Transcripts For CNBC The Profit 20240712

Lemonis if i cant help them and their franchisees find a way forward. Im pissed right now. I am record pissed. Tea time will be over. And i am not gonna [bleep] around. My name is marcus lemonis, and i risk my own money to save struggling businesses. Were not gonna wake up every morning, wondering if we have a job. Were gonna wake up every morning, wondering how many jobs we have to do. Its not always pretty. Everythings gonna change. Everything. But i do it to save jobs, and i do it to make money. This is the profit. Lets go to work. Taylor welcome to tea 2 go. How are yall doing today . Lemonis in 2013, jeff hunt enlisted his son, taylor, to help him launch tea 2 go a franchise concept offering madetoorder drinks and looseleaf tea by the ounce. Taylor you need sweetener in that one. Lemonis he wasted little time Building Stores and pitching franchises. Jeff to built out, to initially open it, all the furniture, probably around 108,000. Lemonis and many folks bought in. Ryan cowboying doesnt have a good retirement program, and so we thought this would be a neat opportunity to get into. Lemonis but he had never actually proven the model, and of the 19 locations that sprung up, only 11 remain today. Man its a tough location just because people dont know that were back here. Lemonis jeff is now juggling a Million Dollars of debt. Jeff this store technically probably needs to be closed. Lemonis the two stores he does own are failing, and his nine remaining franchisees are twisting in the wind with little or no support from the parent company. As crowded as the coffeeshop space has become, tea still has tremendous room to grow. And with its 11 locations, tea 2 go already has a solid footprint. If i can help the hunts turn it around, i think we have a real shot at success. Jeff howdy. Welcome to tea 2 go. Lemonis how are you . Jeff good, how are you . Lemonis im marcus. Jeff jeff hunt. Lemonis hi, jeff, how are you . Are you the owner . Jeff yes, sir. Lemonis nice to meet you. Jeff my son, taylor. Taylor taylor. Lemonis taylor, how are you . Taylor doing well. Nice to meet you, marcus. Lemonis youre looking sharp today. Taylor thanks. I dressed up. Lemonis this is interesting. I wanted to get, like, a chance to just look around for a minute. Look, if i had to describe this store in one word, it would be barren. There are no accessories for sale, no pointofpurchase system, and zero food. Its almost like they did the absolute bare minimum and then said, yeah, this is good enough. Whyd you do a tea business . Jeff i just thought there was a need, you know. Obviously, it was starbucks. I just feel that its only in the upper 1 type malls and areas in our country, and i felt there was a need to bring it to the regular mother of four. Lemonis and so what is your relationship, the two of you . Jeff im still a dad first and a boss second. Lemonis how old are you . Taylor 23. Jeff 40. Lemonis so, he was born when you were 17 . Jeff turned 17 three days after he was born. Lemonis okay. Jeff i didnt get to do a lot of stuff that i wish i had while he was growing up. Just wasnt around. Lemonis where were you . Jeff messing around, trying to figure out my life. I didnt get to watch him play tball, softball, soccer. Taylor i mean, it is weird. We started kind of going fishing when i was about 18. Were trying to learn each other. This has allowed us to build a relationship. Jeff you know, i wanted to bring my son on board not only to teach him lemonis so you guys started this business together . Jeff well, i started it in 2012. Lemonis so, when did you come on board . Taylor the summer of 13, i left school. Lemonis you left college to start a tea business with your dad . Whered you go to college . Taylor university of texas in austin. Lemonis why did you think it was a good idea to leave college . Taylor because he asked me to. Lemonis thats why you left . Taylor i mean, that was the start, but then ultimately, i saw opportunity. Lemonis so, how far away were you from graduating . Taylor about two full semesters. Lemonis so you had basically a year left. Taylor yes, sir. Lemonis what were you studying . Taylor marketing and management. Lemonis things you need in business. Taylor if i could go back and make the decision again, i would make the same decision. Lemonis why dont you go ahead and get changed . I appreciate you dressing nice. Taylor okay, yeah. Lemonis its nice to know that jeff wanted to build a relationship with taylor, especially after the mistakes from the past, but to ask taylor to drop out of college . I wouldnt say thats exactly great parenting. Lemonis you look like youre in the tea business now. So, i want to taste the tea. I want you to pick two of your most popular teas on the whole wall. Taylor okay. Lemonis so, what is this that youre doing here . Taylor so, we are steeping your tea. This is the madagascar coconut white tea. Lemonis okay. Which ones this . Taylor thats the coconut chai. Lemonis theyre both good. So break down the cost for me. Taylor our cost on your actual tea lemonis how do you buy it, by the pound . Taylor we buy it by the pound. Lemonis and so how many scoops go into a pound . Taylor 128. Lemonis and so, and how much is it a pound . Taylor the madagascar coconut, 15 a pound. So 15 divided by 128 is 11. 