it's not called the bunny tank. they smelled blood in the water, they saw a successful business, and they just jumped all over it. i visit swansons fish market, a multi-generational landmark located in fairfield, connecticut. is it always this busy? gary: yeah. lemonis: but after a tragic fire, these owners are struggling to keep their heads above water. how are you surviving? gary: we'll take money out of the deposits. i'm put against the wall. lemonis: and morale is at an all-time low. larissa: i've just been through a lot trying to help everyone, and i just don't know how much more i can deal with. lemonis: if i can't throw them a line, this historic institution may close forever. gary: it's the only hobby i really have. sue: it's ridiculous! lemonis: my name is marcus lemonis, and i fix failing businesses. if you don't like money, don't follow my process. i make the tough decisions.

we're closing the store, we're done, i'm not talking about it anymore. i back them up, spending my own money. it's not always pretty... man: perfect flavor. lemonis: ...but this is business. you got to trust the process. i do it to save jobs, and i do it to make money. thanks for your business. this is "the profit." fairfield, connecticut, is a pretty new england town right on the coast of the long island sound, and swansons fish market is one of fairfield's local institutions. for over 40 years, they've been selling fresh fish, hot soups, and doing a little catering and, along the way, got their fair share of critical acclaim. gary: okay, you're getting the works today. lemonis: gary swanson jr. took the market over from his dad and worked alongside his wife, sue, and they made a comfortable life for his family. but on july 4, 2009, a fire destroyed his original store.

[ siren wails ] dispatcher: code 6. gary: completely devastated. lemonis: not only did the family lose income for an entire year, but they lost a good portion of their customer base. gary: we definitely need to pay a couple of these vendors. hopefully, we have enough money in the account right now. lemonis: when the store finally reopened, a year after the fire, gary was $900,000 in debt. sue: monday's deposit that should have went in on tuesday didn't go in till the following week. gary: i'm put against the wall. lemonis: sue is so demoralized by the downturn that she's spending less and less time at the store... sue: i need a break. i'm reaching my boiling point. lemonis: ...forcing their daughter, larissa, to come home and work with her dad and help pick up the slack. this is a critical time for swansons. gary: i really don't know how much time we have left. lemonis: family-run businesses like swansons are the lifeblood of this country, and i know with the injection of some cash and some improvements in their process, i can rejuvenate the business and turn swansons into a big fish once again.

swansons' location seems great. it's on one of the busiest streets in fairfield, it's in a beautiful building, and there's two other businesses next door. -spencer: morning. -lemonis: how are you? -i'm marcus. -spencer: spencer. -lemonis: hey, nice to meet you. -spencer: you too. -lemonis: i'm marcus. -paul: how you doing, marcus? -i'm paul. -lemonis: nice to meet you. -paul: good to meet you. -lemonis: wow. you got a lot of good stuff. paul: yeah, we're working on it. man: how you doing? do you have 2 pounds of red snapper? spencer: no reds today. -man: no reds? -spencer: no. man: well, i'm gonna try some grouper today. 2 pounds. spencer: okay. lemonis: what else are you out of? paul: i believe we are out of tuna. lemonis: tuna's kind of a popular fish to be out of. is gary, the owner, around? spencer: yes. i'll go get him. he's in the office. lemonis: okay. the place is definitely underutilized. i look to the left, and there's this big counter

with nothing on it, nothing merchandised on it. it definitely has room for improvement. paul: i mean, this is a great place. i love the job and everything. it's just that sometimes it gets a little bit stressful when you don't know what's going on. lemonis: what kinds of things are you -- paul: like money, really, to be honest with you. sometimes, we're asked if we mind waiting for our checks a week or two. we've had problems paying for product. so we've all pooled our money together on several occasions -- -lemonis: people that work here? -paul: yes. ...and helped them out. lemonis: how much are we talking? 100 bucks? paul: a couple hundred each. lemonis: in what business are the employees actually buying the inventory? they have bills to pay. this business is in real trouble. how are you? gary: good. -lemonis: i'm marcus. -gary: i'm gary. lemonis: gary, nice to meet you. this is an unbelievable location. how long have you been here? -gary: 41 years. -lemonis: wow. -and who started the business? -gary: it was my dad. lemonis: and do you guys rent this property? gary: no, we own this property. lemonis: how much did you buy this property for? gary: way back when, it was $450,000, and i bought it from my dad for $600,000. lemonis: it's a really nice building.

gary: well, it didn't look quite like this, 'cause it burned down. lemonis: remind me a little bit -- when did this fire happen? gary: 4th of july, 2009. it was 100% loss. lemonis: and how much was the total loss? gary: over $1 million. lemonis: how much did the insurance pay? gary: about $1.2 million. lemonis: so the loss was $1 million, but they paid $1.2 million? -gary: yeah. -lemonis: okay. -do you mind if i come around? -gary: oh, no. you're welcome. lemonis: do you have a mortgage on the property? gary: i do. lemonis: how much is that payment a month? gary: about $3,800. lemonis: so, those people next door are your tenants? -gary: yes. -lemonis: how much do they pay? gary: $3,000 a month. -lemonis: each one? -gary: each one. lemonis: so you have $6,000 coming just from them? gary: yes. lemonis: so more than covers your mortgage? gary: more than covers it. lemonis: swansons' monthly mortgage payment is $3,800, but the rent they collect from the two tenants is $3,000 each, so swansons, after they make their own monthly payment, will still clear $2,200 each month, totaling $26,400 each year.

they actually make money on this deal. so, you have a bit of a kitchen here. gary: oh, yeah. lemonis: and what's the most profitable -part of the business? -gary: prep foods. -lemonis: prepared foods? -gary: yeah. lemonis: so how much fresh fish do you sell each week? gary: about $18,000. lemonis: $18,000? what are the margins on that fish? gary: about 30%. lemonis: and then how much in soups and prepared foods do you sell a week? gary: it's equal -- about $18,000. lemonis: and what are the margins on that? gary: that's about 60%. -lemonis: double the margins? -gary: yeah. lemonis: and what does it take to run this place a month? what does it cost between mortgage payment, utilities, payroll -- everything? gary: i would guess $18,000. lemonis: so, gary's explained that he does $150,000 a month in business. i asked him what his margins are, and he told me 30% on fresh fish and 60% on prepared foods. half and half is the business mix. if i take 45%, which is the average of the two, across $150,000 in revenue, that's $68,000 in gross profit per month. he then tells me that his expenses are $18,000 a month.

that would leave him with $50,000 in net profit at the end of the month. there's almost $70,000 in gross profit, and the expenses are only $18,000. gary: no, that was -- you know what? that's way off. there's just a lot of expense that's associated with running the business. lemonis: so what's that? like, give me an example. gary: those are loans, the mortgages, we borrowed money from people for construction, and i have vendors that i couldn't keep up with. lemonis: and is all that debt still outstanding? gary: yeah. lemonis: when i'm talking to gary about his numbers, what i'm kind of scratching my head on is he's making money. i can see the customers outside. i believe him on his margins 'cause i did some research. and so the numbers aren't adding up to me. you know what i'd love to do, is taste the soup. gary: okay. spence, you want to give marcus the soup tour? -spencer: sure. -lemonis: soup tour. -how does this stuff sell? -spencer: great. this is swansons' family recipe. lemonis: so, what is this called? spencer: this is bouillabaisse. -lemonis: this fish is amazing. -spencer: yeah, thank you.

lemonis: i'm a little disappointed that gary hasn't expanded his prepared foods. the margins are double what the fresh fish is. if he can just have what i call "attachment" -- attaching one prepared-food item to every fresh item that he sells -- his business should go up markedly pretty quick. how you doing, sir? do you come here often? -man: i do. -lemonis: what do you get? is there a specialty that you love? man: i love this coconut shrimp. the stuffed clams -- i can't make them at home as good as he makes them here. i just wish he did more prepared stuff. i'd like to see the man open a restaurant. lemonis: will you come help us wait tables? i'll wait them with you. man: aw, i don't know. i'll come to eat. lemonis: okay. nice meeting you. man: thank you. lemonis: is it always this busy? gary: yeah. yeah. well, this time of day, yeah. larissa: dad, can i get you to sign some of these checks for the vendors? lemonis: how are you? i'm marcus. larissa: hi. nice to meet you. larissa. i'm gary's daughter. lemonis: and you're the one that reached out to me?

larissa: yes. i was shocked. i didn't think you would call. lemonis: what prompted you to come here? larissa: well, all the stress. my mom was doing the books, and she was so overwhelmed that she didn't have any help, and neither did he, and... lemonis: you had another job? larissa: yeah, i was working retail. lemonis: was it a good job? larissa: yeah. i was getting paid well. lemonis: so you didn't really know what you were doing? larissa: not really, no. lemonis: and do you live close to here? larissa: no, i live an hour away. lemonis: you drive an hour each way? larissa: yeah, an hour each way every day. lemonis: why do you do it? larissa: my family keeps me going, and it's hard watching people you care about struggle. lemonis: how is it working with your dad? larissa: it's nice. gary: yeah, we get along fine. her and her mom -- not so much. larissa: yeah, we'll argue who we should pay first -- this vendor, you know. gary: yeah, my wife will come in and yell at me and bitch, bitch, bitch, bitch, bitch, and i just leave. lemonis: yeah. hi. i'm marcus. are you sue? sue: marcus! lemonis: nice to meet you. sue: oh! i love it that you're here!

