Maryland Launches New Probe into Coffee Beanery Violations
Commissioner to Be "New Pair of Eyes" to Look into Case
ANN ARBOR, Mich. (Blue MauMau) - After a lengthy exchange of emails and letters with the State of Maryland, Coffee Beanery franchisees Deborah Williams and Richard Welshans now have received new hope that the state will look deeper into the allegations they have brought against the franchisor. In her letter dated June 29, 2007, Securities Commissioner Melanie Senter Lubin assured the franchisees that the state was taking their claims against Coffee Beanery very seriously, and that the Attorney General had asked her to be the "new pair of eyes" to look into the case. Not only will they be looking to see if the company violated the Maryland Franchise Registration and Disclosure Law, but also its 2006 Consent Order issued against the company.
Franchisees Response: 'Shocked" at State Allowing UFOC Amendment
In their June 2 response to Commissioner Lubin's letter, Williams and Welshans said they felt The Coffee Beanery was able to "get around" the issue of whether it disclosed its cafe concept on a timely basis. They wrote, "We are shocked . . . that Coffee Beanery was given an opportunity by the state to amend, this obvious violation of the Consent Order and Maryland Franchise Law." They also stated that even though the franchisor was given the opportunity to skate by the law again, the amended version is still in violation of the 2006 Consent Order and Maryland franchise laws.
Williams and Welshans expressed that the Commissioner's investigation will prove their allegations are warranted and they hoped her office will sanction the franchisor to the fullest extent possible. "To allow the UFOC to be amended or wait until registration is due again," according to their letter, "would be a travesty to us and justice."
Rifkin Submits 'Letter' to Judge Duggan
In a supplemental submission of materials filed today with the U.S. District Court for Eastern District of Michigan, Harry M. Rifkin, attorney for franchisees, explains to the court that the letter from Melanie Lubin is self-explanatory in its discussion of the continuing investigation of Coffee Beanery. On behalf of his clients, he is asking for Judge Duggan to review the letter before making his decision on the Motion to Reconsider. He states that if The Coffee Beanery, Ltd. and Kevin Shaw violated the Consent Order then the limitations in the Order as to the "deniability of a violation of Maryland law in sale of the franchise" to his clients are no further in force or effect.
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Shame on Maryland
How can you expect any one selling franchises in Maryland to take your law seriously. YOU DON"T TAKE IT SERIOUSLY, when ever someone questions wheather or not Zors are given special treatment just refere bak to this story. Does this mean that CB is still in violation? How could this happen? Are they selling any franchises out there?
Accurate Unemotional Report
When can we expect you to do a story on a franchisee that cheats the IRS, their landlord, their franchisor, hires illegal aliens and drowns kittens? Janet CB may be a bad citizen, but there must be at least one story of franchisee that takes advantage of a franchisor and the rest of their franchisee brother and sisters? Maybe you could put your partisan sentiments aside and be a little more balanced?
Grand Larceny is much more Interesting
Quit picking on Janet Sparks who doesn't hide her light under a bushel and peels away the Zor spin that so often hides the truth from the public.
How great that Maryland is doing the right thing and and continuing to investigate this incident that worked such an injustice on the CG franchisees.
I, again, thank Janet Sparks and the CB for bringing this story to Blue Mau Mau and sharing it with us. Our government and our courts are supposed to be open to the public to make sure that our laws provide equal justice for all.
Is Janet Pro Zee
Janet you can only report what is going on out there. The fact that a Zor has broke the law, entered into a Consent Order and is sanctioned for violating Franchise Registration and Disclosure Laws, which by the way was a weak sanction at best, and then was confident enough to register the first UFOC after Consenting not to violate Maryland Franchise Law is questionable. Janet you didn't tell Maryland not to examine that UFOC, did you? I maean lets get off the Zee and the Zor thing and take a look at this case. How does the Maryland Securities Commissioner defend the Coffee Beanery UFOC sliding by with so many violations? This is so obvious that a first grader could figure it out. I read The Consent Order and then read the disclosure in the UFOC (before it was allowed to be amended) and I have to tell you the franchisees whose respose is posted is right on the money. These attorneys and CB put some time into this and it should have been a no brainer,1997. This case should be closely watched, the proof of what is going on out here is right with in the very heart of this story. Shame on Janet for making all of these prople act so badly, just to side with a Zee.