7 cents, roughly 12 cents, and so the cup is how much . Taylor okay, so your cup is about 12 cents, your lid and straw is about 2. 5 to 3 cents, totaled up, 27 cents. Lemonis and what does that retail for, that exact size . Taylor about 2. 89. Lemonis so its got a 90 margin . Taylor yes, sir. Lemonis now you know why im interested in the tea business. The margins are spectacular. Tea 2 go seems like takeout. I mean, why not tea 2 stay . People are sitting around here. Why do you want people to go . Taylor we have been asked that question many times. Lemonis why dont you offer scones or theres nothing to enjoy my tea with, so theres no coffee as an alternative. Theres nothing to eat. Why dont you have that here . Jeff cost issue. Lemonis and this is the only looseleaf container to take home . Jeff in this store. Lemonis do you guys like tea . Jeff im not a tea drinker. Lemonis youre not a tea drinker . Jeff no. Lemonis are you guys trying to kill this store . Why get into the tea business if you dont absolutely love it . I mean, its now really obvious to me why this place looks so halfassed. If you dont have passion for it, its gonna show to the customer. How much business does this location do . Jeff this one only is grossing right around 10,000. Lemonis so, how much does this store lose a month . Jeff 3,500, sometimes 5,000. Lemonis so, it can lose anywhere from 40,000 to 60,000 a year. Jeff yes. Taylor and currently, we own two other stores, this one and the one in austin, and i gm that store. Lemonis how many different teas do you carry . Taylor theres a signature set of 65 teas that are gonna have to be in every single store no matter what. Lemonis and so all of your tea comes from the same distributor . Jeff yes, sir. Taylor we have a tab that weve kind of gone too far on. Lemonis how much do you owe . Taylor around 75,000. Lemonis how much is really past due . Jeff all of it. Lemonis all of it. The distributor that they have now distributes essentially 100 of their product. If he wants to close the business down, he just stops shipping. The question that i have is, why hasnt he shut him down . So i wanted to meet him and find out what the real story was. Hi, im marcus. Manish manish, nice to meet you. Lemonis nice to meet you. You provide them all the loose tea . Manish everything, actually. We bring in all the looseleaf teas. We bring all the flavors, all the ingredients. Lemonis so, you obviously know the tea business. Manish yes. Lemonis i mean, thats your thing. Have you been doing it for a long time . Manish 18 years. 85 of all tea consumed in this country is cold, so its a really nice tea concept. Lemonis who do you work more with . Manish taylor. Lemonis and how often do you work with jeff . Manish we probably chat about once or twice a week. If youre really not into tea, and you dont feel a sense of mission and vision, then it starts to fall off. Things like the brand. It doesnt have the soul that it needs. Lemonis they need a stronger conviction. Manish yes. Lemonis you just want somebody to feel passionate about what theyre doing. The only thing that has any passion here is the passion tea that i think is made of mango. At the Holding Company level, which is where you own the concept, is there debt . Jeff yes. Lemonis how much debt is there . Jeff rounded off, right around a million. Lemonis whered that come from . Jeff 750,000 of it was from construction. Went to our lubbock location, which is gone. Lemonis what else . Jeff went to this one, the austin location, and then it went to our phoenix and tempe, arizona, locations that are lemonis you built out your franchisees locations . Jeff no, they were originally corporate. Lemonis so you built it out, and then you sold it . So you put all your money in building out locations of which you dont own any of them anymore except this location and austin. And youre left with a pile of debt and no businesses to show for it. Jeff and right now, were sufficing our debt with future franchise sells and lemonis how many do you sell a month, franchises . Jeff i would average maybe one every three months. Lemonis so, what do you get paid . Do you get paid from every franchise . Jeff the norm is 30,000. Lemonis up front . Jeff up front, and then 4 royalties. Lemonis okay, and what did you do with that money . Jeff paid off debt. Lemonis jeff hasnt really been building a business. What hes been doing is digging a ditch with a lot of debt. First of all, he borrowed 750,000 from a bank to build five corporateowned stores to get the concept off the ground. But then he went out and rushed and sold 14 different franchises and collected those fees, only to be able to service the debt that he had borrowed. But with 30 grand per franchise, he was barely collecting enough to cover the interest on the loan. Instead of owing less, he owes more, like a Million Dollars. And instead of owning five stores, he now owns two stores, and he clearly didnt put his franchisees in a position to succeed because theres only nine left. This is a giant mess. In order to learn a little bit more about the franchisees and their troubles, i wanted