you don't know what we've been going through, marcus. lemonis: well, tell me about it. sue: gary can drive you nuts the way he does his books. you know, when there's not enough money here, he'll pull it out of the realty, and then, you know, that's the tenants' checks that are coming, you know. there are times that i'm like this. lemonis: and so, are you out of the financials now? sue: i want to be. yeah. lemonis: but i thought your daughter did the books. sue: yeah, she just started. she could see it, you know, that i just don't have it in me anymore. right now, we can only pay, like, one or two people a week, and that's it. lemonis: how's payroll getting made? sue: gary was able to put a few thousand dollars aside, and he made payroll last week. lemonis: it's that tight? sue: marcus, i'm behind two months on my mortgage. lemonis: at home, you mean? sue: yeah. i get my verizon shut down every month. lemonis: the reality of it is, the situation's bad. sue: oh, yeah. -lemonis: right? -sue: mm-hmm.

lemonis: the good news is, we'll figure it out, because what i know for sure is that i saw a lot of customers come through. this is an institution. we just have to figure out how to make money, okay? sue: yeah. okay. gary: we have a beautiful office. lemonis: and so, this is all new? you built this building from scratch? gary: yeah. lemonis: after meeting with sue downstairs, i'm a little confused about the numbers now that she's passed them off to larissa. i want to get them all together so i can clearly understand what the numbers really are and what the company really needs. gary: i have a picture over here of what the old building looked like. lemonis: that one's, like, one you want to just take out of your memory. how did the fire start? do you know? -gary: they don't know. -lemonis: what do you think? larissa: well, we had a fire in our warehouse. lemonis: so, wait a minute -- there was two fires? larissa: yes. gary: it's hard to believe that it happened twice.

lemonis: and how much did that fire cost you to rebuild? gary: i didn't track it, but i want to say 30 grand. lemonis: how much did the insurance give you? gary: think it was about $220,000. lemonis: and how much did it cost to rebuild here? gary: probably about a million dollars. lemonis: how much money did the insurance give you? gary: $1.2 million. lemonis: with the warehouse, gary told me they received $220,000 from the insurance company, but it only cost him $30,000 to rebuild. with the main fish market, the swansons location, he received $1.2 million from the insurance company, but it only cost him $1 million to rebuild. that means that he got an excess of $390,000 from the insurance company. i'm a little confused why they're in such trouble. larissa, was it a total mess when you got here? larissa: oh, god. it was such a mess. that's why i needed somebody's help with it. no one helped me. sue: i talked to you on the phone. larissa: no, you didn't. lemonis: sue, i'm kind of getting the feeling that you really kind of left larissa with the bag in trying to figure all of this out.

i mean, she's a young girl. sue: yeah, no, no, not that bad as you might say. larissa: no, i was pretty much here alone every day trying to teach myself. lemonis: gary, do you feel like sue left larissa holding the bag? gary: yeah. yeah, she has. lemonis: i mean, you want the business to survive, somebody's got to teach her how to do it instead of dumping it on somebody else. that, to me, is like "holy crap." larissa: [ sighs ] i'm sorry. lemonis: what are you stressed about? larissa: just everything -- all the bills and everything that's been piling up. it's just so much. i've been trying my hardest to help, and i just don't know how much more i can do, you know? sue: exactly. why do you think i'm at home? i'm dealing with the phone calls at home. -gary: mm...no, you're not. -sue: yes, i am. persuade them, you know, to work with us. that's what i'm doing. lemonis: sue, look, it's clear to me that you need to take more of an active role in the business. are you able to be here on a daily basis to take some of this burden off larissa?

sue: yes. lemonis: the fact that i can't analyze these numbers the way i normally do makes me very uncomfortable. so, i tell you what i'd like to start with, is understanding this whole universe of debt. and so do you have that on a spreadsheet? so, taxes, i.r.s. -- $33,000? larissa: yes. lemonis: kas mortgage -- $345,000 on the building? -gary: correct. -lemonis: i'm a little confused how a business that got a fresh start after receiving insurance money can be in such debt. they owe their vendors $187,000, taxes -- $67,000, credit cards -- $30,000, utilities and services -- $44,000, and all mortgages at $595,000, totaling $923,000 in debt from a company that got a fresh start just a few years ago. how do you guys pay the bills at home? how are you surviving? gary: i will take money out of the deposits. i will take money, cash out, and give it to her to go to the store. lemonis: and sue was telling me downstairs that one of the things she struggled with

is you were pulling from this fund and pulling from that fund. gary: yeah. sometimes that would happen. and a lot of these expenses are just household expenses. lemonis: gary, so you told me that your mortgage is really past due, as well. gary: at home, yeah. lemonis: is your mortgage paid here? gary: yes. we're in good shape. lemonis: what kind of car do you drive? sue: the bmw. lemonis: well, where do you get the money to pay it? -sue: well, i... -lemonis: out of the company? sue: yeah. lemonis: you owe your credit-card providers, you owe your vendors. you have a mortgage that's past due. you can't pay your employees on time. the employees are having to pay for fish themselves. driving a bmw may not be a deal breaker as it relates to their finances, but it's a deal breaker as it relates to sending a message and leading by example. it just isn't right. do you have a profit-and-loss statement for the business? larissa: oh, yeah. right here. lemonis: so, $1.8 million in total business? and the business, on paper, made $148,000.

gary: on paper. lemonis: and so, what it doesn't account for is any money that left the business to pay debt. from what i can see, swansons has a lot of business, and they actually make a decent profit, but between paying their mounting credit-card debt and sticking their hand in the till, that paper profit is really a cash loss of hundreds of thousands. this is a 40-year-old family business. it's a long time. it's a lot of history. it's a lot a fish. it's a lot of customers. it's a lot of memories. and those are to be taken very seriously. the struggle that i have is, the numbers are fuzzy to me. and with the numbers being as fuzzy as they are, no investor -- particularly me -- is gonna invest in a business that isn't cleaned up. i'm not rolling the dice. this is not a parlay game. i'm not gonna continue to just hope that it works out,

because we haven't demonstrated as a collective group that we can manage money very well. it's too dangerous. it's russian roulette. gary: well, then we're wasting our time. then there's nothing we can do. lemonis: or you have the option -- you sell the building. and so my offer is i'm willing to put $1 million up to buy the building... ...which allows all of your debt to get paid off, own 100% of the business, and put working capital in the business and not have to lose sleep at night. gary: i don't want to sell the building. giving up the building would be a mistake. lemonis: how much is the monthly payment? i feel like you're offended by me asking the question. i'm kind of annoyed that you're offended. if you don't want the million dollars, sue, just tell me, and you guys can figure it out.

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fighting for a plan that lemonis: i'm willing to put $1 million up to buy the building. gary: i don't want to sell the building. giving up the building would be a mistake. and $1 million might not be the right number. maybe it's worth $1.6 million. that wouldn't be a good deal. lemonis: and let me tell you how i arrived at that. $1 million, coincidentally, happens to clean every bill you have up

and put working capital in your business. gary: but then we no longer have this future investment. sue: that's our security. gary: can't do it. lemonis: and if you had the ability to buy it back at a future date? gary: okay, well, you have my attention with that. lemonis: okay, at some point in the future, if you are able to save money from your profitable business or you decided to sell your business, you can then come back to me and buy the building back. i don't know how that doesn't seem reasonable. gary: well, now that you're saying that there's an opportunity to buy it back, i would be interested in that. lemonis: so, is that a deal? gary: yeah. -lemonis: okay. -gary: thanks. when do we do all this? do we -- lemonis: well... gary: oh, boy. sue: [ sighs ] lemonis: $1 million. gary: give it to larissa. larissa: ohh! [ laughs ] lemonis: when i normally write a check,

i allow the business owner to deposit that money right into their account for operations or equity. in this case, the check that i'm writing is gonna go into escrow. when the attorneys have confirmed that everything's clear, the money will be dispersed. it'll go to the banks first, the vendors second, and whatever's left after everybody's paid will then go into the business. that ensures that there's no issues -- no fuzzy math, no questions, no risk. sue knew she was supposed to be here today? larissa: yeah. gary: i don't know. lemonis: she's not answering? gary: she's not answering. lemonis: [ sighs ] so, guys, i wanted to get everybody together to kind of tell you -- last night, gary and i made a deal for me to buy this building for $1 million. i'm not buying it to make a real-estate investment. i'm buying it to give gary an opportunity to get the business back on its feet. and so i'm gonna bust everybody's fanny to make sure that we're successful. so, when we go through this process, i'm 100% in charge.

what i say goes. and so, we're gonna look at people, process, and product. i think the process is broken. when i find out that you guys are taking money out of your own pockets to make sure there's fish there, that's a broken process. when i found out that customers want prepared foods and we don't have them, that's a broken process. and so we obviously want to study this case, study the square footage, and figure out ways to make every square inch of this place more profitable. in swansons fish market, their cases make up 54 square feet of space -- 18x3. i now believe that i can take 54 square feet of space and double the revenue. the prepared foods have a 60% margin, versus the fresh fish at 30%, and so i know that if i can take the products that are in the current case and cook it, grill it, boil it, season it -- do all the things to it -- and make them prepared foods, we can go from doing $150,000 a month in sales to well over $200,000.

what can we do to get more in their basket and more through the register? -hi, sue. -sue: hi. how are you? -lemonis: good. -sue: good. lemonis: do you want to go ahead and join us? sue: yes. lemonis: sue committed that she was gonna be more excited and more involved in the business, right? and she's gonna do whatever it takes to make sure that we're successful. you're committed, right? sue: oh, yes. i'll be larissa's backbone. i will guide her every step of the way. definitely. lemonis: 41 years this business has been here. it's our job to make sure that it doesn't go away. all right, let's get to work. -thanks, guys. -gary: thanks. thank you. gary: okay. well, yeah, it's -- all right. what we'll do is i'll talk to you guys in the next day or so. nelson: all right, thank you, gary. gary: all right, bye. lemonis: what's that about? gary: black rock café -- they're falling behind on the payments.

