Theyre not gonna bail you out anymore. Theres no more going back to them for money. Ever. If i cant shake him out of his tailspin, his companys day in the sun will come to an end. Tony the process is a little [voice breaking] overwhelming. I put my whole life into this. Lemonis 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. Tony ladies, we got bars to make. Lemonis in 2012, tony fellows launched hippops, a dessert truck specializing in handcrafted gelato bars. Tony so you choose your flavor and then your dip and then whatever topping youd like. Woman great. Lemonis his goal was to generate some buzz in sunny south florida, then franchise the concept nationwide. Tony thank you. Enjoy. Lemonis tony had been in the frozendesserts business before trying his hand at real estate, only to suffer big losses when the market collapsed. He decided to return to his roots, and that is when hippops was born. Yolanda oreo milk rainbow. Thatll be 6. Lemonis but while the truck itself has been profitable, the franchise effort is a bust, burning tons of money with nothing to show for it, and putting tonys dreams on ice. Freyda its been very slow for the last six months. Tony were in debt now 50,000 . Freyda yes. Lemonis still, i think the concept is fun and easy to replicate, and with my help, im confident tony can put this business on the right track, so im heading to Fort Lauderdale to jump right in. Handcrafted awesomeness. Good morning. Tony holy smokes lemonis how you doing, my man . Im marcus. Tony marcus. Tony. Lemonis nice to meet you. Tony oh, my god. This is unbelievable. Lemonis this is a cool truck. Wow. Can i try one . Tony absolutely. Lemonis okay, so theres how many different toppings . Tony we have about a dozen unique toppings. Lemonis okay. Tony and then three chocolate dips. Lemonis so you take a base, you dip it, and then you can put all the toppings on it. Tony my favorite is definitely the godfather. Lemonis okay. Are you the godfather . Tony i dont know. Lemonis okay. Tony you might you might be the godfather. Lemonis there you go. Tony can i get a traditional size bar, please. Lemonis hey, hey, hey, im ordering. How are you . Im marcus. Jorge hey. How you doing . Im jorge. Lemonis jorge . Do you have coconut . Jorge i do. Sprinkles . Lemonis its breakfast time, so i wanted to have a little fruit. Okay, so lets do dark chocolate with what are the other chocolate options . Jorge chocolate sprinkles. Lemonis lets do that. Tony so we handcraft them in small batches here. Hows your breakfast . Lemonis i think it tastes amazing. I actually think it tastes really amazing. Tony thank you. Its a littler healthier option, because with gelato, youre using skim milk and just a little bit of cream. So the base itself is about 93 fatfree. When you get the bar, it should be nice and creamy. Lemonis how much is this . Jorge thatll be 5. Lemonis i mean, it seems like a heck of a deal for 5 bucks. What does it cost you to make this . Tony the bar itself runs about 50 cents. Lemonis okay. And then the toppings . Tony so 25 cents for the toppings and 25 cents for the dippers. Lemonis stick . Tony so the stick runs 5 cents. Lemonis okay. Tony all in, with the dip and topping, i have about an 80 gross margin. Lemonis how many of these will you sell in a day . Tony we could do anywhere from about 1,000 to as much as 2,500. Lemonis does this truck run every single day . Tony yes, sir. Lemonis when a food truck can do 1,000 to 2,500 a day, 6 to 7 days a week, at 70 plus margins, thats a business that i would be interested in. So, lets go in the truck. I want to see how this whole thing works. Whats all the milk and whipped toppings . Tony you can take any pop and turn it into a popshake. Lemonis what do you sell it for . Tony 8. Lemonis 8. And of a percentage of sales, how many milkshakes do you sell . Tony 5 to 7 . Lemonis is it laborintensive . Tony its laborintensive. Lemonis so why do you do it . Why not just stay simple . Tony you know, we didnt have it initially. Lemonis yeah. Tony but folks came and asked, and we wanted them to be able to have that option. Lemonis yeah. So this is a traditional gelato case. Tony no, this is a special case. Lemonis whats special in. Tony you know, its all glass, and its completely open over here. Theres only one manufacturer in italy that makes a case like this. Lemonis how much does it cost . Tony i paid 25,000 for it. Lemonis for this . what did it cost to set up this whole truck . Tony all in, about 125,000. Lemonis im not sure if tony did any research on what a truck like this should cost, or whether he thought that spending gobs of money would automatically