WOW
It would certainly be a wonderful feather in the cap of this forum if the uproar in here over CB played some part in a change of the current circumstances of this franchisee. The cynical part of me doubts anything positive will come of it that might affect their situation.
A new look by the enforcement agency that resulted in a change of the consent order that made it possible to set aside the rescission offer made and rejected could be grounds for negating the arbitration, depending on how it went down.
I know what I would ask Judge Duggan to do now if I were franchisee's counsel. I know what I would be doing at the state level too. Lets hope for their sake that that gets done properly.
Richard Solomon
www.FranchiseRemedies.com
Maryland Franchise
Some one had asked if any new Coffee Beanery franchises has opened in Maryland. The answer is yes.
Maryland Order
Richard after reading your remarks it would be great if this site helped these people.
I started following thier story in Forbes. I can't beleive how obvious it is that CB got off with less them a slap in Maryland, and thier arbitration is a night mare. We should all ask some questions here. Don't you think it looks bad for Maryland to allow them to register a UFOC in violation and then let them amend it. Does anyone know what the violations are that the franchisees are claiming to be in the amended UFOC?
CB New Probe
Is this a new pair of eyes or an old pair who had earlier involvement?
Maryland on the hot seat
Richard in reading your comment there is much truth in what you say. I have a bigger question. After Maryland got involved, why is it that they let CB off with a tap? Once Maryland got involved they should have finished the job. It looks worse for Maryland that they Ordered a restricted recission after all the time and effort put into the investigation. What makes Maryland look even worse is that they now have an arbitrator who has in the award ruled that the regulator was wrong and that she found contrary to the regulator. That in combination with Maryland allowing what appears to be a UFOC that was in violation of the Order being registered. If I'm following this story correctly, the regulator was notified that there was a violation and then Maryland allowed the UFOC to be amended. WHY? This is what I see as the story that is being told. It is very rare to bring a bad Zor to justice and when the process is started it has to raise the question as to why it was not carried out to the letter of the law.
Maryland Coffee Beanery and Justice
We have just been asked by The American Association for Justice, to have our story presented to Congress. We have sent our BMM story along with our acceptance to present congress our story.
Coffee Beanery continues to cover up
During the investigation by Maryland CB lied about how many cafes had opened and closed. There were about 30 locations they did not disclose to the Securities Commissioner. The 2005 UFOC had 12 cafe owners terminate the system and each one disclosed the phone number and address for the location they just closed. CB had all of the home address and phone numbers and we received these documents in Discovery. Joanne Shaw under oath said that disclosing this information has always been required by the Feds and the State and that she has always complied. That was a lie. The 2006 UFOC that has been amended once in Maryland has violations of the same thing A cafe owner is listed as a traditional coffe shop owner and The Coffee Beanery # 25 is disclosed as her name. Another cafe owner who is terminated has the wrong phone number listed even though we have corporate documents showing the correct information. There are two other terminated cafe owners who are not disclosed as a matter of fact the one owner is still listed as operational in the Outlet Listing We have documents with this information as well These documents have been sent to Maryland along with the reminder that the disclosure date in the Order is 1997 and the amended UFOC id disclosing 1995. Every disclosure ommision involves the cafes. I can't believe Maryland has allowed them to continue selling these things
CB Closings
CB started franchising in 1985
These are the closings for years I have found:
1990 - 3
95-98- 15
1999 - 17
2000 - 29
2002 - 18
2003 - 15
2005 - 22
2006 - 26
2001 - 22
Total 181
The closings for 2001 were calculated by counting locations open in 2000 and not disclosed as open in 2002. There is no record of a 2001 UFOC registered. Fran Data could not find one and concluded that one was not registered. There are another 20 that have never been disclosed so the figure is 201 They have closed more locations then they have ever had open at any one time.