to meet some of them, so i headed over to the coppell location. Im marcus. Randy randy. Lemonis good to see you. This store is big. Randy it is. Lemonis isnt it . Randy yeah, its a good size. Lemonis wow. How is your store set up differently than the other stores . Sarah well, if you know about tea, if you like a certain tea, we introduce you to our tea wall. Dawn would you like to smell . Lemonis yeah. See, you love it. Look how passionate you are about it. This smells so authentic and so dawn for the people that are true green tea lovers, there you go. Lemonis yeah. What does this store mean to you and your family . Sarah it means everything. I mean, my dad and i started this from the beginning. We laid the tile. Lemonis you guys built this store yourself . Sarah yeah, me and my dad and my brother. Lemonis i mean, theres more than just money invested here. Theres a lot of heart. Sarah heart, yeah. Lemonis theres what . Shayla its a family business. We take it very seriously. Lemonis and how much money do you have invested in this location . Randy 150,000. Dawn and the equipment is probably 80,000. Lemonis so you have 230,000 . Dawn at least. Lemonis thats a lot of money. Dawn its everything we have, so it has to succeed. Lemonis so, what type of revenue will this store do . Randy its averaging about 28,000, 29,000 a month. Lemonis how much gross profit will there be . Dawn were not making a profit. Lemonis look, the stores brighter than colleyville, and theres much greater attention to detail. Theres a lot of thought being put into it. For me, that means theres passion for the business. I think whats most disappointing is that with everything this familys put in, theyre still not making money. I learned that there was another franchise location not too far away in fort worth, so i wanted to drop in there, as well. How are you . Im marcus. Ernie yeah, ernie. Really nice to meet you. Lemonis this is a really nice store. Ernie thank you. Lemonis i notice that you have a lot of accessories. Ernie i basically try to get as much retail as i can. Lemonis this comes through corporate, or this comes ernie no, this we did ourselves. Ive had to add more products to meet the rent kind of thing. Lemonis do you work with taylor at all . Ernie no. Lemonis never. Ernie ive been told i shouldnt email past 5 00, im intruding upon his time. Lemonis he tells you that. Ernie yeah, we dont really have a good working relationship. Lemonis look, id been planning to hang out around dallas, but after hearing what ernie had to say, i wanted to see taylors store in austin. Honestly, my first impression, i wasnt even sure if it was open for business. As the owner of the business, you have one your managers convince you to open up a store in austin. You get here, you decide to tour the parking lot because you want to experience it as the owner. Its got no drivethrough pole. You get up here, theres a blank sign. Whats the first thing you think . Jeff i wouldnt allow him to open it this way. Lemonis then why did you allow him . Jeff cause hes my little squirt. You know, i wanted to put him where he wanted to be, obviously. Lemonis did guilt play a role in you allowing this . Jeff possibly. Lemonis if he wasnt your son, what would be happening . Jeff he would no longer be a part of my company or be an employee. Lemonis can you make me some tea . Im hot. Jeff thats why i dont like austin. Lemonis man, its hot. Whats at stake here for you . Jeff ive put all my chips into this. I took my son out of college for this. Ive got to live with that right now. Lemonis you feel like this is a chance for you to make amends with him or fix things . cause sometimes thats hard. Jeff i was hopeful. Thats part of it, yes. I feel like were friends. He finally calls me with dad questions, just fatherly advice that i know he never had. Just a bad dad. Lemonis you were a bad dad . Jeff yeah. If they were handing out awards, i got an f. I love my son, you know, and id do anything on this planet for him. Lemonis its becoming clear to me that the relationship between father and son is a much bigger issue than i originally thought it was. If im gonna partner up with them, i have to get to the bottom of it. So, why did you leave dallas . Taylor honestly, i kind of wanted to get away. Our personal relationship is very interesting. Lemonis whose personal relationship . Taylor jeff and is. Lemonis why do you call him jeff, just out of curiosity . Taylor he never earned the father role. Like, at the end of the day, that just isnt our relationship. I know he wants it to be, and i feel guilty, and i feel like im obligated to be that son for him, but honestly, he missed it. Lemonis you dont think about him as a dad . Taylor not really. I mean, his names not even on my birth certificate. He wasnt even there when i was born. I didnt find that out until about a month ago. Lemonis like, he wanted you to come join him because he wanted to try to build a bond with you that he knew he broke. Taylor and i agree. Lemonis and hes probably throwing money at the problem because he feels like, if the business fails, youre gone. Why dont we jump in and look at the financials . So, in the last year, 2015, total revenue of the locations is 2,050,000. 