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. Brushing only reaches 25 of your mouth. Listerine® cleans virtually 100 . Helping to prevent gum disease and bad breath. Never settle for 25 . Always go for 100. Bring out the bold™ vo because we know you want to get back to going your speed. Steering life at 10 and 2. Youre prepared for this. And so are we. Soon youll get back to skipping the counter without missing a beat. Back to choosing any car in the aisle. Back to being the boss of you. Go national. Go like a pro. 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, it