Comments on: CUPPY’S COFFEE: A Franchise Without a Franchisor http://www.everyjoe.com/articles/cuppys-coffee-a-franchise-without-a-franchisor/ Sports News - Tech Reviews - Entertainment - Life Tips for EveryJoe Wed, 09 Dec 2009 10:43:10 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Carol Cross http://www.everyjoe.com/articles/cuppys-coffee-a-franchise-without-a-franchisor/comment-page-1/#comment-304163 Carol Cross Tue, 03 Mar 2009 17:02:02 +0000 http://www.franchisepick.com/cuppys-coffee-a-franchise-without-a-franchisor/#comment-304163 Alex and Igor! Thank you for sharing your experience with readers of Franchise Pick. Has anyone tried to collect royalties from you since you opened and, if so, where do you send them? I am not an attorney and can't give you legal advice. But, you need legal advice at this point. If you don't have working capital and can't borrow more to see if you can bring your business to breakeven in a year or so, you must start looking for solutions now to cut your losses. Maybe the local SCORE people and some government agencies would put you in touch with somone who could help you pro bono. Good Luck to you! http://w.w.w.unhappyfranchisee.com/2009/02/carolcross/ Alex and Igor!

Thank you for sharing your experience with readers of Franchise Pick.

Has anyone tried to collect royalties from you since you opened and, if so, where do you send them?

I am not an attorney and can’t give you legal advice. But, you need legal advice at this point. If you don’t have working capital and can’t borrow more to see if you can bring your business to breakeven in a year or so, you must start looking for solutions now to cut your losses.

Maybe the local SCORE people and some government agencies would put you in touch with somone who could help you pro bono.

Good Luck to you!

