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Former Multiunit Franchisee Paints Dim Picture of Cold Stone Creamery

former Cold Stone Creamery multiunit franchisee Frank Caperino of San Diego
Former Cold Stone Creamery multiunit franchisee Frank Caperino

SAN DIEGO — Former Cold Stone Creamery multiunit franchise owner and once president of its franchisee association, Frank Caperino, speaks with Blue MauMau about how Cold Stone Creamery has lost the love of the brand. Caperino paints a dim scene scene of buying and running a franchise with under the Cold Stone Creamery brand.

Building up to eight stores, Caperino was one of the largest multiunit franchise owners in the Cold Stone Creamery system. Having been with Cold Stone for 15 years, San Diego-based Caperino says his problems became more acute when his franchisor was taken over by Kahala Corporation, the current holding company of Cold Stone Creamery. The conglomerate company that sells franchise licenses and supports franchisees under concepts such as Blimpie sub shops, Taco Time, Samurai Sam's, and Cereality has 14 brands under its umbrella.

Nowadays, franchise owners are desperately pushing for franchisor transparency in how much it marks up goods in an effort to bring down their sky-high cost of goods. "We can't get into the franchisor's books and nobody wants to show us," says Caperino.

After the brand was acquired by franchising conglomerate Kahala, says Caperino, there has been a lack of dedicated staff to support Cold Stone Creamery. Where once there was 250 staff that supported Cold Stone franchise owners, there are now only four dedicated employees, he observes. Business functions are shared among the brands. "We've lost that love of the brand," declares the former Cold Stone multiunit owner about how in a conglomerate when brands share everything, all become poorer.

The results? From a franchise owner's perspective, Kahala's two largest brands are failing miserably. Cold Stone Creamery in 2012 was considered to be the 19th worst franchise to buy among almost 600 major brands. Blue MauMau compiles an annual list from the Small Business Administration that ranks how many franchise owners fail to pay back their SBA-backed loans. Cold Stone's rank isn't as bad as sister company Blimpie. Its sandwich shops are ranked 15th worst. That ranking is particularly bad since SBA lenders require a franchise borrower's own house as collateral should they not be able to satisfy their payments. Kahala's two brands of Cold Stone and Blimpie are passed by only a few worse duds, such as Mr. Goodcents Sub and once grand Carvel Ice Cream.

Cold Stone's National Advisory Board, a committee of owner-operators who tried to advise the franchisor on the operations of the ice cream shops, wasn't effective in getting the conglomerate to listen and respond to their efforts to lift the brand for all. So Frank Caperino and other franchise owners founded the National Independent Association of Cold Stone Creamery Franchisees in 2011. It is an independent group that can look after the interests of the ice cream shop entrepreneurs, without fear that the franchisor can silence or disband them.

At first the association tried to collaborate with the franchisor. But that didn't work.

Going forward, Mr. Caperino hopes that the members of the association can one day create a national franchisee purchasing cooperative to bring down the cost of goods and bring transparency to its cooperative owners — franchisees.

An electrical engineer by education and profession, and a once financial planner, Caperino now consults prospective franchise owners on what to look for in buying and growing a franchise on his web site

Here is a twelve minute audio interview (mp3 file) by Blue MauMau of Frank Caperino. Click the arrow below to listen to the interview. (Must have Flash to see the arrow.) Listeners can also download the entire mp3 file in the link "download audio file" below.

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Don Sniegowski is editor of Blue MauMau, the daily news journal for franchise & small business owners. Call him at +1 (270) 321-1268, tweet @bluemaumau or email