make the business successful, but what i do know is that he overpaid. Its not complicated. Theres not tons of cooking equipment with hoods. Theres a refrigerator, a sink, and an icecream cooler. Maybe 75,000 . Where did the name come from . Tony so actually, my mother came up with the name. Lemonis oh, she did . Okay. Tony she did. Lemonis take me back to why you started it, how long its been around. Tony 2009, i was in real estate, buying properties, and then, you know, realestate market fell apart. I lost money. Lemonis and so who funded the growth of the realestate business . Tony my dad. Lemonis and how much did you lose during that whole thing . Tony we probably lost a couple hundred thousand dollars. Ice creams always been my passion, and so i thought, wow. We could really create a different experience, take the pops to the people. And if the Business Model worked, my dream was to franchise it. Lemonis and do you feel like youve proved the concept . Tony i believe so. I franchised it around a year and a half ago. Lemonis you set up the franchise. Tony i did. Lemonis and how many have you sold . 10 . 20 . Tony i sold one large deal. An International Deal in dubai. Lemonis so why not any success in the United States . Tony i dont know. Lemonis the first sale he has is halfway across the world . And he couldnt sell one in the United States . So, where do you make the pops . Tony so the whole creamery is in the back of the warehouse. Lemonis can i see it . Tony absolutely. Sure. Lemonis oh, wow. This is like a real kitchen. Ladies, im marcus. How are you . Annette hi. Im annette. Annette. Lemonis annette. Yolanda yolanda. Lemonis yolanda, nice to meet you. Im marcus. Can we make a batch from scratch . Tony absolutely. Lemonis what do we have prepped . Yolanda we have pistachio prepped and we have lemon. Lemonis lemon . Yolanda lemon with mint. Annette you a lemon guy . Lemonis my last name is lemon. Annette all right. Give it here there you go lemonis lets make lemon yolanda this is the lemon mix. Annette out of fresh lemons. Lemonis fresh lemons. Yolanda we squeeze fresh lemons. Annette go ahead, now there you go, marcus shake what your mama gave you lemonis you got to shake it and stir it. Annette there you go lemonis okay, so thats the mix. Now what we doing . Annette you got to pour this in the gelato machine. Lemonis okay, so this goes in the machine. Annette yeah. Okay, now were gonna mint and zested lemon. Go ahead, there. Go ahead and pour it. Dont lemonis i got it. Okay. Annette and let it come out. We gonna put it in the mold. What we do. Take it. Tony and then it has to go into the blast freezer. Lemonis and these will take how long . Annette two hours. Lemonis two hours. Yolanda and this is our biggest problem. Lemonis whats the problem . Yolanda it it goes on defrost and it shuts down. Lemonis so this doesnt work . Tony so every six hours, it goes onto a defrost. Lemonis so why wouldnt you get another one . Tony so its brandnew. Its about 7,500. Lemonis its odd to me that with everything tony spent money on, that he would only invest in one freezer. Not only does he limit his ability to grow his business, but if the one freezer goes bad, hes out of business. These freezers cost about 7,500. Im not minimizing the amount, but in comparison to what he spent on the truck, its not much at all. So, let me spend some time just with them, okay . Ill see you in a little bit. Tony okay. Lemonis yeah. Get out of here. Tony you got it. All right. Lemonis dont be supervising our conversation. Yolanda [ laughs ] lemonis whats it like working for tony . Annette it has its up and downs. Out of a week, well see him probably, id say about three days for that week. And then hes here a couple hours about. Yolanda sometimes we dont see tony for a whole week. Lemonis theres times you dont see him for a whole week . So tonys really not around that much. Yolanda no. Lemonis oy. Wheres all the inventory . Annette the big white freezer. Lemonis can you show me real quick . Annette okay. Yolanda like, see these freezers . This is where we hold our products. Lemonis why does this look like this . Open like this . I mean, it seems totally disorganized. Yolanda yeah. Lemonis so how do you know whats in here . It it labeled on top . Yolanda no. Lemonis and so you really never know, unless you come out and look, what you have and what you dont. Theres no Inventory System. Yolanda right. No. Lemonis in order for a franchise to sell, there has to be a proof of concept. And that concept includes not only the revenue and the profitability of the idea, but the systems that are in place. A franchisees gonna want to