Legal Issues
There have been allegations by independent franchises that Cold Stone's business practices have put them at a competitive disadvantage. These former franchises claim that the parent company opens locations too close to each other, requires expensive remodeling and overstates potential revenues and income. Other franchises have contended that is not the case and that they are experiencing growth amid financial uncertainties and higher costs associated with fuel and energy prices.
In June 2008, the Wall Street Journal examined the issue. The article stated that a large number of locations, approximately 16-20%, of Cold Stone Creamery franchises have closed or were put up for sale by their owners, many of whom had suffered significant financial losses due to their investment. The article included claims by franchisees that the company had misrepresented the average revenues of Cold Stone stores and acted in ways that reduced stores' profit margins. A company spokeswoman said that the number of stores for sale was "at par with industry expectations" in light of "the economically challenging times."
Read more about this topic: Cold Stone Creamery
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