my equity should have been worth more. i think for where they are and where they want to go, i think he had a better vision for them. i don't disagree. amber: you ready to watch the hippops episode? ♪♪ lemonis: was it hip hop pops or hippops? amber: hippop. lemonis: hip hop pops. that would actually be a cooler name, 'cause you could put, like, like a deejay inside. to be honest, that would be cooler. in this particular one, i ate a ton of popsicles. and the reason that i did is 'cause they taste damn good, and i'm not going to apologize for it. hippops was one of the countless businesses that i visited during "the profit." let's go make some money. [ horn honks ] i've traveled the country trying to fix the people... when you do a million dollars a year, you should be -- man: but we don't know how to keep any of it. lemonis: ...fix the process.... see? it is flimsy. don't ever make these again. you don't sell them. ...and create a few new products. juli: it reduces anxiety and depression. lemonis: i kind of like it.

i spent countless days working on these companies. how much money did you burn through? man #2: $650,000. lemonis: we can't always fit everything i'm thinking into the show. so tonight, i'm gonna be giving you an inside look at hippops. annette: go ahead, now! lemonis: over the next hour, we're gonna take you deeper behind the scenes than i've ever gone before. you and your husband own the business? you own none of it? his parents are the check writers. edward: ed fellows. lemonis: they were on the brink of real jeopardy. this is garbage. you wanted process? i'll give you process. and find out what i was really thinking when i got involved in the deal tony: so what happens to my salary? lemonis: what do you make today? tony: about $100,000. lemonis: $100,000. this [bleep] is not ice cream. tony: i was a little overwhelmed. lemonis: overwhelmed by what? their sugar coating went out the window. you essentially called me to come build your business for you. we watered that down to not make him look so bad. my name is marcus lemonis. and this is an inside look at "the profit."

part of the reason that i picked this episode to do an "inside look" for is that i always love a good redemption story. and when it doesn't end well, like it does in this episode, it's important to me that people get a chance to redeem themselves. i'm hopeful that tony's business is still in operation, but i wanted to see if any of his big ideas had actually come to life three or four years later. tony: ladies, we got bars to make. lemonis: in 2012, tony fellows launched hippops, a dessert truck specializing in handcrafted gelato bars. tony: so you choose your flavor and then your dip and then whatever topping you'd like. woman: great. lemonis: his goal was to generate some buzz in sunny south florida, then franchise the concept nationwide. but while the truck itself has been profitable, the franchise effort is a bust, burning tons of money with nothing to show for it and putting tony's dreams on ice.

dcrafted awesomeness." good morning. tony: holy smokes! lemonis: how you doing, my man? i'm marcus. tony: marcus. tony. lemonis: nice to meet you. tony: oh, my god. this is unbelievable. lemonis: this is a cool truck. wow. can i try one? tony: absolutely. lemonis: okay, so there's how many different toppings? tony: we have about a dozen unique toppings. lemonis: okay. tony: and then three chocolate dips. lemonis: so you take a base, you dip it, and then you can put all the toppings on it. amber: initially why were you interested in the popsicle business? was it a sweet tooth, great margins? like, why popsicles? lemonis: the fact that tony was able to create a business model in a very small truck that gave me as a consumer a lot of choices with the pop was intriguing to me because it allowed us to have seasonality, it allowed us to address different parts of the country. and most importantly, it didn't take a lot of resources to execute the idea. i thinreally amazing.zing.acs tony: thank you. it's a little healthier option, because with gelato, you're using skim milk and just a little bit of cream.

so the base itself is about 93% fat-free. when you get the bar, it should be nice and creamy. lemonis: how much is this? jorge: that'll be $5. lemonis: i mean, it seems like a heck of a deal for 5 bucks. what does it cost you to make this? tony: the bar itself runs about 50 cents. lemonis: okay. and then the toppings? tony: so 25 cents for the toppings and 25 cents for the dippers. lemonis: stick? tony: so the stick runs 5 cents. lemonis: okay. tony: all in, with the dip and topping, i have about an 80% gross margin. lemonis: how many of these will you sell in a day? tony: we could do anywhere from about $1,000 to as much as $2,500. lemonis: does this truck run every single day? tony: yes, sir. lemonis: one of the things that i'm really liking early on about tony is you can tell that he understands his business. at least he understands what's happening with the product itself. so, let's go in the truck. i want to see how this whole thing works. what's all the milk and whipped toppings? tony: you can take any pop and turn it into a popshake. lemonis: what do you sell it for? tony: $8. lemonis: $8.