-lemonis: the people next door? -gary: yeah. lemonis: how much is that? gary: around 15 grand. lemonis: boy, that's a lot of money. where's all the paperwork? gary: i have it. lemonis: and who's joseph? gary: he's the money guy. he told me they're not making it. lemonis: they're not gonna make it? gary: no. doesn't look good. lemonis: the situation at black rock is bleak. they opened up a couple months ago, and already, they're $15,000 past due on the combination of rent and equipment. it looks like they're ignoring their financial obligations. gary: he has the money. i think he's made a decision to not put anything more into the business. lemonis: so he's personally guaranteed this? gary: yeah. lemonis: the owner of black rock café has a $75,000 personal guarantee on this equipment and the lease. what that means is that we can go collect on his personal assets. i don't want to do that. what i actually want to do is come up with a solution that works for black rock and works for swansons. well, if they can't pay, then what about the possibility of turning that into, like, a swansons grill? maybe it's a way to sell more fish, get better prices.

gary: yeah, that might be a great idea. lemonis: swansons should have a restaurant, and black rock, the way it exists today, isn't a viable business, so i feel like i could fix both situations with one meeting. why don't we maybe see if we can get together with them, okay? where is sue, by the way? larissa: she's on her way. gary: yeah, she's always late. lemonis: i'm annoyed that sue continues to come late. she's trying to convince me that she's committed to the business. she's not committed to the business. she's committed to herself. gary: aha. finally. sue: morning, marcus! how are you? lemonis: good afternoon. gary: "good afternoon." sue: [ laughs ] lemonis: you told me you were all in this business. did something change? sue: no. lemonis: i got here early thinking you were gonna be here, and so i'm just -- if you're not gonna be engaged, i just need to get that around my head. sue: no. let's move forward. lemonis: i feel like these guys are doing all of this by themselves. am i missing something? am i just wrong about how i'm seeing it? are you able to get rid of your car to lower that payment?

can you change to a different car? sue: [ chuckling ] here we go again. lemonis: how much is the monthly payment? gary: is it $500? lemonis: it's $500? sue: yes. lemonis: i feel like you're offended by me asking the question. i'm kind of annoyed that you're offended. if you don't want the million dollars, sue, just tell me, and you guys can figure it out. it does send a bad message when your employees downstairs are taking money out of their pocket to buy the fish and you're driving a bmw, right? gary: yeah, no, you're right. lemonis: am i thinking about it the wrong way? lemonis: can you agree with that? larissa: i agree with you 100%. lemonis: and so, you don't agree with that, sue? sue: that...? lemonis: it sends a bad message? sue: but that started happening afti was driving it. it didn't happen before. so... larissa: it is upsetting that you have kind of abandoned the whole thing and put this all on me and don't feel bad about it. sue: larissa, when you're in here, are people calling? larissa: i'm here all day every day. i'm dealing with everyone coming in and out of that door all day.

sue: and it's very stressful, yes. larissa: people looking for checks -- they didn't get paid last week. sue: and then we bounced two checks this week. larissa: i know about all of that. sue: i don't know if you're aware about it. larissa: i'm here five, six days out of the week. sue: okay. because obviously -- larissa: it's my routine every day coming here. sue: obviously, i'm not -- larissa: i drive an hour every day to get here from branford. i don't know why i made everyone's problemy problems. [ voice breaking ] sorry. i'm getting emotional. i've just been through a lot trying to help everyone. and i just don't know how much more i can do. -like, it's just... -sue: oh, no. larissa: i try to be strong for everyone, but... sue: ohhh. you're doing a fine job. you're doing great. [ smooches ] mommy loves you. no, you are. you're doing good. but no, working here -- larissa, the amount of -- i know. i know the amount of stress. larissa: i don't really have anything else to talk about now. this is just a lost cause.

[ sighing ] i just... lemonis: you guys are $15,000 behind. in the real world, if you don't pay your rent, the door gets locked and everything inside becomes his property.

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and they've pretty much given up on honoring their financial obligations. secondly, gary really needs to expand his business in the prepared-foods market. so i'm looking to come up with a solution that not only gets gary his restaurant back, but lets black rock off the hook. nelson: gary. how's it going? lemonis: how you doing, sir? i'm marcus. joe: marcus. joe. nice to meet you. lemonis: nice to meet you, joe. right now, the business is struggling. you're a few months in, and you're already $15,000 behind. joe: i understand -- i mean, i have other business interests, as well, so it's kind of tough. lemonis: you have $75,000 on the hook, and you have a lease. do you have the money to take care of this guarantee? joe: i could pay it, but it's a question of "do i want to go into my retirement account and start liquidating?" lemonis: and honestly, i don't want you to do that. and so we're giving you a lifeline. we're suggesting that, for a very nominal amount, your personal guarantee is gone, all the liability would go away. yes, you would take your losses on everything you've put in thus far, but it at least stops the bleeding.

nelson: so, what is that nominal amount that you're talking about? lemonis: $10,000. that'd be probably it. this is a no-brainer. anytime somebody allows you to get off the hook for 10 grand on a $75,000 obligation, it seems like there's not much to think about. this restaurant would become part of gary's business. you would become kind of the chef for the swansons team. we'd be making prepared foods here. and everybody keeps their job. this gives the opportunity for the employees of black rock to keep working and for gary to sell more fish. seems like a win-win to me for everybody. joe: we had a little bit of hiccups with opening this up. that kind of put us behind the eight ball. so i'm okay with walking away. nelson: we are gonna go ahead and do the deal. lemonis: i see this as a really good opportunity. gary: yeah, this could be a great success. lemonis: it's going to be a great success. i'm glad the deal's done. we'll see you guys tomorrow. nelson: marcus, thank you. lemonis: thanks, guys.

you had put together a spreadsheet of everything we owe. -is this it? -larissa: yes. lemonis: so, here's what i want to do, gary. i want to start calling some of these vendors right now. what i want you to remember is you're getting a set amount of money from me. and so the less that you can have leave, the better. and so i'm looking for you to negotiate as best you can... larissa: with everyone. lemonis: ...with every single person. let's start with val's. i want you to call them and offer them $35,000. larissa: okay. lemonis: we owe a lot of money to our vendors -- almost $200,000. one of those vendors, val's, that supplies our fish, we owe $53,000 to. we need to negotiate these down. and quite frankly, i'm assuming that most of these vendors will be happy to hear from us 'cause getting something is better than nothing. larissa: hi. this is larissa from swansons fish market. i just wanted to see what our outstanding balance was with you. man: it's $53,000. larissa: okay. how would you like to meet me at $35,000? man: that'd be a bit much after all this time. i couldn't go below $40,000.

larissa: all we have is $35,000. i mean, we're just -- we're trying to, you know, get our pennies together and just pay off as much as we can, but that's all we could really do. lemonis: today. larissa: i would write a check for you today. man: certified check? larissa: certified check. man: all right -- $35,000. larissa: okay, thank you. thank you so much. lemonis: how much did you just get off? -larissa: i think $20,000. -lemonis: $20,000? you're $20,000 closer to buying your building back. larissa: mm-hmm. lemonis: you did a great job, by the way. kickass. -larissa: thank you. -lemonis: so keep going. as i go through the case, talk me through what logic you have when putting stuff in certain places. spencer: i actually kind of try to keep it color-coordinated somewhat. lemonis: what's the number-one most-popular-selling item? -spencer: salmon. -lemonis: okay, where is that? spencer: it's right here. lemonis: right in the middle.

