Cuppy's Coffee CEO Dale Nabors Arrested! Wanted in Florida
MUSCLE SHOALS, Ala. – Robert Dale Nabors, chief executive officer of Cuppy’s Coffee, Medina Management and principal of FranSynergy, was arrested on March 31 by Alabama’s Colbert County authorities for being a fugitive from a Florida warrant for his arrest. The local online news, ShoalsInsider, posted information on Mr. Nabors' arrest on its site the next week, April 6.
The face value of Nabors' bond was $1,500. A Colbert County judge allowed for a $150 cash bond that granted Nabors temporary freedom the next day.
The Florida Attorney’s office originated a charge for Mr. Nabors' arrest because of two reported felony worthless checks. According to Nicole Wagner, community relations coordinator for Florida’s Okaloosa Sherriff’s Department, worthless checks over $300 are considered a felony offense. When Nabors did not show up, Florida considered him a fugitive from justice.
In April of 2008, FranSynergy, the company that Dale Nabors founded and heads, took over troubled entrepreneur Robert Morgan’s Medina Management firm, which includes franchising firm Cuppy's Coffee. With over 80 employees, the size of Cuppy's work force was considered quite large by franchise experts, given the size of the chain and the trickle of royalty payments coming in. Nabors took over the company, but unlike Morgan, he took over both the firm's assets and its troublesome liabilities. He began downsizing the company, suspended franchise sales and announced he would focus on strengthening franchise store operations. A few months later he closed down the distressed franchise chain's spacious headquarters from Fort Walton Beach, Florida and moved a few personnel to Muscle Shoals, Alabama.
One company insider thought that the unpaid checks that Nabors is charged with most likely are from the bounced paychecks sent to terminated Fort Walton Beach employees. After the paychecks bounced, Nabors promised to drive down that Friday to pay cash to his ex-employees left behind. But according to a former employee, he never came.
Employees were upset.
Below is the Florida Warrant for Dale Nabors
Florida Department of Law Enforcement—Wanted Person
If you have information about a missing or wanted person, do not take action on your own! Please contact the reporting agency. [If you wish to report a tip without disclosing your name, you may do so.]
Name: NABORS, ROBERT DALE
Date of Birth: 05/24/1963
Reporting Agency: Okaloosa County Sheriff’s Office
Offense: Fraudulent Activities
Agency Case #: 2009CF570S
Date of Warrant: 03/27/2009
Race: WHITE
Sex: MALE
Height: 5′ 07″
Weight: 133
Hair Color: BROWN
Eyes Color: BLUE
Cuppy’s Coffee and related Java Jo’z have seen considerable controversy in the last two years. Java Jo’z founder Roy Snowden went to prison for tax evasion and fraud. The assets of the Java Jo’z chain were promptly sold to Robert Morgan without any of the liabilities. Some watchers of the firm felt that this showed signs of fraudulent conveyance, where a firm is sold for almost nothing to a new buyer with the understanding that the old owner will receive future benefits. Such under-the-table dealings with a wink of unwritten monetary benefits to the seller are illegal. But Medina's former in-house counsel confirmed with Blue MauMau in 2007 that Mr. Morgan had not acquired the firm for nothing and had deposited a downpayment.
The reborn firm originally denied any ties to Java Jo’z, despite almost identical logos and the use of the same employees, stationery and office. It also avoided putting the Java Jo'z ties and information on its franchise disclosure documents, something the law requires. Although franchise chains sometimes would like to hide the information that their founder went to jail for tax fraud, the disclosure document is designed to reveal to franchise investors a chain's history and background.
The amount lost by employees is a fraction of the amount allegedly lost by the system’s franchise owners. A number of starting franchisees accused then head Robert Morgan of not returning their $30,000 deposit when there was nothing to show for it. In addition to the deposit, a Cuppy’s Coffee store can cost hundreds of thousands of dollars in total investment from franchise operators.
Many franchise owners complained that the Cuppy's Coffee business model wasn’t profitable and that they were losing their life savings.
Ms. Claudia Robbins, a Delaware-based owner who bought her Cuppy's Coffee franchise right out of MBA school in November of 2005, is one of those individuals. She still owns a store but says, "I really have no hope of ever covering my debt service with the shop. I have just started a full time paying job, which 60% of my salary would go to debt service if we do not declare bankrupcy." She says, "Our total expenditures so far are about $400K."
There were allegations of money paid for store construction but no actual build-outs. The PNC Bank pulled out from funding the franchises. And then the Small Business Administration launched a quiet investigation into SBA-backed loans that were approved for Cuppy’s, where money was allegedly released to pay for build-outs of shops, but that were allegedly never built.