and of a percentage of sales, how many milkshakes do you sell? tony: 5% to 7%. lemonis: is it labor-intensive? tony: it's labor-intensive. lemonis: so why do you do it? why not just stay simple? tony: you know, we didn't have it initially. lemonis: yeah. tony: but folks came and asked, and we wanted them to be able to have that option. lemonis: yeah. so this is a traditional gelato case. tony: no, this is a special case. lemonis: what's special in... tony: you know, it's all glass, and it's completely open over here. there's only one manufacturer in italy that makes a case like this. lemonis: how much does it cost? tony: i paid $25,000 for it. lemonis: for this?! what did it cost to set up this whole truck? tony: all in, about $125,000. lemonis: as part of the franchise concept, you have to be able to convince franchisees that they can really get into this model for not a lot of money. you don't even need a food truck. you could shrink down that footprint by getting a machine with a dipping station and the topping station and the money and a cooler in the back. instead of it being $125,000, it would be $50,000. amber: yeah, that's true.

lemonis: where did the name come from? tony: so actually, my mother came up with the name. ice cream's always been my passion, and so i thought, "wow. we could really create a different experience and take the pops to the people." and if the business model worked, my dream was to franchise it. lemonis: and do you feel like you've proved the concept? tony: i believe so. i franchised it around a year and a half ago. lemonis: you set up the franchise. tony: i did. lemonis: and how many have you sold? 10? 20? tony: i sold one large deal. an international deal in dubai. lemonis: so why not any success in the united states? tony: i don't know. lemonis: this had the legs to be what i would call a hub-and-spoke franchise model. a hub and spoke would allow a production facility to exist in a market like the jersey shore, and it would maybe cover three or four trucks all along the jersey shore. but this idea that tony was going to make things in one location and ship them over to dubai... i love dreamers, but i also want people to be realistic.

lemonis: oh, wow. this is like a real kitchen. ladies, i'm marcus. how are you? annette: hi. i'm annette. annette. lemonis: annette. yolanda: yolanda. lemonis: yolanda, nice to meet you. i'm marcus. can we make a batch from scratch? tony: absolutely. lemonis: what do we have prepped? yolanda: we have pistachio prepped and we have lemon. lemonis: lemon? yolanda: lemon with mint. annette: you a lemon guy? lemonis: my last name is lemon. annette: all right. give it here! there you go! yolanda: this is the lemon mix. annette: out of fresh lemons. lemonis: fresh lemons. yolanda: we squeeze fresh lemons. annette: go ahead, now! there you go, marcus! shake what your mama gave you! lemonis: you got to shake it and stir it. annette: there you go! annette: you got to pour this in the gelato machine. lemonis: okay. annette: and let it come out. we gonna put it in the mold. what we do...take it... tony: and then it has to go into the blast freezer. lemonis: and these will take how long? annette: two hours. lemonis: two hours. yolanda: and this is our biggest problem. lemonis: what's the problem? yolanda: it -- it goes on "defrost" and it shuts down. lemonis: so this doesn't work?

tony: so every six hours, it goes on to a defrost. lemonis: so why wouldn't you get another one? tony: so brand-new, it's about $7,500. lemonis: let me spend some time just with them, okay? i'll see you in a little bit. tony: okay. lemonis: yeah. get out of here. tony: you got it. lemonis: what's it like working for tony? annette: it has its up and downs. yolanda: sometimes we don't see tony for a whole week. lemonis: there's times you don't see him for a whole week? so tony's really not around that much. yolanda: no. lemonis: oy. where's all the inventory? annette: the big white freezer. lemonis: can you show me real quick? yolanda: like, see these freezers? this is where we hold our products. lemonis: why does this look like this? open like this? i mean, it seems totally disorganized. yolanda: yeah. lemonis: so how do you know what's in here? it it labeled on top? yolanda: no. lemonis: and so you really never know, unless you come out and look, what you have and what you don't. there's no inventory system. yolanda: right. no. lemonis: one of the things that's required to apply for a franchise is to put a document together called an fdd. it's a franchise disclosure document, and it essentially memorializes every part of the business.

a franchisee is going to want to see a detailed inventory management system, clear procedures for storing, ordering, and labeling products. they're going to want to see a clean and thoughtfully designed facility with the correct workflow and the right equipment. and they're going to want to know that the franchisor has thought through every little detail. and when there's a problem, they've come up with the solution. but tony hasn't done any of those things. i wonder if what happened with tony is that because he doesn't have the process set up internally, he wasn't able to transfer that knowledge and that process into a document that somebody was able to digest, get comfortable with, and invest in. oh, thank you. okay. is this -- hi, ma'am. how are you? freyda: i'm good. i'm freyda. lemonis: i'm marcus. freyda: hi, marcus. nice to meet you. lemonis: are you the bookkeeper here? freyda: i'm the bookkeeper. and i am the mother. lemonis: oh, you're anthony's mother? okay. well, that's awesome. do you get paid? freyda: yes, with kisses. tony: with pops.

