1. Heartache and Financial Failure: What Happens When Financial Challenges Become Overwhelming
GROUP 1
JOEY 陳清水 MA1N0207
JACK 阮陳福 MA1N0214
HUNG 黎阮維雄 MA1N0204
AARON 林志聰 MA1N0237
HA 陳黎燕河 MA2N0235

2. Introduction Cold Stone Creamy
American-based company founded by Susan and Donald Sutherland in 1988
Main product is premium ice cream
In 1995 it had the first franchise store. The number of franchisees grew quickly in the late 1990s and early to mid-2000s.
As its peak it had 1,400 franchise stores.
However, it was a mess later on with a large number of franchisees who have to quit due to several financial losses and emotional distress.

3. Franchisees’ challenges
High prices in a tough economy
Saturated market
Believing the hype
Franchisor control

4. Question 1
If you were thinking about buying a franchise, like a Cold Stone Creamery store, what financial information would you look at and analyze before you completed the purchase?

5. Answer to question 1 Timeliness of entry into the target market
Franchisor’s requirements
Cost and revenue of existing franchisees

6. Question 2
After reading the case, are you sympathize with disgruntled Cold Stone franchisees, or do you believe the company explanation?

7. Answer to question 2 (1/3) Cold Stones franchising management has
received a lot of complaints from franchisees:
From UnhappyFranchisee.com:
“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”
Websites like BlueMauMau.org, ColdStoneFacts.org contain numerous horror franchise stories.

8. Answer to question 2 (2/3) Cold Stones explanations:
“Cold Stone insists it doesn't provide profit potential to
prospective franchisees. It also says the revenue figures it
gave for existing stores were based on franchisee
reports.”
“Costs will depend on how well a store is operated”
"We want all franchisees to succeed. However, minimal
restaurant experience, a lack of desire to do local-store
marketing or the inability to be operationally excellent
can all contribute to a franchisee's inability to succeed.“
Source: R. Gibson, “The inside scoop”, Wall Street Journal, June 12, 2008

9. Answer to question 2 (3/3) Our conclusion:
Both sides need to work together
Franchisees need to do better job in financial management to ensure profitability
Franchisors need to reconsider their franchising management.

10. Question 3
Do you think that some businesses that have financial trouble might never have had a chance to begin with? If so, what can a business owner (including a franchisor of a Cold Store Creamery) do ahead of time to make sure the business is financially feasible?

11. Answer to question 3(1/2)
No investor wants to invest to a company if they think it doesn’t have any future or financial growth, people are tend to be attracted on what is famous and trending.
Most of company doesn’t show all of their financial studies.

12. Answer to question 3 (2/2)
As an investor(franchiser), doing research is more suggestible before buying the business.
Doing more feasibility and market might help change the way you understand the company.
Every country has their own culture, so before trying to franchise, think first the factors that may affect you business.

13. Question 4
Answer some points in your career, could you see yourself buying a franchise ? If so, what type of franchise do you think you’d enjoy owning ?

14. Answer to question 4 (1/2)
Buying a franchise = do business with low risks
Good management process
Good products or services
Good support
Choose to buy a franchise to base on customers’ need at the suitable time

15. Answer to question 4 (2/2) However, I’m interested in Drinks Food
Services
Because customers always have those needs, but they have different needs at different times.