COLD STONE CREAMERY Franchise Complaints
January 27, 2012
According to the leading source of franchise misinformation, Entrepreneur magazine, Cold Stone Creamery is one of the world’s top 50 franchises.
According to many who believed the deceptive advertising hype and bought a franchise, Cold Stone Creamery is one of the worst franchise investments in recent history.
In addition to UnhappyFranchisee.com, websites like BlueMauMau.org and ColdStoneFacts.org contain numerous franchise horror stories.
We’ve included some of the Cold Stone Creamery franchise complaints below.
[Read more Cold Stone Creamery franchise stories]
Allegations include franchise churning, vendor kickbacks and under-the-table “rebates,” excessive discounting and couponing, lack of franchise support, and a broken, unsustainable business model.
What do you think? Do you have a Cold Stone Creamery franchise complaint or horror story to share? If so, please leave a comment below.
Cold Stone Creamery Franchise Complaints
Current franchisee wrote:
The problem with Cold Stone is its management. Dan Beem and Kevin Blackwell are the worse managers in the history of franchising. They have allowed this thing to get so far out of control that it is now impossible to save. (BMM)
David wrote:
I am a Cold Stone franchise owner with three stores and no one knows better than me of the misery that comes with being a Cold Stone Creamery franchisee. There are stores planning to close across the country. I am planning to close my stores as well. Despite having a very high volume of sales, we cannot make a profit in these stores because of Kahala’s kickbacks. My wife and I cannot even pay our mortgage Me and other franchisees will lose millions, our homes, I even had to pull my kids out of college because I spent their college fund trying to keep my stores open.
Cold Stone Creamery is among the most unsuccessful franchises in the nation and everyone should know that!
http://blogs.roanoke.com/storefront/2011/01/warm-treats-on-the-way-to-cold-stone/
Unfortunately Still a Franchisee wrote:
Cold Stone is quick to point the finger at you if you are not profitable. They will actually accuse you of not reporting all your sales so you could get away from paying royalties. This franchise is nothing but a pyramid scheme aimed at taking advantage of hard working individuals with entrepreneurial spirits. We pray that those like us who are still in this nightmare persevere and those that are out mend their broken lives and find a way to get this behind them.
ex-Cold Stone franchisee wrote:
As an ex-Cold Stone franchisee, I also had to withstand the onslaught of the Kahala regime. I called myself being a nice guy and giving them forewarning that I would be closing my store in two weeks. For some odd reason, I expected them to send me a letter thanking me for my dedicated service. Instead they sent me a termination letter and then began to call and harass me to turn over my keys to them. They began showing up at my store unannounced to (“inspect”) verbally harass me. When I told them I planned to remove my equipment and sell it, they became even more hostile, telling me they had a right to the equipment and that they would sue me if I didn’t turn over the equipment and get out immediately. This went on for two agonizing weeks. They stood out in front of my store for a full hour to watch me load my equipment onto the truck and to harass me about what I was removing from the store…
In a letter to CNBC’s Darren Rovell, another Cold Stone franchisee wrote:
[Kahala/Cold Stone] were not there when we began to keep us on the right track, they were not there when we were failing, and they were not there to help us when we failed. They assigned us a trainee area developer who didn’t help us with ordering and inventory, they had us report sales and income daily and we expected feedback if we were doing anything to lead to failure and after we closed our store, they were still taking out franchise fees. They were terrible to us and to 400 plus franchisees.
…We were promised that there is so much money to make but we lost all in six short months.
