Complaint Review: Cuppy's Coffe / Elite Manufacturing LLC

Franchise Owned:

None. We tried to be part of Cuppy's Coffee but the bank did not qualify us. Cuppy's Coffee/Elite Manufacturing owe us a refund.

Time period of ownership:

We applied for the Caf Franchise in August 2007. We signed a purchase order in September, 2007 and sent $37,900.00 to Elite. We also signed a lease agreement in October 10, 2007 with Elite and Advantage Leasing Company for the Cuppy's Coffee Mobil Unit. We were going to operate a Caf and a Mobil Unit. We had to send Advantage $6,000.00 as a down payment for the Mobil Unit. Advantage in turn sent Elite $28,327.00 to start building the unit.

Franchise fee? Royalty? Marketing/other fees?

They stated at the beginning of our relationship that they will not charge royalty fees nor any other fees but when they sent me the franchise contract these fees were added.

Current Status on the CAFE: (Franchisee, Ex-franchisee, Prospective franchisee)

We are ex-prospectives waiting for a refund since December 2007 when we notified them that the the bank turned down our application. It was until June 9, 2008, six months after begging for our refund, when Elite stated that they will refund us the money in payments. We accepted out of desperation and signed a settlement. They sent their first payment of $1,500.00 in July 2008. Payments of $1,500.00 were due every month after that. We have not received anymore payments. It looks that they are not going to send anymore payments according to a conversation we had with the legal aid in Elite's office.

Current Status on the MOBIL UNIT: (Franchisee, Ex-franchisee, Prospective franchisee)

We are ex-prospectives waiting for a refund. The Mobil Unit was not included in the above mentioned settlement. Elite never built the Mobil Unit. Time went on and they were not returning any phone calls nor e-mails. Due to the way they treated us and handle their business with us, it was clear to us that Cuppy's/Elite did not want to do any business with us. So, we ordered a cancellation to Elite and Advantage Leasing. Elite did not return the $28,327.00 to Advantage. Advantage has filed law suit against Elite and charging me interest for the $28,327.00 ($1,617.00 so far). Advantage will not return my $6,000.00 until it recovers it from Elite.

Total investment to date:

$37,900.00 Cafe
$6,000.00 Mobil Unit
$1,500.00 Credit
$42,400.00 Total

What's your background? What were you doing prior to owning your franchise?

I, Joshua, am a kindergarten teacher. Clara, my wife, is a nurse at a convalescent hospital. We are leaders at our jobs and were convinced that as leaders we had the skills to hire managers and run a Caf business while maintaining our current professions.

When did you decide you wanted to own your own business? Describe the process you went through to determine which franchise to buy.

We started with the idea of investing to make extra money. The idea was to use the bank's money and invest it. So, we opened an equity loan to start investing. We made a Real Estate investment that went bad; we lost money. We started searching on the internet and came across the Franchise Gator. Franchise Gator showed all this great opportunities to start a business. We also had read an article that most rich people were business owners. I made inquiries to several franchises. They all called back including Cuppy's Coffee. However, Cuppy's made the most promises and made it sound so easy that I went with them. I didn't bother to check them out because they were members of the Better Business Bureau, had the seal of the AAFD with the highest score ever achieved for fair franchising standards and were recommended by Franchise Gator, an internet service with guidance and information to franchise seekers. I also took the time to visit a Cuppy's Coffee store. The owner gave me all the encouragement to go with the business franchise.

How did you first learn about the general concept? What did you find appealing about this type of business?

Coffee business here in California was blooming. Other coffee businesses were making so much profit, so, we decided to sell it too.

How did you first hear about your specific franchise? What attracted you to the company?

The Franchise Gator recommended and introduced us to Cuppy's Coffee. Cuppy's was a member of the Better Business Bureau and had the seal of the AAFD with the highest score ever achieved for fair franchising standards. I also took the time to visit a Cuppy's Coffee store. The owner gave me all the encouragement to go with the businesses. What was also attractive to us is that they stated that they did not charge royalty fees: a very appealing offer to a starting franchisee with limited assets.

Describe the company's sales process and your interaction prior to becoming a franchisee.

A contact person got in touch with me. He answered all my questions very politely and was very encouraging. Every time we talked, I ended up with the feeling that I was going to do great and that things were going to be so easy because the franchise will be with me 100%. They stated that my profits will run from $1,500.00 to $5000.00 per day.

How was the company's training and pre-opening support. Was it a positive experience?

I never got into training. As soon as they got my down payment, the calls to me stopped. They became very hard to reach, and when I was able to talk to someone, they were rude.

What marketing and promotional guidance, programs & support were provided? Were they effective? Why or why not?

