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AAFD's Statement Regarding the
Suspension of Cuppy's Coffee Accredited Contract Status
Other Topics:
Coffee Contract
AAFD
August 9, 2008
The American Association of Franchisees and Dealers
(AAFD) announced today that it has suspended its
recognition of Cuppy’s Coffee and More, LLC as an AAFD
Accredited Contract recipient, pending a determination
of the Association’s Board of Directors that AAFD’s
Accreditation of the Cuppy’s contract should be
withdrawn.
In an Email to Cuppy’s CEO, Dale Nabors, AAFD Chairman
Robert L. Purvin stated, “Due to the serious allegations
that have been raised [regarding Cuppy’s failure to
honor various contractual commitments], and your
apparent decision to cease our communications, I have
determined to suspend your Accredited status with the
AAFD pending consideration and action of the AAFD Board
of Directors.”
In a formal notice being delivered today to Cuppy’s
Coffee, Purvin added, “In that the AAFD Board of
Directors next meeting is set for September 4, 2008, I
am acting to immediately to suspend Cuppy’s Accredited
Contract status pending action of the AAFD Board. I am
causing this action to be published on the AAFD Website,
and to appropriate media. All listings of Cuppy’s Coffee
will forthwith be removed from the AAFD Website, and we
are instructing Cuppy’s management to remove all
references to the AAFD from its Website and franchise
marketing literature.”
Cuppy’s earned AAFD Accredited Status in May of 2007 in
an admitted effort to reinvent its corporate personal
and ‘arise from the ashes’ from legal and economic
difficulties of its predecessor brand, Java Jo’z.
As part of its commitment to collaborative franchising
practices, Cuppy’s adopted a new franchise agreement
that substantially complied with the AAFD’s Fair
Franchising Standards and further agreed to support the
formation of an independent franchisee association, to
collaborate with the development of a purchasing
cooperative to be jointly owned by Cuppy’s and its
franchisees, and to submit claims and disputes to
mediation upon the request of any party.
In February of this year, the AAFD became aware of
several claims that Cuppy’s or its affiliate, Elite
Manufacturing, was not honoring promised construction
deposit refunds. The AAFD commenced a publicly announced
investigation of these ‘refund’ claims, including
tracking some 22 refund demands that had been made
between October, 2007 and April 2008. The AAFD reported
that if it was determined that Cuppy’s was not honoring
the provisions of its Accredited Contract that the AAFD
would act to suspend or withdraw AAFD Accredited status
to the company.
The AAFD was able to confirm that 18 claims had been
resolved in a commercially reasonable fashion, and four
claims were disputed. Cuppy’s issued a public statement
of its intent to honor its contractual commitments, and
to submit disputed claims to mediation through the AAFD.
Through April, Cuppy’s fully cooperated with the AAFD’s
investigation.
In April, 2008, Cuppy’s was sold to a new management
team. The AAFD was subsequently advised that the company
would abide by all written commitments, but that any
oral commitments, including publicly acknowledged
commitments to promised initiatives regarding an owners
association, the purchasing cooperative and to mediate
claims and disputes would be subject to further review.
Between July 15 and August 5, the AAFD became aware of a
new series of complaints that Cuppy’s and/or Elite
Manufacturing was not performing promised build outs of
franchisee storefronts. Some claimants contended that
they had been waiting for promised construction for
months (and in some cases for more than a year), during
which time the claimants were unable to open for
business but were bound to pay rent on their premises.
Around this time, the AAFD also learned that Cuppy’s had
been sued by its retained general contractor for
non-payment of construction invoices.
Despite diligent efforts of the AAFD to complete its
investigation and to gain Cuppy’s fulfillment of
promised initiatives with its franchisees to avoid
sanctions from the AAFD, Cuppy’s new management has
ceased to be cooperative, and since June 12, 2008,
Cuppy’s has not replied to repeated invitations from the
AAFD to respond to this new waive of complaints and
allegations.
Mr. Purvin added that it is still not too late for
Cuppy’s to avoid ultimate consequences by the AAFD. Said
Purvin, “Our purpose remains to inspire fair contracts
and collaborative relationships, and we are open to
negotiating and mediating effective relief for all
Cuppy’s franchisees in a manner that will effect
restitution from injuries and will allow Cuppy’s Coffee
to achieve the corporate goals set by new management
upon its acquisition of the company.”
Purvin added, “The path to a successful resolution of
the Cuppy’s quagmire is through communication,
negotiation, collaboration, and if necessary, mediation.
The path to certain destruction is to ignore the problem
and face an inevitable and costly litigative path.”
About the AAFD
The AAFD is a national non-profit trade association
representing the rights and interests of franchisees and
independent dealers throughout the United States. Formed
in 1992, The AAFD is focused on market driven reform to
achieve its mission to define and promote collaborative
franchise cultures that the AAFD describes as Total
Quality franchising. Since its formation the AAFD has
grown to represent more than 50,000 franchised
businesses
throughout the United States. The AAFD currently has
members in all 50 states and represents more than 100
different franchise systems.
The AAFD's Fair Franchising Standards, Fair Franchising
Seal, Trademark Chapters, and emphasis on Marketplace
Solutions led to the Association's recognition as a
growing force in franchising. The AAFD’s Branded Partner
programs add a new dimension to the value of AAFD
membership. The AAFD provides a broad range of member
services designed to help franchisees build market
power, create legislative support of interest to
franchisees, provide
legal and financial support, and provide a wide range of
general member benefits.
For more information about the conference or the AAFD,
please call toll free 800-733-9858 or visit
www.AAFD.org. |
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