Robbins was one who incurred debt from PNC bank. The bank sent a check for the finished build-out, but there was actually no shop build-out. That helped her realize that something was very, very wrong with the franchise system. Of the whole fiasco, she now concludes, "I hope Dale Nabors' arrest will now draw the attention of the media and the Florida Attorney General to the alleged fraud which has been committed by Dale, Robert Morgan and others."
The franchising and affiliated companies have disappeared. Web sites such as CuppysCoffee.com and FranSynergy.com are gone. The firm's phones are disconnected. Its CEO's emails no longer work. And franchisees and employees have not heard from its underground CEO in weeks or months.
According to a web page by lending broker Funding Solutions LLC, Cuppy's franchise system last year had at least a couple hundred franchises. This year the chain has now largely disappeared.
So how much have franchise owners of Cuppy's been bilked?
Michael Webster, a franchise attorney practicing in Toronto, has been watching the Cuppy's Coffee fiasco almost from beginning to end, with its initial franchise system boom and then implosion. He states, "I estimate that there are some 200 or more franchise owners out there who have been convinced to hand over $30 million of their money to Cuppy's, based on the reporting from the SBA prepared by Cuppy's and Funding Solutions. That information has been removed from the Internet."
Ms. Robbins talks about the stress of her Cuppy's business failing. "My parents owned a business and I knew of the sacrifies and hard work which was involved," she says. Still, the hole that her business has slid down has caused considerable hardship. "I have lost 50 lbs from stress since labor day." She continues, "I worry more about my husband who is slightly older than me (58). We're both on anti-depressants, which I have never needed in my life." But she also adds, "Thank God I have a fabulous husband and we never got into an argument where one of us blames the other for this."
Although it looks increasingly like she will need to close her shop, she is still hopeful. In every email, Robbins concludes with a quote from Ralph Waldo Emerson, "Our greatest glory is not in never failing, but in rising up every time we fail."
Nabors is scheduled to be arraigned on May 20 at 8 a.m. in the Colbert County District Court, the county in which Muscle Shoals, Alabama is located. Judge Carpenter will preside.
Florida’s Okaloosa County Sheriff’s Office awaits Mr. Nabors' extradition from Alabama to Florida to face charges.
The publisher of local online paper the ShoalsInsider told Blue MauMau that he plans to write a news story on the event, and a local television station is planning to air the story.
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Related Reading:
- Shoals Insider: CEO arrested, may have bilked investors for $1 million+
- Cuppy's Coffee Announces Move to Alabama
- Cuppy's New CEO To Improve Operations and Meet Refund Obligations
- Cuppy's Coffee: In-House Attorney Attempts To Set Record Straight
- Cuppy's Franchisees Desperately Plead for Answers
- Cuppy's Speaks Out on Accusations, SBT, AAFD and More
- Cuppy's Coffee & John Dozier: What Franchise Times Won't Tell You
- How Blogging Saved the World: A Tale of Java Jo'z and Cuppy's Coffee
A member has emailed in to remind us that Dale Nabors said in an interview with Janet Sparks that Cuppy's Coffee in August of 2008 had 168 build-outs at that time. Those build-outs do not include existing stores that had already paid.
They estimate that the damage in just the direct money paid to Cuppy's at that point in time was:
Tell that to the people who gave them "refundable" "deposits."
Tell that to the people who are stuck paying back SBA loans for hundreds of thousands of dollars for which paperwork was submitted to the bank alleging that work was completed and product ordered even though those statements were false.
Tell that to folks with mechanics liens--placed on them by a "construction" company secretly controlled by key persons of the franchisor.
Swindled? You make the call.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
For all you fleet of foot franchisors, just remember what singing for your supper at the AAFD Convention might wrought.
Isn't there something deeply ironic about Nabors getting pinched for bouncing cheques to employees of the Cuppy's fraud?
Don, can we now officially move Dale's helpful hints forum to blackguard posts?
Quotes from Dale aka FranSynergy : "For more than 20 years now I've helped small business owners to build and grow their business, with the past 12 being focused on Franchising."
And Dale on Cuppy's : "I've stated our objectives very clearly, and quite simply. We will curtail sales, we will focus on opening sold but unopened stores and help every store increase their bottom line profitability. The cuts which have been made and that will be made, are being made in order to strengthen the company and to allow us to deal with mission critical issues like opening stores, improving systems, and providing refunds to those who are entitled to such."
Was the advice to grow by bouncing cheques?
Finally, the infamous dance at the AAFD Awards Banquet , where Dale "admitted, "In my opinion, we [Cuppy's] weren't living up to AAFD standards. Cuppy's had a desire to. I'm here tonight to say that we are going to commit to living up to the AAFD fair franchising standards."
