International Law

Cuppy's Coffee Interview

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Sean Kelly has an interesting conversation with a Cuppy's Coffee Franchisee, which highlights the big mistake prospects make in reviewing a franchise opportunity.

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

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

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

Joshua:  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.

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

Joshua:  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."

It is clearly silly to rely upon the BBB for a franchises recommendation.

But, the bigger error, something that I see all the time, is the failure to realize tha the oral representation about earning claims is inconsistent with the Cuppy's UFOC, or Uniform Franchise Offering Disclosure document, in particular item 19.

This is a major red flag - you drive through this one and you deserve the crash you will end up in.

So how did Cuppy's obtain the AAFD award, if there is this major red flag? Simple, despite my protestations, the AAFD decided not to mark contracts based on standard 15, which in part covers the franchisor's disclosure obligations!

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Full post as published by Misleading Advertising Law on October 07, 2008 (boomark / email).