you know when you go into a grocery store, where do they put the milk and the bread? -spencer: in the back. -lemonis: right. and so the sides are your back. and so the things that you sell every day, all the time -- you don't even have to work at it -- should go on the ends. and then the highest-margin stuff in the middle. 'cause this is what people are gonna look at first. so what i want to start doing is moving some stuff around. spencer: okay. lemonis: i'm gonna go through that case and make sure that every square inch has product that we can sell, it's presented properly, and it now has room for prepared foods. that was down there. this is now here. gary: yeah. i mean, it looks great. sue: all right, come on. how is it that you can have a boat and get away with it and he's up my ass about the bmw? you know how i feel. it's a good car and how i feel safe driving it. so, now i'm wondering if...

what do you think about getting rid of the boat where i don't have to get rid of my car? what does it actually cost you to put that boat in the marina? without repairs, $5,000 a year. gary: you want the car 'cause you want the car. sue: i don't want to find out that i'm gonna have to drive around in a smart car while you have the freaking boat that's been nothing but an expense, and i've been after you to sell it. gary: it's the only hobby i really have. sue: it's ridiculous! gary: to you, it is. you know what? you, it is. sue: the amount of money -- $2,000 minimum. gary: i work for it. sue: a waste of money, that boat. you've had it. i've asked you year after year -- -gary: so was the bmw. -sue: [bleep] the bmw, okay? gary: blah, blah, blah. sue: [bleep] sick of it. lemonis: hey, guys. what are we talking about? gary: well, she wants to keep her bmw, so i should sell my boat. lemonis: i didn't know you had a boat. gary: yeah. lemonis: so, you didn't want me to see it? if your business is in trouble and you need my help, log on to...

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lemonis: i didn't know you had a boat. gary: yeah. lemonis: so, you didn't want me to see it? gary: yeah, it wouldn't send a good message. lemonis: to who? gary: to anyone and everyone and you. lemonis: everybody else knows you have a boat, so that feels a little funky to me that you didn't feel like you could just be honest with me about it. the fact that i'm hearing that gary has a boat

is outrageous information, and i'm not gonna lie to you -- it pissed me off. the fact is that he didn't want me to see it, and that bothers me more than the fact that he has the boat. gary: the boat got swamped in a hurricane, and it got bought out by the insurance. i got a $70,000 check -- probably double the value of the boat. it hasn't been a huge expense. sue: minimum 5 grand for the season. minimum. at least i use the car for business reasons, okay? lemonis: do you deliver fish with it? sue: yeah, i've picked up shrimp and whatever. gary: no. you don't really do that. lemonis: the reality of it is is that i'm writing a check so that you guys can get stuff refinanced. your employees are taking money out of their pocket. you could see to the outsider how a boat and a bmw looks a little... sue, can you see how somebody would look at that or no? the bmw and the boat have to go, so i think that's...

one of the ways i can make swansons more profitable is by taking their existing space and getting more out of it. what's in here? paul: nothing. lemonis: ugh! it smells. we're not utilizing the space properly. i'm taking the old equipment out that was broken, and i'm bringing in new refrigeration. that's fine. i went out and spent $17,000 to buy new equipment that allows for great presentation of prepared foods. anything that's in that kind of container ready to roll -- prepared. spencer: okay. lemonis: salads pre-made -- boom. soups prepackaged -- done. nelson's next door preparing a number of different recipes that we're gonna sell at swansons grill, as well as in the prepared-food cases. -did you taste that? -gary: yeah, i did. i'm gonna taste it again. this is delicious. lemonis: i'm also adding fresh produce in the store 'cause customers may want to buy some vegetables to go along with their fish, increasing the amount they spend per visit. in the past, swansons was nothing more than a fresh-fish market.

now you can buy prepared foods, you can buy produce, you can buy lunch or dinner next door, you can buy soup to go, both fresh and frozen -- lots of different options. all of that's gonna double the business here. i've spent over five days at swansons spread out over four weeks, and i'm finally back to see what sort of progress they've made. the first thing i see when i get there, is sue rolling up in her bmw, and what's worse, it's 12:00. that's not my definition of commitment, and that's not gonna fly. hey, sue. i guess the first thing for me, really, is when you say, "i'm gonna help you, i'm gonna be your backbone," you have to actually be that backbone. it doesn't look good that you show up late, it doesn't look good that you're driving the bmw. can you see my point at all? sue: oh, marcus, i don't feel like doing this. okay, marcus? lemonis: what do you mean, "okay"?

you're asking these guys at the front to show up and take money out of their pocket and buy the shrimp and buy the fish, and you got a $500, $600 car payment. and so when things get tough, you make sacrifices. you don't put yourself in front of the employees. sue: yeah, no, i've already explained it to you. i don't feel like going over it again. lemonis: you cannot be driving a luxury car. hey, sue. sue: i am not gonna get into any more discussions about the bmw. i'm done. i am [bleep] done. lemonis: i mean, i just don't understand why you think it's okay. sue: one more time, and i swear to you, i am gonna punch somebody in the face -if they mention the bmw again. -larissa: mom! no, seriously! lemonis: seriously, what? sue: i am sick of it -- of constantly being reminded or being reprimanded about this. lemonis: well, if you're not gonna give me the courtesy of discussing this, then we have no deal. because i didn't put my money down into a business so that you could do what you want. your daughter's driving a car that's older thyou, and she's doing all the work.

-be committed to your family. -sue: i am. lemonis: no, you're not. you're showing up late. sue: i had a contractor at the house and the painters showed up. lemonis: did sue just tell me that there's contractors at their house? remodeling? painters? bmws? boats? we're here trying to build a business. they're out rebuilding their house? how am i supposed to do business with people that aren't transparent? meeting with the painter's more important than being here with me? if it is, no problem. maybe the painter will give you a million dollars. look, if you have nothing to say, then i should just go. i'm sure you have some plan, 'cause you don't seem to be concerned about paying me back.

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this is humira giving me new perspective. doctors have been prescribing humira for ten years. humira works for many adults. it targets and helps to block a specific source of inflammation that contributes to ra symptoms. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal infections and cancers, including lymphoma, have happened, as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening heart failure. before treatment, get tested for tb. tell your doctor if you've been to areas where certain fungal infections are common, and if you've had tb, hepatitis b, are prone to infections, or have flu-like symptoms or sores. don't start humira if you have an infection. talk to your doctor and visit humira.com this is humira at work i'm sure you have some plan, look, if you have nothing to say, then i should just go. 'cause you don't seem to be concerned about paying me back.

larissa: i know you're upset, but look at this opportunity. why are you getting so angry? he's doing us a huge favor. you just, like, screamed at him. you should be grateful. don't you understand that? you just got to suck it up. like, he might back out on us, and i wouldn't be surprised. [ sighs ] lemonis: gary and sue called me here to help them fix their business. they told me they were in dire straits. but i'm learning that they're living a lifestyle that people that are in dire straits don't live. so i'm going to town hall to find out if there's anything else i don't know. woman: good morning. may i help you? lemonis: i'd like to look up some public records. -woman: sure. come on over. -lemonis: okay. the clerk gave me access to the computer, which allowed me to see all the records on gary's realty since 1990. i can't believe what i'm learning. the swansons are actually in foreclosure right now.

while i'm spending all this time and money getting prepared to buy the building... this started back in 2012. ...the bank is getting prepared to take the building back. the representations that gary and sue gave me regarding their building -- they're not accurate. this foreclosure action gives me a reason to not want to do the deal. now i feel like i need to confront gary. i'm tired of his misrepresentations and, quite frankly, i'm tired of his lies. over the time that we've been together, i've had to go fishing for information. i've had to learn things on my own. things have come to light. you hid a boat from me. gary: i didn't hide the boat from you. lemonis: you told me that downstairs! you told me you didn't want me to know. gary: i didn't waanyone to know. lemonis: you got paid $75,000 from the insurance company. you told me the money went into the business. -gary: yes, it did. -lemonis: okay. and so i'm watching all these trails of money come from the insurance company and go into your business,

and i can see the business is thriving downstairs. where is the money from all those people that are buying? gary: i think we explained that. lemonis: explain it again! gary: some of the cash goes for... -lemonis: personal bills. -gary: yeah. we've got to pay -- lemonis: just like the insurance claims. gary: yeah. lemonis: then when i go to buy a piece of property, i decided to run a title search. gary: right. lemonis: first thing that comes up is a lien. the second thing i have is a foreclosure action. gary: from kasowitz mortgage. lemonis: you never told me about this. -gary: [bleep] i didn't. -lemonis: [bleep] when? gary: you sat here at this desk when we called that guy up and told him we'll pay him tomorrow. lemonis: but you didn't tell me that he was foreclosing. the foreclosure action started before i even got here! which means that documents were sent here notifying you that the foreclosure process was started. sue: we didn't see that. where are they?

