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It’s the New Year and the founder of the now defunct franchisor Cuppy’s Coffee wants to come clean. Robert “Morg” Morgan writes a public apology to the hundred or more franchise buyers who spent their fortunes for eventually a fistful of nothing. The franchisor founder had previously been stripped of his insurance license and penalized $134k for defrauding customers. He had also been successfully sued for fraud by franchisees in his former franchise system Slender Lady Fitness. But Cuppy's Coffee, wrapped in a veneer of validity by government and associations, revealed nothing of this unflattering background to store buyers in its franchise disclosure document, a document that the government requires franchisors to fill out according to a template (Insert this kind of information in Item 1, this other in Item 2, 3, etc.). Federal and state government bodies do not read disclosure documents, let alone monitor them for accuracy. Cuppy's was listed on the federal government's Small Business Administration's franchise registry. It was a franchising member in good standing with the International Franchise Association. It was given accredited [fair franchising] contract status with the American Association of Franchisees and Dealers, a standing that the association removed in the final months of Cuppy's Coffee.
Franchise consultant Dale Nabors took over to turn around the troubled franchise chain, which was purchased from Morgan for virtually nothing.
Morgan now writes his apology and assures he believed back then that he could help others prosper instead of the harsh reality of creating at least two franchise chains that spread the virus of financial catastrophe to all who bought in.
I really thought I could make a difference with Medina and the other companies that I led. I was wrong about that, but there was not a day that I did not try to make things work for everyone. I just plain failed and thereby caused terrible suffering for everyone. Perhaps it does not matter that I did not intentionally do harm. The harm is evident and I was the leader of the company.
I don’t know if my apology will help some of you or not, but it’s all I have to give. If I could restore your finances, I would. Despite what’s been reported, this venture left me and many of my family members penniless as well. I have no savings, business or personal property, and no, I have not moved my assets off shore or into anyone else’s name. However, I know my losses and hardship do not compare to what some of you have endured.
I have left the business world with no plans to ever return. I will never again be involved with selling franchises or business opportunities.
Read the full apology at Unhappy Franchisee
There are still unanswered questions. For example, did Morg have an undisclosed agreement with soon-to-be imprisoned Roy Snowden, the founder of the chain's predecessor, Java Jo'z? Would there be money and a position for Snowden in Cuppy's when he got out of jail for tax evasion? That smacks of fraudulent conveyance, of unlawful and hidden perks in the sale and transfer of a business. That's when a business person agrees to sell his business for a dollar, wink wink, because he knows the buyer will grease his palm under the table with future benefits.
Despite the lack of such details in Morgan's apology, small businesses who want to create a franchise chain should remember franchising's cautionary tale of Cuppy's. So should franchise buyers. Franchise regulators too.