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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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