272,000 of assets and 1,052,204 of liabilities for a negative tangible net worth of 780,204. Making the company insolvent. Jeff itll cause you to lose a few hours of sleep from time to time. Lemonis you started a concept, you sold franchises, and so, jeff, the business isnt worthless. On paper, it is, but im not a paper investor. I see the bones of an idea. Theres just no meat there. The Company Needs working capital. It needs to satisfy its relationship with its vendors. It needs to make sure that the locations look right, and they have the proper inventory in place. And that, at a minimum, one of the stores is truly what the concept should be. I know this concept will not work in its current form. It is the worst name ive ever heard of in my life. I dont ever want to tell somebody to go from my business, to leave. In addition, i think its important that the franchisees, those relationships are repaired, and that they do see theres a plan, and they have to feel like youre invested in their business. Not because you want a royalty check, because theyre essentially buying and believing in what youre selling. My offer for a business that is essentially insolvent is 350,000 for 75 of the business. Because the risk for me is huge. I want to own 75 of the concept. Taylor i mean, the 75 is steep, but i dont know if we have an alternative. Jeff what would it look like what would a deal look like where were 50 50 . Lemonis it probably wouldnt look like a deal. Coming up. Taylor i went out and got drunk. Lemonis im pissed right now. I am record pissed. I dont know that youre cut to work here, and i am not gonna [bleep] around. Jeff what would a deal look like where were 50 50 . Lemonis it probably wouldnt look like a deal. Jeff okay. I would like to do 65 35, if this is the direction were going. Lemonis and i would like to do 100 and 0. Jeff okay, fair enough. How about settling in the middle . Lemonis 70 30 . Jeff 70 30. Lemonis so my final offer after your back and forth is 350,000 for 70 . Jeff all right, you got a deal. Lemonis we got a deal . Jeff thanks, marcus. Lemonis you got it. Taylor thank you, marcus. Lemonis when i write this check, i really am 100 in charge. Jeff thank you, sir. Taylor thank you. Lemonis congratulations. Jeff thank you. Lemonis so ill see you back at the shop, okay . Taylor okay. Jeff sounds good. Lemonis all right, everybody. Ernie good to see you again. Lemonis i thought we could get some of your staff together, and lets give everybody a summary of whats happening so that people arent in the dark. For me, the first order of business is gathering the franchisees and letting them know exactly whats happening because if theyre not on board, we might as well shut the door. Jeff, where is wheres taylor . Jeff that, i have no idea. Lemonis okay, okay. So, i wanted to let everybody know, jeff and i made a deal for me to invest 350,000. That money will be used to develop a onestore, singular concept that we can all say, okay, this is what the model is supposed to look like. New product offerings, and were gonna change the name. Tea 2 go feels like, come in, get your tea, and get out as fast as you can. Taylor hows it going, mr. Marcus . Lemonis how are you . Where you been . Taylor doing well. Lemonis okay, why are you late . Taylor we worked till late last night. Lemonis you should plan better because we all got here on time, and we waited as long as we could for you. I think with taylor, its confusing for me because one day, he shows up in a suit, and then the next day, he shows up late. I think what hes really struggling with is determining whether hes gonna be an adult or a kid. Well, i dont need the suit. What i need you to do is be an adult and be responsible. Any other questions . Im excited. Thank you for having me be a part of your family. Lets go to work. [ applause ] jeff hows it going, marcus . Lemonis good morning, how are you . Today, were at the International Franchise expo. This place is packed with experienced operators people that have a proven track record of taking care of their franchisees and helping them grow. We want to give taylor and jeff a chance to learn from the best, well, this is it. How much is the attention to detail important in the coffee tea business . Man incredibly important. Lemonis why is that . Man when people come into your stores, they expect it. If its not right, theyll tell you. Lemonis thats a really nice booth. How are you . Man 2 good to see you. Thank you. Lemonis how many franchises have you sold . Man 2 about 68 open and about another 100 coming behind it. Lemonis so, these guys are in the tea business. What advice could you give them that youve seen as franchisors . Man 2 the biggest thing is communicate, communicate, communicate. You cannot overcommunicate. Lemonis do you struggle with communicating with your franchisees . Taylor theres been some past issues, but something that ive been really trying to lemonis like what . Taylor respect for time was kind of one of mine. Getting texts at 9 00, 10 00 at night. Lemonis i have a news flash for you. When you start to put yourself in the position as the franchisor, and you say to somebody, id like to take your money. And every month as you do