lemonis: so you don't get paid? freyda: i work for love. lemonis: how much money have you put into this whole concept so far? tony: we're somewhere close to around a half a million dollars. my parents invested money. lemonis: how much money have you and your husband invested in this business? freyda: around $200,000. tony: but it's closer to $350,000. lemonis: out of your personal savings? freyda: out of our personal savings, because we believe in our son. lemonis: where did the rest of the money come from? tony: the rest of the money came from the dubai deal, too. lemonis: no money came from you personally? tony: yeah, about $50,000 from myself. lemonis: so they really -- do you own -- do you and your husband own the business? you own none of it? tony: it was a loan. freyda: it's a loan. lemonis: you charge him an interest rate? freyda: i wouldn't. my husband does. lemonis: and do you pay the interest monthly? tony: we do, but, you know, i -- she doesn't always pay it. lemonis: when you start doing business with your family and if money is going to actually transfer hands, it should look and act like a loan because your child needs to understand that while you've made the process easier to collect the money, you shouldn't actually make it easier

on the actual repayment of the money. they have to learn how to do business the right way, and you can't enable them by giving them the ability to just skirt around it. it's not going to be good for them in the long run. tony: it's important to be able to, you know, to get my parents' money back to them. they're not young. lemonis: and if they can't get it back, what does that mean? tony: [ voice breaking ] i'm scared. yeah. freyda: he's always had a tough life. he really got into trouble. lemonis: what kind of trouble? freyda: drugs. okay? lemonis: you had a drug problem? freyda: drugs. tony: thank god, you know, october, i celebrated 19 years clean. lemonis: congratulations. tony: thank you. it's important. and i have three little kids and -- lemonis: are you married? tony: i'm divorced. lemonis: divorced. okay. tony: yeah. you know, this business is, like, everything i have. lemonis: how do you pay your rent and your car payment and all that? tony: i live at home. lemonis: you live with mom and dad. tony: yeah. it helps financially. lemonis: yeah. tony: you know, for my children and my ex-wife. my ex-wife does all the social media. lemonis: she's an employee of this company? tony: yes. so there's other people i'm responsible for here as well. lemonis: it's tough.

i think that's really important that people get a second chance in life and that people get a chance to right their wrongs. and whether that's in business or in personal life, we all make mistakes, and you can see truly that he recognizes the value of that second chance and he takes it very seriously. tony: what do you guys think? lemonis: be an adult. his parents are the check writers. and his decision-making could put them in real jeopardy.

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lemonis: so in 2015, you did $533,000 in sales. the gross profit was $435,000, which is 81% margin, which is killer. tony: yep. lemonis: your total expenses were $381,000, and the company shows a profit of $54,000. tony: correct. lemonis: in 2016? tony: $492,000. lemonis: okay, gross profit's the same at 80%. and right now, the business shows it's gonna lose about $8,000 for the year. $7,000 to $8,000. tony: yes. lemonis: so this is the gelato business. this is hippops handcrafted gelato bars. that's one entity. now the franchise concept. tony: now, the franchise concept has no -- lemonis: it's a separate legal entity? tony: right, so there are no -- essentially no sales, you know, for the whole year. lemonis: how much has it lost in the last two years? tony: it's lost...$250,000. lemonis: so you have, in the last two years, the actual hippop entity

is netting to north of $40,000 in profit. the other legal entity, this "franchise idea," has lost $250,000. gone. so let me explain this a little more clearly. how tony had set this business up is he was the franchisor, the owner of the concept, and he was also acting like a franchisee, which is why he had separate financials. the actual franchisee, the operating entity that was selling the popsicles, was only losing about $8,000. the owner of the concept, well, that's where the problem was. it had lost almost $250,000. that's really where all the money was going. do you feel like this is a well-oiled machine? tony: no, that's why i called you. infrastructure -- lemonis: but, i mean, you essentially called me to come build your business for you. tony: alongside with me. lemonis: uh-huh. tell me about your watch. tony: so it's a rolex. lemonis: how much is that watch worth? tony: $10,000. you know, it's the one luxury, you know, that i have. lemonis: it's a [bleep] watch. tony: i know.

lemonis: and i'll tell you that if i was a potential franchisee, i look at stuff like that. and then i find out that there's one freezer in the kitchen, really would be better if there was two, 'cause you could crank up production. how much does the freezer cost? tony: $7,500. lemonis: how much does the watch cost? tony: i get it. lemonis: i will tell you one thing. i give you a lot of credit for making other sacrifices. living at home. you're taking care of your kids. you've been honest with me about your past. that meant a lot to me. you should feel good about where you stand today. tony: i appreciate that. lemonis: i appreciate the time we spent today. i'm gonna study the numbers, and i'll be in touch, okay? tony: okay. great. lemonis: for me, tony had largely checked the people box. he was demonstrating a high level of transparency, a high level of humility, and i understood that he had been through a lot, but that was in the past. now we have to figure out if he can handle the changes that are required to move forward. lemonis: tony, how are you? tony: how are you?