… We learned a very expensive lesson about payroll taxes, high taxes in general, Kahala fees being ridiculously high and Kahala kickbacks. We used our retirement and our children’s college funds hoping to make our $500,000 and get us on the road to retirement. We were forced to walk, bankruptcy and nearly lost our home… (BMM)
Another Kahala Cold Stone Creamery franchisee wrote:
Kahala has gotten so greedy that the kickbacks received by them in 2010 were $13 Million. Franchisees like myself, invested $350,000 and saw no support to be successful. They got our money, made their profit, and continued making profit. We closed our doors after six short months. Kahala continued taking franchisee fees and advertising fees from our accounts even after we closed the store. Readers, please don’t buy into this rosy picture. Kahala and Dan Beam are thieves and they will have to restore losses to all the 400+ franchisees who lost their stores, believing in this company cared about them. " (BMM)
Current franchisee wrote:
Me and my husband are losing everything we’ve worked for and all these people care about is having franchisees sell more ice cream. It’s all very upsetting what’s happening to us and so many others and I really want this nightmare to be over. I can’t take it anymore. I regret the day I ever heard the name Cold Stone. Cold Stone has cost me and my family so much pain and we have lost everything. And all Cold Stone cares about is us turning over our stores to them so they can resell them to another innocent family.
These people are evil. (BMM)
Are you familiar with the Cold Stone Creamery franchise? Please share a comment, opinion or observation below.
To contact the author and site admin, email UnhappyFranchisee[at]gmail.com
COLD STONE CREAMERY: Another Franchise to Close
June 25, 2011
(UnhappyFranchisee.com) The Cold Stone Creamery franchise in Los Gatos, CA will stay open until Labor Day, then close forever.
According to The Patch, Cold Stone Creamery franchise owner Charles Hamm, of San Jose, said sales were declining and the business environment has “made it impossible to continue operation.”
The store has been in Los Gatos since 2006. Hamm bought it in March of 2007 from a previous owner who also had been losing money. At the time, there were two Cold Stone Creamery stores in Los Gatos. According to Hamm: “They had mediocre sales and I thought if one closed, those customers would come over. In the summertime it’s not too bad, but I just can’t afford the winters.”
[Read more articles on Cold Stone Creamery]
Hamm owns another Cold Stone Creamery in Rivermark Plaza, in Santa Clara. Lamented Franchisee Hamm:”We’re hanging in there … We’ll continue operation there, but it’s a tough time, it’s been tough since 2008.”
Commenting on The Patch article, Cold Stone Creamery ex-franchisee David Klein wasn’t so quick to let the franchisor and parent company, Kahala, off the hook for the franchise failure. He stated::
I understand Mr. Hamm’s struggle and I feel very badly for him, but he is wasting his time and money trying to keep the second store open. It will never make it. I owned three stores. Two of them were among the top stores in the nation and the third operated at well above the average unit volume. Still we could not earn a profit.
I think overwhelmingly, most Cold Stone franchise owners are not profitable due to the actions of Kahala and Cold Stone Creamery. It may even be that no stores are profitable because it was discovered that Cold Stone accepts kickbacks from the distributors that it forces the franchise owners to use. This was reported on CNBC but also in the Wall Street Journal. That causes Cold Stone franchises to become unprofitable. In many cases, this results in the loss of $500,000 or more in savings and other assets and leads to bankruptcy and ultimately the loss of the owner’s home. It’s corporate greed at it worse.
As Cold Stone continues to engage in kickbacks and until the federal government steps in says “no more kickbacks”, this will continue to happen.
Are you familiar with Cold Stone Creamery and Kahala? What do you think? Share a comment below.
DAIRY QUEEN Franchise Closes After Franchisor Rejects Sale
March 4, 2011
Unhappy Franchisee – A Dairy Queen franchise that has operated for 25 years will close after Dairy Queen Corporation refused to approve a transfer to a new owner and subsequent relocation.
The Dairy Queen franchise is the only ice cream shop in Boulder, Colorado’s Gunbarrel community, according to a story in the daily camera.
The franchise owners, Carl & Mandy Patron, will lock the doors for good this Friday after struggling for years to make money.
The Patron’s bought the Dairy Queen franchise in 2001, and have struggled in recent years. They reported that during the winter months they survive off a line of credit, which they spend the summer months paying back.
According to franchisee Carl Patron, “There is very little overall profit with the store.”
