Joe Smith, Dennis Mason & NY Bagel Café Franchise Exposed: 10 Things You Should Know

Joseph “Joe” Smith is the founder and President of NY Bagel Café, a franchise concept with a near 90% failure rate.  Dennis Mason (“Mr. Dennis”) is the franchise salesman with a rich history of franchise lawsuits.  If you are thinking about buying a franchise from Joe Smith or Dennis Mason, or if you think ANYONE is policing franchising, here are 10 things you should definitely know.

(UnhappyFranchisee.Com)  The NY Bagel Café & Deli website states “NY Bagel Cafe & Deli is the brainchild of Joe Smith, an enterprising upstate New Yorker who saw the opportunities back in 1994 for making inroads in the franchise fast-food market… Then structure the business for ease of investment and operation, and ‘spread the wealth’ with other motivated self-starters … like you, perhaps?”

Joe Smith’s NY Bagel Café franchise may appear to be a great opportunity:  beautiful stores, delicious food items, happy, profitable franchisees… and 100% financing beyond the discounted franchise fee!

But before you get taken in by the beautiful pictures and the smooth talk of Joe Smith and Dennis Mason, there are 10 things you should know:

1)  NY Bagel Café franchises have a 90% failure rate

2)  Joseph Smith & Dennis Mason have been sued, collectively, more than 10 times

3) State franchise agencies and the FTC are reviewing complaints about NY Bagel Café

4)  Current franchisees are compensated for helping to close franchise sales

5)  NY Bagel Café franchise ads make untrue (in our opinion) promises of 100% direct financing beyond the franchise fee

6)  NY Bagel Café franchise advertising includes untrue and questionable representations

7)  NY Bagel Café has neither a proprietary bagel nor a protected trademark

8)  Joe Smith refuses to provide basic information about the franchisor corporate entity or its address

9)  Joe Smith refuses to show us a valid FTC-compliant Franchise Disclosure Document (FDD)

10)  We’ll have an attorney review the NY Bagel Café Franchise Disclosure document for you for free.

[Note:  This post contains the opinions of Relentless, Inc., publisher of UnhappyFranchisee.Com, which are based on publicly available sources and complaints we’ve received.  We continually ask Joseph Smith and Dennis Mason to provide corrections, rebuttals, and to point out anything they believe to be inaccurate or misleading… which we will post on receipt.  We invite our readers to conduct their own research and come to their own conclusions, and to consider every viewpoint – including ours – with a healthy dose of skepticism. – ADMIN]

Ten Things All Should Know About the NY Bagel Café Franchise & Those Selling It

1)  Nearly 9 out of 10 NY Bagel Café franchises that opened have closed

Unhappy Franchisee analyzed the NY Bagel Café company location lists and social media and discovered that between 2007 and 2015 approximately 35 locations have opened, 30 have closed… some within just a few months.  Several failed stores changed hands multiple times.

See our list of NY Bagel Café Franchise Failures.

 

2)  Joseph Smith & Dennis Mason have been sued more than 10 times

Joe Smith and Dennis Mason were sued by NY Bagel Café franchisees in West Chester, PA for fraud.  Read Rutherford bagel franchisor accused of fraud.

NY Bagel was also sued by Jeanette Mora, who won an arbitration case for return of her $29,500 franchise fee (Jeanette Mora v. New York Bagel Enterprises, Inc., et al., American Arbitration Case No. 18 114 e 730 10).

Joe Smith’s New York Bagel Enterprises, Inc. was sued by Bassam M. Barqawi, Basil M. AlBarqawi, Rima AlBarqawi, for a $29,500 franchise fee in 2011 which was not returned. Neither Smith nor Mason would return their calls once they had the money, forcing the AlBarqawi’s to sue.

In 2013, an arbitrator reportedly awarded Rockaway, NJ franchisee Min Huebner $385,000 in Huebner v. NY Bagel Enterprises, Inc.  Dennis Mason was named as a co-defendant.

In addition, Dennis Mason has a history of franchise controversy and litigation with multiple now-defunct franchise companies.

Read more at Dennis Mason Franchise Lawsuits [posting soon].

