The Scoop on Ben & Jerry’s Failing Franchises
(FranchisePick.Com) I don’t know how many Ben & Jerry’s flavors joined the ill-fated “Economic Crunch” in the Flavor Graveyard last year, but I do know how many scoop shops went to the Ben & Jerry’s franchise graveyard: 38.
In her recent Newsweek article (Ben & Jerry’s Bitter Crunch), Suzanne Smalley reports that last year 38 of Ben & Jerry’s 456 North American ice-cream shops, or 8%, closed their doors. Cold Stone Creamery closed an even greater number of shops (71), which represented a slightly lower 5% of their total units.
Ben & Jerry’s Chief Executive Walt Freese blames the fact that while ice cream sales have remained flat nationwide, competition from upstarts such as Cold Stone Creamery & Marble Slab has tripled in recent years. Failing Ben & Jerry’s franchise owners aren’t so quick to let the franchisor - now owned my multi-national giant Unilever - off the hook. In interviews with two dozen current and former franchisees, a number of complaints some of the complaints levelled against Ben & Jerry’s include:
- Ben & Jerry’s misled franchisees into “investing their life savings into stores doomed to failure…”
- The company “did little to help them stay afloat.”
- Wholesale pricing extended to big buyers like Wal-Mart & Costco enabled them to undercut scoop shops
- Headquarters failed to provide effective marketing and support
- Ben & Jerry’s provided misleading earnings projections in their franchise disclosure documents.
The Summer of Love This Ain’t
Allegations regarding the allegedly deceptive “earnings claim” numbers provided to prospective Ben & Jerry’s franchise owners is the basis of at least one lawsuit so far, and others may follow. California franchisee Mehrdad Porghavami alleges the company’s “financial projections” were “false and misleading.”
Ex-franchisees Bekki Ramsey and her husband, Aaron Richardson, claim that the average store sales numbers provided by Ben & Jerry’s were inflated by including higher-volume locations such as casinos and airports. They claim that they have lost $220,000 of Ms. Ramsey’s elderly parents’ retirement savings due to the failure of their Phoenix scoop shop.
Struggling Blacksburg, Va. franchisees Alan and Shannon Sherman also say they relied on the gross sales average of $364,892 cited in the 2004 Ben & Jerry’s franchising circular. They opened their scoop shop in 2004 with a business plan based on that sales volume. The Shermans claim they’ve already lost a half-million dollars and counting. They feel abandoned by the franchisor and plan to sue.
According to Smalley, many other Ben & Jerry franchisees have no complaints and dismiss the critics as unsuccessful owners blaming the company for their own failures.
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The Scoop on Ben & Jerry’s Failing Franchises at PIGASYS
Nov 29, 2007 at 7:43 am
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