Franchisee Association Not High on Cuppy's Priority List
Nabors said before he took control, Cuppy's had paid the AAFD a considerable sum of money. But when they approached him about starting a franchisee association, he said although he was open to discussing it he felt it was not the best use of their money. "I believed that at this point and time when we have a number of issues to deal with as a company the money could be better used." He said AAFD wanted $100 per location the first year and the $300 per unit the second and third years. After doing the math, Nabors said he just didn't want to commit the franchisees to that expense. Besides, he added, he had already started his own franchisee advisory council to get feedback and share it with other franchisees.
As far as the AAFD's accreditation award, Nabors said the franchise agreement is as fair today as it was when Purvin's group approved it. He said nothing had changed there. AAFD had added Cuppy's to its roster of companies earning its Accredited Contract status, a recognition offered to new franchise systems, or to new ownership and management teams. It highlights companies whose franchise agreements conform to the AAFD Fair Standards, but lacked operating history to evaluate franchise relationships. AAFD made the decision recently to suspend Cuppy's award.
Additionally, AAFD wanted to set up a buying co-op for Cuppy's, but Nabors said when it does form one it then takes a percentage of the total sales of that buying co-op. "I believe that was going to be a 1.5 percentage," he explained. He said he and Purvin went to great lengths on the issue because he had already established a distribution system for Cuppy's when he was a consultant for them, without having the details on what the company had put together with Purvin's group. "The system I already had put together using a company out of Dallas allowed us to deliver a good product on time at a fair price to the franchisees, and it resolved some of the distribution issues Cuppy's was faced with in the past." He again explained, "To increase the cost of the products to the franchisees so that the AAFD could earn a percent and a half was not what I felt was in the best interest of the franchisees, so I said no." Nabors saw no need to have AAFD manage the cooperative.
The other requirement under AAFD was to allow them to mediate disputes. "I’m certainly open to mediation and it can be very beneficial for both Cuppy's and the franchisees. What I objected to was the $325 per hour--or it might have been $350 per hour--that was paid to Purvin or AAFD." He added, "Because the two are kind of intermingled, it’s hard to figure out who the money is going to for the mediation." And when there are other sources for mediation that are less, Nabors said again he didn't want to commit the franchisees to it.
One source he mentioned was the International Franchise Association, which offered through its ombudsman program free mediation. He said they have used it and it worked successfully for them at no cost. He concluded on the subject, "So it came back to whether I wanted to commit to $350 an hour for an unknown number of hours to Bob Purvin or AAFD when I could get the same service rendered for less money or no money. Bob Purvin and I had a three hour conversation about a month ago where I was constantly being asked for my support. And the support came down to economic support. I made the decision that at this time it was not the best utilization of the company's money to pay the AAFD."
Nabors said, "I would like to believe that AAFD has the best of intentions. And I think that Bob Purvin and Julie are great people." But he again states, AAFD is just not high on Cuppy’s priority list.
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Related readings:
- Cuppy's Speaks Out on Accusations, SBT, AAFD and More
- Cuppy's New CEO To Improve Operations and Meet Refund Obligations
- AAFD Accreditation of Cuppy’s Coffee
- Purvin Justifies Decision to Suspend Cuppy's Accreditation
- FranSynergy Cleans Cuppy's House

Guest writes: "Morg, Brian, Dale, Executive Team, Attorneys, Consultants, Key Players: We need you guys to work together harder and come to some kind of resolution so we can move on. Please use the wisdom God gave you and work this thing out so my family can stop hurting."
I have never seen in print anything more appalling than this post.
Mr. Nabors and Mr. Morgan have engaged in systemically looting the prospective franchisees, misrepresenting illegal earnings claims to the SBA approved lenders to induce them to lend, and stealing funds from buildout loans.
I do not say this lightly, and with full understanding of my duties as an officer to the Court, but Mr. Nabors and Mr. Morgan have some very serious allegations to meet.
Michael Webster PhD LLB
Franchise News
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
Actually, this is an evolving area of law. It depends on the relationship between the owner of the blog and the commentators.
I would be concerned about it.
Michael Webster PhD LLB
Franchise News
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
Michael Webster PhD LLB
Franchise News
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
I don't know about the "liar" and "twit" parts.
But I take issue with the "fop" and "yupster" adjectives.
However, the golden age of Yuppies does provide us the theme song for the upcoming Cuppy's movie (screenplay by Sean Kelly, technical advisor Michael Webster):
Easy choice: Boy George in Karma Chameleon .