 

3) State & Federal agencies are reviewing complaints regarding the franchise sales practices of Joe Smith & Dennis Mason

Complaints have been filed with the Federal Trade Commission (FTC) and multiple state regulatory agencies regarding potential deceptive advertising, violations of the FTC Franchise Rule and the offering of franchises without registering in states where prior registration and approval is required.

California’s Department of Business Oversight is investigating allegations that NY Bagel Café unlawfully sold a franchise to Amber Robinson [pictured, left], a military veteran and single mother of two.  Amber’s Tracy, CA NY Bagel Café failed in only 5 months.  NY Bagel Café is neither registered nor approved to offer franchises in California, yet continues to advertise even after the Tracy store closed.

Read more:  Is NY BAGEL CAFÉ Violating Multiple State Franchise Laws?

 

4)  Current franchisees get paid a commission when a new franchisee signs on. Can their advice be trusted?

Usually, franchise experts suggest you speak to as many current franchisees as possible to learn about their experiences.  However, Joe Smith and Dennis Mason have seemingly turned their franchisees into commissioned salespeople… which makes positive feedback unreliable.

NY Bagel Cafe franchise ads claim that the company pays commissions of $2,000 to $7,000 to a current franchisee whose store is used to sell a new franchisee.  If a current franchisee is struggling to keep his head above water, do you think they’ll be eager to share their troubles and pass up a few thousand dollar commission?

Do you think they’ll tell you about the other 30 stores that have come and gone?

 

5)  NY Bagel Café franchise ads promise 100% direct financing beyond the franchise fee. We suspect that’s not true.

NY Bagel Café franchise ads on Craig’s list promise 100% financing beyond the franchise fee.

However, the NY Bagel website states:  “N.Y. Bagel Cafe’ & Deli does not provide direct financing.”

Joe Smith has refused to answer our requests for clarification, so we believe the promise in the ad is intentionally deceptive.

The NY Bagel Café franchise fee is NON-REFUNDABLE.  That means that if you pay a franchise fee of $17,500 – $29,500 and you are unable to obtain financing for the additional $100,000 – $200,000 investment, they get to keep your franchise fee and you get nothing in return.

We have heard from several people who say they were led to believe financing was available, and once they paid their fee and signed the agreement, they were handed a list of possible lenders it was THEIR responsibility to contact.  When they weren’t able to obtain financing, Joe Smith and Dennis Mason refused to return their money.

Read Janet Conlon’s account:  NY BAGEL CAFÉ Franchise a Scam? MA Woman Says Yes

 

6)  NY Bagel Café franchise advertising includes untrue and questionable representations.

We have found that Joe Smith and Dennis Mason include untrue, inaccurate and/or questionable representations in their franchise advertising.

NY BAGEL website states:  “Presently, there are 30 NY Bagel Cafe & Deli shops, and 50 more under development.”

THE TRUTH:  There are only 4 franchise locations (Houma, LA, Jersey City, NJ, Middletown, NJ, Doral, FL) and one company-owned location (Newburgh, NY).  30 have closed.

NY BAGEL website lists locations in Tracy, CA, Newark, DE, & Rivervale, NJ.

THE TRUTH:  Those locations have closed but remain listed on the website.

NY BAGEL ads claim:  NY Bagel Café has “96% brand awareness”

THE TRUTH: With only 5 local stores and no regional or national brand advertising, NY Bagel Café has little to no brand awareness in most markets.

NY BAGEL website claims it is the “#1 bagel franchise in the country.”

THE TRUTH:   NY Bagel Café has 5 stores after ten years in business.   Einstein Bros. Bagels has 600 locations in 40 states.  Bruegger’s Bagels has 300 bakeries in 26 states.  Noah’s New York Bagels has about 75 locations. Manhattan Bagel has about 70 locations nationwide.  Chicago-based Big Apple Bagels has about 87 locations.  Sorry, Joe, but NY Bagel Café is not anywhere near being the #1 Bagel franchise… nor has it ever been.

Also read: NY BAGEL CAFE Kicked Off Franchise Sites for Deceptive Ads

 

7)  NY Bagel Café has neither a proprietary bagel nor a protected trademark

Franchisees often buy a franchise to get the rights to sell an exclusive, proprietary product and the ability to operate under a protected, registered trademark.

