Is the Relationship Between Cold Stone Creamery and Its Franchisees a Bit
by Mario Herman
Cold Stone Creamery has had its share of problems over the past few years.
The latest chapter is a lawsuit by a number of its franchisees.
In mid-January 2012, a lawsuit was filed in the Miami-Dade Circuit Court, by an
independent franchisee association against franchisor Cold Stone Creamery 2012.
The association is made up of more than 120 franchisees who allege that Cold
Stone Creamery withheld information from its franchisees regarding monies
collected from third-party vendors and funds collected under the Cold Stone
Creamery gift card program. The complaint alleges that although the members of
the franchisee association requested an accounting of the vendor rebates the
franchisor received under its Flexible Marketing Program (“FMP”).
Of concern to the members of the franchisee association are:
- What percentage of vendor rebates that are marked for the
FMP are actually being used for marketing
- What percentage of supply prices from vendors were used to
offset kickbacks to the franchisor
- In the matter of gift cards that have been sold but not
redeemed, the franchisees seek an accounting of the amount and
accrued interest thereon.
The complaint alleges that Cold Stone Creamery franchisees were told in emails
and in company meetings that the money from vendor rebates would be used for
marketing, and the interest on the money from unused gift cards would be used to
offset the cost of using third-party vendors to sell the gift cards. The
lawsuit seeks an order that Cold Stone Creamery provide the association with the
above referenced information, as well as costs of the litigation. Clearly,
this case is in the early stages, and will be interesting to watch unfold.
Mr. Herman based in Washington, D.C., represents franchisees
domestically and internationally negotiation, mediation, arbitration, and