Usefulness of NRN Annual Rankings

Thanks for the warning. It appears that the real risk of buying a franchise can be routinely disguised in the UFOC's under current laws. Again, the franchisor can survive because of their ability to churn failing stores and sustain their visibility in American communities. This visibility helps them to continue to sell new franchises on the market. Customers who frequent Cold Stone think that these stores must be a gold mine for the owners, but, of course, a great portion of the public has no idea that these stores are not owned by Cold Stone. Cold Stone sounds like the UPS and Quiznos scenario where it is hard to break-even amd there are many failures, but the franchisor is still pulling in profits from those who pay royalties when the frasnchisee is operating at a loss, a profit, or at breakeven. The blurring of identities in the franchise world between the ZOR and the ZEE and the constant PR about the success of franchising and the failure of the UFOC's to require the ZORS to disclose the true and KNOWN risk of the investments results in much pain for ZEES who are really just a source of venture capital for ZORS. Thanks for getting out here with your info. Not too long ago, we had someone who wanted to buy a Cold Stone because the wife liked Cold Stone so much. At least one of our readers warned them that the guy you might see mopping the floor at midnight was probably the owner and to Let the Buyer Beware.

Again, we can see how the SBA Loan Default List, that is ONLY available on Blue Mau Mau to viewers, misleads both prospective franchisees and the banks as to the actual failure rate of first-generation franchisees who have used loans other than SBA losns to finance the purchase of a franchise. We see too that the government is willing to guarantee loans with very high failure rates and the banks are apparently willing to make loans on franchises without knowing the true and actual failure rate of the business plans. This is evidence, of course, that the risk factor is obscured under government policy because who would want to negotiate a loan to build a new franchise unit for a franchisor who was experiencing 20%, 30%, or 40% failure rates of first-generation franchisees. I have been told that the only due diligence the bank owes is to the stock holders and if the collateral on the loan is there, they have no due diligence obligation to investigate the risk of the investment in which the borrower is investing the loan proceeds. However, with the advent of the colapse of the sub-prime mortgage market and the insecurity of the real estate market and the drop in sale prices of existing homes, how can banks be making home equity loans without putting their stockholders at risk. Isn't it dangerous for the banks not to know the real and true failure rate of first-generation franchisees that is known to the ZORS. Hasn't their failure to know been a type of subsidy for the franchisors?

I too, am an angry, bewildered franchisee. I paid $375K for my store. Cold Stone boasts a 20% profit on its average store, and 'average" stores (according to CS) do approx $420K in annual sales. BULL!! My store did less than 300K the first year out, and has declined significantly every year since! (Despite the fact that I have followed Cold Stone's "Prescribed" marketing plan to the "T") I'm in California, and I will be closing my store before winter is over, because we won't make it through another winter. My neighboring stores are getting ready to do the same thing! I know over 12 different franchisees who are in the same boat that I am in...and it's sinking fast! BUYER BEWARE! I wouldn't sell this store to anyone knowing what I know today! Why set someone else up to fail?? I'll just take the HUGE loss, close it up, and wait for the next door to open! P.S. Even Cold Stones own Corporate employees say that the only people who actually make money on these stores are the 2nd, 3rd, or 4th owners who get the stores for nothing!