They stated that my financial pre-qualification by them looked very good and was directed to start looking for a business location. They directed me to get contact names and numbers from the prospect business locations that were qualifiers by a ranking sheet they provided me through e-mail. They did not call them as they had promised. I started calling them myself and was able to narrow down a location that I was interested in. The owner provided me with a lease. I e-mailed it to Cuppy's. They in turn, told me that a lawyer had to review it. They introduced me to a lawyer stating that the lawyer was going to charge to prepare the lease. I made a consultation with the lawyer over the phone but there was never a lease prepared. Now, the lawyer is charging me $1,500.00. I turn to Cuppy's for answers and never returned my calls.

How was your grand opening and your first year as a franchisee?

The grand opening was all a promise and a dream that never came true. I was promised that my grand opening was going to be done in time for the Christmas holiday. They promised that at the grand opening they were going to send the Cuppy's Mascot. They promised that Cuppy's trainers were going to help me run the business for at least two weeks making sure everything was going smoothly. They stated that my profits will run from $1,500.00 to $5000.00 per day. They promised me to honor my request to schedule the training during a week of October when I had a week off from teaching. They promised me to accommodate all my family and that it was okay to bring them over. My wife requested her vacation at that time. And when it was near the time for the training, nobody had talked to me. So, I began to inquire again about it. Phone calls and e-mails were not replied. I finally talked to someone who directed me to the Cuppy's College director who did not know anything about me. She got upset that I was requesting a date for the training. I explained that those dates were promised to me. She yelled at me accusing me of trying to get ahead of the line. She yelled that it wasn't fair that I should get ahead of others that were in front of me. Then, she stated that she was going to make contact with me when she had a date for my training. I replied that I was a school teacher and that I couldn't just leave my class to attend the training on any date. I also told her that my wife had already requested her vacation per instructions from the person who introduced us to Cuppy's so that she could also attend the training. She didn't care and referred to me as a person of a retarded mind.

Was owning this franchise what you expected? Why, or why not?

No. See above.

Was the ongoing support what you expected? Why or why not?

No. See above.

What were the positive aspects of your experience?

None.

When did things start to go wrong? What was it that made you an unhappy franchisee?

I felt I was pressured by Elite to give them money. I still had questions about the company and she wanted the money that same day before 4 p.m. her time. I'm in the Pacific Time which is three hours earlier. They had offered a $3000.00 towards Cuppy's College traveling expenses but only if I sent them the money that same day. My wife had to request to get off work early for us to wire the money. As soon as I gave them my money, they stopped talking to me. What makes me unhappy is that they are not only stealing hard earned money from good honest people, but robbing them of the American dream: The dream to make it and be successful in the land of opportunity.

Have you tried to resolve your issues with the franchisor? What was the outcome?

In June 9, 2008 Elite stated that they will refund us the Caf money in payments. We accepted because we had no other hope. We signed a settlement and they sent their first payment of $1,500.00 in July 2008. Payments of $1,500.00 were due every month after that. We have not received anymore payments.

What is your current situation? What would you like to see happen at this point?

What they owe me came from an equity loan. I'm making payments on it with interest. I would like to get my money back so that I can pay off this loan and go on with my life. I am willing to help in whatever I can to resolve this situation and the situation of other franchisees.

Do you think that the franchise concept is a viable? Under what conditions?

It is viable for the rich who are the only ones who can invest in the good and expensive Franchises. The rich could hire expensive lawyers to make sure they don't get ripped off. For us, who could only rely on good credit, to invest in small unknown franchises through a bank loan, are vulnerable to fraud. It is viable as long as franchises have the seal of the AAFD with the highest score ever achieved for fair franchising standards. Wait a minute!!! Cuppy's Coffee had that seal!!! How? Why? I think we should make the AAFD responsible for all the damage as well.

What mistakes did you make? Looking back, what would you have done differently?
I should have checked this company throughout like the way I'm doing it now and not pay any attention to the fact that they belong to the AAFD and BBB.

How has your franchise investment decision affected your life?
I'm broke with my wife and 3 children to support. My paycheck comes and goes and my bank account is going in red numbers.

What advice would you give to prospective franchise owners? What questions should they ask? What warning signs should they look for?

Do your research and check the company throughout even if they are affiliated with the Better Business Bureau and other affiliations. If you are financing the business, make sure you are qualified by the loan institution before you do anything. I was qualified by Cuppy's and they assured me that I had no problems in getting a loan from a bank. It turned out that I didn't qualify. All the phone calls, money, and time spent was for nothing. A bank should qualify a franchisee before anything else.

Joshua
Apple Valley, California
U.S.A.