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Nautical Bowls CEO ousted after lawsuits
The head of a popular food franchise that started in Minnesota has been forced out following several lawsuits from investors. FOX 9’s Karen Scullin has the story.
MINNETONKA, Minn. (FOX 9) - Investors in Nautical Bowls, a franchise headquartered in Minnesota, are out hundreds of thousands of dollars and its CEO has been fired.
Humble beginnings
Nautical Bowls opened in 2018 and initially there were two Minnesota locations. The founders are Bryant and Rachel Amundson, who developed the fruit bowls touted as a healthy meal alternative.
The Amundsons made the decision to franchise their model, and brought on board the man many people recognize as a franchise leader today, Peter Taunton.
Taunton, from Willmar, was the man who started Lift Brands, Snap Fitness, and has hosted Tim McGraw concerts at his former Lake Minnetonka home. Known on social media for his franchise advice, for Nautical Bowls, he was a salesman and face of the franchise.
Since franchising Nautical Bowls began, stores have popped up all over Minnesota, as well as across the U.S. and Australia. But as fast as the stores are opening, many are closing up shop – sinking before they ever got sailing. Some have closed in less than a year due to staggering losses.
Owner allegations
Investors in a franchise headquartered in Minnesota are out hundreds of thousands of dollars, resulting in allegations that led its CEO to be fired.
Matt Riggs owned the Hopkins store but says he quickly realized the business model was bad, and the promised profits were a lie. Riggs told FOX 9 that on average he was losing $10,000 to $15,000 a month at the location since it opened.
He detailed how much it hurt him and his young family.
"If you add up opportunity costs, full investment, capital injection – on a month-to-month basis – $700,000 to $800,000 total," Riggs said about the total sunken cost of the location.
He’s not alone either, with dozens of store owners sharing their losses with FOX 9.
Former San Diego Nautical Bowls storeowners Brian and Michelle Gibbs said they lost $20,000 the first month, then $15,000 the second month, $10,000 in the third month, and $17,000 in the fourth.
Dozens of more owners told FOX 9 they were out hundreds of thousands of dollars – with some filing for bankruptcy, using life savings, retirement savings, college money and more.
The Riggs’ had to sell their family home and are now renting.
Another couple lost everything, saying the ordeal caused so much emotional pain they moved out of state.
While some owners blame the founders for letting it happen, most fingers are pointing at Taunton for selling a dream that couldn’t come true.
Lengthy lawsuits
There are now three lawsuits filed by one current and two former owners in Arkansas, California and Minnesota. They all accused Taunton and the Amundsons of breaking the "Cardinal rule of franchise sales" by promising profit margins as high as 22%. The claim was found in corporate literature, articles and social media.
"Our stores are so far ahead of the curve on what money falls to the bottom line. Our percentage is 22% — 22 cents of every dollar falls to your bottom line. That’s amazing," Taunton says in one video.
There were many more promises made too.
FOX 9 spoke to dozens of owners who attended what the company calls "Nauti University" – classes held in Minnesota for new owners. When they first signed on to open a franchise and then during class week, franchisees FOX 9 spoke to say they were told they would be lucrative on day one, gross $16,000 a week, and would require zero working capital.
However, owners say none of that was true.
"You have the American dream. And this is an American horror story that's going on every day," Melvin and Tunisia Wells told FOX 9 after they bought the rights to three stores in South Carolina.
They wanted to open the stores because their daughter is disabled, and at the time Nautical Bowls were the only thing she could eat.
Melvin Wells is a disabled veteran and dreamed of the entire family being able to work at the stores. They paid $100,000 after Taunton assured them all current stores were "in the green," and doing well.
Within two weeks, they learned that wasn’t true, and wanted their money back. Taunton said it was too late, and they should just move forward, they claimed. What makes losing the store and so much money even more difficult, store owners say, is the way Taunton blames the owners for not working hard enough.
"He would shame you and tell you it was your fault every time you call them, because we had bad numbers. He would say you’re not doing enough. We're scared of Peter. Mentally, he also tries to manipulate you and scare you," said a store owner who wished to remain anonymous because they feared they would be sued for speaking out.
On a corporate call obtained by FOX 9, Taunton was mad that struggling owners were sharing their experiences with others.
"And then some p**** scares them off the rocking chair and throws a wet blanket on their dream, just because their business sucks — they take someone else’s dream, and they flush it down the toilet," he said.
As of July, the Nautical Bowls website claimed 71 locations were open, 191 stores are in the planning stages, and 15 are getting ready to open. But since 2022, more than a dozen have closed, including several stores open less than a year.
Even Taunton’s own Miami location was open only one year. On top of that, nine stores have been sold one to three times, and seven or more are currently for sale.
Nautical Bowls is also accused of luring franchise owners with inflated sales figures from two Minnesota locations that defied the government shutdown orders during the pandemic.
"They were open when everybody else was closed and somehow they stayed open. But how am I supposed to know that? I don't know that you sold me this, because that was your numbers. So he basically admitted the numbers that he gave us, he knew were not possible," one owner told FOX 9.
FOX 9 asked Taunton for a response to the claims, and received an email response back saying; "As I’m sure you’re aware, anyone can file suit if they choose to do so. These claims are baseless and we have filed a petition in all three states to have them dismissed. Unfortunately, that’s the litigious world we live in today… There’s nothing to explain. At this point, we have to wait until we go to court to contest the baseless and frivolous claims against our company."
Owners say what makes losing their money and store even more difficult, is the quick action by Taunton to work on finding a new owner for a small fraction of what the original owner paid. Owners say that’s the game: Keep rolling stores over to collect franchise fees as bankruptcies and financial ruin sit in its wake.
"[Peter] sent a tweet out to everybody on the store chat… He knows what to do. They're walking away from their store. And now somebody can swoop in and pick it up for pennies on the dollar," one anonymous owner told FOX 9.
All the franchises were marketed as semi-absentee-owned businesses and great investments for retirement. But according to the lawsuits, these promises were like profits: too good to be true.
"More people really need to ring the alarm and tell people what's going on so that this doesn't happen to them," Tunisia Wells said.
Taunton faced similar complaints and accusations when he owned Snap Fitness. From 2017-2019, several owners posted in online forums saying Taunton lured them into buying Snap franchises with lies.
Looking forward
It appears for now Nautical Bowls is not accepting new franchise applications.
Company owners Bryant and Rachel Amundson sent a statement to FOX 9, saying that they are "Devastated any time a franchise isn’t successful" and it factored into "Why we recently made the decision to part ways with our now former CEO as soon as it became clear his vision to steer the company away from our founding purpose was not going to hold up in the difficult economic conditions in which every business is currently operating."
FOX 9 asked Taunton to comment on his firing from Nautical Bowls, but he has not responded.