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come on in. [ male announcer ] by meeting you more than halfway. lemonis: the foreclosure action started before i even got here! the documents show it. you guys have lied to me. gary: [bleep] we did! [bleep] we did. lemonis: gary, how come i didn't know about this? gary: how come we didn't know about it? lemonis: how am i supposed to know? gary: we were behind a payment. lemonis: the guy can't foreclose if you're behind a payment. gary: and he hasn't foreclosed. lemonis: yes, he has. this is entered in the court. i got this from the city hall. gary: and you stood here and said we were gonna pay him off. lemonis: that's because i ran a title search and i found [bleep] that you didn't tell me about!

gary: then why didn't you do the [bleep] search first? why didn't you do the goddamn search before? lemonis: because i took you at your word. gary: [bleep] lemonis: i don't negotiate with people and run background checks on them. -gary: [bleep] -lemonis: [bleep] my ass. gary: yeah, get the [bleep] out. lemonis: the deal's off. -sue: marcus -- -gary: get the [bleep] out. sue: marcus. lemonis: you know, i do business on handshakes, and i try to help people, and i do it to make money. there are a lot of struggling businesses out there -- not because they're taking money out of the till, not because they're spending it on lavish things that they shouldn't have, but because they genuinely are struggling. not all of them get my money, and not all of them get my time, but this one didn't deserve either. they just flat-out lied. is your mortgage paid here? gary: yes. we're in good shape. lemonis: for that reason, i'm out.

courage. bis: is a family-run clothing company with seven stores across the country, but they have stumbled badly over the past two years. lousy decisions... noemi: i never approved this design. -nicolas: you approved this. -stephanie: are you kidding? lemonis: ...and poor execution... i just see cash. ...have put the company in a deep financial hole. that's created a ton of family drama. nicolas: you want all of the accolade without doing any of the work. lemonis: if they can't figure out a way to iron out their differences, there won't be a business to fight over. stephanie: nicolas, i don't want him to walk out that door because of this. lemonis: my name is marcus lemonis, and i fix failing businesses.

i make the tough decisions. i back them up, spending my own money. nicolas: whoa, whoa, whoa, whoa. stephanie: where did you learn to negotiate? nicolas: it's just gonna be thrown inside boxes. lemonis: it's not always pretty, but this is business. i do it to save jobs, and i do it to make money. this is "the profit." greenwich, connecticut, is one of the wealthiest towns in the country. its shops cater to a fashionable clientele. noemi: wow, look at that. lemonis: the goureau family opened courage. b in 2008 and have been designing and retailing upscale clothing ever since. noemi: voilà. lemonis: noemi has been the chief designer behind courage. b. noemi: look all the detail inside. this is what i love. you understand that? lemonis: her son, nicolas, oversees the operations. nicolas: did you make the labels for these yet? lemonis: while her daughter, stephanie, manages the finances and just as often plays the role of referee. [ both shouting in french ]

stephanie: stop. stop, stop. stop, stop. lemonis: despite generating $5 million in annual sales, courage. b is losing $500,000 per year. -stephanie: we're losing money. -nicolas: calm down. lemonis: and with the losses mounting, so is the tension. noemi: when i wear this color, i don't need makeup. nicolas: you know what colors i care about? red and green. and i'm trying to get this company back in the green. lemonis: if i can't figure out a way to break through all the family conflict... noemi: no, no, no, no, no, no, no. miss stephanie? lemonis: ...courage. b will completely unravel at the seams. when i arrive at the greenwich store, the first thing i see is a handwritten 60% off sign -- not the greatest first impression. i can't believe what i'm seeing. i feel like i'm in absolute chaos. feels like a flea market. i see pants randomly plopped on a table. i see a crowded jewelry display. i see things on sale everywhere. and i see soap for sale?

there's so much product jammed on the racks that it's hard to focus on a single piece of anything. do you shop here? woman: no, no. i have a store right around the corner. it's actually my first time in. lemonis: she owns a business in this neighborhood and she's never been in this store? well, that really tells me something. what's your first impression? woman: feels a little too busy for what's going on. can you pick out one thing you would buy? woman: um... i probably would have walked out. [ chuckles ] lemonis: really? -woman: yeah. -lemonis: okay. that's great feedback. thank you very much. woman: thank you. nice to meet you. lemonis: have a great day. -how you doing? i'm marcus. -noemi: ah. lemonis: how are you? nice to meet you. you're french, so you kiss? -noemi: yep. -lemonis: okay. how many years have you been doing this? noemi: i decide to don't talk more than 20. i think i born with this talent. i understand woman. a woman my age, you know? she's 35, you know. -lemonis: she's 35. -noemi: [ laughs ]

lemonis: that was good. stephanie: hi. noemi: voilà. this is my babies. lemonis: how are you? i'm marcus. your name? stephanie: stephanie. lemonis: stephanie, nice to meet you. nicolas: hi. nicolas goureau. lemonis: nicolas, nice to meet you. marcus. and so you deal with the operations. nicolas: i deal with the overall management of the entire business, stephanie finances, and my mother the product. lemonis: everybody's got a role. nicolas: they're my captains, you know, if you want to call it that. lemonis: and you're the general. how many stores do you have? nicolas: so, currently, courage. b has seven retail locations. lemonis: and the business will do how much in sales this year? stephanie: we are shooting to do $6 million. -lemonis: last year, how much? -nicolas: $5 million. lemonis: and so there's some substance to that number. and how about margins? nicolas: 50%. lemonis: okay. stephanie: last year, we lost. nicolas: we lost a lot of money last year. -lemonis: how much? -stephanie: a half million. lemonis: okay. industry average of margin on clothing is about 70%. in 2013, courage. b had margins of 50%. they do over $5 million a year in sales.

if we can just get courage. b's margins to increase by 20%, that's $1 million in gross profit. courage. b would go fromloss of $500,000 to a profit of $500,000. all of the seven locations are cash-flow positive? -nicolas: correct. -stephanie: no. nicolas: we did the numbers yesterday, stephanie. stephanie: fopp's is losing money. nicolas, that's -- it's losing money. nicolas: okay. lemonis: what did the "fopp" stand for? stephanie: a fopp is a very elegantly dressed woman. -nicolas: yeah. -lemonis: a minute ago, i thought that courage. b had seven locations. now i'm finding out that one of the locations isn't even callcourage. b. this business is looking more scattered by the minute. nicolas: there was a store that had been around for 20-plus years, which was my mother's store. and through poor business management, if you want to call it that... ...the business was starting to go into debt. she called me. she's like, "i just want to design." and i said, "fine. i can build the business." so, i started courage. b. lemonis: i'm finally starting to understand the goureau family business. noemi has actually owned an apparel store in manhattan

for decades. courage. b started in 2008 when noemi decided to step back from management and just focus on design. well, i want to get more of a tour. can you kind of give me a tour of the rest of the place and -- -nicolas: may i? -lemonis: yeah. nicolas: we built this store fully finished. lemonis: mm-hmm, and when you open a new store, who does the merchandising? stephanie: the merchandising is done by the employees in the stores but run by the managers themselves. lemonis: look, i have hundreds of businesses all over the country, and even my best manager cannot be left to do the merchandising. if you're gonna be a national brand, you have to have a national look and feel. i want customers to be able to travel the country and land at any of our locations and have the exact same experience. that's what a brand is about. i'm fascinated by how all this stuff gets from someone's head and how does it land finally on the shelf? nicolas: so, i'll walk you through, for example, our handbags. finest craftsmanship. you can probably just see the way that they are.

the, um... okay. lemonis: but who came up with the design? nicolas: okay, so for example, this bag right here -- lemonis: just answer that. nicolas: noemi came up with the design for this bag. we mainly -- stephanie, myself, will come up with what connects to the rest of the merchandise that we're producing for that season. stephanie: noemi is the one who is constantly looking out in the world at what the trends are. but for the last five years, noemi has, you know, made a lot of designs and brought a lot of things in. many times -- not all -- things have come in that we've taken hits on. nicolas: right. lemonis: where's all this bad inventory? is there storage, stock room? nicolas: we have a storage room downstairs. lemonis: can i see what you have here? -nicolas: let's go. -stephanie: yeah. nicolas: so, the inventory that we have down here -- this is what didn't make it. lemonis: and so, because i'm not in your business, i just see cash. -stephanie: yes. -lemonis: that's what i see. who designed, like, these two things right here?