Franchisees hopes rise with new prospective owner
After years of struggling to make a profit and unsuccessful attempts to sell their store, the Patron’s finally got a break. A prospective buyer emerged with a plan to move the Dairy Queen to a nearby location and turn it into a co-branded store with Orange Julius. The new franchisee was the most qualified the Patron’s has encountered.
Three weeks ago, the franchise owners secured a contract on the sale of the business and were near closing when officials Dairy Queen Corporation refused to approve the transfer of the store. According to franchisee Patron, the denial was in part, was due to the new buyer’s plans to relocate the business even though it was only a short distance and would still be within the same shopping center.
With their plans to sell to the new owner crushed, the Patron’s have decided to take the loss, close the 25 year franchise and move on.
From Wednesday to Friday, the store is offering everything at 50% off until it’s gone.
ARE YOU FAMILIAR WITH THE DAIRY QUEEN FRANCHISE OPPORTUNITY? WHAT DO YOU THINK? SHARE A COMMENT BELOW.
Related reading:
DAIRY QUEEN Sues Franchisee for $13M Extortion Scheme
DAIRY QUEEN Sues Franchisee for $13M Extortion Scheme
February 23, 2011
Dairy Queen claims it’s the victim of a $13 million extortion scheme perpetrated by one of its own franchisees.
International Dairy Queen Inc. is soft-serving up a lawsuit against multi-unit franchise owner Guy Blume of Ankeny, Iowa.
IDQ, Inc. claims Blume is threatening to go public with information he says would cause $100 million in damage to the company.
Dairy Queen wants a federal judge to sever its ties with Blume, who operates four Iowa stores, and to issue a court order to keep the franchisee from defaming the company.
Blume hasn’t filed a response to the suit yet, but his attorney denied the allegations.
Source: Minneapolis St. Paul Business Journal
COLD STONE CREAMERY: Failed Franchisees Attack Doug Ducey Campaign
October 17, 2010
Doug Ducey, the former Chairman and CEO of Cold Stone Creamery and CEO of Kahala-Coldstone, is campaigning for the position of Arizona State Treasurer.
Angry former Cold Stone Creamery franchise owners, who claim Ducey knowingly sold a flawed franchise opportunity that cost them their financial well-being and the government millions, have joined forces with Ducey’s opponent, Democratic nominee Andrei Cherny, to try to melt his hopes of ever reaching office.
Doug Ducey calls Cold Stone Creamery “a true Arizona business success story”
Doug Ducey’s campaign strategy is to cast himself as a proven, successful business person who built a successful 1400+ unit franchise chain endowed with a “culture of accountability.”
According to his campaign website:
Over the last 20 years, Doug Ducey has been a business leader and a business builder. Through his innovation, team-building skills, and results-based managerial style, he has created thousands of jobs in America and worldwide, helped hundreds to realize their dreams of business ownership, and created a culture of accountability and a mission that has become a model of business best practices.
…As the former CEO and Chairman of Cold Stone Creamery, a true Arizona business success story, Doug discovered that the key to achieving seemingly impossible goals is to set a vision, ignite people to it, provide tools and support, and manage for results. It’s Doug’s proven method, and it’s what he’ll do as Arizona State Treasurer.
Failed Franchisees Want to Melt Ducey’s Political Hopes
According to an article (“Former Cold Stone Franchisees, Cherny Campaign Slam Ducey”) in the Arizona Capitol Times:
A group of former Cold Stone Creamery franchise owners accused Republican state treasurer candidate Doug Ducey, the company’s former CEO, of using a raft of dishonest business practices to perpetuate a revolving-door system that lured in franchisees, bankrupted them and then pushed them aside to make way for new ones.
At an Oct. 7 press conference, hosted by Andrei Cherny, Ducey’s Democratic opponent, four former Cold Stone franchise owners blasted the former CEO. They accused him of attracting franchisees with inflated profit projections, intentionally undermining owners and using Cold Stone’s store evaluation system to bully franchisees who challenged the company’s actions…
“They know they were selling a failed business model to franchisees, yet they continued to do it year after year to the profit of the creamery. Most of us, a number of us here, were just ruined financially,”Ken Gornall said at the press conference, which was held at Arizona Democratic Party headquarters. “He was the CEO. He was responsible for whatever actions took place.”