business, youre gonna pay me. I dont give a [bleep] if he emails you at 4 00 in the morning. Taylor needs to be available 24 7 for these franchisees. They pay his bills. I dont know if jeff is letting him slide because hes his kid, or hes letting him slide because hes the worlds worst manager. I want you to treat him like an employee and not like your son. He has to earn your respect and their respect, or hes gotta go. Jeff he almost got fired on sunday. Lemonis for what . Jeff you know, we had some stuff to do on saturday. Lemonis and he didnt show up . Jeff no. Lemonis at all . The whole day . Jeff he was a kid and stayed out the night before. Lemonis whats this that your dads telling me about what happened on saturday . Taylor i went out and got drunk like a child. Lemonis so, all the franchisees are there, and you dont show up . Taylor no, sir. Lemonis i dont know that youre cut to work here. Im pissed right now. I am record pissed. And i am not gonna [bleep] around. If your business is in trouble, and you need my help, log on to. Lemonis i dont know that youre cut to work here. Im pissed right now. I am record pissed. And i am not gonna [bleep] around. You can go get a real job and not have your dad wipe your ass every day. cause youve never worked for anybody, have you . And you cant wipe his ass. Look, i dont care that taylors trying to push limits with his dad because he doesnt know where the boundaries are. And their relationship has been such where hes been able to get away with whatever he wants. This [bleep] isnt gonna fly with me. When youre at a company function, and other people are flying in and spending their money to come to an event, thats a problem for me. Taylor i cant even process why i chose not to think. I would have preferred to have been fired. Lemonis do you prefer to be fired . Taylor no, i want to do this. I want to be challenged. Lemonis it doesnt matter what you say. It matters what you do. Thats whats gonna matter to me. So get in here, and lets meet some people, okay . How you doing, brother . Jeff good to see you. Lemonis lets head in. Were back from new york, and ive arranged for us to meet manish, the tea supplier, at his warehouse. How are you, my friend . Manish good to see you. Lemonis good to see you. I want to learn what he does, how he does it, and how good he is at it. What else do you have in this warehouse besides tea . Manish spices. We have cardamom, ginger, cloves, black pepper, and a lot of these spices are in our tea blends. Lemonis i mean, that doesnt seem like a huge leap to me to add another Revenue Source inside the store, does it . You ever thought about being in the spice business . Jeff weve had people inquire about it. Manish is obviously a tea guy, so when i found him, i knew we could get different 100 different types of teas. Lemonis a good chunk of teas happen to be made with spices. So, were already in the spice business, anyway. Why not just now tell people about it and make money from it . So, youre holding a 70,000 receivable. I made a deal for 75 of the business, okay . And so what id like to propose is that we take the money that youre owed, and we roll that into equity, and you become partners with me, and we move forward. Manish we move forward. Lemonis and were now gonna get into the spice business. Manish i think this concept has legs. Lemonis okay. Manish there you go. Lemonis lets make some tea. What i want to do is really hear from some of you from my perspective, this is a failed franchisor franchisee relationship. I wanted to get the franchisees together so i can give them an update on all the progress were making in the business. But before we jump into that, i wanted to give them a chance to clear the air. Its obvious to me that theres been a lot of frustration thats built in over the years. These people put their hardearned money into this concept, and if this concepts gonna move forward, were gonna need to talk through it. How many people have asked for more product to be part of the concept . And whats the response been . Heather there isnt one that i know of. Lemonis anybody else had any issues . Ernie the training aspect. We definitely i felt like weve had to do our own training. Ryan when we first got in, jeff was our man we talked to. And then taylor got involved and started telling us what to do or how to do things, and to have a 21yearold kid tell me how to run my business and make money was really frustrating. We were just struggling to make a living down there. I mean, we had a 2,200squarefoot store with lots of blue sky with nothing for sale in it. Lemonis does everybody agree with that . Woman yes. Dawn we have an issue. Lemonis okay. Randy we had to do a lot of work on our own to get things going, and we were working 86 hours a week. There were a lot of issues with that store. We werent gonna make it. Lemonis when people buy into a franchise, theyre buying into a proven model, and youre supposed to give them a path to success. These people literally got nothing, but it cost them everything. Thats gonna stop today. This is your sole income today. Dawn he took less of a retirement because we thought it would make so much more money than staying with his job, and weve been subsidizing