-stephanie: noemi did. -nicolas: noemi did. noemi: it's funny. you pick two things. it's, like, popping out. it doesn't belong in this pile. nicolas: well, we could probably pick 100 things like that. noemi: we liquidate that. nicolas: it doesn't matter if we liquidate. don't try and justify it. it wasn't correct. lemonis: and you know what's even more amazing to me? you're doing $5 million with this product. can you imagine what you would do if your product was right? and so what is the problem? how did it happen? nicolas: obviously, it's a family business, so the problem is that noemi's work wasn't up to par, and -- noemi: i had a very bad year. nicolas: noemi's work wasn't up to par. we were still depending on that product, and we ate it. lemonis: how much do you think it's cost? nicolas: almost a quarter of a million dollars. lemonis: and who signed off on them to be designed? nicolas: nobody checked. lemonis: the fact that they've lost $250,000 is alarming, but what's more alarming is the reason they lost it. you have one person designing it, and nobody is check and balancing that process. anything else i should know about what's down here? golf clubs, luggage? nicolas: no, those are my dad's golf clubs. lemonis: is your dad still around? nicolas: no, he passed away. my mom raised us by herself.

lemonis: 'cause i didn't know all of that. stephanie: in '87, they opened fopp's. my father and her opened a small boutique on lexington, and six months later -- noemi: he got sick. stephanie: ...he got sick with cancer and died. noemi: the year after, he died. very young man. stephanie: 38 years old. noemi: and he left me with stephanie, was 4, and nicolas was 7. stephanie: she got remarried. nicolas: two years ago, he divorced her. because he was married to her, and he started suing us, and... stephanie: the little bit she had left, she put into this business. noemi: it's why when we talked about the design, also, it was a part of that. stephanie: she checked out a little. nicolas: it was just bad. lemonis: for everybody. you could not have built this business without her. -period. -nicolas: period. lemonis: you know, it seems like this business really thrives when noemi's at the top of her game. when she's engaged, things are really good. the real courage to start the business came from you putting all your poker chips on the table.

by the way, that's the courage. but i don't give you credit for whatever this is. all right. nicolas: let's move along. lemonis: now i'm going to visit fopp's, the family's first location in manhattan, and it also happens to be the biggest financial drain. they should have called it "flops." stephanie: these are the pants we just sold if you want to just replace that. lemonis: so, tell me about this location. noemi: okay, this is the first location we opened in new york and my first store. lemonis: this store suffers from the same issues as the one in greenwich -- no thought process, no merchandising, product all over the place, crammed into every crack and corner you can find. i couldn't imagine a 30-year-old coming here and buying this stuff. what's a good sales day here numbers-wise? raquel: would be like about $1,500 a day. noemi: but not enough for the rent we pay. lemonis: $10,000? $12,000? noemi: no. you must be joking. stephanie: [ chuckles ] noemi: we're talking about almost $30,000. -lemonis: how much? -noemi: almost $30,000 a month.

$28,000 a month, yes. -lemonis: $28,000 a month? -nicolas: yeah. lemonis: if their average daily revenue is about $1,500, that means on a monthly basis, they're doing about $45,000. let's assume that their margins are 50%. their rent is $28,000 a month. before you pay any bill of any kind, including labor, they're already cash-flow negative. no wonder they got a problem here. how do you make that work? nicolas: well, we're eating up profits from the other locations. the lease has about another year and a half left on it. this is the only manhattan location? nicolas: this is the only manhattan location, yes. lemonis: after visiting two courage. b locations, the picture is much clearer on how this company got in trouble. even though they were smart enough to pick excellent retail locations, bad merchandising and design inconsistencies is why this company is all over the place. now i need to meet the family at their corporate offices and dig into the financials. well, this looks a lot different than the store.

-nicolas: yeah. -stephanie: yes. -lemonis: looks nice. -nicolas: thank you. so, this is home base, if you want to call it. lemonis: yeah. nicolas: this is our conference room/showroom. lemonis: i like it. i walk into their corporate office, and i'm surprised how different it is than the two retail stores i've been to. it looks like an edited collection of what courage. b actually stands for. it's much cleaner, and it's much clearer. stephanie: this product is our best-selling product. it is just an easy hanging cardigan, in essence, that we call the duster, 'cause it literally kind of dusts the floor. -lemonis: who designed it? -nicolas: mom did. lemonis: retail price on that? -nicolas: $99. -lemonis: cost? nicolas: $11. lemonis: look, there's very few businesses in the world where the margins are as explosive as they are as the clothing industry. fashion is a feeling. the better they feel, the more they'll pay. if you can take a product for $11 and sell it for $99 -- a 900% markup -- those are amazing margins. you're not gonna find that in very many industries,

and that's why i think there's a great opportunity here. i like it, but i'm gonna tell you something you're not gonna like. i think that the fit and finish, 'cause i looked at it on her, could use a little tweaking. noemi: exactly. nicolas: right here is the aspen bag in all the various different colors. lemonis: that's almost like a signature design. this is a good product. did somebody bring you this design? -noemi: no, this is me. -lemonis: well, i'm noticing that noemi has a keen sense of fashion. but while noemi's talent tells me this company has a real shot at success, these financials are telling me a very different story. the loss on this statement shows $500,000, which is what you told me. -stephanie: exactly. -lemonis: okay. professional fees of $250,000. stephanie: we went through a tough lawsuit last year. lemonis: was it the divorce? stephanie: yes. lemonis: ah. so, this is not a recurring... stephanie: no. no. this does not happen normally. lemonis: so, if i look at the financials for last year,

i take out the lawsuit, which means i still lost $250,000 for the year. we have about $900,000 of inventory. how much of that would you say is wrong? stephanie: right now we're stuck with about $400,000. lemonis: you have cash tied up in inventory that isn't right for your business. i understand that they lost $500,000 last year -- $250,000 from a lawsuit and $250,000 of bad inventory. but that's not the real problem. the real problem is the company doesn't have the right product on the ground, and if i can fix the product going forward and then merchandise it in a creative way, i know i can make money immediately. you're at a very weird place. this has the makings of being something great, but the business needs money, and all i have to get my head around is we're talking about changing the product and changing the process, and it's extreme, and putting money in at the same time. i'm gonna study these a little bit more. thank you. -stephanie: thank you very much. -lemonis: yep.

stephanie: [ sighs ] lemonis: well, you know, i've spent the last couple days asking you guys a lot of questions. while i struggle a lot with the product, you guys have spent a lot of time working really hard, but the business is really in trouble. i mean, you do $5 million of sales. but at the end of the day, last year, you lost money. stephanie: how do you envision the growth of this business? lemonis: it's about changing every single product that you have. you have $900,000 tied up in inventory. half of it should go into the garbage. how long can you survive? nicolas: we're trying to be as lean as possible. i have about three months where i won't be able to pay my rent at home. lemonis: how much money do you think this business needs? nicolas: i believe it needs around $1 million.

it's 20% of what we do on an annual basis. lemonis: well, it's 20% of what you sell. my offer is $800,000. i have full control. there's 100% of the stock today. -i'll have 50% of it. -noemi: [ gasps ] stephanie: whoa, whoa, whoa. nicolas: whoa, whoa, whoa. stephanie: we away off. nicolas: at this point, it's gonna be 50% for you and 50% for me. lemonis: i'm at 50%. nicolas: marcus. lemonis: and before you answer, just know that if you don't do a deal with me, you may not make it. nicolas: no. you want all of the accolade without doing any of the work. stephanie: nicolas. i don't want him to walk out that door because of this.

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lemonis: so, $800,000. my total offer to courage. b is $800,000. i feel they need $300,000 in renovation, $300,000 in inventory, $100,000 in working capital, and another $100,000 to pay off existing debt. how much equity in your business is that worth to you? nicolas: 10%. lemonis: i'm insulted. at 10%, i'll give you a half-a-million-dollar loan and take the stock of the company as collateral.

i mean, if you default, i'll take the business. so, you don't want that option. the option that you want is you want me to be just as excited as you are. nicolas: is it just because you want 50%? lemonis: forget about what i'm asking for. nicolas: so, let's get close. lemonis: you wanted me to have skin in the game. but at 10%, i don't really care. stephanie: i was just gonna say that. -lemonis: i don't really care. -nicolas: 25%. lemonis: it ain't even correct at 25%. it ain't gonna happen. are you willing to give your sister equity? nicolas: absolutely. lemonis: does she have equity today? nicolas: no. lemonis: okay, so i'm willing to come off my 50% if i know she has equity. does your mom have equity? nicolas: no. lemonis: i'm willing to come off my 50% if everybody has equity. and so, my final offer -- it is it -- is i'm comfortable with you having the most. no doubt about it. you'll have 40% of it, i'll have 30% of it, stephanie will have 15%,

and the lady that founded the business, your mother, will have 15%. let me be very clear. i'm gonna be 100% in charge. we have a deal? nicolas: i accept this. stephanie: wow. -lemonis: partner. -stephanie: that's right. -that's right. -lemonis: partner. i'm gonna write a check to courage. b for $800,000. we're gonna be partners. and we'll let the fun begin. nicolas: i've never seen a check that big before. stephanie: [ chuckles ] lemonis: you'll be making checks much bigger than this. so, you guys want to get everybody together and we can tell them what's happening? noemi: let's talk. lemonis: you guys may or may not know why i'm here,

but i'm here to make an investment in this business. and i believe in the potential of this business, and so i'm investing $800,000 to be a partner with them. woman: oh, my god! yes! lemonis: i will be a 30% partner. nicolas will have 40%, and stephanie and noemi will each have 15%. everybody's gonna have very defined roles, but noemi will not be controlling design. noemi: okay. got it. lemonis: i actually think that the foundation for the business is sound. people, process, and product -- my three principles. the people are awesome, and so that's why i'm standing here today. the process to design merchandise is broken. we are going to re-brand and re-merchandise all of the stores. woman: wow. [ cheers and applause ] lemonis: and we are gonna install a planogram system.

stephanie: i have been saying planograms to nicolas for six years. lemonis: a planogram is a visual merchandising tool used by retailers. it ensures that the product is displayed properly. it also ensures that multiple locations have a consistent look and feel. since courage. b has seven locations, this is the first step in creating consistency across all their stores. we have hundreds of thousands of dollars in mistakes in inventory. we will never make those mistakes again. i think the clothes are affordable. what we won't be doing is selling things that don't have good fit and finish. it's disturbing. what we want to do is improve all of that. my goal is to really improve the fit and finish of all the products. i'm gonna do that by improving the quality of the fabrics and also being more selective about the manufacturers i use -- really raising the standards. -let's get to work. -woman: okay. woman #2: all right. thank you.