lemonis: good seeing you. edward: mr. lemonis, how are you? lemonis: hi. i'm marcus. edward: ed fellows. lemonis: ed, nice to meet you. edward: same here. lemonis: wait. i know you. freyda: i know you. lemonis: how are you? is he behaving? freyda: absolutely. lemonis: okay, well, that's his mother talking. i'll find out what his dad has to say. edward: ask his father. lemonis: that's right. amber: why was mom and dad there? i don't think i've ever seen a negotiation with parents before. lemonis: you and i debated it, amber. amber: yeah. lemonis: originally you just wanted him and i. you and i had a big fight about it that morning, that his parents are the check writers. they were on the brink of retirement, and his decision-making could put them in real jeopardy. i wanted them to hear from me that i was no longer going to allow them to put money in the business. i think the business today, it's an ice-cream truck. it is not today a franchise concept. edward: but is it doable? lemonis: is it doable by somebody who wants to show up every single day and to pay attention to the details? yes. i don't know if tony is that person. we know that the margins in this business are spectacular.

i want to make an offer of $100,000 for 50% of the business. tony: wow. lemonis: franchising is a good idea when you have a model that you can show somebody that's what's called a proof of concept. none of that's been done yet. and i understand process and what it's gonna take, and i think it takes $100,000 to get it right. of course, i'll be 100% in charge. tony: and so what happens to my salary? lemonis: what do you make today? tony: about $100,000. lemonis: [ chuckling ] okay. amber: that's a big red flag for us as a producer, right? lemonis: that's reality gold for you. amber: [ laughs ] lemonis: as a producer, i'm sure you love when people -- amber: it is, but we go to some businesses and they don't pay themselves any salary, and you say that's not right either. but $100,000 seems like a lot. lemonis: well, let me back up. when i go into a business and a business owner isn't paying themselves a salary, it convinces me that they realize that the business is bigger than they are. but once i put money in and become a partner,

i can't have my partner working for free. amber: right. lemonis: the opposite of that is when i walk into a business that is on its last leg, and on top of that, they're taking $100,000 out. $100,000. what it says to me is you care more about yourself than you do about your business. that is shocking to me. you are not gonna live the life of luxury, at least while i'm around. tony: i'm not living the life of luxury now. lemonis: give me your watch. tony: i mean, this is a 10-year-old watch. lemonis: give me your watch. you want to know what it's gonna go towards? buying a new freezer. i'm exhausted watching this. hold on to that for me. and do not... freyda: i will not give it to him. lemonis: ...give it back to him. freyda: i promise. lemonis: when the business makes money, you can take half of the profits and i'll take the other half. it's not about me. it's about the business. tony: what do you guys think? lemonis: no, no, no. be an adult. edward: this is your decision. lemonis: don't put the pressure on them. because they're not gonna bail you out anymore. so do we have a deal? tony: we have a deal.

it's scary, but i believe in you, and i believe in myself. and i know we'll build a business. you're gonna do the work. i'm gonna do it with you, but i'm not gonna do it for you. tony: i will. lemonis: okay, the most important line in the entire show -- not only for this episode, for every episode that's ever been done -- "you're going to do the work." amber: right. lemonis: my job is to build the bridge and to help you get from one side to the other. my job isn't to build the bridge and carry you across and then carry you seven miles down the road once we're on the other side. i'll take an apron, and i want to be -- i'm on your team. i'm working for you today. i need to be taught, 'cause i'm gonna be in the line with you. yolanda: oh, okay, then. jorge: you dip it in. pull it out. then you put that -- lemonis: the reason that i wanted them to teach me wasn't because i didn't know how to dip a popsicle in chocolate and toppings. it's because in order to have a franchise, you have to be able to train potential franchisees. and i wanted to see if they had any process written anywhere or any sort of formal training --

here's where the bars are. here's where the chocolate is. this is what has to happen, and it has to happen within this much time. i didn't feel like there was that formal process, and that's essentially what i was pointing out. i'm running [bleep] here. [ laughter ] you know why? tony: already? lemonis: 'cause you're not on time. what time is it? tony: it's 5:47. lemonis: so you're late. tony: i'm late. lemonis: okay, can't be late with me. when's the last time you worked the truck? tony: i don't work in the truck. lemonis: ever? tony: nope. lemonis: okay. tony: hey, folks, how are you? woman: hi. tony: what can i get for you guys tonight? woman: can i get a milkshake, please? tony: milkshake. sure. woman: a mango milkshake. tony: mango? sure. absolutely. lemonis: how long does it take to make a milkshake? tony: five minutes. lemonis: five minutes?! anything for you, sir? man: mango popsicle. lemonis: okay. do you want it dipped in chocolate? man: sure. yeah. woman: thank you. girl: hazelnut ice cream in milk chocolate. lemonis: you said "milk"? so it's gelato on monday, karate on fridays.

