Coffee Latched, Part 3

I had no sooner written a comment saying that they must be out of business, hence the utter lack of communication, when I finally saw:

Denver’s Peaberry Coffee chain closes shop – The Denver Post 

Owners of five remaining franchise stores received letters Monday from Peaberry saying the company had closed. Some remain open, though not as Peaberry.

Deliveries were halted and access to the company’s computer system cut off, leaving operators with no way to ring up beverage sales.

Peaberry also closed five stores it owns outright. A sign on the downtown Denver store at 621 17th St. read: “Unfortunately, we are no longer able to serve you.”

And the reasons?

The decision came from a combination of factors: underperforming stores, the economic downturn and “the burden of the lawsuit” brought by franchisees.

In 2003 and 2004, Peaberry — a Denver-based coffee wholesaler and retailer that Tointin started in 1990 — sold franchises. Franchise owners in 2006 filed suit against Peaberry, alleging the company gave misleading and inaccurate financial information in the franchising process.

As a result, franchisees quit paying the company royalties — a percentage of the stores’ profits — in February 2008, Gottschalk said. However, the stores continued to pay for Peaberry products.

A Denver district judge last year ruled against the franchisees and said they owed the company the unpaid royalties. An appeal is pending.

Peaberry “went out of business and left the franchisees twisting in the wind,” franchisees attorney Rick Podoll said. He called the company’s closing “the most egregious case of aggravated fraud that I’ve seen in 30 years of handling fraud cases.”

So either Peaberry screwed its franchisees for all they’re worth and once the last bit of fraudulent money was squeezed out closed things down, or Peaberry was hounded to death by franchisees what wanted a bigger profit but only ended up killing the bird that laid the lightly roasted egg, or varying factors of both.

In either case, it’s sad, both for customers, for the folks who lost their jobs, and for the folks who are struggling to hang on in renamed ex-franchises.