CB and Maryland
Well after Illinois issued The Order to With Draw, the ball is in Maryland's court. It will be diffcult at best to continue to protect CB. All eyes will be on Maryland and the investigation. This could also work against an arbitrator who found that Maryland was wrong and CB did COMPLY with the law. It would be difficult for this arbitrator to re write the law in all of the 15 States that have Registration Laws.
Then there is the IFA. Joanne is a poster child gone BAD
Are you there
Maryland are you watching all of this?
It's your turn. With the Illinois Order I don't see how Maryland can get around the violations Rick and Deb have alleged
Thanks to BMM
Although some of the information may bore some of the visitors who log on, I would like to thank BMM for allowing us to bore some of the users. We have been able to obtain important information pertaining to our case in Maryland, through boreing postings from some of the users. We will be meet with our attorney on Monday to decide how much of this new info will effect our case in Maryland and possibly with Judge Duggan. We will let you know if new information is going to be used. We are pretty sure that it will.
Thank you again BMM
Be Heard
While it is easy to get caught up in the theroy being thrown around on the site, that there are certain people who had we obtained thier services, we would not be Whining. Take my advice and keep Whining. The only way to be heard is to continue to stay focused and believe in your own cause. From what you are reading it is obvious that you are being dismissed as not "worthy" because you are viewed as no longer being of use to thier "cause" I would like to tell the gentleman who is so upset about the VET loans that you have to continue to bang away at the regulators in your State and your Congressman and Senators. When dealing with Paul Bland I went into it with the thought that arbitration was arbitration. With AAFJ I was some what shocked when I was told that I was the first "franchise arbitration issue" they had delt with. They called because Mr. Bland had told them our case was the most unfair he had seen this year. They were impressed. Now we will attend a press conference that will be held before congress when this new bill is introduced. Do I think it will change the arbitration laws, maybe, maybe not. My point is you cannot stop. When we attend this press conference our story will be documented and given to every media person who attends. I don't know that one of them will be interested enough to prusue our story, but guess what, we would not even be at this point had we listened to all of those who continue to try and convince us that we are wasting our time. You have to look at everything that you are faced with as an opportunity. During the presentation we will try in advance to schedule a small block of time with our State reps. and tell them our story. Have you written your state reps? I feel for you because I know first hand how you feel. We will not stop our fight until we either get our money back or why the law is being disregarded in order to protect CB. We deserve an answer. The other goal is to try and get someone to expose Franchising. That does not mean expose as in looking for bad guys. Franchising accounts for almost 50% of our economy retail and I just had an advocate tell me that they are not familar with franchise arbitration. In an industry being controlled by the DLA Pipers and FTC and IFA what better way of dealing with franchisees then to force them into a "private" judicial system.
Current CB UFOC
I'm currently looking on the CA website and believe that I am reading their most current UFOC registered 3/15/07 with the State of California. Here are some of the things that I find interesting:
1. Two other franchisees are suing CB (one in IL, the other in TX) using the same attorney as Deborah and Richard, and according to the UFOC are 'making identical claims even though the store is not located in Maryland'.
2. I agree with Deborah and Richard that their phone number is missing in the UFOC and that 'The Coffee Beanery 25' is shown as both operating and terminated, but I do see phone numbers in both the terminated and operating sections of the UFOC. The operating section does state the owners of the store. I'm confused as to how you've characterized them as a 'cafe' store, when the store was opened initially in 1990. Was something done officially to call it a 'cafe' store? Also, if the 'cafe' was such a bad product, why did the Tannehills open a new 'cafe' store in 2003, after buying their store #25 in 1998?
3. It discloses that they Pepsi is an approved supplier and paid them $.45 to $.70 per gallon. And that an advanced payment was made in 1999 to the marketing fund to defray the costs associated with the National Convention and placing the Pepsi into both franchised and corporate owned stores. They haven't received payment since 1999.