what can i get you? woman: i want the chocolate with the white chocolate. lemonis: thank you for your business. man: may i have a vanilla bean with shredded coconut? lemonis: thank you. good seeing you. woman: okay, i would like a pistachio with the dark chocolate. ♪♪ all righty. lemonis: all right. tony: would you like a little whipped cream on top? it comes with it. man: yeah, sure. tony: you got it. lemonis: here you go, guys. that took over five minutes to make that shake. for me, it's speed. certain number of people out here, the longer they wait, they may walk off. the key to the food-truck business is the velocity in which you can turn customers. what tony needs to really understand -- and that this is simple math -- he may be selling the shake for $8, but it takes him so much more time, that in that same time, he could've sold five pops. that's $25, not $8. ♪♪

tony: here's a complete list of the inventory. lemonis: so where's the inventory of, like, these freezers, those coolers, that ladder? where is all that? tony: i don't have an inventory of that. lemonis: why not? tony: just because it's just been us. lemonis: you want to have an inventory of things like your dollies and your freezers and your styrofoam freezers. i want you to just go through the warehouse, and i want you to write down any fixed asset you see. this is a really important takeaway when you think about your balance sheet. i wanted to clearly understand what assets are necessary to run the business. the reason that that's important is because a potential franchisee is going to want to understand, what is my total investment to open one of these up? when you can clearly outline -- you need six freezers, one dipping machine, one gelato machine -- you'll be able to assign values and assign quantities. and it should be inventoried and clear for everybody. tony: yep. lemonis: how much of this is garbage? tony: probably a lot of it.

lemonis: can't do inventory if i don't know what's here. ♪♪ these don't need to be here. every single inch of this place is gonna have a purpose. it's gonna have a label. "this is for this," "this is for that." and if we don't use it, it goes away. tony: we need those shelves for the blast freezer. lemonis: for the blast freezer that's not working well? tony: yes. lemonis: there's so much dust on them. you obviously haven't used them in a year. you wanted process. i'll give you process. so, tony, this is your job for the next week, is to get this place organized. let's give them a system where they can see a quantity, how much they're supposed to have. and remember, we're creating a blueprint. help me build the blueprint. tony: okay. i will. lemonis: 'cause i don't feel like you're into it right now. are you into this, or are you frustrated? tony: well, i'm a little frustrated. lemonis: why? tony: yeah. just with the equity issue. lemonis: you're still hung up on that. tony: yeah. i-i am. lemonis: much like i get fixated on things, he's getting fixated as well, but what i would rather him say is, "listen, can i just ask you a quick question?

when we're done going over this whole process, are you open to sitting down so we can have a discussion about something that's bothering me?" at least give me the choice. don't look like you're not engaged while i'm climbing up ladders, throwing stuff down. tony: you know, one of the things that i didn't discuss with you and, you know, that i needed to bring, you know, to your attention is niva does have some equity. lemonis: your ex-wife? tony: my ex-wife. lemonis: the fact that your ex-wife is a partner of mine is a very big problem, considering that i haven't met her. why didn't you tell me about any of that? coming up... you already got an "f" in the first day of our relationship of not telling me the truth. if he had told me this at the negotiation or before, i probably would have put it in the same $100,000, and i would have backed my equity up.

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so we only pay for what we need. it's pretty cool. that is cool! grandma! very cool. only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪ lemonis: the fact that your ex-wife is a partner of mine is a very big problem, considering that i haven't met her. so you already got an "f" in the first day of our relationship of not telling me the truth. why didn't you tell me about any of that? talk to me. talk to me, tony. tony: [ voice breaking ] just the process is a little overwhelming. lemonis: what's overwhelming? tony: i put my whole life into this business for the last four years. didn't expect to give up 50% equity in the business and have niva have 25%. i know i'm gaining something, but it just doesn't feel that way. lemonis: i totally agree with him.

to be totally honest with you, if he had told me this at the negotiation or before, i probably would have put in the same $100,000, and i would have backed my equity up because i wouldn't want to be in business with somebody that didn't feel like they had enough skin in the game. i think in life, people get overwhelmed. this is an overwhelming process for you. i'm here to help you. i am willing to sit down with you today and we can talk about reworking the deal, but she's got to be at the table. tony: yes. i agree. lemonis: period. end of story. your facts are sketchy right now. tony: i-i understand that. lemonis: and i need her to clean them up, 'cause i don't feel like i'm getting the whole story. tony: that's fair enough. i'll call her and get her to... lemonis: okay. tony: ...to meet us. lemonis: i'll see you in a little bit. tony: okay. lemonis: all right? ♪♪ hello. i'm marcus. niva: hi. niva. lemonis: nice to meet you. amber: how did you feel about that situation, marcus? all of a sudden, you're in business with someone that you don't even know you were in business with. lemonis: it didn't really bother me

because she was a straight-up individual. it was the first time that i was open-minded to a renegotiation because i felt like one of the interested parties, his ex-wife, wasn't able to have her day in court, her seat at the table. and i felt like it would be disingenuous of me not to respect that process. niva, just so you know, i just learned about an hour ago that you are a 25% owner in the business. how do you feel about what's happening? niva: financially ignorant, basically, and not kind of knowing what's going on. lemonis: so you're not comfortable with the deal that's on the table today. we need to resolve this issue, or we need to shake hands and i need to move on. so where -- where are we? tony: i feel good at 35%. lemonis: for me to have 35%? that's too low for me. i can't go down by 15% 'cause you had a sleepless night. i'm willing to go down to 40%. tony: so you're gonna go to 40% and we're gonna hold 60%. lemonis: right. tony: and from the 60%, niva gets 25%.