see a detailed Inventory Management system, clear procedures for storing, ordering, and labeling product. Theyre gonna want to see a clean and thoughtfully designed facility with the correct workflow and the right equipment, and theyre gonna want to know that the franchisor has thought through every little detail, and when theres a problem, theyve come up with a solution. But tony hasnt done any of those things and then he wonders why he hasnt struck any deals. Oh, thank you. Okay. Is this hi, maam. How are you . Freyda im good. Im freyda. Lemonis im marcus. Freyda hi, marcus. Nice to meet you. Lemonis are you the bookkeeper here . Freyda im the bookkeeper. And i am the mother. Lemonis oh, youre anthonys mother . Okay. Well, thats awesome. Do you get paid . Freyda yes, with kisses. Tony with pops. Lemonis so you dont get paid . Freyda i work for love. Lemonis is he a good manager . Freyda hes a good manager. Hes a phenomenal boss. Lemonis now, is that his employee talking or his mother talking . Tony [ laughs ] lemonis you know, when you reached out to me, you told me this was a franchise concept. And so how many different potential franchisees have you actually pitched . Tony weve done webinars with at least, um, 300 people. Lemonis im sorry . Why do you think not one person converted . Tony i dont know why. Lemonis maybe they dont think the concepts good. When i look at all of the finished pops in the freezers, theres not really an Inventory System of whats in there, what needs to be made, theres not a schedule. Typically, before you make it a franchise concept, you have to perfect your own business. How much money have you put into this whole concept so far . Tony were somewhere close to around a half a million dollars. My parents invested money. Lemonis how much money have you and your husband invested in this business . Freyda around 200,000. Tony but its closer to 350,000. Lemonis out of your personal savings . Freyda out of our personal savings, because we believe in our son. Lemonis where did the rest of the money come from . Tony the rest of the money came from the dubai deal, too. Lemonis no money came from you personally . Tony yeah, about 50,000 from myself. Lemonis so they really do you own do you and your husband own the business . You own none of it . Tony it was a loan. Freyda its a loan. Lemonis you charge him an Interest Rate . Freyda i wouldnt. My husband does. Lemonis and do you pay the interest monthly . Tony we do, but, you know, i she doesnt always pay it. You know, for me, its important to be able to, you know, to get my Parents Money back to them. Theyre not young. Lemonis and if they cant get it back, what does that mean . Tony [ voice breaking ] im scared. Yeah. [ sighs ] cause i want to be able to get my Parents Money out of the business. Lemonis you want to what . Tony get their money out of the business. Freyda hes always had a tough life. He really got into trouble. Lemonis what kind of trouble . Freyda bad trouble. Lemonis what kind of trouble . Freyda drugs. Okay . Lemonis you had a drug problem . Freyda drugs. Tony thank god, you know, october, i celebrated 19 years clean. Lemonis congratulations. Tony thank you. Its important. And i have three little kids and lemonis are you married . Tony im divorced. Lemonis divorced. Okay. Tony yeah. You know, this business is, like, everything i have. Lemonis how do you pay your rent and your car payment and all that . Tony i live at home. Lemonis you live with mom and dad. Tony yeah. It helps financially. Lemonis yeah. Tony you know, for my children and my exwife. My exwife does all the social media. Lemonis shes an employee of company . Tony yes. So theres other people im responsible for here, as well. Lemonis tough. Ive met a lot of people throughout my Business Career that have suffered with different dependencies, and the fact that tony was able to recognize the problem and recover and stay clean is a sign of hard work. What id like to do is, lets gather the fina i want to gather the Financial Data and we could sit down and go over some numbers. Tony sure. Lemonis so in 2015, you did 533,000 in sales. The gross profit was 435,000, which is 81 margin, which is killer. Tony yep. Lemonis your total expenses were 381,000, and the Company Shows a profit of 54,000. Tony correct. Lemonis in 2016 . Tony 492,000. Lemonis okay, gross profits the same at 80 . And right now, the business shows its gonna lose about 8,000 for the year. 7,000 to 8,000. Tony yes. Lemonis so this is the gelato business. This is hippops handcrafted gelato bars. Thats one entity. Now the franchise concept. Tony now, the franchise concept has no lemonis