4. That they have received vendor rebates (paid to the marketing fund) in the amount of $434 in the last fiscal year.
5. That they have an agreement with Ronin LLC to receive a 1% commission on sales to both franchisees and non-franchisees. They do not disclose the amount received from Ronin.
6. That the financial statements dated 6/30/06 consolidated Shaw Services. Is that the warehouse that was being talked about as being against GAAP?
7. Stores have dropped from 171-159 from 2003-2006. They have opened 69 stores in that timeframe based on a financial statement disclosure.
8. They got about 9 Notes Receivables from franchisees (different maturities from 2004-2006). That should be a sign to prospective franchisees.
I could probably find more, but I'll stop for now. My questions to the CB franchisees:
Are there more payments from vendors that you know about that aren't disclosed in the UFOC? If not, I don't know see how the vendor payments from Pepsi or the vendor rebates are material. Would you have changed your mind on them getting $434 of vendor rebates, and no payments from Pepsi since 1999? What were the amounts they received in 2002?
Maryland
How long has it been since it was first disclosed to Maryland that CB was in violation of the Consent Order?
How Much
I've been reading the comments over the past couple of days and there has been some good information.
So I thought I would get feed back on a question that has bothered me for quite some time.
The Coffee Beanery has a "zone pricing chart" which breaks down the different areas in which the franchises are located. The "zone" you are located in determines the price per LB. we pay for coffee beans.
We are told that this is because CB pays for shipping on beans and that all franchises pay the same per LB. with this methode.
I asked before what the price per LB. is and I always get the same answer.
I have a difficult time understanding why the shipping does not differ as opposed to the cost of the beans
What do you think?
CB Pricing
It was my understanding that the franchisor is required to disclose revenue they receive from the sale of required purchases to the franchises. If I understand GAAP, when CB seperated Shaws Services,Inc. from the corporate financials, the reason was that, Shaws sells product to other buyers apart from the franchises.
That would mean CB buys from Shaws and then sells to the franchises, right?
If this is true , then there has to be a price for a LB. of coffee.
WHATS UP MARYLAND
After the article on CB and the with draw from Illinois, I can't be the only waiting to see if Maryland lets CB skate, or sanctions them for the obvious violations. I can't imangine that any State regulator is not just speechless at the display of total disregard for Franchising Law. Did CB think that this would help thier situation?
Richard hit the nail on the head, and I don't think that CB is smart enough to dig out of this mess they have created.
Can Maryland gain some respect back in light of all that has happened? After all, you would think that Maryland would have been the watching CB instead of Illinois. Maryland needs to talk to Illinois. No one likes to see a situation with so much gone wrong , if not out of control, Maryland needs to put CB out of thier misery.
Come to think of it, what is the IFA think about the fair haired child? What a poster child to put out there as a mentor for women
Interesting
Pizza Guy I coundn't agree more. I visit the BMM site when I get the time. I think that it is one of the best information sites on franching yet. The story of R& D caught my attention when Forbes printed the article some months ago.
This has been one to follow. There are quite a few interested in the out come.
When TTLPJ picked up the "fight" so to speak, I knew there was a reason. These guys don't get involved in a losing situation. I said before, this was a winner that should have won. CB did more harm withdrawing from Illinois then they can imagine. What an admission of guilt.
They put Maryland and every other state that regulates Franchising with no other choice then to sanction them or force them to with draw. What a move! I dare you to tell me I have to follow the rule like other Zors?
WHAT WERE THEY THINKING?
Whinning
Jd stop your crying. It would be a lot easier to check for wrong doing when disclosure is made. CB has hidden so much, where do you begin?
There may have been some defense for CB, but after what they just pulled in Illinois, why would you continue to try and defend them?
CB has no interest in defending them selves. As a matter of fact they just proved what most were thinking.
WE ARE GUILTY AND DONT GIVE A DAMN WHAT YOU THINK WE WILL JUST BLOW THIS POP SICLE STAND AND CONTINUE ELSE WHERE
Maryland and CB
I would have to think that Maryland, DLA Piper and the IFA are finished with CB
Maryland gave CB a huge and questionable break in the restricted recision.