The Success Story with a 31% Failure Rate
Ducey’s run for Arizona State Treasurer has prompted an aggressive alliance between unhappy ex-franchisees eager to share their feelings about Ducey’s allegedly sleazy business practices, and Andrei Cherny, who is more than happy to give them a megaphone to do so. Cherny videotaped failed franchisees bashing Doug Ducey and Cold Stone Creamery, and posted the video series both on his website and on YouTube.
See: Videos for Press Conference about Doug Ducey with Former Cold Stone Creamery Franchisees
According to a Phoenix News Times (Doug Ducey’s Record at Cold Stone Could End Up His Albatross) story:
The ex-Cold Stone hawkers ran through a litany of common complaints regarding Cold Stone’s alleged business practices: promises of profits that rarely materialized; "cannibalizing" sales by placing franchises too close together; forcing franchisees to purchase high-priced goods from favored vendors who provided "remunerations" to Cold Stone; two-for-one coupons that the franchisees had to eat the cost of; and on and on.
One allegation in particular was an eyebrow-raiser. Redd, who operated four stores in Arizona, said on camera that the franchisees were supposed to pay sales tax on the freebie ice cream offered by the infamous two-for-one coupons. He said he was forced to pay this when he was audited by the state. Moreover, Redd claimed he informed Ducey and Cold Stone about the situation.
"We told Cold Stone about it," Redd explained at the press conference. "They told us to just not pay the sales tax, to just, you know, throw the coupons away."
Redd suggested that Cold Stone may not have paid state sales tax on "hundreds of millions of dollars of ice cream" distributed through the promotion.
Also read:
Failure Rates of the 10 Most Popular Franchises
COLD STONE CREAMERY: Bitter Franchisee Alleges Encroachment
COLD STONE CREAMERY: Franchisee Alleges FR “Churning”
Cold Stone Creamery Gets Served by Franchisees
ARE YOU FAMILIAR WITH DOUG DUCEY AND THE COLD STONE CREAMERY FRANCHISE? SHARE A COMMENT BELOW.
Contact the author or site admin at UnhappyFranchisee[at]gmail.com
Failure Rates of the 10 Most Popular Franchises
April 26, 2010
Failure Rates of the 10 Most Popular Franchises What are the failure rates of the 10 most popular franchise opportunities? Read more
RICKY’S: Summit, NJ Store Equipment Auction
December 11, 2009
Another sad milestone for the dying Ricky’s Candy, Cones & Chaos franchise dream.
Equipment for the defunct Ricky’s Candy, Cones & Chaos franchise in Summit, NJ will be auctioned by A.J. Willner’s Auctions on Monday, December 14, 2009 at 11:00 AM.
Here is the information from A.J. Willner’s auction page:
ABSOLUTE AUCTION
Like New Gelato, Ice Cream & Candy Equipment
re: Ricky’s Candy, Cones & Chaos of Summit
By Retention of Landlord. Everything Must Be Sold Regardless of Price!
Auction Date(s): Monday, December 14, 2009 Time: 11:00 AM
Address:
333 Springfield Ave.
Rt. 24 to Exit 9A
Summit, NJ 07901
Inspection Date(s):
Monday, December 14, 2009
Time: 9:30 AM to 11:00 AM 
Pickup Date(s):
Monday, December 14, 2009 Time: 1:00 PM to 4:00 PM
Tuesday, December 15, 2009 Time: 9:00 AM to 1:00 PM
LIKE NEW ICE CREAM, GELATO, CANDY & RESTAURANT EQUIPMENT:
# "New" Prima 18 PLUSA 5 Ft. Glass Front Gelato Showcase (s/n L40002; Recently purchased for $25,000!)
# Master-Bilt Glass Ice Cream Showcase
# Scotsman Undercounter Ice Machine
# True Undercounter Rolling Refrigerator
# 47 Compartment Candy Dispening Unit
# 3 well S.S. Sink w/ Sprayer
# Single Head SaniServe Ice Cream Dispenser & (3) 5 Ft. S.S. Tables 
# Bunn CWTF35 Coffeemaker & 6 Head Coke Soda Dispenser
# Beautiful Free Standing & Custom Built Store Fixtures Including Wonka Mobile, Cabinets, Menu Board w/ TV, Outside Lighted Sign, Wall Signage, Decorations, etc.
# 8 Sections of Metro Racks, Small Sentry Safe & Samsung SF 560 Fax
# Large Qty. of Paper Goods, Supplies, Accessories, Tables, Chairs, Hot Fudge Disp., Hand Sinks, etc.
Featured Items:
Prima 18 Self Contained Gelato Showcase
Master Bilt Self Contained Display Freezer Case
Scotsman Under Counter Ice Machine
SaniServ Frozen Beverage Machine
True Under Counter Single Door Refrigerator
Stainless Steel Prep Tables 
Stainless Steel Triple Well Sink
Hot Topping Dispensers
6 Flavor Soda Fountain
Dial Face Safe & Fax Machine
Interior Signage
Exterior Signage
Bulk Candy Merchandising Unit
"Wonka" Store Fixture
Animated Store Fixtures
Tables & Chairs
For Complete Catalog please click on "download catalog" at the A.J. Willner’s auction page.
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
photos: A.J. Willner
BASKIN ROBBINS: Franchisees Lose $1.45 per Scoop on Promo
November 17, 2009
Discount promotions like Baskin Robbins 31 Cent Scoop Night might be great for ice cream lovers and great for the franchisor… but what about the Baskin Robbins franchise owner who foots the bill? According to Smart Money, BR franchisees lose roughly $1.45 a scoop on 31 Cent Scoop Night
It’s one of the hottest topics in franchising. Here’s why: Franchisors make money off the gross sales of their franchisees, regardless of franchisee profitability. Some franchisors make additional money marking up ingredients and food products to their franchisees. Public franchisors benefit from higher sales – and stock prices – that are not tied to franchisee profitability.
SmartMoney.com surveyed franchisees from different franchise chains regarding the cost to them of some current and recent promotions. The Smart Money article points out that franchisees generally bear the brunt of a promotions’s cost, including the food, labor, rent and utilities, among other things.
Here’s the Smart Money finding for Baskin Robbins 31 Cent Scoop Night, which report a $1.45 loss per sandwich:
Baskin Robbins
Promotion: 31 Cent Scoop Night – This annual promotion occurred between the hours of 5pm and 10pm on April 29.
What they normally charge: $2.29 (one single scoop)
Promotion Price: 31 cents
Bottom line for restaurant: Loss of roughly $1.45 a scoop
Baskin-Robbins’ 31 Cent Scoop Night is done in the name of charity. Not only does the company donate $100,000 to NVFC National Junior Firefighter Program, but it’s also quite generous to ice cream lovers as well. One scoop (of any flavor you choose) for just 31 cents compared to the regular price of $2.29 at one location in Wisconsin is a pretty sweet deal. Franchisees don’t feel much of that goodwill, however: Beyond the approximate 60-cent cost of the ice cream, a spoon and a cup, store operators also pay another $1.15 per scoop for rent, utilities and labor, estimates one store owner in Wisconsin. Baskin-Robbins spokeswoman, Danielle Sullivan, says the company’s own calculation on per-item profitability differs from those provided to us by franchisees, but she declined to give specific figures. She also declined to comment further on costs and profits.
RELATED POSTS:
SUBWAY: What Do Franchisees Make on $5 Footlongs?
