CUPPY’S COFFEE: List of Locations, Status  Here’s the location list from the Cuppy’s website.  I’ve started adding closed locations, and those who paid but never opened. Contribute additions or clarifications with a comment or by emailing unhappyfranchisee[at]gmail.com.

Cuppy’s Coffee Overview   Here’s a central page with links to Cuppy’s Coffee franchisee interviews, stories, documents and information. Direct people here to get them up to speed on the Cuppy’s Coffee story.

CUPPY’S COFFEE, Java Jo’z, Elite Manufacturing, Medina Blogliography  Franchise Pick’s links to Cuppy’s Coffee, Elite Manufacturing, AAFD, & Java Jo’z related posts.

As Richard Solomon and Paul Steinberg say, there is NO budget for enforcement of the ineffective and weak regulatory laws that are on the books, and no strong will by the regulators to enforce the laws against franchise systems because franchise “systems” feed the economy and the special interests. Franchisees, under law, are merely resources for the entrepreneur franchisors who are encouraged by government regulation to prove their ventures with the cheap labor and cheap capital of franchisees.

The Regulatory Capture of the FTC is pretty obvious but this wouldn’t have been possible unless this was the “will” of the Congress and the Department of the Commerce and the Department of the Treasury and the other powers that be.

Personally, I believe the original sin, to begin with, is the regulation of franchising by the federal government. If franchise regulation had remained under state laws, perhaps the UNIT performance statistics of systems would have been mandated under State laws as MATERIAL to new buyers of franchises and there would not be as much “churning” and “fraud” as we have today in franchising, because of the fact that franchisors know they have protection from fraud claims in the courts because of the FTC Rule and their boilerplate contracts.

If prospective buyers of franchises had access to the proprietary unit performance statistics of franchises before they signed on the dotted line, they would give their informed consent to the odds of success/failure, profits or lack of profitability, as demonstrated by other “first” owners of franchises in the system, and second and third owners, etc., when they put their signature to the contract. They wouldn’t feel so “defrauded” when their franchise failed if the real odds had been disclosed to them before the purchase. Of course, conversely, they might not have made the purchase if the real odds of the purchase had been disclosed to them. And, this is why we have federal regulation of franchising.

The “sin” here is in the selling of franchises as the American dream with little risk and in the franchisors being allowed to withhold MATERIAL proprietory unit performance statistics that would indicate the the risk/reward of the purchase of their franchise because of the package of a government disclosure document and a binding “boilerplate” franchise agreement that deems that these statistics are not MATERIAL to new buyers of franchises.

I also would not characterize the AAFD’s open door as any test of commitment to franchisees. I’d rather see money get returned to the rightful owners – the depositers of tens of thousands of dollars – than to the AAFD for a space on the stage at next year’s karaoke contest.

Carol:
I think the Cuppy’s story is a good demonstration as to why pre-sale disclosure and legislation alone will not solve this problem. All of the regulation put in place for presale disclosure was worthless, in this case, because there’s no enforcement.
What good are regulations if there’s no enforcement? The AAFD gives awards for fair contracts but doesn’t seem to concerned about whether they were even given to prospects in accordance with the law. And throughout this whole ordeal, there’s not a peep from the FTC, state franchise regulators, state attorneys general or law enforcement.
Make & Take Gourmet talked about selling unregistered franchises and gave earnings claims in NY business publications and no one bothered to stop them… still haven’t. Nobody’s at the wheel… so why bother to comply?

The Cuppy’s Mess demonstrates the problem with the franchising model itself. Franchisors are encouraged by the status quo of regulation and the law to try to grow franchise chains and under the law, their contracts protect them from franchisees who fail in arbitration and the courts. This emboldens them, of course, and encourages overselling of franchises to perpetuate the franchise system and grow the gross sales of the systems upon which the franchisors realize their profits.

Obviously, Dale Nabors knew that the current contracts would protect him from Cuppy’s Franchisees who failed or would fail in the future, but ENOUGH Cuppy’s franchisees were standing that he thought he could revive the system and grow it in the future.

Obviously, the negative publicity hasn’t helped sales and the black swan of a recession hangs over all commercial activity.

Couldn’t all of “franchise” abuse and exploitation be stopped if franchisors were required to disclosure UNIT historical financial statistics to new buyers? Then, only the viable franchisors would stand in the economy and they would have to compete for the cheap labor and cheap “venture” capital of prospective franchisees to grow their brand chain systems?

Carol

Dales Nabors famous last words…

Believe (my lies) And Succeed (in going broke)

Just exactly, what is Sean’s Conflict of Interest in real terms, Michael Webster. Surely you can speak more plainly that this! It’s not like you to want the last word.

If Sean hadn’t given these franchisees a voice and made an issue of this, wouldn’t more prospective franchisees have been put at risk. There is no doubt that the Cuppy’s Website was using the AAFD Fair Contract Accreditation to sell franchises, is there?

It is appearances that count. In retrospect, the easiest way to have disclosed your possible conflict of interest would have been to have “coffee.franbest.com” appear beneath your signature when posting about Cuppy’s or any coffee franchise.

There’s nothing to disclose. I’m currently making my living blogging and if links in the sidebar under a list of my sites isn’t full disclosure, I’m not sure what you want.

Eventually, conversation on BMM like many forums ends in character assassination and that’s why people come for a while, participate, and then leave. If you think the points I make and made – and all of the evidence I’ve sent your way – are on par with Paul’s fantasies, that’s fine.

The fact that I don’t work for any coffee company currently – and that none would hire someone to sink Cuppy’s when they’ve done such a fine job on their own – is probably not worth bringing up.

However, I believe that Paul’s comments on BMM about disclosing competing interests are relevant.

Sean knows what his client list is, but to maintain objectivity, when you have a pro franchisor X site, and you are commenting on a franchisor, it is appropriate to mention or raise your possible conflict of interest.

The appearance of a conflict is what matters. And, conflicts of interest are not simply the province of attorneys.

I will say that I believe, on the evidence provided so far, that Paul’s assertion of a secret campaign by Sean has as much plausibility of Sean’s assertion that Purvin is somehow in bed with fraud artists.

But, as Sean is finding out, it is very difficult to refute such suggestions – especially when made by a talented attorney like Paul.

I have personally come to no conclusion about Paul’s suspicions – except to note that it would have been more appropriate for Sean to have fully disclosed the coffee blogs earlier.

Unfortunately, for Sean, his valid criticisms of the AAFD, and there certainly are some, may well be lost in a general “Sean is a hypocrite” mood.