NY Bagel Café sells non-proprietary bagels made by Davidovich Bakery and are available to anyone.  In fact, you can have the same par-baked bagels sold by NY Bagel Café Fedexed to your house overnight.

Joe Smith was unable to obtain trademark protection for the name “NEW YORK BAGEL CAFÉ & DELI” because in the opinion of the USPTO the words “New York Bagel” were too descriptive in nature and too generic to be claimed as a trademark by anyone.  That means if someone in your market is using the name “New York Bagel Café,” you not only can’t stop them, you can’t open a business with that name.

It also means that there’s nothing stopping someone in a new market, hypothetically, from opening a “New York Bagel Café” on their own and ordering Davidovich bagels directly, without paying a franchise fee or monthly royalty.

 

8)  Joe Smith refuses to provide basic information about the franchisor corporate entity or its address

Joe Smith won’t answer our requests for basic information about the franchisor entity or its location.

The NY Bagel Café website lists the corporate address as “301 Rt 17N Suite 800 Rutherford New Jersey 07070”

However, an affadavit from the Albarqawi lawsuit confirms that this is just an office suite that forwards mail to Joe Smith in Newburgh, NY.

The latest-known franchisor entity, New York Bagel Enterprises, Inc., was registered to that address but had its corporate status revoked by the State of New Jersey in 2011.

Read:  NEW YORK BAGEL ENTERPRISES INC. Franchisor’s Corporate Status Revoked

Joe Smith says that’s no longer the franchisor corporation, but refuses to say what is.

The NY Bagel Café logo is registered to New York Bagel Franchise, Inc. of Newburgh, NY which was dissolved by proclamation in 2011

 

9) Joe Smith refuses to show us a valid FTC-compliant Franchise Disclosure Document (FDD)

According to the Federal Trade Commission Franchise Rule, franchise sellers must provide a document called a Franchise Disclosure Document (or FDD)  to a prospective franchisees at least 14 days before they are asked to sign any contract or pay any money. The prospective franchisee has the right to ask for (and get) a copy of the sample franchise disclosure document once the franchisor has received the prospective franchisee’s application and agreed to consider it.

The Franchise Disclosure Document must disclose 23 specific items of information about the offered franchise, its officers, and other franchisees.  The NY Bagel Café FDD should disclose information about the franchisor, the identities and business experience of key persons, bankruptcies or litigation history, obligations of both the franchisee and franchisor,  financing arrangements, trademarks, financial performance representations (optional), and information regarding franchises that opened, closed or were transferred to new owners.

The NY Bagel Café FDD should include the number of franchise fees paid for stores that never opened.

The NY Bagel Café FDD should include the contact information for both current franchisees and franchisees who left the system.

The NY Bagel Café FDD should include important information about the company’s financial status, including audited financial statements to ensure the company is financially stable and has the wherewithal to fulfill its obligations to its franchisees.

While the FDDs of most franchises are publicly available through their state registrations, NY Bagel Café has not filed an FDD in registration states.

Requests for the NY Bagel Café FDD have been ignored by Joe Smith.

 

10)  We’ll review the NY Bagel Café Franchise Disclosure document for you for free.

Joe Smith refuses to provide us with the current franchise disclosure document he provides to prospective franchisees.

He has seemingly avoided providing his FDD to state regulatory agencies, despite advertising to their residents.

We suspect (we don’t know for sure) that the materials he is providing might not be in compliance with Federal Trade Commission guidelines.

If you are considering buying (or have bought) a NY Bagel Café franchise from Joe Smith or Dennis Mason, send us a copy of the franchise disclosure materials and the franchise agreement they have provided to you.  We will have a qualified franchisee attorney review it for you and give you an assessment free of charge.

Send us your NY Bagel Café franchise disclosure documents to UnhappyFranchisee[at]Gmail.Com.

Also read:

NY BAGEL CAFÉ Franchise: How Many Have Closed? [UPDATED]

NY BAGEL CAFÉ & DELI Franchise Complaints

DENNIS MASON Franchise Complaints

 

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