Posted On: January 15, 2010
Potential Franchisees Do Your Research First—You Can't Afford to be Wrong!
Earlier this year, Cuppy's Coffee, a franchise founded in Florida but later moved to Alabama, simply disappeared into oblivion leaving nearly two hundred franchisees without a franchisor. A warrant for the CEO of Cuppy's, Robert Nabors, was issued in Okaloosa County, Florida, in March of 2009. Some of the investors now face bankruptcy as a result of investing hundreds of thousands of dollars in the franchise but never even getting to open their business. Cuppy's took the franchisees' money but, never built their stores. From the start, Cuppy's was a questionable franchisor; Cuppy's grew out of the failed franchise, Java Jo'z.
Cuppy's isn't the only franchisor to be hit with lawsuits in Florida; I recently posted a blog discussing The UPS Store franchisees suing UPS alleging it withheld information from franchise purchasers regarding profitability. Another franchisor sued by its franchisee is Cold Stone Creamery, which was sued by a Tallahassee, Florida, franchisee on claims of fraud related to the store's profitability.
I find the continuous stream of investors in franchises and other business opportunities who buy into risky and questionable businesses both startling and saddening at the same time. The most important thing a potential franchisee can do is research the company; that means researching other sources of information about the franchisor and not just relying on information provided by the franchisor itself. Potential franchisees can look to sources such as, franchise magazines, franchise blogs, franchisee associations, and talk to current franchise owners to find out things like what kind of support, feedback, and dispute resolution the franchisor provides. In addition before signing any Franchise Agreement a potential purchaser should seek counsel from an attorney experienced in franchise law.
Cuppy's isn't the only franchisor to be hit with lawsuits in Florida; I recently posted a blog discussing The UPS Store franchisees suing UPS alleging it withheld information from franchise purchasers regarding profitability. Another franchisor sued by its franchisee is Cold Stone Creamery, which was sued by a Tallahassee, Florida, franchisee on claims of fraud related to the store's profitability.
I find the continuous stream of investors in franchises and other business opportunities who buy into risky and questionable businesses both startling and saddening at the same time. The most important thing a potential franchisee can do is research the company; that means researching other sources of information about the franchisor and not just relying on information provided by the franchisor itself. Potential franchisees can look to sources such as, franchise magazines, franchise blogs, franchisee associations, and talk to current franchise owners to find out things like what kind of support, feedback, and dispute resolution the franchisor provides. In addition before signing any Franchise Agreement a potential purchaser should seek counsel from an attorney experienced in franchise law.