its a separate legal entity . Tony right, so there are no essentially no sales, you know, for the whole year. Lemonis how much has it lost in the last two years . Tony its lost. 250,000. Lemonis so you have, in the last two years, the actual hippop entity is netting to north of 40,000 in profit. The other legal entity, this franchise idea, has lost 250,000. Gone. Do you feel like this is a welloiled machine . Tony no, thats why i called you. If the structure lemonis but, i mean, you essentially called me to come build your business for you. Tony alongside with me. Lemonis uhhuh. Tell me about your watch. Tony so its a rolex. Lemonis how much is that watch worth . Tony 10,000. You know, its the one luxury, you know, that i have. Lemonis its a [bleep] watch. Tony i know. Lemonis and ill tell you that if i was a potential franchisee, i look at stuff like that. And then i find out that theres one freezer in the kitchen, really would be better if there was two, cause you could crank up production. How much does the freezer cost . Tony 7,500. Lemonis how much does the watch cost . Tony i get it. Lemonis i will tell you one thing, i give you a lot of credit for making other sacrifices. Living at home. Youre taking care of your kids. Youve been honest with me about your past. That meant a lot to me. You should feel good about where you stand today. Tony i appreciate that. Lemonis i appreciate the time we spent today. Ill study the numbers, and ill be in touch, okay . Tony okay, great. Lemonis tony, how are you . Tony im great. How are you . Lemonis good seeing you. Edward mr. Lemonis, how are you . Lemonis hi, im marcus. Edward ed fellows. Lemonis ed, nice to meet you. Edward same here. Lemonis wait, i know you. Freyda i know you. Lemonis how are you . Is he behaving . Freyda absolutely. Lemonis okay, well, thats his mother talking. I wonder what his dad has to say. Edward ask his father. Lemonis thats right. Its a little out of the ordinary for me to meet with the parents of the owner. Edward okay. Lemonis but as i learned about the genesis of where the money came from, i thought itd be good for us to talk as a family if im gonna be part of your family. Edward not a problem. Lemonis when it comes to the business, i think the business today, its an icecream truck. It is not today a franchise concept. Edward but is it doable . Lemonis is it doable by somebody who wants to show up every single day and to Pay Attention to the details . Yes. I dont know if tony is that person. cause i will tell you, your staff thinks you dont put a lot of time in. Tony it was a difficult year. You know, i ended up, you know, leaving a 17year relationship [voice breaking] and sharing, you know, with my kids, you know, that our marriage was ending. I kind of felt, you know, like i failed. Lemonis yeah. I want to know that youre gonna be willing to make the sacrifices that are necessary. Tony im committed to my business. Lemonis heres the good news, right . The good news is, is that its a very simple, reasonablypriced dessert that anybody can enjoy, no matter what age they are or where they come from. Edward correct. Lemonis and we know that the margins in this business are spectacular. Im willing to make an offer. So i want to make an offer of 100,000 for 50 of the business. Franchising is a good idea when you have a model that you can show somebody thats whats called a proof of concept. None of thats been done yet. And i understand process and what its gonna take, and i think it takes 100,000 to get it right. Of course, ill be 100 in charge. Tony and so what happens to my salary . Lemonis what do you make today . Tony about 100,000. Lemonis [ chuckling ] okay. I mean, i dont mean to be funny about it, but that is shocking to me. You are not gonna live the life of luxury, at least while im around. Tony im not living the life of luxury now. Lemonis give me your watch. Tony i mean, this is a 10yearold watch. Lemonis give me your watch. You want to know what its gonna go towards . Buying a new freezer. Youll hold onto that for me. And do not. Freyda i will not give it to him. Lemonis . Give it back to him. Freyda i promise. Lemonis when the business makes money, you can take half of the profits and ill take the other half. Its not about me, its about the business. Tony what do you guys think . Lemonis no, no, no. Be an adult. Edward this is your decision. Lemonis dont put the pressure on them. Because theyre not gonna bail you out anymore. If your business is in trouble and you need my help, log on to. Tony what do you guys think . You say that customers make thelets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept