Tue 24 Jun 2008
Cold Stone: A Franchising “What Not To Do”
Posted by Megan Dorn under Random thoughts, Small Business
I first read about the big Cold Stone controversy early last week on Independent Street. Then Business Pundit added to the debate yesterday. Now I feel compelled to contribute my two cents as well.
So here is the gist of the story. A group of Cold Stone Creamery franchisees are attempting to file a class-action lawsuit against the parent company, Kahala Corp., claiming “potential revenue numbers were misleading,” among other things. Cold Stone, on the other hand, suggests the franchisees were not fit to run a business, and that’s why so many franchises are failing. So who’s the culprit, corporate or the franchisees?
There’s no doubt in my mind that the majority of the blame lies in corporate’s hands. Cold Stone was incredibly trendy for a while, so the company over expanded its reach and now sits there with a franchise on every street corner and a consumer market moving on to the next hot trend, not willing to spend that kind of money on luxury ice cream anymore. Cold Stone isn’t like Starbucks, in the fact that, unlike coffee, ice cream is a “once in a while” type of deal. So it doesn’t make sense to have them everywhere. The overexpansion is not the franchisees fault. It’s just poor management from the top down.
But a class-action suit? Really? Let’s keep everything in perspective here. The Cold Stone franchisees in one way or another lost a lot of money, and that sucks! They’re doing the right thing by expressing their dissatisfaction with Cold Stone and Kahala Corp. But they still have to look at the facts and understand that they jumped on a bandwagon that had yet to show signs of longevity. That’s the lesson to take away from this.
Even though corporate may have enticed them with all kinds of happy-go-lucky gobbledygook, these franchisees still looked at the business model through rose-colored glasses, and that IS their fault. I’m not saying that the franchisees are a bunch of starry-eyed, business-inept morons. That’s not at all the case. But even the most knowledgeable, business-savvy people can get caught up in the hype sometimes. And that’s what happened here.
June 26th, 2008 at 9:36 am
Amazing that people actually do look at things through “rose-colored glasses” as much as they do. What is even more amazing is that people will continue to buy these Cold Stone franchises, even with all the blogging about them. We started an eBay drop-off store and after nine long months of hard work, endless hours, and all of our money gone, we realized the model did not work. We would advise others against start ups and especially franchising. Didn’t matter. People did not listen spent their hard earned money anyway on a losing business. Anyone from this day forward that buys a CSC franchise has no excuse, and should not blams CSC HQ. Caveat emptor…doesn’t that sound like a flavor. I’ll have a scoop of Caveat Emptor with some M&M’s sprinkled on top please.