Committed to jail on the other hand?
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
As a Dwyer Group "alum", I was appalled to find such an ignorant and inflammatory comment about a company that has ZIP to do with Cuppy's collapse. Had you done your research, you would have found that Don Dwyer founded Dwyer Group in the 80s and his family (after his death) has truly built a first-class organization. Might I enlighten you that Dina Dwyer-Owens, CEO of Dwyer Group has recently been installed as Chairwoman of the International Franchising Association. Would you like to also smear the IFA with the same ignorant-brush used against Dwyer?
Matters belonging to Curve's rest with Curve's and matters belonging to Dale Nabor's rest solely on Dale's shoulders. Dwyer Group is simply a former employer of Dale Nabor's and considering the length of time he has been in the workforce, 5 years at Dwyer wasn't a long time. A versed member of the franchise community, or a laymen for that matter, should be aware that virtually every city has numerous companies that share the same zip codes... Waco is no different. Find another outlet for your "outrage".
As a Dwyer Group "alum", I was appalled to find such an ignorant and inflammatory comment about a company that has ZIP to do with Cuppy's collapse. Had you done your research, you would have found that Don Dwyer founded Dwyer Group in the 80s and his family (after his death) has truly built a first-class organization. Might I enlighten you that Dina Dwyer-Owens, CEO of Dwyer Group has recently been installed as Chairwoman of the International Franchising Association. Would you like to also smear the IFA with the same ignorant-brush used against Dwyer?
Therefore, matters belonging to Curve's rest with Curve's and matters belonging to Dale Nabor's rest solely on Dale's shoulders. Dwyer Group is simply a former employer of Dale Nabor's and considering the length of time he has been in the workforce, 5 years at Dwyer wasn't a long time. A versed member of the franchise community, or a laymen for that matter, should be aware that virtually every city has numerous companies that share the same zip codes... Waco is no different.
without parole - don't you just love Social Media ....
[Richard you are up early]
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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
Sleepless nights and other unhealthy outcomes are reality in much of franchising. I personally cannot suggest that my insomnia is a product of franchising. That has been a lifelong trait. But with franchising I was to become an ‘offensive insomniac'. For years I considered my friends in the media, at FCA and various zors who regularly woke to my efforts were being kind suggesting I an aggressive provocateur but it recently dawned on me that some were being unkind. While some media blocked me the FCA and friends couldn't resist following my efforts ... but they just didn't like me and that hurt my feelings and sense of self-worth. But I digress from my original intent. I really wanted to have a shot at lawyers .. 'opportunity missed' and all that.
In my early days in franchise scamthuggery I met and spoke with a number of lawyers who were only too willing to advise ... admittedly one took over 2 years to work out that scamthuggery wasn't just contractual confusion - it was indeed a deliberate fraud. Hell the vast majority still don't have a clue.
On the other hand one of my first contacts was with another franchising novice lawyer who became so outraged he eventually went to the media and it saw him bankrupted by a zor [Lenards Chicken thuggery - long story] after zees from many Aus franchise networks clambered for his attention. His health suffered as he worked 24/7 for nada.
In the early days and on more than one occasion I would shoot off some work around 3.00am expecting a reply in 6 or 10 hours only to get a response within minutes. It isn't a secret that the big money in franchise lawyering comes from squeezing zors. Squeezing zees is hard yakka. Working lawyers putting in free time just because scamthuggery makes them angry is very weird.
I still hold with my opinion that most lawyers would rather be entertained pulling the wings from flies than to be open to weak human traits such as empathy or conscience. These people probably sleep well but probably take assistant drugs. Yes franchising problems mostly come back to clarifying contractual obligations and the consequence of stupid decisions but clearly much of franchising is outrageous. The sun is coming up and the birds are making their god-awful noise again.
Ray writes: "I still hold with my opinion that most lawyers would rather be entertained pulling the wings from flies than to be open to weak human traits such as empathy or conscience. These people probably sleep well but probably take assistant drugs. "
Jeez, bud, pretty harsh judgment. I might want to rethink that opinion, if I were you.
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
have known and been in contact with many genuine and remarkable lawyer folk over many years I would like to change my opinion. Unfortunatley I find they are grossly outnumbered by those who seem to believe they have the God-given right to walk over the carcasses of the newly, or about to be, poor after contributing to their demise through lousy advice or the support of unconscionable strategies. The real problem I have is that the virgin franchisee cannot tell the difference.
Michael; I would not have thought that any lawyer in this place would consider that opinion to include them. I'm sorry you had trouble sleeping on this occassion but I'm sure it was something you cooked.
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