-lemonis: hi, guys. -stephanie: hey. lemonis: i thought we could maybe all huddle in the conference room and start looking at those five foundational products. stephanie: great. yeah. lemonis: right now courage. b has way too many products. in order to move this business forward, i have to simplify things. a good example would be pants. we can have different shapes and different sizes, but they're all still pants. let's use this space -- nicolas: for merchandise? -lemonis: yeah. -nicolas: okay. lemonis: i want to go through all the products that we have today and see if any of these existing products will contribute to one of the five pillars. i want everybody to pick what they think is a foundational item. stephanie: i look through this, and i'm just like -- i don't understand how we made any money. lemonis: honestly, for me, the dresses and the tops are the ones that need the most work. you want to have a 35-year-old buyer? really? you look at these tops, you wouldn't wear this stuff. noemi: absolutely not. and i don't. lemonis: and that should be your first signal

that there's a problem. we've lost our way here, and we're bringing in a designer to fix them 'cause i don't like where we're sitting today, and i don't think you guys do, either. courage. b has a terrible identity crisis. they don't know who they're selling to. in order for this brand to be relevant, it has to be more youthful and more innovative and more comfortable. you look at this duster, the quality of it's terrible. -noemi. -noemi: yeah. lemonis: this is your responsibility. the quality is your responsibility. we're gonna make sure that the fabric doesn't rip. and we're gonna add some things to it so we can make a whole collection out of it. we're gonna have five pillars. pillar number one's gonna be this duster. it's a great money-maker for us, and so let's get it made right. we're gonna have dresses. they're gonna be classic and simple. we're gonna have tops that are gonna be clean-cut that are more flattering. and the pants -- we got to have more variety and we got to be a little bit more on the strike zone. bags -- we basically just knocked off everybody else's bags. what most important thing do you want to be known for? stephanie: i fight for the fiji. i'm sorry.

woman: the old design was the winner. lemonis: so, why did you change the design if she says it's a winner? nicolas: because it was falling apart. stephanie: i'll tell you what happened. nicolas: wait one second. we tried different factories, different patterns, and this is the one that -- noemi: i never approved this design. stephanie: yes, you did. you made this design. noemi: no, no, no. it was so quick. -i'm sorry. -nicolas: you approved this. stephanie: are you kidding? you made that. nicolas: don't even. -don't even. -noemi: okay. you went too quick with that. i'm sorry. nicolas: excuse me. stop it. noemi: i blink, and somebody approve it. -i'm saying the truth. -stephanie: no, you're not. noemi: i designed the other one. nicolas: enough with your ego already. enough! lemonis: we're gonna literally take all this stuff out, so if we're gonna get started -- stephanie: wait, what? hold on. nicolas: what do you mean? lemonis: we're gonna be closed for a period of time -- -probably for about a month. -nicolas: what?!

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noemi: i never approved this design. stephanie: yes, you did. nicolas: enough with your ego already. enough! noemi: it's not ego. nicolas: you want me to show you a million things that you approved that you claim you didn't? noemi: this design -- i didn't approve it. lemonis: why are you frustrated? nicolas: because she's just not comprehending what we're doing right now. noemi: no, we don't have to agree. one second. nicolas: it's not agreeing or disagreeing. lemonis: let's leave it to the side for just a moment.

noemi has talent, and she's made some beautiful pieces. but there's been more mistakes than there have been winners. but nicolas is ultimately in charge of the business, so i'm not interested in them playing the blame game anymore. what i'm interested in is getting these five pillars established and getting these products selected. and if they're gonna waste time swirling around with a bunch of nonsense, i'm gonna pick the products. this will end up becoming our signature product. stephanie: messenger. lemonis: what i want to task you with is going back to the drawing board on this product. nicolas: yep. lemonis: and i want to see five to six variations of things with this. i want to see a diaper bag, i want to see a duffel bag, and i want to see a computer bag, a computer cover like this. courage. b will now focus its business on five key items -- dusters, tops, pants, dresses, and bags. going forward, if it's not in one of those categories, it won't be on the shelf. this is gonna end up being a name change, as well. this is gonna be called "the courage bag."

-stephanie: love it. -woman: oh, my god. lemonis: our store's gonna be badass. today, i'm headed back to greenwich to rethink and re-lay out the way this store is merchandised. i just look around, and i feel like i'm in a flea market. once i get that figured out, this will now become the blueprint for all the existing stores and any new store going forward. we're gonna literally take all this stuff out, so i'm gonna -- -we're gonna get started -- -stephanie: wait, what? nicolas: what do you mean? lemonis: we're gonna be closed for a period of time -- probably for about a month. -nicolas: what?! -stephanie: hold on. what's gonna happen with this merchandise? lemonis: we're gonna liquidate it. designing and buying products for the five pillars is gonna be expensive. in order for us to do that, i need to liquidate the existing bad inventory that we have so that i can take that cash and reinvest it in new inventory that sells. stephanie: sorry. get right in there. noemi is still the face of the brand, and it's still her eye that i trust.

but in order to make sure that she's successful, i'm gonna hire legitimate designers with legitimate track records. lynn: make one version striped and make another version solid. lemonis: lynne hiriak, who's worked with great designers such as michael kors and derek lam, is gonna work directly with noemi to help courage. b establish a real retail-brand identity. now that we've ensured that our designs are gonna be taken care of by an experienced designer, it's now time to fix the quality. woman: hi. how are you? lemonis: going forward, we will only be sourcing the finest fabrics for our collection. feel this. noemi: oh, my god. lemonis: this fabric is a higher-grade fabric than we have today. noemi: yes. lemonis: we charge $99 today for a product that, labor and material, costs us about $11. noemi: mm-hmm. lemonis: if we go to $22 or even $25 -- lemonis: in order to increase the margins in this business, we have to increase the quality of the product.

today, the duster is made for $11 and sold for $99. i believe that if we dramatically change the fabric and the stitching, all the fit and finish that goes along with it, we'll be able to charge $145. the new cost will probably be around $25. that gives us a net gain of $32. we're gonna be instilling this philosophy across all the products and all the pillars. i'm confident that courage. b is now heading in the right direction. hey, guys. stephanie: hey. good morning, marcus. lemonis: what's happening? nicolas: i made a new version of the duster with the different type of trim. lemonis: okay. nicolas: you talked about the trim was fraying. -lemonis: can i see it? -nicolas: yeah. let me get it. lemonis: noemi, can you come on down? nicolas: the weaving is a little tighter, so it feels slightly different. lemonis: who's the one that actually changed this?

nicolas: i did. lemonis: nicolas, why are you working on the duster? nicolas: because i had the resources to do it. lemonis: but you didn't include your mom? noemi: no, because we went through that. lemonis: it sounds like you have a problem with that. nicolas: i don't have a problem with that. noemi: it's the control. i told you. this is another problem we have. nicolas: so, are we talking about the past or the future or -- i don't understand. noemi: future. -nicolas: okay, so -- -noemi: we already decide. why are we going back and talking about it? nicolas: so, if we're talking about the future, what happened in the past is irrelevant. lemonis: nicolas, i told you to work on the bag, not this. it looks exactly the same and it feels the same. so you wasted time. i specifically tasked noemi with improving the duster line. i wanted her to upgrade the fabric, and i wanted her to upgrade the finish. but what baffled me is that nicolas decided to take charge and do this on his own. so many companies fail when people do jobs that they're not supposed to do. going forward, i want her to deal with this kind of stuff. nicolas: okay.

lemonis: i don't really understand why nicolas has so much animosity towards his mother, but i need to understand it because, ultimately, it's gonna determine if courage. b succeeds or not. i'm struggling with how nicolas talks to you. noemi: he's a good person. but sometimes, he doesn't know the limit. lemonis: how does it make you feel when you fight? noemi: bad. bad. nicolas: you don't change that. we will tell you whether it is financially and logistically feasible to do. lemonis: i need to kind of understand what i just walked into. if your business is in trouble and you need my help, log on to...