lemonis: you guys work that out. tony: how do you feel about that? niva: so if he has 40% and there's 60%, so i'm at 25%, you're at 35%. tony: why would i take less equity and leave you at -- lemonis: dude. stop. you really -- honestly, stop. okay, in all fairness, she had 25% and he had 75% prior to me getting there. that's the new information that we all learned. when a new investor comes in, he shouldn't be the only one to get diluted. which means if i get 10%, 20%, 50% of the business -- we use 50%, for example -- she should also be diluted by 50%. that's the fair and equitable business transaction. but you can see his level of uncomfortableness and her lack of being willing to offer up her dilution as well. for you to go down a little isn't unreasonable. do you agree with that? niva: i agree. lemonis: okay. maybe you go from 25% to 20%. do you feel it's valuable enough for you to give up 5% for me to come in? niva: yes. lemonis: okay. so i'll be at 40%, you'll be at 40%, and she'll be at 20%.

and i'm doing that only because i feel like it's not fair for me to be disrespectful to her, okay? tony: yes, sir. lemonis: do we have a deal? nice to finally meet you. are we good? tony: we're good. lemonis: this is it. tony: we're good. lemonis: okay. amber: did you ever see this casting tape before you went? lemonis: look, i watch these application tapes. i watch hundreds of them. i don't remember every little nugget. i sort of walk away with a general theme of "do i like to business? do i like the location? do i think it's a good idea?" amber: she was on the tape. lemonis: let's take a look. tony: hi. my name is anthony fellows. i'm the chief pop officer of hippops. we've got the hottest frozen-dessert concept on the market today. you know, we believe that this is a $100 million-a-year business. niva: my name is niva botkrecht. i am the social media queen, as we call it. tony is a very passionate person. it's black or white. there is no middle scale for him. has it been hard as being married to that kind of personality? absolutely. now i can say he's my ex-husband, so the words

i may choose may not be as great as they would have been two years ago. he lets everybody else run the business, and he kind of steps behind, and he doesn't put into it as much as he did in the beginning. lemonis: i forgot that his ex-wife actually told me up front that he's not in the business that much. amber: never there. yeah. lemonis: i don't like the milkshakes, and i don't want them on the truck anymore because it takes time. so here's what i think about it. one, two, three, make money. essentially, what i was trying to create is a dessert-on-a-stick business, right? and so if you think about the stick is actually what makes it a popsicle of sorts, then any single thing can go on this stick, can get dipped in chocolate and can have toppings on the side of it. oh, um... pretty good. if all you have is gelato pops and you're parked at the same place every wednesday for 52 weeks a year, you may only see a particular customer once, maybe twice a month. but if your product offering is wide, to include other products,

you may see them every wednesday. but it was the portability of the stick that actually made this concept work. going forward, no more milkshakes. and we're gonna add other things like banana, key lime pie, but i want to have a process for adding that on. ♪♪ hey, bud. i wanted to make a visit to south florida, 'cause i wanted to see if tony followed through on completing organizing the warehouse. walk me through what you did. let's start up front. tony: we actually finished this wall. lemonis: what happened to the shelving we were gonna put up here? tony: we didn't put up any shelving yet. lemonis: how come? tony: what i decided was to put stuff for the truck on the side. lemonis: and what about this? remember, wanted to organize -- we wanted to organize stuff like that. so we really didn't get that done. tony: no. not yet. lemonis: getting the freezers organized was top priority. tony: all the -- all the sorbets are here.

lemonis: but this isn't organized by anything. and then what's different up here? it looks the same to me. ♪♪ oh, my god. what is all this? coming up... i don't really know what the point is. tony: the point is, is our process is broke. lemonis: we're trying to fix it, and you're not following the rules.

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lemonis: oh, my god. what is all this? tony: so this whole area was filled up with stuff. lemonis: it looks the same to me. tony: well, we organized it. lemonis: it feels like you put up some drywall, you moved the metal racks over there, you reshuffled around the freezers, and that was it. if you ultimately want to duplicate this model and sell this concept to other people, it needs to be so refined that people come here and they say, "holy [bleep] these people are thinking about every last thing." tony: i get it. lemonis: okay? ♪♪ what i noticed happened a lot with me, with tony, is that my frustration would manifest into something else, and i think it was that i felt a little sorry for him based on everything that he had been through. and i never really got out the true frustration that i had.

i continue to be frustrated with tony, so what i've decided to do is give him a surprise visit to new jersey. i'm taking him to mr. green tea. when i first invested in mr. green tea, they were doing about $750,000 in sales. three and a half years later, they're gonna do north of $10 million. rich emanuele, this is tony. tony: hey, rich. richard: hey, tony. tony: it's a pleasure to meet you. lemonis: as i got deeper into making the show over the years, i realized that me telling the business owner one thing was going to only go so far. but if they hear it from another business owner who has been through the same process, who's struggled with the same issues, who has now overcome them and had massive success, it would add a layer of credibility to what i was asking him to do. i wanted them to see how a real creamery works. richard: right. lemonis: because i have gotten us a very big job in south beach. it's the grand opening of the new t-mobile store. so i want to work on flavor development that's customized for them. ♪♪

the quality of this production is very organized. it's the process that, no matter how small or how big, it has to be there. richard: nothing comes in here without it being tagged with exact orders, barcoded, and what the flavor is. there are no mixed pallets. lemonis: do you see how organized everything is? niva: yeah. we go all in? lemonis: all in. richard: all in, baby. lemonis: i want you to develop two different ideas for the t-mobile thing. you know their colors. let's try to do something big, okay? tony: sounds good. lemonis: just trying to understand your schedule for the next couple days. so you're gonna go back, when, tonight? tony: tomorrow. i have some friends that live up this way, so i'm gonna go see them. lemonis: is there a catering event tomorrow? tony: is there -- i have a few catering events tomorrow. lemonis: so you won't be there for them? tony: well, our business will be there. i personally won't be there. lemonis: who's gonna run them tomorrow? tony: well, my partner will be there. lemonis: your partner marcus? tony: niva.

niva: we came up for business, and that's what we came up for. i also want to stay in manhattan for the night and see some friends. amber: you flew tony to new york, and it seems like he wants to make a personal trip out of it and take advantage. that's got to burn, right? lemonis: the fact that he is making this a vacation is a problem for me. there were certain things that i was looking for him to do that demonstrated a commitment that was different than what i saw previously. in order to run your business, you have to be present in your business. tony: why is it an issue that i'm going back tomorrow for you? niva: because we came up here for one purpose, and it's to be here. and it's done. it's over with. we need to go back. we need to keep on going. lemonis: so i think the point that niva's making is she's going back today and she's gonna cover for the catering event. and you're staying here, and you're gonna... tony: see a friend. lemonis: so, amber, tony just went silent on you? amber: no. so then he called back. he apparently has been, like, really thriving during covid. so he has had an event today. lemonis: if his business was thriving, for him to just get on zoom for three minutes...

amber: i know. lemonis: ...while there's lots of activity and he could talk about how well he's doing. it seems like he's avoiding. coming up... i took you somewhere to see a process. then you come back here and you do none of it. you can imagine my frustration, 'cause i don't really know what the point is. he was more focused on selling his theory to somebody else 'cause he's a dreamer. if you're looking to take your business to the next level, log on to theprofitcasting.com. ♪ ♪

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lemonis: i think the point that niva's making is she's going back today and she's gonna cover for the catering event. and you're staying here, and you're gonna... tony: see a friend. niva: we came up here for one purpose, and it's to be here. and it's done. it's over with. we need to go back. we need to keep on going. lemonis: there's an event tomorrow, so sometimes you want to see a friend and you just... tony: so are you concerned that the catering job will not be -- take -- be done tomorrow? lemonis: i'm concerned that you're not going home today when the work is done and getting back to work. the reason to come up to new jersey was to come up, meet this family, get some contacts, learn some process,

and go back down there and get back to work. tony: i understand what -- what you're saying. lemonis: we're in the middle of this whole business process. tony: right. lemonis: and that includes everybody being 100% in and working hard. and so in the next week, you need to come up with a few options for that t-mobile grand-opening event. amber: why wasn't tony in his business that much? lemonis: 'cause he's a dreamer. and instead of him living in the moment of creating and proving out his thesis, he was more focused on selling his theory to somebody else. and you don't think your employees pay attention to all those things? when i asked the two ladies in the kitchen, "is tony ever here?" they're like..."no." amber: [ laughs ] lemonis: and we watered that down to not make him look so bad, by the way. okay. what do we have to see? tony: all right. niva: okay. niva: we have a mango chili. lemonis: okay. niva: and a café cubano. tony: so niva named the mango "t-mobile mango." lemonis: colorwise, how will that tie back to their brand?

tony: that flavor doesn't relate to -- niva: to the colors. it's more miami. tony: the brand. it's more miami. lemonis: really? tony: it has a little chili in it. t-mobile's very hot. it's on a big upswing. lemonis: did you notice the wall that was in the warehouse? it happened to be magenta, so he knew the color of hot pink. it was already in his logo. so when i said to him, "t-mobile -- come up with a color and a flavor," it wasn't like he didn't know what the color was. it's on his freaking wall! this [bleep] is not ice cream. tony: i-i was a little overwhelmed. you know, you want to try and get everything done... lemonis: overwhelmed by what? i just wanted you to finish one task. i flew you up to new jersey so that you can learn from people that do it really well. and i did that for one reason -- see somebody who started as a small business who now has a huge business, and then i tasked you with what? tony: creating two flavors. lemonis: so you can imagine my frustration, because i don't really know what the point is. tony: the point is, is our process is broken. lemonis: dude, we're trying to fix it, and you're not following the rules. then you come back here, and you do none of it.

if you want me to write you a check and, like, go away, i -- i'm not gonna do that. i'm not the right guy. if it's just that you don't want to do it, i would rather you just be a man and just say to me, "i don't really want to do that." tony: no, i'm open to doing it. lemonis: but then why didn't you do it? tony: i thought that we did. lemonis: i... ♪♪ my only remaining complaint about tony -- he always provided a portion of the information, and today is a good example where he agreed to come on with you, amber, and then when it comes time to it, he's "busy" at an event during a pandemic, which we know there's no events happening. coming up... tony: just didn't feel $100,000 was reasonable for 40%. we're talking about money? for exclusives, extras, and business advice, visit theprofit.cnbc.com.

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lemonis: i feel like i haven't gotten answers. man: i feel free to bare my skin. i don't get the truth out of you all the time. tony: no. i just need the direction. lemonis: what?! did you sell your watch yet? tony: no, i gave it to my -- i gave it to my father against money that i -- i owe them. lemonis: but you could've taken it and sold it and... tony: i know. lemonis: i need to take a minute to determine if i should move forward. let me take a minute, okay? i just need to cool off. amber: how many chances are you gonna give him? we're past three strikes. lemonis: yes, i felt like i had three or four very clear tasks along the way, and they kept getting missed. now, i don't think tony's a bad guy. i don't think he's dishonest. i don't think he's manipulative.

i think that he was just so paralyzed by all these moving parts and pieces that he wasn't able to execute the things that i know he was capable of executing. i worry that what's gonna be next and what's gonna happen after that and what's gonna happen when i don't check on it. i was literally sitting in my car just wondering, like, "why am i still doing this?" i thought it would be good to get all of us together and really have a conversation of where my head's at. it's been a tougher process for me than i had originally expected. i feel like your follow-through for stuff just wasn't what i had wanted it to be. tony: no, i mean, i-i -- i think being accountable and, you know, having to answer to a partner, i mean, i think it's something that i have to really work on. lemonis: good move. acknowledge the issue. as investors or as business owners, it is important for us to always acknowledge the issue, and when we're wrong, it's okay to say, like, "you know what? you're right. i didn't follow through like i should." it's starting to gain credibility back, at least attempt it.

is it fair to say you were never really happy with the original financial arrangement? tony: i just didn't feel $100,000 was reasonable for 40%. lemonis: we're talking about money? ...put you in a situation where you're gonna be uncomfortable and regret having a partner, nor do i want to be in the situation. because i honestly don't believe that you really ever wanted a partner. tony: no. i-i-i agree. lemonis: there are moments in time where you realize that the relationship just can be friendly and it can be cordial and it can be professional, but it isn't a good fit. lemonis: i don't feel like we can do business together. tony: okay. lemonis: i think it's better to just, you know, end it in a way where we can respect each other, we can shake hands. normally, i would exit and you'd never see me again. tony: right. lemonis: but i -- i'm here. and i think you have a ton of potential and you do have a good business. and you're a smart guy, and you're gonna kick ass. with all that tony has been through in his life and the challenges that he's had to overcome, i felt like it was important to leave him with a glimmer of hope, with the idea that

it was possible if he put the work in. good luck to you. tony: be well. thank you. lemonis: i thought giving him his dignity and respect may be the thing that he actually needs more than anything. amber: have you talked to him since the shows? have you to him? lemonis: i got a text from tony a couple of months after we shot the episode. "i just wanted to reach out and thank you again for this awesome experience and most importantly, your time. even though we were making a television show, i don't think you know how grateful i am for the opportunity. in the end, you have to feel comfortable investing and partnering with me. it was never my intention to mislead you and make you feel that you couldn't trust me. integrity is an important value for me today. i know you were busy and opted to leave. however, i feel there's a connection between us. thank you again from the bottom of niva, the kids, my parents, and the team's heart. stay well. tony." amber: last time i talked to him and heard that they're doing

hippops in dallas, hippops in atlanta, like he's franchising come january 2021. lemonis: yeah. 'cause a lot of people are doing that right now. amber: [ laughs ] lemonis: like, i just -- i don't know that i see it thriving, but i'm glad that it's surviving, which is amazing. d are you? cory: 13. lemonis: really? cory: yep. lemonis: a pint-sized entrepreneur and his mom have created a popular cookie brand. cory: would you like to try a cookie? jennifer: these are really good. cory: thank you. lemonis: but now their company is going through growing pains. lisa: when you don't have the right resources or the brain, this is what happens. i'm back to square one. lemonis: the c.e.o. struggles with the fundamentals. how much does it cost to make a dozen? cory: a dozen is around... lemonis: you don't know. cory: oh, no. lemonis: his mother struggles with self-doubt. lisa: i don't think i can take the company where it needs to be. lemonis: you can. i'm positive. i wouldn't be standing here. their product tastes great, but it can't be sold in stores.