Then Maryland gave CB another break by letting CB amend the UFOC for a violation of The Consent Order
CB spit in the face of the law by with drawing in Illinois. I would have to think that CB has become to much baggage for any one to try and protect at this point.
CB brought all of this on them selves
CB Leases
We have thought that CB has intentions of getting out of Franchising and going straight into distrbution.
This is why we think that all of the field people were fired and Shaws was seperated from The Corp. financials
when will janet do a bad franchisee story or are they all good?
I did not say her reporting on CB was wrong in any way. She doesn't seem to write many stories about bad franchisees.
I just don't know?
Has CB sold any addtional franchises in MD? Are they actively offering franchises in MD?
Dirty little secret there are more cheating Zees than Zors
There are franchisees that sell goods and services that they do not report to their franchisor. These same franchisees that do not pay royalties also hang on to the sales tax and do not pay their fair share of state and federal income taxes.
Bad Zors
I'm sure that there are plenty of bad Zees. The difference between a bad Zee and a bad Zor is the Zee is not exempt from the law. A bad Zee does not have the IFA and the FTC to hide behind. A bad Zee has to go out of his way to Sams Club in order to cheat the IRS. A bad Zor just steals the Zees money and sets up shop off shore
WAIT A MINUTE
CB didn't get stopped by Illinois. CB itself requested (so the article says) that its Illinois registration be cancelled - so that it can restart if/when Ms BEAUZEAUX can get her shyte together.
Richard Solomon
www.FranchiseRemedies.com
CB AS WARNING ABOUT SBA REGISTRY AND PATRIOT EXPRESS
I believe the COffee Beanery Franchise is on the SBA Registry of franchises and will be available for Patriot Express Loans and this should be a lesson that there are many vehicles for fraud on the SBA Franchise Registry. Tomorrow, I'm sure, some poor soul could apply for a Patriot Express Loan to purchase a Coffee Beanery, The UPS Store franchise, Quiznos, or other vehicles for fraud who are on this list. They will be led into a false sense of security by the offer of Vet/Fran Discount and a special "Patriot" loan and the appearance of endorsement by government who sponsors the SBA Registry of franchises.
Because the actual failure rate of the business plan for first-generation franchisees is not required to be disclosed under law and is obscured in the Item 20 transfer columns, the actual failure rate of many of these franchises registered with the SBA is hidden from view.
Please! All of you who read Blue Mau Mau, try to WARN the veterans, National Guard and Reserve, and retired military and their spouses who are elibible for these loans that THERE ARE MANY VEHICLES FOR FRAUD ON THE SBA FRANCHISE REGISTRY and that the UFOC's put out by the States will not protect them as these UFOC's do not require the failure rate of first-generation franchisees to be disclosed anywhere in the UFOC to enable new prospective franchisees to assess the risk of the purchase. PLEASE BE AWARE THAT almost all transfers, if not all transfers, are business failures and that the failure of first-generation franchisees who provide the capital and the labor to build the physical units that wear the brand name are hidden in the transfer columns of the UFOC's.
LET THE BUYER BEWARE! Do your due diligence and remember that the visibility and fame of the Brand Name may be hiding an unviable business plan as in The UPS Store and Quiznos and Coffee Beanery, ISoldIt, and many others who are on the SBA Registry and eligible for Patriot Express Loans.
You may ask! Why would the SBA make guarantees on loans for franchises with high failure rate of first-generation franchisees. The SBA can do this because they don't officfially know that the failure rate of first-generation franchisees is hidden in the transfer columns of the UFOC's, and they use only their own SBA Default List when approving the loans. This List, of course, presents a false picture of the viability of the franchise to the SBA.
Contact your elected officials and ask them about this new program and ask them to protect the troops and their families from bad business decisions that will be made because these franchisors with high failure rates can obscure the actual failure rate of their plan and appear on the SBA Registry.
WOW
Richars thanks for hoping it goes well for us.
