Back in March, we ran a story about Deborah Williams and Richard Welshans, a Maryland couple who alleged that they’d been defrauded by the Coffee Beanery, a national coffee franchiser. They tried to sue to recover some of the more than $1 million they lost after opening a Coffee Beanery cafe, alleging that the company had failed to disclose the fact that most of their franchises failed within three years rather than netted $250,000 in profits, as the company officials had promised. Instead, the couple landed in mandatory arbitration hell. A private arbitrator, hired by Coffee Beanery, ruled against them and ordered them to pay Coffee Beanery more than $100,000, which included the opposing counsels’ lunch tab during the hearing.
The couple fought the decision all the way through the 6th Circuit Court of Appeals, which earlier this year overturned the arbitrator’s decision, paving the way for Williams and Welshans to sue the Coffee Beanery in Maryland civil court. But Welshans and Wiliams might have had a much happier ending to their story if they’d been able to access the civil justice system from the beginning, and had their complaint heard in a real court of law, with a real judge and a real jury. Instead, the failure of their franchise plus the arbitration and expensive legal battle sent them into bankruptcy. Now, they are about to lose their house. Last week, Deborah wrote to me saying that their lovely waterfront Annapolis home was going into foreclosure and they had 45 days to leave the premises. In an email she writes:
We now have nothing left to lose. We thought that if by a miracle, we should win our appeal we would finally achieve Justice. But even that was not to be. We are the first franchisee in the State of Maryland to be denied the protection of Maryland Law. I’m crying as I write this, because for the first time I realize our backs are broken and there seems to be nothing left for us. We don’t know where we will go. Renting will be almost impossible, I still have not been able to find a job, and then there is the bankruptcy. As you can imagine, any landlord would determine us a high risk.
I continue to try and find an answer as to why our lives have brought us to this point. Rick and I have always been law-abiding, tax paying citizens. Not even a traffic violation. Yet we have been destroyed. We find ourselves at the age of 56, and not even knowing if we will have a roof over our heads 45 days from now. It’s still hard to believe. Prior to this experience, we would see TV specials on homeless people, and wonder how so many people who had been so successful could become homeless, in what seemed like overnight.
Now we know.
Meanwhile, Williams tells me that Coffee Beanery has continued to sell franchises in Maryland and Illinois, both states where officials found problems with the company’s disclosure forms and prohibited it from selling franchises there. So far, according to Williams, the company has not been sanctioned as a result, leaving the franchise free to dupe other unsuspecting investors into its money-losing investment scam. It’s hard to blame the couple for being bitter.