Cuppy's Coffee CEO Dale Nabors Arrested! Wanted in Florida

"I estimate that there are some 200 or more franchise owners out there who have been convinced to hand over $30 million of their money to Cuppy's, based on the reporting from the SBA prepared by Cuppy's and Funding Solutions. That information has been removed from the Internet."
May 6, 2009

Cuppy's Coffee CEO Dale Nabors Arrested! Wanted in Florida
Don Sniegowski

MUSCLE SHOALS, Ala. – Robert Dale Nabors, chief executive officer of Cuppy’s Coffee, Medina Management and principal of FranSynergy, was arrested on March 31 by Alabama’s Colbert County authorities for being a fugitive from a Florida warrantfor his arrest. The local online news, ShoalsInsider, posted information on Mr. Nabors' arrest on its site the next week, April 6.

The face value of Nabors' bond was $1,500. A Colbert County judge allowed for a $150 cash bond that granted Nabors temporary freedom the next day.

The Florida Attorney’s office originated a charge for Mr. Nabors' arrest because of two reported felony worthless checks. According to Nicole Wagner, community relations coordinator for Florida’s Okaloosa Sherriff’s Department, worthless checks over $300 are considered a felony offense. When Nabors did not show up, Florida considered him a fugitive from justice.

In April of 2008, FranSynergy, the company that Dale Nabors founded and heads, took over troubled entrepreneur Robert Morgan’s Medina Management firm, which includes franchising firm Cuppy's Coffee. With over 80 employees, the size of Cuppy's work force was considered quite large by franchise experts, given the size of the chain and the trickle of royalty payments coming in. Nabors took over the company, but unlike Morgan, he took over both the firm's assets and its troublesome liabilities. He began downsizing the company, suspended franchise sales and announced he would focus on strengthening franchise store operations. A few months later he closed down the distressed franchise chain's spacious headquarters from Fort Walton Beach, Florida and moved a few personnel to Muscle Shoals, Alabama.

One company insider thought that the unpaid checks that Nabors is charged with most likely are from the bounced paychecks sent to terminated Fort Walton Beach employees. After the paychecks bounced, Nabors promised to drive down that Friday to pay cash to his ex-employees left behind. But according to a former employee, he never came.

Employees were upset.

Below is the Florida Warrant for Dale Nabors
Florida Department of Law Enforcement—Wanted Person

If you have information about a missing or wanted person, do not take action on your own! Please contact the reporting agency. [If you wish to report a tip without disclosing your name, you may do so.]

Date of Birth: 05/24/1963
Reporting Agency: Okaloosa County Sheriff’s Office
Offense: Fraudulent Activities
Agency Case #: 2009CF570S
Date of Warrant: 03/27/2009
Height: 5′ 07″
Weight: 133
Hair Color: BROWN
Eyes Color: BLUE

Cuppy’s Coffee and related Java Jo’z have seen considerable controversy in the last two years. Java Jo’z founder Roy Snowden went to prison for tax evasion and fraud. The assets of the Java Jo’z chain were promptly sold to Robert Morgan without any of the liabilities. Some watchers of the firm felt that this showed signs of fraudulent conveyance, where a firm is sold for almost nothing to a new buyer with the understanding that the old owner will receive future benefits. Such under-the-table dealings with a wink of unwritten monetary benefits to the seller are illegal. But Medina's former in-house counsel confirmed with Blue MauMau in 2007 that Mr. Morgan had not acquired the firm for nothing and had deposited a downpayment.

The reborn firm originally denied any ties to Java Jo’z, despite almost identical logos and the use of the same employees, stationery and office. It also avoided putting the Java Jo'z ties and information on its franchise disclosure documents, something the law requires. Although franchise chains sometimes would like to hide the information that their founder went to jail for tax fraud, the disclosure document is designed to reveal to franchise investors a chain's history and background.

