Coffee Beanery

Coffee Beanery is a Flushing (Mich.)-based chain of coffee shops operating in the United States, Europe, Asia, and U.S. Territories. The company was founded in 1976. Coffee Beanery locations serve espresso, fresh-brewed coffee, tea and other specialty drinks, while also selling gourmet coffee beans, tea bags, baked goods, sandwiches, soups, fresh salads and a line of branded mugs and coffee machines. The company sells coffee shop franchises and derives most of its income from selling equipment and products to the franchisees. History: In 1976 JoAnne and Julius Shaw began selling specialty coffee to consumers in their first store in Dearborn, Michigan. As of February 2007, the company had 131 franchise locations in the United States and another 25 in other countries, most notably in Kuwait, Bahrain, China, Cyprus, South Korea, United Arab Emirates and Lebanon. Business model: The store concepts offered to franchisees include retail specialty stores, coffee bars, kiosks, double-wide drive-thru and café stores. In 1997, the company introduced a new location concept, the café store, offering an extended menu of sandwiches, salads, soups and bakery goods. The café concept differed from earlier ones, requiring additional equipment, floor space and staffing, and locations outside of malls. The café concept was not treated differently in franchisee documents, so it was difficult for potential franchisees to tell if any cafés were making money. At least one of the café franchisees later sued, claiming they had planned to buy the traditional coffee shop but were enticed on discovery day to buy the café concept instead. Legal determinations: In 2006, the Maryland securities commissioner determined that the company had made "material misrepresentations" to prospective franchisees in violation of state law, and ordered it to release Maryland franchisees from their contracts without penalty. In 2008, the Illinois attorney general made a similar determination. The Maryland order also directed the company to "permanently cease and desist from offering and selling" franchises in Maryland. In the judge’s latest court order, he ruled “This case is buyers’ remorse” and the case was settled in 2013.