Disturbing Allegations About Cuppy’s Coffee Franchise All Too Familiar

(FranchisePick.Com) In 2007, Cuppy’s Coffee disputed allegations that it was collecting refundable franchise deposits and refusing to return them by blaming its predecessor, Java Jo’z. Disturbingly similar allegations are spreading in 2008.

It’s deja vu all over again: Prospective franchisees give a drive-thru coffee company large, refundable deposits ($30-$40K) while they try to secure funding and/or real estate. When they are unable to do so and return for their “escrowed” funds, they are told those funds are no longer available.

The first wave of franchisees (which included Ben Scoble, brother of A-list tech blogger Robert Scoble) had given their money to a company named Java Jo’z. When they returned for their money, the name in the logo was “Cuppy’s Coffee.” They were told that Cuppy’s Coffee had bought assets – but not obligations – of Java Jo’z. And though the Cuppy’s execs looked strikingly similar to the execs of the evil Java Jo’z, the new Cuppy’s Coffee was even given an award by the American Association of Franchisees & Dealers for how fair it was going to be.

But now it’s 2008, and all-too-similar allegations are arising. This time, it about Cuppy’s Coffee and Cuppy’s affiliate, Elite Manufacturing. Here are some of the allegations surfacing on the ‘net.

See: LIST OF RECENT CUPPY’S COFFEE COMPLAINTS

11/7/2007 Ralcalee; Long Beach, California Source: Rip-Off Report

“My wife wanted to invest in a franchise, so she looked on the web and found Cuppy’s Coffee and More. She filled out the online application and soon Cuppy’s reps were calling her… My wife was very excited and gave a deposit of $36,000.00. Cuppy’s sent us the Franchise Offering Circular and Franchise Agreement. We also filled out paperwork for third party financing (Cuppy’s was to refer us to different finance companies). My wife was not able to secure a business loan. Cuppy’s was not able to get us a loan either. Cuppy’s has held our deposit for over a year now. I believe they knew my wife was not qualified for a loan and still said she was pre-qualified. After reviewing the Franchise Offering Circular I noticed that the $16,000.00 franchise fee was not refundable. We never got the franchise, so why should that apply to us. I also noticed that Cuppy’s never put the rest of the money in an escrow account. Elite Manufacturing is refunding $20,000.00 to us but in monthly installments because of what Cuppy’s did. That was very dirty on Cuppy’s part….CUPPY’S should be ASHAMED of their tactics.”

11/20/2007 Charles Hunter Source: Complaints Board

“Have requested refund of tendered deposit for a build out for a franchise business. A statement on their purchase order agreement states that, if subject to third party financing and return of down payment; “in the event that Purchaser is unable to obtain financing, then this agreement shall automatically terminate, neither party shall have any further legal obligation hereunder and any down payment tendered shall be returned to Purchaser.”
I have requested a refund of down payment due to not getting financing. I have not been given a refund as requested and they admit that I am due a refund, but only offer it in payments of 13 months. I did not send them a loan. I sent down payment which they should return in full. The company representative does not call me back or email me to return my refund of down payment.
“This company is practicing fraud to prospective purchaser’s of their products. They need to be prosecuted and stopped for their illegal practice! Beware all!”

2/8/2008 Rolando BUENA PARK, California Source: Rip-off Report, FranchisePick.Com

2/21/2008 Jls E STROUDSBURG, Pennsylvania Source: Rip-Off Report
02/21/2008 Daniel Suarez FranchisePick.Com

2/26/2008 Steve Tierre Verde, Florida Source: Rip-Off Report

“I too have fallen under the same type of scam by Elite Manufacturing and Cuppy’s. I signed a purchase order with Elite Manufacturing and was pressured into wiring $37,900 to their bank account in order to ’save’ myself from pending increases in the franchise fees and increased build out costs. Elite would pay the franchise fee for me if I wired them the money to thier bank account the next day which I did.

“I was given one day to wire the money which I did on 8-16-07. After working with Cuppy’s on financing and was instructed by the Cuppy’s finance department to enter my current salary on the financial docs and to indicate that I would be maintaining my full time job and current salary in order to obtain the financing. I did do that and after realized that I would be committing fraud.
I notified the finance company that I was withdrawing my request. I contacted a lawyer to mitigate the issue with Elite. Surprising that after 4 weeks my lawyer was able to talk with Elite’s lawyer who just happened to be Cuppy’s lawyer. After several months of phone tag, my lawyer was given a proposal for me to review which was that Elite would keep $15,000 for ‘loss of revenue’ purposes and that they would refund the balance of $22,900 over 20 months.
“Cuppy’s lawyer indicates that they are waiting for final bank approval on many deals and they don’t have the cash to return my refund. I am perplexed that any legitimate corporation persuades the public to furnish them money in the intent that a business partnership may blossom only to refuse to return money that is not rightfully theirs….
“I don’t know what else to do other than to sue for the refund back. The signed purchase order states it is contingent to financing which I did not get as well as within 1.5 months of providing the $37,900, Elite was notified that I wanted a full refund. My purchase order states that a refund will take place. No where does it stipulate that it would be returned in payments. It has now going on 5 months that I have not gotten my money back and Cuppy’s or Elite, is still stalling on doing the right thing.
“I am not a bank and should not be held accountable for funding other franchises for Elite or Cuppy’s. Someone needs to do something about these corporations taking advantage of naive people such as myself.”

02/29/2008 KD Source: FranchisePick.com

03/08/2008 maria Source: FranchisePick.com

“I’m in a similar situation as the others who are trying to get their deposits back from Elite. The only difference – I never signed a franchise agreement. It’s been 5 weeks since I informed Desiree at Elite that I would not be signing the franchise agreement and wanted my deposit back. What do you know – I haven’t heard back from anyone…”

03/09/2008 MJ Source: FranchisePick.com

“…Prior to my visit, my sales rep advised me that I needed to speak with Elite which leads me to red flag #2. I was provided a SOW and Purchase Order for the configuration I’m interested in. I was advised that my deal (including a ‘free’ upgrade package) was contingent on my willingness to purchase a franchise with Cuppy’s and to be a referral for Elite. I told the Elite rep that if I move forward, and Elite exceeds my expectations, then I would be happy to be a referral. I was then told to bring a check during my visit for a down payment toward my buildout. I told the Elite rep that I am still investigating Cuppy’s, and have not made that commitment yet. And, I advised her that I had just received my UFOC that morning, and the ten day requirement had not passed. My Cuppy’s sales rep followed up with me apologizing for Elite’s fast-track tactic.”

3/12/2008 Chip Geneva, Illinois Source: Rip-Off Report

3/13/2008 Robert Source: FranchisePick.Com

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