I beleive that this site had a great deal to do with Maryland looking a second time. We have asked Judge Duggan to consider this in his response and he has been given information other states are taking as well. It is our hope that this site will help keep the players honest. We will be going over the award and pointing out what exactly what this arbitrator did and said. As an attorney you know the importance of carefully reading what is written and this award is some what tricky.
This has been the most unjust thing I have ever seen. Maryland needs to make sure the right people receive justice this time around. They have given them as you would say a "get of jail pass" twice. I don't know if you have ever heard of F. Paul Bland. He is an attorney for The Trial Lawyers for Public Justice, and works every hour of the day in an effort to try and bring to the fore front what is going in in these forced arbitrations. A study was done in California involving a big bank out there. The same arbitrator it seems kept being appointed. This arbitrator heard 80 cases and the bank won all 80, 78 of the wins were for the exact amount asked for by the bank and the other two were slightly less.
If anyone ever wants to see the documents that were submitted in evidence at arbitration, it would be a shock. Any one who knows Franchise Law would get a eye opening look at what goes on.
And did CB properly disclose the franchise in MD?
Have you spoken directly with that franchisee and asked how they were doing? Do they have the same equipment and POS problems you had?
LOOKING BAD
Other than the uproar on this forum site, it is highly unlikely that anyone on the planet took notice or would care if they did.
I'm old, and I was around back in the 50s and 60s when franchising was flying high and fraud was flying high right along with the trend. The abuses is what lead to franchise investment laws being enacted in California, Minnesota, Illinois, and a few others eventually. I was on the committee that wrote the implementing regulations of the Michigan Act in the 1970s, and I well remember being appointed to that comittee by Attorney General because there was no one else to speak for the franchisees. It was a good and well enforced regime for a while. Eventually the IFA got into its usual lobbying gig in Michigan and the Act was weakened. Whenever a state's economy goes into the tank, trade associations like the IFA have a golden opportunity to go in and get laws pertaining to their industry changed and made weaker using, among others, the argument that the state really has more important matters to spend enforcement money on than franchising, especially since franchisees can get good lawyers and sort it out in private litigation. Private enforcment was always viewed as the best approach because the litigators who made a living doing that were much tougher and smarter than any state government staff lawyers would ever possibly be. As a priority consideration, every prosecutor takes into consideration whether private litigation might deal effectively with a problem before they decide to commit state resources to it.
Maryland is comapratively a much more recent entry into franchise regulation. It too has other prosecutorial priorities. If Maryland had done nothing at all about CB, it wouldn't have looked bad. Compared to the other states in which CB sells franchises that have done nothing at all, Maryland actually looks activist for even taking a peek at it. So there is no possibility that Maryland will look bad for not doing a thorough job of CB issues. You might well ask the question how many trial lawyers does Maryland even have on its franchise enforcement agency staff; how many cases have they tried; when is the last time they were in court; when is the last time that they even went through an entire administrative enforcement procedure. When you don't do this regularly, it is rather daunting to think of taking on a competent outside law firm that can run you around in minutiae for months and years, using up resources that you have to get from the legislature every year, making state government lawyers work much harder than they normally do. A modest donation to a committee member will get a budget request stalled in every legislature in America. When you consider that the FTC does almost nothing at all regarding franchise enforcement (except to go after people who won't fight back for the most part - to get statistics to go to Congress with when they want appropriations), and that they are responsible for some form of franchise effort at the national level, expectations of state level franchise enforcement militancy are rather naive. Remember too that whatever the state enforcers might otherwise be inclined to do, they have the politics of the attorney general's office to deal with. Even the mmost aggressively stimulated enforcement attorney can get a call from the AG's bag man (and this is true in every state) telling him to back off. When that call comes, everything just goes soft. It's erectile dysfunction - no one can shoot pool with a rope, and that call takes the wind out of all the sails. I'm not saying this happened in the CB instance in Maryland. It's just something that prosecutors are aware of when they are making a decision what to prosecute and one target is tight with an aggressively lobbying association. Iowa backed off its aggressive franchise regulation approach because of similar IFA tactics. The IFA FranPac fund aint there to pay for garden parties, you know.
