- Front Page
- Biz Tools
I want to share a tale about a glut of ice cream shops, a surplus of frozen yogurt stores and what one franchisor did about it. Ice cream retailers, the franchise industry and franchise owners everywhere need to know.
Back in early 2007, I spoke with a senior executive at Ben & Jerry's on the phone for an article that I was writing. There was a rare franchisee lawsuit that the franchisor was involved in. At a point in the conversation, the executive told me that Ben & Jerry's had decided that no more new franchises would be sold because their research had showed that there was a glut of ice cream and frozen yogurt store chains that had saturated the market over the past three years, 2004 - 2007. It was more than the market could bear.
That was about the time that Cold Stone Creamery, Marble Slab, MaggieMoos, Pinkberry and others had hit their stride or were about to. They were on a roll like there was no tomorrow. Credit was easy and the franchising was good. That go-go environment should have also been a bonanza for Ben & Jerry's franchise sales too.
I contemplated his words, "We have decided not to sell franchises because the current market will not support new franchise owners." Those were foreign words to me back then when I was a novice reporter on the beat of franchising.
I thought, "Who does that?" The franchising companies that I saw kept trying to sell franchises through rain or shine, thick or thin, come hell or high water. Their franchise development departments bragged about how many hundreds they would sell by this time next year. It would be obvious that the market could bear no more only when Sales could get no buyer to show up. When no sizable sales commission could be had. It was the law of supply and demand at the micro-level, the franchisor level.
That's why Ben & Jerry's phrase, "the market will not support new franchise owners," actually caused me to pause so that I could wrap my head around what that meant. "We are closing down new franchise sales at this time," the executive said again, filling the awkward pause in my interview.
As I looked on the Internet, I saw that their web page, which I had seen selling franchises, was gone. The franchisor went on to say that he and his team felt badly for the unprofitable franchise owners who were suing them, among the last in their franchise selling efforts before they identified the glut of existing ice cream shops and the tide of more to come. That's as close to a real apology as I have ever heard among franchisors. Usually the "apology" for franchising gone bad of a franchising company is in an implied form of: "We're so sorry we took the money from these rubes who are now suing us out of their disgruntledness. We should've known that these guys were losers who could not follow our instructions on how to run their store." (Although Ben & Jerry's apology seemed very genuine, I guess at the end of the day the question remains, did Ben & Jerry's feel bad enough to compensate and settle with the parties?)
Then came the magic phrase. The Ben & Jerry's executive added that he didn't think it was the "socially responsible" thing to be selling new franchises in 2007. Socially responsible. It sounded like some sort of new age phrase to my conservative ears. But in essence, he was reminding me of the Golden Rule. If he wouldn't buy an ice cream or frozen yogurt franchise for himself in this glut, then why should Ben & Jerry's put a new franchise owner through such an ordeal?
I was impressed. REALLY impressed.
In December of 2007 the economy officially entered into decline, one that would slump into the depths of the Great Recession. All hell was about to break loose on ice cream franchisors and their franchisees.