Students returning to the Whitehead Campus Center after winter break were greeted by the mechanical whirring of Haverford’s latest vending machine. A bright maroon arrow signals to curious students that “Robotically Served Frozen Yogurt HAS ARRIVED!” while carnival music hums in the background.
The vending machine, provided to Haverford by Reis and Irvy’s, a subsidiary of the health-conscious vending machine company Generation NEXT, now serves vanilla, chocolate, or twist frozen yogurt, or “froyo”, from 7 AM to 1 AM. For $5, students can get a regular sized cup of frozen yogurt with up to two of six toppings, which include M&M’s, Fruity Pebbles, and Granola. For an extra dollar, they can either upgrade to a larger cup or extra toppings.
Many staff members have been excited for the arrival of the futuristic froyo robot, though students have largely been surprised and even amused by the spectacle, which includes videos and music, a touch screen, and an automatic yogurt dispenser. While the machine has been the brunt of jokes for students and staff alike, the checkered past of its parent company is no laughing matter.
“We honestly thought this would never happen”
While the machine is brand new, the process of bringing the frozen yogurt robot to campus has been over two years in the making. Talks of bringing in an automated froyo machine began in late 2016, when former Head of Dining Services Joe Binotto was still in charge. In exchange for hosting the machine, clearing out space, and covering electricity costs, Reis and Irvy’s agreed to give Haverford College a portion of the revenue from each sale.
According to current Head of Dining Services Thomas Mitchell, Binotto— who signed the deal with Reis and Irvy’s—thought the machine was “neat” and thought that it provided a new and modern offering to Haverford’s existing vending machines. Geoffrey Labe, director of the Whitehead Campus Center, agreed, noting that it operated at “essentially no risk” to the college since Haverford did not own the machine, nor did it need to pay for the machine’s maintenance and upkeep.
After an agreement was made between Reis and Irvy’s and Haverford, a series of delays on the end of Reis and Irvy’s, which included machine updates, miscommunication, and even a brief “ghosting”, delayed the machine’s full installation to the end of Fall semester. The consistent delays and lack of response from Reis and Irvy’s had made the machine, or rather the lack of a machine, a running joke for the Dining Services staff.
In one instance, Reis and Irvy’s called Haverford to let them know they were bringing in the machine that weekend, demanding Haverford hire weekend staff to prepare for its installation. That weekend, no one from Reis and Irvy’s showed up, and the representatives for the company did not respond to Haverford’s questions for weeks. It was not until four weeks after the agreed upon date that the machine arrived. In fact, when the machine was finally installed, Corey Wilkinson, Haverford’s Retail Operations Manager, was shocked that it had actually arrived, noting that “[I] honestly thought this would never happen”. While the machine was briefly out of service for repairs after a recent Haverford graduate jammed the dispenser with a ping pong paddle, this semester Reis and Irvy’s froyo machine has been operating smoothly.
While the froyo is being dispensed without problems now, a deeper dive into the history of Reis and Irvy’s, as well as its parent company Generation Next Franchise Brands, reveals that its problems as a company are far more serious than simple miscommunication or mismanagement.
“Repeatedly engaged in misleading and deceptive conduct”
Reis and Irvy’s, the distributor of the frozen yogurt machine, is the only subsidiary of Generation Next Franchise Brands. Founded by entrepreneur Nick Yates, Generation Next is a small, publicly traded franchising concept based in San Diego which “operates as a franchisor, direct seller, and owner and operator of frozen yogurt equipment, robotic soft serve vending kiosks, healthy drink and snack vending machines, and micro markets” according to Bloomberg. Currently, Generation Next consists only of its robotic frozen yogurt branch, Reis and Irvy’s, which was founded in 2016.
According to the company’s LinkedIn page, they make the “first fully automated frozen yogurt robot vending machine to ever hit the market”. Reis and Irvy’s sells their frozen yogurt machines and franchising rights to malls, hospitals, schools, and other institutions across America, including West Chester University, just a short drive away from Haverford. According to their own reports, by fall of 2018 they had $11.9 million in quarterly franchise bookings and over $129 million in future booking agreements, and their stock price had increased 132% from $0.89 in February to $2.00 per share in September. However, amid the company’s meteoric rise is a long history of fraud.
Prior to selling frozen yogurt franchises, Generation Next Franchise Brands went by the name Fresh Healthy Vending (FHV), which sold vending machines that provided healthier snack options such as carrots or smoothies, as opposed to the traditional chips, cookies, and sodas that other vending machines usually serve. At its peak in 2011, Fresh Healthy Vending reportedly had over 2,000 vending machines in schools, hospitals, office buildings, health clubs, and shopping malls across the country while its brand gained mainstream recognition from CBS and Fox. Its rapid ascent within a year of its founding is not unlike that of its successor, Reis and Irvy’s. Where are they now and what became of this promising vending franchise company?
