Doug Ducey's Record at Cold Stone Creamery Again on Blast
It's like 2010 all over again, in more ways than one, when it comes to the self-described "conservative ice cream guy," Republican state treasurer and wannabe governor Doug Ducey.
Back in 2010, Democrat Andrei Cherny opposed Ducey in the treasurer's race, and took aim at Ducey's leadership of Cold Stone Creamery, which ended in 2007, after Cold Stone was sold to Scottsdale-based Kahala Corporation, and Kahala cut Ducey loose.
Kahala since has sold a controlling interest in its company to Canadian investors. But Ducey's reign at Cold Stone resulted in a lot of ticked-off franchisees, who blame Ducey and Cold Stone for them losing their shirts.
A 2010 commercial from Democrat Andrei Cherny, criticizing Ducey for Cold Stone's record with franchisees
I discussed the franchisees' complaints at length in an August 2010 article titled "Doug Ducey: Emperor of Ice Cream or as Sleazy as They Come?"
Here's an excerpt:
Indeed, many former franchisees who got into Cold Stone during the Ducey years -- from 1995 to 2007 -- have similar complaints about Cold Stone and what they refer to, over and over again, as a failed business model.
They say this business model encouraged expansion at all costs and hobbled them with high-priced goods they were obligated to purchase from Cold Stone-approved vendors. And they complain about Cold Stone's erstwhile two-for-one coupons, with the franchisee picking up the tab on the freebie, and the fact that stores were located too close together, thus diluting sales.
This year, in a review of the 10 most popular franchises, CNNMoney.com noted that Cold Stone franchisees have a 31 percent failure rate.
"The product is sweet, but the financials can be bitter," notes the article. "In the last 10 years, almost one in three [Small Business Administration]-backed franchisees defaulted on [its] loan. It's an expensive shop to start, too: The initial franchise fee is $42,000."
Far more devastating was a June 2008 piece by Richard Gibson in the Wall Street Journal that detailed the plights of ex-franchisees, some of whom had gone bankrupt, losing homes and life savings in the process.
That default rate was even higher according to a 2013 analysis done by the Small Business Administration's Office of Inspector General. The OIG's audit cited a 46 percent default rate on government-backed loans to Cold Stone's franchisees in the years 2002 to 2009. (Granted, that includes post-Ducey figures.)