Franchisees have nothing comparable on their side. The franchisee associations with their little fairness foolishness and their policy debating patty fingers games serve only to divert effort from really doing something positive. No one is happier that the AAFD is what it is than the IFA. If the IFA didn't want the SBA to play garden party games with the AAFD, the SBA wouldn't do anything at all. But the IFA knows that the SBA fairness and prequalification standards are nothing but empty window dressing that accomplish nothing in terms of effective regulation, and if that keeps franchisees thinking they are making headway, the IFA folks are thrilled. Wimpy discussion groups are not anything at all like militancy. The AAFD is nothing like the IFA and it never will be. And if that is what franchisees think will get them anythng substantive, Hey - the IFA is thrilled. It takes a lot of money to get really effective lobbyists working on your issues, and the franchisees will never cough it up like the franchisors do. If the franchisees would pay for it, they could have a group like the IFA. But it won't happen, and the balance of power will not change.
So - to answer your question - no, I don't think Maryland will look bad due to this CB matter. In fact they look bloody militant for doing anything at all, no matter how ineffective.
Richard Solomon
www.FranchiseRemedies.com
Does this mean you will testify in person?
Or just submit your story?
So the Trial Lawyers Assoc. is on your side!
Well with that kind of support your case must have been a winner that should have won!
CB's poor track record and your due diligence comes too late...
I say so what!
CB
Talk about detail. You answered some questions that have not been asked. Could it be that JD stands for Jane Doe? And while you bring up the other law suits, I'm sure you notice that the disclosure is some what misleading. The Texas case as I'm sure you are aware, had a different kind of FRAUD. This franchisee was sold a Double Drive Thru, and the UFOC does not even disclose a drive thru, nor do they have a Franchise Agreement for one. This UFOC does not disclose that CB settled out of court. Does this UFOC mention that the case in Illinois is also a different kind of fraud as well? If not let me know
50% of our economy retail and the abuses are hidden?
Do you really beleive this crap you write. I know that you have the undying support of Z-Rube. And it's a good thing right, Z-Rube supporting you?
Current UFOC
We wanted to let you in on a little secret. We signed our FA in 2003, the disclosure in 2007 is far too late. The disclosure in 2007 is a direct result of our forcing focus on what CB is doing
Current CB
How do you connect the Tannehills with anyone ilse in this UFOC?
Thanks to BMM - illuminating
Far from boring your case was and is very illuminating. I don't doubt that it has been instructive for many visitors. There were postings which went off track which caused a few sideshows but that's the beauty of this site - warts and all.
Most here wish you luck with your quest - it's a merely a subject for people here but for you it's a daily ordeal.
I've been impressed with how you've handled some of the rougher home truths tossed your way. Some of the people tossing them clearly know a lot about the subject and although not always something you'd probably wanted to hear I think you'll get a lot of mileage out of their input.
I look forward to the updates
PizzaGuy
Illumination
Apart from opinions as to law, it is interesting to see some of the reaction to the inaccurate franchisor UFOC. Few would go as far as the member who claims that the UFOC doesn't matter, and only the FA is binding. A more mainstream legal view has been expressed with regard to materiality of those misrepresentations, and that is one which you do need to address.
The Maryland regulators, and the court, should be bothered by untrue statements in a UFOC. It appears that there was deliberate falsification of some UFOC statements, and that should be grounds not merely for recission but for some out-of-pocket damages, plus sufficiently high punitives to dissuade other franchisors and franchisor counsel who will be looking to the example set in the CB case.
From a cost-benefit standpoint, mere recission actually increases the objectionable behavior. In particular, given the low likelihood of being caught and the low probability of the damaged party to have a monetary damage great enough to warrant prosecution of an action for damages, your case illustrates the need for a private right of action under the Franchise Rule and baby FTC acts.
In closing, I would caution you that it is not wise to identify yourself as you have in your profile. Apart from being contacted by salesmen reading your posts (as has happened with others on this site), you may be giving away strategy to your opponents, and subjecting yourself to an expansion of discovery under oath.