Today, Fresh Healthy Vending is banned from selling franchises in the states of Washington and California for committing fraud and violating numerous of the states’ commercial laws. In 2013, the California Corporate Commissions revoked Fresh Healthy Vending’s franchising rights and demanded they pay remissions to franchisees due to “multiple violations of the California Franchise Investment Law”, which include the intentional withholding of ownership identity, litigation, and bankruptcy history.
According to the California Corporate Commissions, Fresh Healthy Vending knowingly and intentionally lied to franchisees about their ownership. Aware that the founders of Fresh Healthy Vending, Nicholas Yates (65% ownership) and Mark Trotter (35% ownership) had previously declared bankruptcy and had been convicted for commercial fraud in their past business ventures, the company repeatedly referred to Nicholas Yates as “Outside Advisor to the President and Chief Executive Officer” and Trotter as “Former General Manager, YoNaturals”, while listing others outside the organization as CEO and founder. The Department of Financial Institutions in Washington state ruled similarly, ordering them to “cease and desist” from selling franchises for violating anti-fraud statutes.
Prior to Fresh Healthy Vending, Yates led a phone card vending company in Australia, where he was ordered to pay $3.5 million in fines when the court found that he “repeatedly engaged in misleading and deceptive conduct”. This included lying to franchisees about the enormous profits his machines would bring in, in addition to distributing faulty machines and cards. Trotter, on the other hand, was ordered to pay over $1 million in fines and fees in Texas for sending unsolicited and fraudulent emails on behalf of his fictitious companies, Leadplex and Payperaction, in 2005. Both Yates and Trotter subsequently filed for bankruptcy, which allowed them to start Fresh Healthy Vending with a clean slate.
Not only was Fresh Healthy Vending litigated for its failure to disclose the “repeated” and “deceptive conduct” of Yates and Trotter, but also the company continued engaging in the same type of deception. In 2017, a San Diego court ordered that Fresh Healthy Vending pay John Coffin, a FHV franchisee, over $1.05 million in restitutions for breach of contract, intentional misrepresentation, concealment, unfair competition and false advertising.
Specifically, Coffin alleged that Fresh Healthy Vending’s then head of sales, Alex Kennedy, made false claims about the revenue that the vending machines would bring in; Coffin found that the vending machines were making little to no money. By the time this case had been resolved however, Fresh Healthy Vending had already been decimated, it’s value falling from $26.7 million at its peak in 2014 to roughly $400k in 2016, and had begun building frozen yogurt robots in its next great endeavor under the new name “Generation NEXT”.
How will Generation NEXT and its subsidiary Reis and Irvy’s differ from its failed predecessors? Under the same ownership, have any of the problems facing Fresh Healthy Vending, been resolved with a name change and a product update?
“Socially responsible business operations have fueled the success of our company”
When asked about Reis and Irvy’s past, Mitchell claims he did not know about the unethical business practices of the company, especially since the deal between Haverford and Reis and Irvy’s was signed before he came in August 2018. A representative from Reis and Irvy’s claimed he had no knowledge of the situation, though he confirmed Nicholas Yate’s continued direct leadership of the company.
While Dining Services reevaluates their contract with Reis and Irvy’s, the robot continues to serve and entertain Haverford guests. For Dining Services, who work tirelessly to provide all students with fresh, convenient, and healthy food options through vending machines, the Reis and Irvy’s frozen yogurt kiosk is an alternative option to provide diverse and state-of-the-art food choices for students and their guests. Students see the machine as at best a sweet new treat in the campus center, and at worst an overpriced fodder for jokes.
Meanwhile, Reis and Irvy’s continues to expand. According to their LinkedIn page, the company has recently signed exclusive territory agreements in both Utah and and Georgia. Their website and social media pages also continue to make no mention Nicholas Yate’s involvement while offering franchisees packages ranging from $172,000 for 3 robots to $600,000 for 12, which are “a guaranteed hit with consumers.” By listing themselves as a subsidiary, they further distance themselves from Yates, the controversial CEO of parent company Generation Next. Their website for potential franchisees claims that “socially responsible business operations have fueled the success of our company, as well as its franchisees”. For now, the Reis and Irvy’s continues to sell their self proclaimed “innovative” and “high-tech” robotic vendors under the time-old tactic of deception.