I appreciate you blogging regarding my comment. It was brought to my attention Sunday evening by a group of MBA students at an Arizona university who set out to analyze Cold Stone as “a company whose business model had to do with making money off of ice cream, however as [they] looked deeper it seems that it has been at the expense of the franchisees.” An intuitive analysis may be persuasive in demonstrating that you very well may have been wrongly characterized, but I cannot imagine that you and Cold Stone enjoy the same juxtaposition; to wit:

First, a recent review of Cold Stone’s website indicated that the company had 392 of its approximate 1,400 stores for sale (that’s a whopping 28% of its total franchises). Why? Without knowing more, one can easily construct an argument that these are franchisees lined up to cash in on the appreciated assets of a hot brand, right?

Let’s look further.

Second, a recent review of bizbuysell.com and other sites revealed several Cold Stone stores with asking prices of less than $100,000 and one as low as $29,000. There is even a listing for a location that was opened in 2006 where Cold Stone corporate is attempting to sell a store that was apparently closed by the local taxing authority just last Thursday when the owner was unable to pay his taxes (see http://www.metrowestfyi.com/story_display.php?sid=9113 ). The price tag: $99,000. How profitable do you think that store is?

It cost me nearly $400,000 to start my campus location. If you invest $400,000 to develop a new Cold Stone and within a relatively short period, you are offering to sell it for $100,000, I doubt you will consider “Cold Stone’s franchise opportunities are about as solid as they come” as they claim on their website. If an investor is selling an asset for 25% of its cost within the time period of the Colorado franchisee, do you think there’s any profit to be found in that investment? I think he was just a hardworking man trying to do something positive for his family and his community and like so many other Cold Stone franchisees, ran out of personal assets to continue propping up his unprofitable business.

Third, in late 2007, Cold Stone claimed to have “more than 1,400 stores” open. As of this month, according to their website, they have “nearly 1,400 stores” open. If that is true, it would appear that during the past six months or so, Cold Stone has been closing more stores than it has opened. That is frightening for a company that has for years claimed to be the fastest growing super premium ice cream franchise in the nation. How can a franchisor thrive if its franchisees are failing in large numbers?

You have my email address. To the extent that you would like proof that you are likely the only victim among the two, email me. I will be happy to provide you with what I feel will be a persuasive argument in my favor.

Take care and btw, I enjoy your work.

Cecil Rolle
cecilrolle@aol.com

I blogged about CS over at franchise-chat, must of have been 3 years ago.

I was whacking some VP shill – I pointed out that their income statement was largely receivables from their franchisees.

Not good when the help cannot pay and they stick you with a “promissory note”

Michael, I believe we’ve both been personally attacked online this weekend. Fortunately for me, my reputation was sullied long ago. Intentionally, of course.

Be interesting to see the franchisor’s response.

Betcha that they decide not to hire any more Irish Marketing guys!