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lemonis: you need whento stand up for yourself,... because i don't see you tell him how you feel, i don't see you fight back, so i wonder if he just thinks you just accept it, he can get away with it.

noemi: no. he cannot. lemonis: i know i can fix many of the business problems that exist at courage. b, but if noemi and nicolas don't work through their issues, it's gonna undermine the success of this business. i've hired professional visual merchandisers to come in and assist in the renovations. woman: this is 128 inches. lemonis: our goal is to create a new and inviting showroom to highlight and feature our new courage. b line. we're gonna need to totally transform this store. we're adding new shelving, recessed lighting, and hip chandeliers to boost the upscale vibe. woman: the mirrors are going here. lemonis: we're opening up the floor plan to increase the visibility of merchandise and increase the customer flow. the purpose of redoing the floor plan at courage. b is not only to increase sales per square foot, but it's also to have a cleaner presentation for the customer. i want them to walk in and see the five pillars that we've created. i don't want to have a cluttered mess like we had before. fixing the floor plan and fixing the merchandising is the first step.

second step is fixing the product. and we're also renovating the manhattan location. the biggest change is gonna be taking the fopp's sign down and putting the courage. b sign up. now for the merchandise. i want to see some of the samples. i'm excited to see the new product, but i know what i want when it comes to quality, and i'm not gonna accept anything less. the fit and finish has to be right. look at the quality. you guys got this one right. you're 80% of the way there. by making these changes, it's gonna really upgrade the new courage. b brand. i want all this stuff ready for the re-launch. it's got to be ready. noemi: we discussed how to do the duffel bag, you know? nicolas: you weren't -- you weren't part of that conversation. noemi: yes, i was. i was there. nicolas: i know, but this isn't your job. you were never asked to do this. this isn't your job.

noemi: i did this bag. nicolas: you came up with the original idea. thank you very much. and now the rest, you're off. noemi: yeah, but do the rest, i'm sorry. nicolas: no, ycan't do the rest. you don't know how to finish anything. it's either a hobby, a game, or it's a business. noemi: it's business. nicolas: i'll give you a little bit about business. you have your job to do. your job is to come up with an idea, and then it is your job to advise, so when the product comes in, we will tell you whether it is financially and logistically feasible to do. stephanie: can you stop? nicolas, please. -noemi: i'm sorry. -nicolas: no. no, no, no. you're not liable. there's absolutely no ownership to your actions. stephanie: please. noemi: i cannot take it anymore. lemonis: i need to kind of understand... what i just walked into. you guys truly have real love for each other, except when you get in here it gets a little toxic. noemi: he's raising his voice, and he's upset. and i don't know what to do when he's like that.

nicolas: so, this is my fault. i'm not a good son. i don't take care of you. stephanie: she never said that. i haven't taken bullet after bullet for you. this is ridiculous. -stephanie: nobody said that. -nicolas: i am your son. i have sacrificed life and limb for you, and i'm not doing any of this -- noemi: i did it in the past for you, nicolas. nicolas: and we started this business with debt that we've just gotten ourselves out of, okay, that your children have been carrying. you want all of the accolade without doing any of the work. stephanie: she also went through a tough time in the last couple years. nicolas: yeah. we all did. i understand that. stephanie: okay, so we have to have a little bit of understanding for each other. nicolas: okay, well, tell that to the bank, tell that to the landlords, tell that to the people that call me for bills. tell that to all them. stephanie: nicolas. i don't want him to walk out that door because of this. please stop. please. i'm begging you.

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nicolas: you want all of the accolade without doing any of the work. stephanie: nicolas, she also went through a tough time in the last couple years. nicolas: yeah. we all did. stephanie: i don't want him to walk out that door because of this. please stop. please. i'm begging you. please. lemonis: i'm there to help fix the business. i'm not a therapist. and candidly, i'm embarrassed that he thinks it's okay to talk to his mother this way. and if i can't understand why he feels this way, i'm not sure that i can respect him in business. nicolas: this is a woman that was able to do anything. like, she could move mountains. lemonis: so, where it gets very blurry for me is when you walk in that door you are her boss. but you also would never talk to an employee that way. so why do you? nicolas: i think my sadness is manifesting itself in anger. it's just sadness i've been carrying my whole life.

lemonis: about your dad? nicolas: [ voice breaking ] yeah. i don't think i ever truly, like, just, like, dealt with it, you know? i was 8. i was 8 years old. we'd just moved to the u.s. and i heard something fall, and i got up and the first thing i saw was my mother on top of him trying to wake him up. he was dying. she was saying in french, like, "patrick, wake up. patrick, wake up." and i was watching all this happen. i didn't speak any english. and i still managed to call 911 and say, "my father's dying. please send an ambulance." then when i hung up the phone, i saw my 5-year-old sister, and she looked at me, she goes, "what's going on?" and i said, "everything's gonna be okay." and i grabbed her, we went into our room and i took out games.

she goes, "what's going on with dad?" i go, "nothing. let's just play." and i put her to bed, and... and then i woke up the next morning and i saw my mother on the couch, and she said, "your father died last night." and i looked at her, and i said, "i think stephanie and i need to go to school." i was 8 years old. that's what i remember. this is another piece of that puzzle. lemonis: what is? nicolas: our relationship. i mean, she is everything -- mom, dad, friend, partner. -lemonis: employee. [ chuckles ] -nicolas: employee. lemonis: discipline her to be creative, but be constructive. and be encouraging and be supportive. she's your mom first. nicolas: yeah. lemonis: and she's your employee last. don't ever forget that she's your mom first, or she will smack you upside your head. nicolas: maybe she should more often. lemonis: yeah. the fact that nicolas was able to open up and be vulnerable and express his feelings with me,

i gained a lot of respect for him in that moment. look, i know that you've been wearing the weight of the world on your shoulders, and your mother and your sister are grateful. i'm grateful because you got us to this point. but you got to let it go. you got to let it go. she knows she made mistakes. you made mistakes. she made mistakes. i've made more mistakes than all of you combined. nicolas: [ sniffles ] yoplait light is now better than ever. it still melts in your mouth. with 90 calories.

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and a lot of transformation has happened. the product's been totally redone, and most of the stores have been renovated. i'm taking them to greenwich tonight so they can see the first one. don't peek. stephanie: yeah, right. lemonis: welcome to your new store. nicolas: [ chuckles ] stephanie: it looks so different. nicolas: oh, my god. lemonis: greenwich feels like a brand-new business. doesn't feel tired and dark. it feels bright, it feels open and airy. my investment feels really good right now. stephanie: this is so cool. noemi: i love that. -i love that. -nicolas: this is awesome. stephanie: oh, my goodness, that chandelier. wow. lemonis: do you now understand why the product also had to be different? noemi: oh, definitely. stephanie: i mean, i'm blown away. it looks like a brand. nicolas: look at all the --

the colors came together and the whole thing. it's like a story. wow. lemonis: my goal at the beginning of courage. b was to transform the brand into something new, youthful, fresh, and fun. the store looks different. what i love the most is i love the merchandising. i feel like the customer can easily understand what's happening in the store, and it's not filled with a bunch of merchandise that doesn't fit in the pillars. noemi: thank you so much. nicolas: marcus, it looks great. lemonis: i think the thing, guys, that maybe is the best is that the relationship of all of you has transformed. noemi: oh, i love my children. nicolas: yeah. noemi: oh, my god. thank you. lemonis: let's get ready for opening tomorrow. -noemi: [ gasps ] wow. -lemonis: okay. -nicolas: do it. -noemi: wow. lemonis: all right, guys. noemi: thank you. lemonis: today's the grand opening for greenwich -- the primary location that we renovated

that will be the blueprint for all courage. b's going forward. stephanie: that's a nice one. it's a little more, like, business conservative. lemonis: how busy it is. nicolas: yeah. noemi: i love it. the color. woman: i love this. woman #2: and guess what. this -- you can put it in the wash. woman: shut up. lemonis: the new courage. b brand, for me, is fresh, it's youthful. customers seem excited. woman: oh, my god, i love this top. lemonis: and it's got much better margins. woman: this is amazing. so high-end. everything that i've tried on fits to the "t." lemonis: there was a lot of work that went into transforming the product. when a customer picks up a garment, they want to know that they're getting their money's worth. you know what i think i'm happiest about? the fit and finish. -after many long days. -noemi: yes. lemonis: i like the fact that you're listening and realizing that quality will drive value.

woman: did you see this? woman #2: no, i didn't. stephanie: there you go. enjoy everything. -woman: thank you. -stephanie: okay. $103.69. thank you. lemonis: you know, sometimes i say that people can't be changed, but in this case, i feel like the people transformed, as well. i'm honored that you guys let me come in and change things as much as i did. noemi: thank you for that. lemonis: and that you've accepted me into your group. you guys are a dangerous trio. i'm just trying to keep up with you guys. [ cork pops ] stephanie: whoo! lemonis: if i can get the rest of the new courage. b stores to open just like this one, we're gonna make a lot of money. nicolas, the numbers every day, the margins every day, i want to hear about them. noemi: we got it. thank you so much. lemonis: okay, guys. nicolas: love you guys. awesome. courage. b.

>> tonight on the car chasers... don draper's sex machine cadillac from mad men-- what's this car worth? >> oh, i hate used car salesmen. >> what? >> i feel like i'm wasting my time. >> for some reason, jeff decides i need help, so he sends me little mac. >> jeff got you working like a madman? oh! >> are you [bleep] kidding me? >> the camaro--the rubber's hit the road a few too many times. it's got all the telltale signs that the car used to be drag raced. >> just a occasional burnout. >> if he's not being honest with me, it can affect the resale value of it. that's it, we're done. >> oh, no. >> my name is jeff allen. i buy, fix, and flip cars. but i don't do it alone. i've got perry...