One Couple's Descent into Coffee Beanery Franchise Hell
This is a story of how Deborah Williams and Richard Welshans (pictured) sunk into franchise hellfire and arbitration agony with their purchase of a Coffee Beanery cafe. The two claim that the franchisor fraudulently misrepresented itself to get them to buy.
They weren't the only ones that saw misrepresentation. Two states saw big problems with Coffee Beanery:
The Federal Trade Commission, meanwhile, rarely goes after franchise abuses.
States do occasionally sanction companies. In 2005, Welshans and Williams tipped off state regulators to problems with Coffee Beanery's legal paperwork, leading the Maryland securities commissioner to determine that the company had misrepresented itself in violation of state law. In 2006, officials ordered the company to let Maryland franchisees out of their contracts without penalty. (In January 2008, the Illinois attorney general made a similar determination involving Coffee Beanery.) [Mother Jones]
When the couple went into arbitration court for a ruling (a boiler plate mandate in franchise contracts), they lost. That's not surprising considering that the arbitrator, selected by Coffee Beanery, had ties to the franchisor, the defendant.
Bankrupt, Deborah and Richard fought on. In a rare decision, the federal court overturned the arbitration ruling, citing the arbitrator's "disregard for the law."
The couple's plight caught the attention of Congress.
Congress is considering a ban on arbitration clauses in franchise contracts, but the franchisors are fighting back. The International Franchise Association, of which Coffee Beanery is a member, has spent more than $2 million lobbying in DC since 2005. [Mother Jones]
A much smaller franchise system than it once was, Coffee Beanery is now appealing the case to the U.S. Supreme Court.
Read the whole article at Mother Jones
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Related reading:- Sixth Circuit Denies Coffee Beanery's Motion to Stay Mandate
- Coffee Beanery Attempts to Stay Mandate Pending Supreme Court Petition
- Sixth Circuit Denies Coffee Beanery Petition for Rehearing
- Sixth Circuit Sends Coffee Beanery Franchisees to Court
- Coffee Beanery Franchisees Win on Appeal; Arbitration Decision Vacated
- Franchise topic:
