Cold Stone Creamery Attracted A Lot Of Franchisees Thinking It Was A Sure Thing. It Wasn’t.
Earlier in this decade, Cold Stone Creamery was one of the hottest franchises around. The super-premium ice-cream stores attracted scores of franchisees hungry for a piece of the “Ultimate Ice Cream Experience.”
Now many franchisees are selling their stores, overwhelmed by soaring bills and shrinking profits. Some have lost their homes, broken their retirement nest eggs or filed for bankruptcy.
What happened?
Even as they rave about the quality of the ice cream, numerous franchisees say the numbers in Cold Stone’s business model didn’t add up. The cost of running one of the shops was so steep that making a profit was daunting, especially in an economy where a $4 scoop was a pricey indulgence, they argue. They also contend the company cut their margins even further by offering two-for-one coupons and making them buy costly ingredients from a single supplier. Some argue that the company’s rapid expansion crowded stores too close together – and brought in too many inexperienced franchisees.
A number of franchisees also contend the company misled them, giving them promises of profit potential that proved unrealistic or inaccurate revenue numbers from existing stores. And some say that they got little help from the company as their stores went under. Read full article.
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