CUPPY’S COFFEE: “Pay-For-Praise” Franchise Allegations
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Cuppy’s Coffee franchise owner Mary affirms that Morg Morgan offered franchisees a financial incentive to provide positive recommendations to prospective franchise owners:
We were desperate for other ways to get revenue into our company and reached out to Morg Morgan several times, offering to be a consultant to some other franchsee going through the construction process, permitting, etc. He didn’t bite on any of those suggestions, but he came back to us with the offer of being a reference for potential franchisees and for us to keep track of how many references we gave.
If any of those potential franchisees signed up we would get a referral fee.
We were uncomfortable with this idea, because we refused to say anything but the truth if we were called for references. We asked Morg to put this plan in writing to us, but of course he never did.
We were called many times for references. I was always brutally honest, but not ugly in any way. I always prefaced my remarks with “I do not know what the current process is like because the company has changed and grown dramatically and has new people and programs in place.” I would tell them of my experiences, particularly that everything costs more than projected and that revenue has been less than expected, and would always state that I did not know what they would experience since the changes occurred.
I’m sure none of the ones that spoke to me actually signed up. We never heard any more about being paid to be a reference after that. At the same time, Morg also offered us the idea of being a “Master Franchisee”, which means if we were able to facilitate the sale of any new franchises in our area that we would be paid $5,000. We of course did not bite on this either, because we were not about to represent buying a Cuppy’s franchise as a good idea to anyone.
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