this business for over 18 months. Retirement income. Lemonis with your savings. Dawn and our savings. Randy they were rude. They wouldnt visit with people. Jeff im not gonna im not gonna get thrown under the bus right now because that is not entirely accurate. Lemonis coming up. Taylor i never felt like youre my father. Jeff i dont care if were in front of him or in front of that [bleep] camera. I wont be disrespected. Ill put you on your ass. Lookentertainmentour experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. Randy they were rude. They wouldnt visit with people. Jeff im not im not gonna get thrown under the bus right now cause that is not entirely accurate. Lemonis i dont know what gives jeff the right to be defensive right now. Its obvious to me and everybody else that hes not giving them any direction, any support, any resources, and hes the one thats annoyed . How many of you would like to see some ideas for the new concept . Man yes. Woman love it. Lemonis going forward, we will not just be carrying tea. We will be in the spice business. Most of you know that youre already in the spice business, and so we want to capitalize on that. And so were gonna build a giant spice wall. Were gonna come up with gift sets, and at this point, the concept is to call it the american tea and spice shop. Woman i love it. Lemonis okay . What do you guys think of the concept . Does that seem too far off . Dawn not at all. Lemonis lets give our group a round of applause. All right, guys, thank you. The best way to prove to the franchisees that i mean business is to start right away by building the prototype store, and the shop that ive chose to remodel is randy and dawns store in coppell because they deserve it. In the meantime, what i want to do is figure out what accessories and supplies were gonna carry. So we found a vendor in dallas. Taylor we really want to focus on bringing our average ticket up. The retail space is where were really, really lacking. Julie okay. Taylor we could make a full gift set, including the markers. Lemonis short mugs, the coasters, anything cooking, spices, tea, or americana. Julie got it. Lemonis well take all of those, as well. Our next stop is empire, one of the premier bakers in all of texas. Dawn hi, how are you . Lemonis not only are they gonna make the product for the stores, but theyre going to distribute it, and dawn and sarah have some great ideas about what to carry. Lemonis dawn, look at this trail mix cookie. Dawn that could be so healthy, and we want healthy alternatives. Lemonis okay. Right now, the average spend per customer is about 3, typical price of a cup of tea, but going forward, after adding food, accessories, im hoping to take that to 10, more than tripling the revenue, and improving the customer experience. Taylor i wanted to apologize about some lack of respect. In general, this being included, yall have had a lot of ideas. I mean, yall have sent in, hey, we have these cool drinks. That was my responsibility to get that out to everyone, and i kind of went with the, no, we have to do this, this, and this. I apologize for it. Lemonis im cautiously optimistic about taylors path, but hes definitely taking a step in the right direction by owning his actions and apologizing to dawn and sarah. Dawn we appreciate it, and we understood, you were trying to do your job, too. Taylor im excited at whats next. Dawn yeah, we are, too. [ cellphone rings ] lemonis hello. Hi, manish, how are you . Yeah, i do, thank you. Yeah, all right. I appreciate it, buddy. Thanks. Bye bye. Manish you bet. Lemonis im hearing from manish that youre still out selling franchises. Is that right . Jeff yes. Lemonis right, but what are you selling them . Jeff the current concept in its state. Lemonis but what contract are they signing up . Jeff our current Franchise Agreements. Lemonis yeah, and who so you have your lawyer drafting those . Taylor i draft the Franchise Agreements. Lemonis what do you mean, youre doing it . Youre not a lawyer. What do you know about Franchise Agreements . Taylor what ive researched. Lemonis jeff is out selling our franchises, and i know nothing about it, and his son, whos not a lawyer, is basically copying contracts from the internet for people to sign. I mean, you want to talk about insanity . Were here. The Franchise Agreement that people are signing now is going to be materially different than the Franchise Agreement thats going to exist going forward. What happens if they dont like the model that we come up with . Taylor up [bleep] creek without a paddle. Lemonis you guys are gonna be [bleep] i dont know whats going on with jeff, but its obvious to me that hes in desperate need for some personal cash because hes out there selling tea 2 go franchises even though the concept hes selling doesnt exist anymore. Have they all paid you . You havent gotten money from them . Jeff no. Lemonis thank goodness these didnt close. We would get in serious trouble. Taylor, why are you doing business this way . Taylor i dont know, its my job. I dont know the alternative. Lemonis youre selling somebody a franchise as a security. Its regulated by the securities and exchange commission. Did you know that . Taylor no. Lemonis they