Some Words From AAFD On Cuppy's Coffee and Elite Manufacturing

Bob Purvin, Chair of the American Association of Franchisees and Dealers, Speaks About AAFD's Relationship with Cuppy's Coffee and Elite Manufacturing

First, I would like to say at a personal level – especially as the first franchise authority to expose abusive franchise practices in my book The Franchise Fraud in 1994- that I am delighted that Sean Kelly has now got religion. Many of you know that the AAFD was born out of a realization that the practice of franchising was seriously amiss – facts well documented in my book.

But the AAFD doesn't exist just to complain about franchisor practices. We recognize that many franchise systems do offer fair and collaborative practices – but their franchise agreements or contracts don't reflect this. The AAFD's Fair Franchising Standards seeks to correct, supplement and at times outright change a franchise system's culture.

Second, let me offer a few facts and observations about the AAFD handling of the 5-6 complaints about Cuppy's Coffee and Elite Manufacturing:

Cuppy’s Coffee and Elite Manufacturing Complaints

1. The AAFD takes all complaints aired to us seriously, and we act fairly to all concerned, the franchisor, the franchisees and the ex-franchisees. We have not yet determined if Cuppy’s or Elite has violated either the AAFD's Fair Franchising Standards or our licensing agreement, but we are continuing to work with all parties.

2. Cuppy’s has earned AAFD Accredited Contract Status for adopting a franchise agreement that substantially conforms to the AAFD’s Fair Franchising Standards. This means the company offers one of the fairest franchise agreements in the marketplace today. AAFD Accredited Contract status is not a guarantee of performance, or success, or a good business model, but it is an assurance of accountability. And as far as we can ascertain, Cuppy’s is prepared to hold itself accountable.

3. Elite Manufacturing readily confirmed that it made refund promises to applicants who were unable to secure financing for a Cuppy’s franchise. It is the AAFD's understanding that these 5-6 prospective franchisees were approved as franchisees and Cuppy's assumed that third party financing would be forthcoming. But the third party financing failed to materialize.

4. I read today on one of the posts that an alleged victim claimed he had been promised that his deposit would be escrowed by Elite Manufacturing (Cuppy’s affiliate). Not one of the complaints registered with the AAFD made that contention, and none of the documents shared with us have documented such a claim. This is important information to know, and I invite anyone with evidence, if such exists, of this to contact the AAFD.

5. Elite has now stepped forward to agree to escrow future deposits, but this prudent commitment, which the AAFD has urged, is above and beyond any written contractual commitment as far as we can determine.

6. But an important point is being missed: If the Cuppy's agreement hadn’t been negotiated by the AAFD to qualify for AAFD Accredited Contract Status, the promise of a refund would not have existed! Literally, the complaining individuals possess a breach of contract claim because of the efforts of the AAFD.

7. Further, all of the Cuppy’s franchisees who have complained through the AAFD have had their complaints aired through the AAFD, and all have been offered a refund plan by Cuppy’s and an offer of mediation of their claims by the AAFD. Cuppy’s has agreed to mediation, but none of the claimants have responded to our offer of mediation.

8. Cuppy’s has not once denied its obligation to make refunds, and has admitted to financial pressures due to the current banking and credit crisis.

9. The AAFD has not received one complaint from a Cuppy’s franchisee in business.

While some have demanded the AAFD to behead Cuppy’s, and “get tough”, the AAFD is most concerned about investigating the claims, mediating solutions, negotiating refunds, protecting a brand, and acting fairly for all parties concerned.

The AAFD prefers to act responsibly rather than to join what we believe to be reckless cries for vengeance. I am certainly not condoning the failure of anyone to promptly make good on a promise, but I suggest that some of our critics go rent the movie, “It’s a Wonderful Life” and advance to the scene in which George Bailey responded to a run on the Bedford Savings and Loan.

George couldn’t return all the depositors money in just one day, but he acted in a manner to save his clients and his business in the long run. Cuppy’s, who has already bailed out Java Jo’z licensees, deserves the same opportunity.

Regarding the AAFD’s Role

I have been puzzled by some responses, or concerns raised, about the AAFD. Numerous collectively bargained franchise agreement spawned and negotiated by the AAFD have greatly benefited thousands of franchise owners nationwide.

The thousands of man hours and millions of donated dollars that have been invested in negotiating Fair Franchising Standards now lay the groundwork for major reform.

All that is needed is the long ago assumed groundswell of franchisee malcontent to surface and support a strong trade association to truly arm itself as the voice of franchisees.

The AAFD is about to celebrate its 16th Anniversary—we have now tripled the longevity of the next best hope for franchisee advocacy.

But let me close with this: The AAFD is not, and has never been pro-franchisee or anti-franchisor – never was, and under my watch, never will be. I believe that balanced collaborative franchising can deliver all of the enormous promise of the franchise model of product and service distribution.

The AAFD has helped spawn dozens of franchisee associations that were dedicated to building great relationships based upon fair agreements within their franchise systems.

The AAFD has created the only true accreditation for a franchise agreement and franchise system. The AAFD Fair Franchising Standards are truly a work of enormous potential for our community.

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Related readings:

• Cuppy's Coffee Franchise Allegations Are Disturbingly Familiar by Sean Kelly, Founder of Franchise Pick  
• Some Words From AAFD On Cuppy's Coffee and Elite Manufacturing by Bob Purvin, Chair of AAFD 
• Cuppy's Coffee: Some Words from AAFD Raises More Questions by Sean Kelly, Founder of Franchise Pick
• Fair Contract Is No Guarantee of Fair Play, Op-Ed by Chris Schmitz, President of Meineke Dealers Association 
• Cuppy's Coffee: Some Words from AAFD Raises More Questions