http://w.w.w.unhappyfranchisee.com/2009/02/carolcross/

]]> By: Alex Rekhtman http://www.everyjoe.com/articles/cuppys-coffee-a-franchise-without-a-franchisor/comment-page-1/#comment-304149 Alex Rekhtman Mon, 02 Mar 2009 23:12:55 +0000 http://www.franchisepick.com/cuppys-coffee-a-franchise-without-a-franchisor/#comment-304149 We send our best wishes to new franchisees who opened their stores and to those which could not open due to reasons beyond their control. We just opened our Cuppy’s Coffee store in Los Angeles, CA and are in the similar situation. In November 2007 we inquired about Cuppy’s Coffee franchise and in a few days their representative Sam called us. He gave us a lot of interesting information and a lot of promises. After that we decided to become Cuppy's Coffee franchisees and let Sam know. In a few days we got a call from Elite Manufactures and they e-mailed us proposal and purchase order. They gave us an offer: they would pay $25,000 franchise fees for us and give us first inventory valued $2,000 for free if we wire 20% security deposit in 48 hours. We agreed. After that we started working with their real estate department that found a space for our store on the new shopping mall. At the same time we kept working on our SBA loan and obtaining licenses. When the negotiations with Westfield Management Company (mall management company) started, they requested architectural floor plan to build the white box. All requests that were sent to Elite Manufactures were ignored because as Elite said they would not do anything until they have signed lease agreement. After lease agreement was signed nothing changed. According to lease agreement, our store had to be open by November 1, 2008, but when we tried to reach Elite Manufactures by phone or e-mail, we did not have any response. Nobody answered the phone and the voice mail system did not work. It looked like they were hiding from their clients. Westfield Management Company started building white box and we asked Cuppy's Coffee and Elite Manufacture to communicate with Westfield Management Company regarding Cuppy's Coffee requirements for white box. It had never been done. In the same time we started having problems with our loan. Commerce Bank refused to loan money to Cuppy’s franchisees to protect its clients from Elite Manufactures. The bank did not refuse loan money to us as a corporation though and we had to choose the contractor who we wanted to work with. We chose the local contractor Sturdy Built and architect Aaron Brumer and they completed the job within three months. When they started building the store we had a new expense: to upgrade white box according to Cuppy's standards. This costed us more than $30,000. At that time Elite Manufactures and Cuppy’s Coffee completely disappeared and so did our deposit. Our total lost including deposit to Elite Manufacture, white box upgrade and delays in opening (rent payments) is over $100,000. We had to invest into business all our personal savings. I withdrew money from my pension plan and paid penalty for that. We had to open the store without any training and marketing materials. We greatly appreciate the help that Cuppy’s Coffee in Moorpark gave us in providing training and sharing all necessary information. We also appreciate all help and support from Coffee D’Arte and Dr. Smoothies. Finally, our store opened on February 2, but because of all losses and huge extra expenses we do not have enough working capital. We planned to open the store before Christmas, the best time of the year. Instead of that we opened it in the worst time of the year and during the recession. Our business is slow, rent is high, we don’t have any employees, spend 12 hours a day, 7 days a week in the store, but during the first month did not earn enough to pay even half of the rent, We truly believe that business can be much better, but we need time to let people know us and we do not have this time because Elite Manufactures and Cuppy’s Coffee took our money when we need them the most and caused huge delays in opening the store. We cannot even afford an attorney to start legal action against Cuppy’s Coffee. Please give us advice on what is the best thing we could do in our situation. We highly appreciate any help and suggestions. Our store is located at Westfield Topanga 6600 Topnga Cyn. Blvd. Store #2054 Canoga Park, CA 91303 Sincerely Alex and Igor Rekhtman Cuppy’s Coffee, Smoothies and More on Westfield Topanga We send our best wishes to new franchisees who opened their stores and to those which could not open due to reasons beyond their control. We just opened our Cuppy’s Coffee store in Los Angeles, CA and are in the similar situation. In November 2007 we inquired about Cuppy’s Coffee franchise and in a few days their representative Sam called us. He gave us a lot of interesting information and a lot of promises. After that we decided to become Cuppy’s Coffee franchisees and let Sam know. In a few days we got a call from Elite Manufactures and they e-mailed us proposal and purchase order. They gave us an offer: they would pay $25,000 franchise fees for us and give us first inventory valued $2,000 for free if we wire 20% security deposit in 48 hours. We agreed. After that we started working with their real estate department that found a space for our store on the new shopping mall. At the same time we kept working on our SBA loan and obtaining licenses.
When the negotiations with Westfield Management Company (mall management company) started, they requested architectural floor plan to build the white box. All requests that were sent to Elite Manufactures were ignored because as Elite said they would not do anything until they have signed lease agreement. After lease agreement was signed nothing changed. According to lease agreement, our store had to be open by November 1, 2008, but when we tried to reach Elite Manufactures by phone or e-mail, we did not have any response. Nobody answered the phone and the voice mail system did not work. It looked like they were hiding from their clients. Westfield Management Company started building white box and we asked Cuppy’s Coffee and Elite Manufacture to communicate with Westfield Management Company regarding Cuppy’s Coffee requirements for white box. It had never been done.
In the same time we started having problems with our loan. Commerce Bank refused to loan money to Cuppy’s franchisees to protect its clients from Elite Manufactures. The bank did not refuse loan money to us as a corporation though and we had to choose the contractor who we wanted to work with. We chose the local contractor Sturdy Built and architect Aaron Brumer and they completed the job within three months. When they started building the store we had a new expense: to upgrade white box according to Cuppy’s standards. This costed us more than $30,000. At that time Elite Manufactures and Cuppy’s Coffee completely disappeared and so did our deposit. Our total lost including deposit to Elite Manufacture, white box upgrade and delays in opening (rent payments) is over $100,000. We had to invest into business all our personal savings. I withdrew money from my pension plan and paid penalty for that. We had to open the store without any training and marketing materials. We greatly appreciate the help that Cuppy’s Coffee in Moorpark gave us in providing training and sharing all necessary information. We also appreciate all help and support from Coffee D’Arte and Dr. Smoothies.
Finally, our store opened on February 2, but because of all losses and huge extra expenses we do not have enough working capital. We planned to open the store before Christmas, the best time of the year. Instead of that we opened it in the worst time of the year and during the recession. Our business is slow, rent is high, we don’t have any employees, spend 12 hours a day, 7 days a week in the store, but during the first month did not earn enough to pay even half of the rent, We truly believe that business can be much better, but we need time to let people know us and we do not have this time because Elite Manufactures and Cuppy’s Coffee took our money when we need them the most and caused huge delays in opening the store. We cannot even afford an attorney to start legal action against Cuppy’s Coffee.
Please give us advice on what is the best thing we could do in our situation. We highly appreciate any help and suggestions. Our store is located at
Westfield Topanga
6600 Topnga Cyn. Blvd.
Store #2054
Canoga Park, CA 91303

Sincerely
Alex and Igor Rekhtman
Cuppy’s Coffee, Smoothies and More on Westfield Topanga

]]> By: carol cross http://www.everyjoe.com/articles/cuppys-coffee-a-franchise-without-a-franchisor/comment-page-1/#comment-303978 carol cross Sat, 21 Feb 2009 18:33:37 +0000 http://www.franchisepick.com/cuppys-coffee-a-franchise-without-a-franchisor/#comment-303978 Dale Nabors was "Dear Frannie" on Blue Mau Mau, wasn't he? He always advised franchisees not to invest more than they could afford to lose and to believe and succeed. Did he not follow his own advice, as a franchisor. As you said, what was in his cool ade? Is he a victim or a villian? Really tough on the new owners who are opening and wish them all the best of luck. Will they be paying royalties in spite of the fact that they are getting no support from the franchisor, who is hiding, or what? Interesting legal situation ---but, of course, when franchisors go bankrupt and are reorganized in a Chapter 11, I believe the franchisee's obligations to pay royalties are never stayed. Dale Nabors was “Dear Frannie” on Blue Mau Mau, wasn’t he?

He always advised franchisees not to invest more than they could afford to lose and to believe and succeed. Did he not follow his own advice, as a franchisor. As you said, what was in his cool ade? Is he a victim or a villian?

Really tough on the new owners who are opening and wish them all the best of luck. Will they be paying royalties in spite of the fact that they are getting no support from the franchisor, who is hiding, or what? Interesting legal situation —but, of course, when franchisors go bankrupt and are reorganized in a Chapter 11, I believe the franchisee’s obligations to pay royalties are never stayed.

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