will put you in [bleep] jail. Its not like you go to court, and you get sued. Jeff if it went the wrong way, yes, im up [bleep] creek, but ive protected him against any lemonis how have you protected him . Hes an officer of the company. Theyd come after him, too. Taylor i didnt actually know that. I should not be an attorney. I shouldnt be involved in all this kind of stuff. I dont trust whats going on. How the hell lemonis do you trust your dad . Taylor on a business standpoint, no. Lemonis what did you tell me in the car in the drivethrough . Taylor i told him that i never felt like youre my father. He asked me about it because i say jeff, like, i use your name when i talk to most people professionally. Jeff dont ever reference me by my first name, or ill put you on your ass. I dont care if were in front of him or in front of that [bleep] camera. Im dad. You ever refer to me as jeff in public or anywhere else, this giant physique is going to put you down. I wont be disrespected. Jeff im dad. You ever refer to me as jeff in public or anywhere else, this giant physique is going to put you down there. I wont be disrespected. Taylor its not a matter of disrespect. Jeff calling me by my first name is disrespectful. Taylor i think its professional when we deal with new franchisees. Jeff you want me to refer to you as a mistake . Lemonis jeff. All hes worried about is his feelings. The pressure that hes put on taylor, its inexcusable. And by selling the old concept, jeff is not only putting the company at risk, but hes putting me at risk. So youre comfortable signing an agreement from a guy who drafted the document who happens to be your son whos not a lawyer, and who knows nothing about franchise law . You gotta have a little bit of respect. Until we get the final concept right, we dont want to sell any concept to anybody. Do you agree . Jeff dutily noted. Lemonis i dont want to get caught in the middle of this. But im also not going to let it affect the business. We have one goal here, getting the prototype ready for grand opening. Counters are being replaced, new displays are being put in place, new wall treatments are being put in place. The only thing thats not getting redone is the floor that randy and dawn put in with their own hands. Ive asked jeff and taylor to meet with me. I want to find out whats going on after our last unpleasant conversation. How you doing . Taylor doing really well, actually. Lemonis good. So, whats gone on since we talked the other day between the two of you . Have you guys had a chance to talk . Taylor we havent really talked at all. Lemonis is that normal for you, not to talk in several days . Taylor no. Jeff its been a doozy. Taylor i dont know, i feel like we needed to be real. I felt like i was playing a role, the idea of being a son instead of us building an honest relationship on who i am, who you are. Like, i originally i called you dad because i knew you wanted to hear that. Jeff so youre full of [bleep] taylor i mean, im sorry. Try to move forward. I dont know what that looks like. I dont know how it works. Jeff my answer to that is, that seems like an awful chicken [bleep] way out of it. Playing fake son and everything. I dont think theres an excuse for that, personally. Thats where it ends for me. How could i ever believe anything that comes out of your mouth at this point . Lemonis jeff, in fairness, hes trying to explain himself. Jeff if thats how you decipher it, okay. Lemonis unfortunately, at this point, i dont think jeff and taylors relationship is gonna get better any time soon. Jeff i tell you right now, im done. No phone, no car payments, no house, no nothing. He wants to give you a job, you can ask him. Im done. But were gonna talk about tea itself. The leaf, herbal teas. Lemonis manish is taking over all the educational aspects of our business, and his responsibility is to get the franchisees up to speed on everything tea. Everybody is firing on all cylinders to get this store open, especially taylor. And after his dad cut him off, i guaranteed him that hed get a paycheck. Test i called jeff and asked him if we could chat before we opened the store. So, whats happened since i left . Jeff some changes are being made. With tea 2 gos direction, we formed a franchise council. Everybodys given 30 days to decide if they want to stay with tea 2 go or not. Lemonis jeff. Im sorry, did i just hear that right . Stay with tea 2 go . I didnt know that was an option. Now jeff thinks hes gonna run a competing company to the new concept . Okay. Good luck to you. Tea 2 go is not a legitimate franchise right now. Jeff at that meeting, i do have quite a bit of support from the people at tea 2 go. Lemonis coming up. So you ready to go in . Okay, ready, hold on, dont look yet. Everybody in . Okay, take a look. Sarah oh, my god jeff at that meeting, i do have quite a bit of support from the people at tea 2 go. Lemonis despite all the work that ive been doing for american tea and spice, i now find out that not only is jeff having a meeting with existing franchisees, but hes now talking about keeping tea 2 go going in a separate company, and hes still selling franchises, so were gonna run two separate businesses, and hes gonna keep the