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3/7/2004

Coffee shop set to shrug off franchise

By Kelly K. Serrano
Times-Call News Group

LONGMONT — The owners of the local Capri Coffee Break franchises in Longmont and Loveland plan to keep their shops open under a different name and, potentially, without the support of the franchiser.

A federal court in Washington state recently determined that the Capri Coffee Break franchise name infringed on trademark rights of Seattle-based coffee maker and distributor CafféD’arte’s Capri espresso.

Longmont’s Capri Coffee Break is located at 1640 Pace St., Suite 400, and the Loveland location is at 1427 N. Denver Ave. in the 34 Marketplace. Capri has 16 shops in Colorado, one in Nevada, one in Florida and several scheduled to open soon.

Both the owner of the Longmont Capri, Curt Doss, and Dave Cantor, one of the Loveland store’s three owners, declined to comment, other than to say they would remain open, just under a different name.

The franchisee’s Denver attorney, Jeff Cowman, has advised them not to say anything else, they said.

Under the franchise agreement with Capri Coffee Break, franchisees are responsible for replacing their signs and anything with the name and logo on it in the event of a name change, said Cowman, who is representing more than 12 of the franchisees.

John Larson, co-founder of the company, said it should cost franchisees about $600 to change the name on their signs, menus and other items.

“They’re replacing two letters,” he said of the stores’ signs.

But Cowman’s clients don’t believe that clause should apply in this case, because Larson should have checked trademarks before naming the company, Cowman said.

Instead, Larson didn’t inform the franchisees of the lawsuit and the court’s decision until recently, although the franchise must stop using the Capri name on March 15, he said.

“They waited until the 11th hour to tell my clients,” Cowman said.

Larson said he didn’t know the issue had reached a serious level until November, when the U.S. Patent and Trademark Office turned down his trademark request for Capri Coffee Break.

“This is a roaster, not a coffee retailer,” he said of Caffé D’arte’s claim. “That’s why we thought this was not going to be a problem.”

Larson said he didn’t inform franchisees of the concern because “you don’t panic everybody.”

He started talking with Caffé D’arte in January, reaching an agreement in early February to cease using the Capri name on March 15, he said.

Larson said he told franchisees of the change three days later.

Nonetheless, it was “very clear” in the franchise agreements that the company didn’t have the Capri name trademarked yet, he said. Now the franchisees Cowman represents are hoping to separate from Larson’s company, possibly turning their shops into independent businesses, without having to pay the franchiser to do so, Cowman said.

“They’re very unhappy and disillusioned with the support or lack of support they’ve seen” from the company, he said. “The value of their business has obviously been substantially damaged.

“ Capri has nothing left to offer them. ... We remain hopeful that we can resolve these issues with Capri without having to resort to litigation.”

Each of the franchisees paid a $30,000 franchise fee and invested more than $100,000 to open their stores, and they continue to pay a 6 percent franchising fee.

“These are small business owners who have mortgaged their houses to make one of the most substantial investments of their life,” Cowman said, adding that they are now faced with a situation that never should have arisen.

It’s not likely the franchise agreements or the board of directors would allow the franchisees to separate from the company, Larson said.