More Lessons From Cold Stone For Franchise Buyers

(Thursday, August 14, 2008) - Scores of readers have posted comments in recent weeks responding to an article about Cold Stone Creamery franchisees' growing frustrations with the ice-cream chain.

Their stories offer first-hand insights about how prospective franchisees can better assess a franchise system before signing the dotted line. Here's some of their advice:

– Compare supplier prices. In the article, one Cold Stone franchisee said he felt he paid too much for ingredients from the company's distributor on top of his $3,700-a-month building lease. Cold Stone said it would not comment on the franchisee's case, but that franchisees can buy products elsewhere if they're identical. Readers say it's a good idea for prospective franchisees to look into supplier relationships and compare their prices with what might be found independently.

– Interview long-time and former franchisees. Some franchisees felt they didn't know enough about franchising or the company's business model before buying. Readers point out that prospective franchisees should be careful who they interview when doing their research. New franchisees may be more optimistic and unwilling to rock the boat. And don't forget to talk to those who left the system and may be less hesitant to vent.

– Good products don't equal a good business model. Readers say to be careful about assessing a franchise based on whether you personally like the product. Product aside, you need to closely inspect the financial model and see whether it's possible for franchisees to make decent profits after all the royalties and fees are subtracted.

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