has only had negative consequences on my life.

Unhappy Franchisee: What mistakes did you make? Looking back, what would you have done differently?

Mike Heber:  I did some on-line inquiries, but at that time, Fall 2006, not much negative had happened that I could find. I even visited a franchise owner in Arizona. Everything seemed too good and I should have followed my instincts to maybe walk away from this opportunity that seemed too good to be true.

Unhappy Franchisee:  What advice would you give to prospective franchise owners?

Mike Heber:  Research, Research, Research. Then more research.   Do your homework. Travel and look at several different locations and franchisees. Scrutinize paperwork and documents for any inconsistencies. Ask for franchisee references and question exhaustively.

Unhappy Franchisee: Thanks for your time and your insights, Mike.

Mike Heber:  Thank you.

 

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4 thoughts on “CUPPY’S COFFEE: Interview with Franchisee Mike Herber

  • September 25, 2008 at 4:33 pm
    Permalink

    Just curious if anyone knows the status of everything? This is my first posting. I am one of the people that have been scammed by these people. I am a 100% disabled veteran and I had an insurance annuity that I cashed in to pay for the down payment. I was told that I was in the top 5% of the people they have worked with as far as being able to qualify for a loan. I gave them my down payment of $37,500 and about a week later, I was told I did not qualify and was sent to a specialist and if I paid them $2,000 they could get me financed. After about a month, they could not get me financed either. I requested my refund and was told that they did not have my money, but they would pay me back monthly. I even signed a contract because I felt like this might be the only way of getting my money back. That isn’t happening either. Not sure where to go at this point. If anyone can advise, I would certainly appreciate it. My annuity was set up to pay me monthly. Since it is gone, I cannot pay my bills.

  • September 26, 2008 at 2:06 pm
    Permalink

    Ex-Employees:

    It is now the 26th and I know that I have yet to receive my final check and make the assumption that no one else has either. Below is a list of contact information and steps for filing the necessary complaints (If you haven’t already done so):

    1) Contact the US Department of Labor (www.dol.gov) and file a complaint. The phone number is (866) 4-USWAGE.

    2) Once you have made contact with them and advised our situation they are going to provide you with contact information to the local office that is closest to you. (Make sure that you notate the date and time that you contact them. If more than 3 business days passes after leaving a message for your local office, contact the US Department of Labor once again and they will directly forward your complaint information to the nearest office.) The Jacksonville office is the one that is closest to us. Their contact info is as follows:

    Jacksonville Area:
    USDOL, Wage and Hour Division
    ESA Wage & Hour Division
    Charles E. Bennett Federal Building
    400 West Bay Street, Room 956, Box 017
    Jacksonville, Florida 32202
    (904) 359-9292
    (904) 359-9279 (Fax Number)

    3) Because we have not been paid it is assumable that Dale Nabors did not take it upon himself to pay the government on the money that we are owed either. You can contact the IRS Tax Fraud Unit at (800) 829-0433. They will direct you to either send a letter to them or complete and mail IRS Form 3949A. Below is a link to the IRS Form 3949A. I have completed this form and have included the letter that was received from ACC in regards to the termination of their relationship with Medina as well as the emails that Ms. Hiller sent out to us. The address to mail the form to is:

    Internal Revenue Service
    Fresno, California 93888

    http://www.irs.gov/pub/irs-pdf/f3949a.pdf

    Hopefully, this will give Dale Nabors more of a reason to pay us what we have earned outside of the fact that we are rightfully due the money.

  • October 7, 2008 at 9:41 am
    Permalink

    There are so many stories like the one above. My heart goes out to you. I too purchased my franchise from Cuppy’s in late 2006. I was told that if I purchased it before the end of Nov the franchise fee of $15,000 would be paid by Elite. I did my research just like so many others did, including visiting with other owners and going to their sites. I waited until the end of the year to make my purchase. My store opened in July of 2007 (not due to any help from Elite, as I did the finish out myself). We stayed open until March of 2008 when we ran out of money nad had to close our doors. We never came close to breaking even. And now we have filed for bankrupsty. Fortunately we did not lose our home as so many others have. It has caused great stress on our marriage and health.

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