LITTLE CAESARS: What Franchisees Make on a $5 Pizza
McDONALD’S: What Franchisees Make on a $1 Burger
BASKIN ROBBINS: Franchisees Lose $1.45 per Scoop on Promo
QUIZNOS: Franchisees Lost $2.25 per Sub on Giveaway
BURGER KING Franchisees Sue Over $1 Cheeseburgers
WHAT DO YOU THINK OF BASKIN ROBBINS PROMOTIONS? SHARE A COMMENT BELOW.
RICKY’S CANDY, CONES & CHAOS FRANCHISE
November 15, 2009
RICKY’S CANDY: Why’d the Princeton Store Close?
November 15, 2009
Thanks to Krystal Knapp, writer for the Times of Trenton, for citing UnhappyFranchisee.com as a source for her recent article on the closing of the corporate-owned flagship Ricky’s Candy, Cones & Chaos store in Princeton, NJ (Princeton Borough sweetshop closes on a sour economic note).
Knapp’s article quotes comments left here and on the retired Franchise Pick website in which Ricky’s new president Donald Cheng blamed the economy for the struggles of the Princeton store and the chain as a whole. “The current economy has impacted the retail sector much more heavily than others. The Ricky’s model was heavily dependent on a robust economy where parents splurge on their children and friends,” wrote Cheng. “However, as the economy worsened, more people became budget conscious and retailers have to react by providing better value and Ricky’s did not adjust fast enough."
Cheng had promised a repositioning of the Ricky’s concept to adapt to current economic climate, starting with the Princeton store. After his short burst of comments here were questioned by current and former franchisees, Cheng was never seen nor heard here again.
The Times article includes some telling details of the financial woes of the failing chain, and its unsuccessful attempt at gaining bankruptcy protection:
In December 2008, the company filed for Chapter 11 bankruptcy. Among other creditors, court records show Ricky’s owed thousands of dollars in back rent to Nassau Tower Realty and $100,000 to the state in sales tax.
Ricky’s struggled to pay rent of $14,590 a month that increased to $15,673 a month in April, court records show. Ricky’s made a partial payment of $2,000 for September 2008, and the realtor tapped into a $75,000 deposit to pay for rent in the coming months. That money was exhausted and Ricky’s owed Nassau Tower $42,301 for March, April and most of February.
The bankruptcy was rejected by a judge and dismissed in May.
According to Knapp, “The Willy Wonka-esque franchise that sold candy, ice cream and other sweets went sour along with the economy, records show.”
Ricky’s demise may have occured “along with” the decline of the economy, but some argue not because of the tough economic times. According to Guest, commenting on a related Ricky’s Candy post:
…The one flaw of the article is the idea that the economic conditions were a factor in the fall of Ricky’s. NO, IT WAS NOT…… Court documents from the Ch 11 attempt clearly showed that even when the economy was roaring and Toll Brothers couldn’t build a McMansion fast enough Ricky’s was not making any money and the only income supporting the shell was the franchise fees and royalties paid by people who thought they were buying into a successful business model. The house of cards began to crumble once the store owners began to communicate directly and the fact checking began.
Was the Princeton store simply a franchise sales tool from the start?
Ricky’s Candy, Cones & Chaos franchisees have alleged that the Ricky’s concept was not viable from the start and the company’s – and founder’s – main goal was to sell franchises. Nearly all franchise stores have failed and closed, and angry franchisees are suing.
The shockingly high rent of the Princeton store suggests that it perhaps was designed to be a brand showcase and franchise sales vehicle rather than a profitable candy store. Could a candy store in Princeton, NJ, even in good economic times, realistically sell enough candy and cones to justify rent of more than $175,000 per year?
Or did Ricky’s corporate assume the high rent and high overhead would be recouped not by selling candy, but by selling the dream of owning a successful Ricky’s franchise?
Related Posts on Ricky’s Candy, Cones, & Chaos:
RICKY’S CANDY: Message from Donald William Cheng
RICKY’S CANDY, CONES & CHAOS: Summit, NJ Store to Close
RICKY’S: Princeton, NJ Store Eviction Notice
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