Current script has the theme song being cued just as Bob Purvin is finishing his final call with Dale Nabors. There are raised voices filled with hurt and anger, then a soft dissolve to Morg Morgan sitting on that Mexican beach. Suddenly Purvin and Dale pause as the mutual realization floods over them, and the music rises as the screen fades to black and credits roll.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
Guest writes - "and I WILL get my money from these bastards, "come hell or high water."
Reply - What is your plan?
The Truth Shall Set You Free!
TIF
The Truth Shall Set You Free!
TIF
You are a pitiful and pathetic Cowardly Guest Troll.
The Truth Shall Set You Free!
TIF
The Truth Shall Set You Free!
TIF
I will gladly FedEx a tasty Quizno's MeatBall Sub to anyone who can start a comment string on another franchisor worthy of lipstick and replace this 'xxx' month old story.
It's not that I don't feel empathy for the investor franchisees, it's just that other franchisors need make-up too.
Nick Bibby is an international franchise consultant and a program developer dedicated to excellence in entrepreneurship.
Nick Bibby founded BibbyGroup.com, an organization dedicated to franchise and entrepreneurial excellence.
Persons who are creditors of a company which is a prospective BR filer should consult appropriate legal counsel.
In particular, you should review the language and current case law under 11 U.S.C. 547 .
This is of special concern to those "depositors" receiving payments. To the extent that any payments are made while the debtor is insolvent, those may be "avoided" as "preferences."
What that means is that if you got money within 90 days prior to the filing, you may have to pay it back to the Trustee in Bankruptcy-- even if you are genuinely owed the money and took the money in good faith.
Moreover, payments made on account of an antecedent debt owed by the debtor before such payment was made may also be avoidable preferences.
What that means is that if you signed an agreement to be repaid in installments, you might have to give back money you received.
One way of dealing with this is to attempt to structure the money as a "contemporaneous exchange for new value" but if the court feels that there really is no new value, you will be screwed notwithstanding any written document attesting that the debtor and creditor are in agreement that new value was created.
Again, this info is provided for guidance only and if you fall into one of the aforementioned categories you really should speak to an attorney familiar with bankruptcy law.
Of course the salt in the wound for franchisees is that they may have to repay money to the Trustee and then the employees who sucked the franchisees dry will have a priority claim for unpaid wages [11 U.S.C. 507(a)(4)(A) ].
But such is the language of the Code.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
As someone has brought to my attention, related party ("insider") transfers can be avoided with a lookback period of a full year.
So if there is still any money which is not basking on some tropic isle, those former Cuppy's insiders could be forced to kick that in to feed the kitty.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
I am being called by Cuppy's franchisees. Some of them invested around $ 250,000 - simply mind blowing.
I am telling those who call me that I don't see a prospect for collectibility, and for that reason (1) I wouldn't consider even a partial contingent fee arrangement; and (2) I would decline to represent them even for cash in front because I cannot in good faith see $$$ at the end, even were we to win.
They are telling me that other counsel are urging them to file immediately.
If there is a competent litigator out there who can do this on the cheap, please identify yourself, and I'll send these folks to you - assuming I can satisfy myself that you are not just some bozo.--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
A good point.
The unpaid employees lived off of the life savings of franchisees and "depositors" for years. They knew why those phones were ringing off the hook and why franchisees (sometimes with attorneys in tow) were showing up unannounced in Ft Walton.
At that time, Mr. Morgan owned the company.
NOT Mr. Nabors.
Dale is to be faulted for many things and has taken justified criticism on BMM.
But if we are going to commence the post-mortem before the game is over, at least let us put the majority of blame with those who made their livelihood off of this scheme for these past years.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
Um..no.
If I had a bank loan disbursed and no build-out, I would be on the phone to the loan broker in a heartbeat, and followup with certified letters.
Which brings me to a puzzle:
According to Funding Solutions, they were under the impression that all was peachy in Cuppyland. Until Michael Webster began making inquiries in connection with the (much maligned) AAFD investigation, the money was rolling in to Elite and the banks and loan broker say they had never had any indication of possible fraud.
This makes no sense. Either you (and those in your situation) are the most docile wimps on the planet, or those involved in the lending process were warned and chose not to derail the gravy train.
My understanding is that once Webster began sniffing around, one of the SBA loan recipients interviewed by Webster called her loan officer, who promptly froze all disbursements on Cuppy's projects.
After 2 years of money flowing like water, it only took 2 weeks after Webster made the Funding Solutions connection till that company took Cuppy's off of its website and loan recipients began calling their banks and the SBA Inspector General.