Cost Per lb.
Unless shipping is INCLUDED in the price per pound I can come up with no logical way that what you suggest would make sense. Even then if the cost per pound is flat rated, this approach would work against the zee because the shipping cost per pound would decrease as the poundage per shipment increases (i.e. it is cheaper to ship 1 pkg at 50# than 5-10# pkgs).
Perhaps some of our UPS guest can shed some light.
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
ZONE PRICING
Zone pricing has been around a very long time. It's purposee was to facilitate info processing so that separate prices for every customer transaction didn't have to be computed, and so that customers in an identifiable area would have essentially (if not perfectly) equal pricing at their front doors.
It would be established usually on the basis of average freight within the zone from the shipping point - sometimes adjusted for multiple shipping points. What that might be could be actual average shipping costs or some other number - so long as it was equal to everyone within the destination zone.
When trying to sort out how zone pricing works, it is important to compare contemporaneous transactions, especially if what is being shipped is a commodity whose price fluctuates - causing the price of the product to change with the fluctuation even though the shipping price per zone may remain constant.
This model assumes total freedom on the part of the seller to set price because the customers are not free to buy elsewhere. Where competition has to be met, zone pricing fluctuates more frequently as freight absorption may become part of the competitive pricing interplay amongst suppliers.
30 years ago antitrtust lawyers played with pricing formulae all day long to find advantages that would not conflict with the reqquirements of the Robinson-Patman Act prohibitions against certain kinds of price discrimination. Nowadays, however, pricing is market driven, with little concern about R-P compliance. The last chance I had to use R-P in litigation was three years ago.
Richard Solomon
www.FranchiseRemedies.com
NOPE
Franchisors are required only to disclose a general statement that revenue is derived from purchases made by franchisees, without having to identify the vendors paying the "revenue" or the amount of revenue.
Richard Solomon
www.FranchiseRemedies.com
Re: whining
Say what you want, but Richard and Deborah haven't convinced me that what wasn't in the UFOC was material to their decision. They felt the earnings claim was conservative (their own words), the gift card program (which they aren't a member of), vendor rebates (which they still haven't said how much CB had gotten), and the Pepsi contract.
I'd be on their side if they would have filed their lawsuits immediately upon finding out these issues, but they operated for a year and when they realized that they were going to lose money, they then decided to go after CB. Had they been successful, would we still be talking about CB? Probably not.
I'm talking about their loss in arbitration, not the current UFOC issues. Consider it whining if you'd like, but I have no vested interest in the outcome, and I'll admit I'm wrong, but right now this is my opinion.
More than interesting - darned useful
This is a great site. You'll learn more here from Richard, Michael and Dale than you would visiting umpteen conventions. The real world information streaming in daily is amazing.
In fact if I were a franchisor on the up and up and a potential zee were to ask why I perhaps charged more or why they should invest with me I would refer them to this site and say - have a look and see what can go wrong and when your done come back and tell me why you should sign with me. ( There are probably precious few that could do that but I'm sure that there are some ).
CB seems to be on the road to nowhere but fortunately for the existing franchisees the bad press has been limited to the "trade" so to speak and isn't really harming the brand at consumer level.
I'm sure that the discussion on this site has prompted certain actions and will lead to more.
I for one am very interested in the outcome
PizzaGuy
Illinois Registration has little to do with the CB v. R&D Matter
It is irrelevant that CB withdrew their registration or are not currently registered in IL.
DLA Piper
Does not represent CB full time. DLA Piper only represented CB in the Maryland Consent Order. Pear,Sperling,Eagan and Daniels are full time council for CB
AS far as assets don't forget the corporate umbrella. There is much to be had.
As for Zees being "lambs" that are silenced, BMM has given unity to the Zees that was not available to them in the past
CB,UPS,Quizons and other Zors who think that all of these issues are gong away, will only aid us in our quest for equal protection.
Maryland you are still being watched. We are waiting to see who it is you really represent. You have much to answere for and we understand that you have a new CB franchise that is now your responsibility.