original one . What . Do you even want to be part of this . Jeff i think thisll work in middle america, smaller towns, i think itll be tough. Tea 2 go is proven in these smaller little markets, is actually successful. Lemonis so your position right now is that youd like to continue to clean up the tea 2 go stuff. Jeff yes. Lemonis this is all unexpected, and quite frankly, maybe a blessing in disguise. Im fine dissolving our deal, and jeff can move on and continue to sell his old tea 2 go franchises, and what ill do is ill set up a brandnew entity called american tea and spice, and this store with randy and dawn will be the first store. The other franchisees who are part of tea 2 go can make a decision. They can stay with tea 2 go, or they can come be part of this chain whoever they think is gonna give them the best chance of success. Jeff i want to see that through. I started it. This whole experience for me has been tough. What happened with my son, maybe getting away from me and being his own thing will teach him versus me trying to help all the time. Lemonis i mean, man to man, i think you just gotta be careful that you dont get yourself into trouble. I wish you luck. Jeff okay, thank you. Lemonis good luck to you. Jeff thank you. Lemonis okay, big day [ applause ] big day. Taylor hows it going, mr. Marcus . Lemonis how you doing, buddy . Taylor im doing well, man. Lemonis todays the day of the grand opening, and to be honest, i havent been this excited about the unveiling of a new concept in a very long time. So, are you ready to go in . Okay, ill guide you in. Okay, ready, hold on, dont look yet. Okay. Everybody in . Okay, take a look. Sarah oh, my god lemonis this place has been completely transformed. Dawn this is amazing. Its so beautiful. Lemonis i give randy and dawn credit. They did the best they could with the resources they were given before, but now this place feels warm and inviting. Honestly, this ones a home run. Dawn thats what i wanted the feel to be. Walking into a kitchen, and youre our guest. Lemonis the store is now stocked with a wide variety of food and beverage options. Taylor yall negotiated a good price point, so were gonna be right about a 60 margin on each of these guys. Lemonis the shelves are full, accessories and books and other gift items. Dawn these are so adorable. Lemonis taylor picked out all these products himself. Taylor check out these tea cubes. Dawn as a customer, thats what i want. Lemonis and manish has done a spectacular job coming up with an assortment of spices from around the world. Manish the actual cost of goods is fairly reasonable. Lemonis so 9. 95 retail price, this is probably somewhere around 3 bucks in cost. Our tea wall now has a great assortment. This is the green tea section. Theres a green tea book. Dawn this is, like, 6,000 times better than what we had before. Lemonis theres not one item thats been brought into this store that has less than a 55 margin. Dawn yall have encapsulated the entire dream that ive i dont know how you did it. Lemonis you guys are really the type of family that embodies what this brands gonna be about. This entire team has done a spectacular job. I couldnt be more proud, but one person has gone above and beyond. The reports that i got back from everybody was that you were here early, and you stayed late, and that you were really contributing in a meaningful way. So im very proud of you. But you need to go back to school. And so the companys gonna pay for you to finish your schooling. That may be the biggest transformation yet. Its better than any wall you can put up, or any product you can bring in. Dawn welcome [ applause ] randy come in, come in lemonis theres old customers, and theres new customers, and theres other Business Owners from the area that made the drive to come here, as well. [ applause ] so, this store this store is officially the First American tea and spice shop in the country. It is the prototype. It will be the training center. This is the training family. What we really wanted to do is build a business thats about the people that put their money on the table, the franchisees, and really build a business around people being able to make a return on their money. Randy i want to thank yall first. So grateful. And im gonna cry, i tell ya, im gonna cry. [ applause ] dawn marcus, we absolutely cannot thank marcus enough. This is his First Business in texas. I think he needs a texas cowboy hat. Lemonis yeah [ cheers and applause ] i think i spent, like, 350,000, and i got the best damn cowboy hat ever. Thank you. [ applause ] you can see from the look on peoples faces that theyre blown away by what theyve seen. And more importantly, you can tell that they like what they see because theres a line at the register. Theres several concepts that ive launched over the last few years, but this one has Something Special about it. It is the last friday in july already so you know what that means its time for options action. Weve got a big show lined up. Heres whats ahead. What Global Recovery . Here we are carter worth explains how the land of the rising sun could signal the sun is actually setting on any real bright spots. 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