So my question for you "Guest" is: When you had the loan money disbursed but got nothing in return, what did you do?
Did you notify the loan broker and bank, or did you listen to the soothing words of the Cuppys/Elite/Medina/SBT/MBT/Emerald/JavaJoz etc. representatives?
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
Unless you are dealing with an unsophisticated person or entity, nasty attorney letters generally are useless and often counterproductive.
On the other hand, a factual attorney letter to a regulatory agency or bank which sets forth the legally-relevant circumstances may be productive.
I would certainly have your attorney contact Mr. Webster, who did quite a bit of research while conducting the AAFD investigation.
As to recovery of monies, it is true that Cuppy's is likely judgment-proof. But there are various legal theories of recovery against other parties, who might have money or insurance coverage.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
The fact pattern really is bad enough to enthuse a prosecutor. The target is too weak to put up much of a defense. Prosecutors like easy fights.
The problem I see is that you may have waited too long to get the real culprits. If there is a Statute of Limitations issue, a prosecutor won't invest the resources. They have to prioretize their task. Easy cases that have juicy headline potential are at the top of their list.
If you really want to get a prosecutor enthused, spend enough money (as a group) to have a really competent attorney put the case together for the prosecutor and just hand it to him on a platter so all he has to do is file it.--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
The attorney who knows the most about it is Paul Steinberg, so you would be way ahead and use your money most efficiently if you hired him to put the case together for a prosecutor.
I have a client who is an ex Florida prosecutor, so the skids might be able to be greased for this if it is done NOW! (The poor bastard left the attorney general's office to buy a franchise)--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
It looks like Medina & Fransynergy are being sued by the former CFO as well:
http://dockets.justia.com/docket/court-flndce/case_no-3:2008cv00457/case_id-51868/
Richard writes: "The attorney who knows the most about it is Paul Steinberg, so you would be way ahead and use your money most efficiently if you hired him to put the case together for a prosecutor."
The idea is a good one, but I daresay that it is unlikely that Paul knows more about this travesty than I do!
Lucky us.
Michael Webster PhD LLB
Franchise News
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
I wasn't slighting you for any merits reason
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
The Federal Court here in Houston just denied Wiireless Toyz motion for summary judgment of dismissal in its entirety.--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Good for you!
Will there be a written decision?
Michael Webster PhD LLBFranchise News
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
there are 14 places left (as of this momrnt) at a wonderful Schramsberg vintner's dinner at The Reef here in Houston on Octobre 1st.
The chef, Bryan Caswell, a protege of Jean George Vongerichten, used to work in our restaurant in Brenham Texas.
I just learnt of it this morning, and apologise for the short notice. I plan to bring the lovely Belinda if I can get her to agree to be seen in public with me. Bryan was her favorite, so I may get lucky.
--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
development. When you become a celebrity chef and actually make money for your investors, as do folks like Emril Legasse and Mario Batali and Herr Puck, you can do as many as you can coach.
Unit development may slow if money gets tight enough, but if high rollers still are throwing it around, getting the money will be easy.--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
If your SBA guaranteed loan was disbursed, and you did not receive the full benefit of the loan, you need to do several things: a) get from Funding Solutions the earnings projections that they made to your SBA loan provider, b) get a copy of the invoices that the loan was disbursed against, c) contact the third parties who provided the invoices to ensure that the work was done, and d) take all this information to a competent franchise lawyer.
Michael Webster PhD LLB
Franchise News
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
My office is walking distance to Canal Street. They have a lot of designer stuff, so I'm sure you can get Coach handbags cheap. Heck, the Rolex watches are only $10; even less if you can haggle in Cantonese.
Better hurry up though, cause Mayor Bloomberg is trying to take away your constitutional right to a cheap knockoff.
On a serious note: Ditto to the GA zees my question above: when did you contact the loan broker and bank to notify them of potential fraud?
(Oh, I'm sorry: you may not have realized that when someone gets $150,000 to construct a store and doesn't construct anything that is fraud. You'd have to be reeel sophisticated to figure that one out.)
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
An understandable sentiment, and that is why I fault Dale Nabors: It may be that Nabors' plan was the best (if not only) hope to salvage Cuppys, but it should not have stopped Nabors from holding the previous management and owner to account.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
I think this must be my long lost cousin because this post definitely has the Frankman stamp of humor!
Welcome Cousin Cuppycina. LOL!
Don't you love these start-up franchises that fill their support staff with cheap greenies who create hodge-podge systems that couldn't respond out of a paper bag while these newbies learn what works and doesn't work?
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