The amount lost by employees is a fraction of the amount allegedly lost by the system’s franchise owners. A number of starting franchisees accused then head Robert Morgan of not returning their $30,000 deposit when there was nothing to show for it. In addition to the deposit, a Cuppy’s Coffee store can cost hundreds of thousands of dollars in total investment from franchise operators.

Many franchise owners complained that the Cuppy's Coffee business model wasn’t profitable and that they were losing their life savings.

Ms. Claudia Robbins, a Delaware-based owner who bought her Cuppy's Coffee franchise right out of MBA school in November of 2005, is one of those individuals. She still owns a store but says, "I really have no hope of ever covering my debt service with the shop. I have just started a full time paying job, which 60% of my salary would go to debt service if we do not declare bankrupcy." She says, "Our total expenditures so far are about $400K."

There were allegations of money paid for store construction but no actual build-outs. The PNC Bank pulled out from funding the franchises. And then the Small Business Administration launched a quiet investigation into SBA-backed loans that were approved for Cuppy’s, where money was allegedly released to pay for build-outs of shops, but that were allegedly never built.

Robbins was one who incurred debt from PNC bank. The bank sent a check for the finished build-out, but there was actually no shop build-out. That helped her realize that something was very, very wrong with the franchise system. Of the whole fiasco, she now concludes, "I hope Dale Nabors' arrest will now draw the attention of the media and the Florida Attorney General to the alleged fraud which has been committed by Dale, Robert Morgan and others."

The franchising and affiliated companies have disappeared. Web sites such as and are gone. The firm's phones are disconnected. Its CEO's emails no longer work. And franchisees and employees have not heard from its underground CEO in weeks or months.

According to a web page by lending broker Funding Solutions LLC, Cuppy's franchise system last year had at least a couple hundred franchises. This year the chain has now largely disappeared.

So how much have franchise owners of Cuppy's been bilked?

Michael Webster, a franchise attorney practicing in Toronto, has been watching the Cuppy's Coffee fiasco almost from beginning to end, with its initial franchise system boom and then implosion. He states, "I estimate that there are some 200 or more franchise owners out there who have been convinced to hand over $30 million of their money to Cuppy's, based on the reporting from the SBA prepared by Cuppy's and Funding Solutions. That information has been removed from the Internet."

Ms. Robbins talks about the stress of her Cuppy's business failing. "My parents owned a business and I knew of the sacrifices and hard work which was involved," she says. Still, the hole that her business has slid down has caused considerable hardship. "I have lost 50 lbs from stress since labor day." She continues, "I worry more about my husband who is slightly older than me (58). We're both on anti-depressants, which I have never needed in my life." But she also adds, "Thank God I have a fabulous husband and we never got into an argument where one of us blames the other for this."

Although it looks increasingly like she will need to close her shop, she is still hopeful. In every email, Robbins concludes with a quote from Ralph Waldo Emerson, "Our greatest glory is not in never failing, but in rising up every time we fail."

Nabors is scheduled to be arraigned on May 20 at 8 a.m. in the Colbert County District Court, the county in which Muscle Shoals, Alabama is located. Judge Carpenter will preside.

Florida’s Okaloosa County Sheriff’s Office awaits Mr. Nabors' extradition from Alabama to Florida to face charges.

The publisher of local online paper the ShoalsInsider told Blue MauMau that he plans to write a news story on the event, and a local television station is planning to air the story.

Related Reading:

* Shoals Insider: CEO arrested, may have bilked investors for $1 million+
* Cuppy's Coffee Announces Move to Alabama
* Cuppy's New CEO To Improve Operations and Meet Refund Obligations
* Cuppy's Coffee: In-House Attorney Attempts To Set Record Straight
* Cuppy's Franchisees Desperately Plead for Answers
* Cuppy's Speaks Out on Accusations, SBT, AAFD and More
* Cuppy's Coffee & John Dozier: What Franchise Times Won't Tell You
* How Blogging Saved the World: A Tale of Java Jo'z and Cuppy's Coffee

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