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I think Cold Stone's leases were set up for churning.

I think Cold Stone intentionally negotiated these high leases because they knew franchisees would either go belly up or Cold Stone would sue them and take their stores. Either way the stores would end up back in Cold Stone's hands so that they could sell them at a cheaper price for the next generation of franchisees. The new generation would have a better chance of surviving because they were paying little or nothing for the stores.

And Robert Zarco was paid handsomely!

Richard Solomon says:

“People make good money saying that you should positively consider doing business with some of the worst sorts.”

Robert Zarco pumping Kahala is like the chairman of the American Lung Association endorsing Marlboro 100s. It would take a whole lot of money to make either happen.

Nobody could have imagined Zarco holding hands with Dan Beem while defending Cold Stone until it actually happened. Probably the only person who believes it took $50k is Robert Zarco himself. The king is fully clothed only in his little fantasy land, but no one’s buying what that guy’s selling.

Granville_Bean's picture

Not nice? NICE???

Bankrupt Guest says: "Cold Stone treated us so roughly. They are not nice people at all. The only thing that mattered to them was the money."

Well duh freakin' hey.  What did you think they were in business for.  Jeebus. Not to be "nice". Sorry for your loss but seems like you were more than a little bit naive.  OF COURSE Cold Stone corporate makes more money if you turn over your equipped location to them and they can re-sell it.  Why would you expect otherwise. If you want to do what would decrease your losses, why wouldn't they want to do what increases their profits?

It's been nearly four years since I got out and filed bankruptcy

but the wounds are still fresh for me. Cold Stone treated us so roughly. They are not nice people at all. The only thing that mattered to them was the money. After losing everything we had ever worked for they attempted to take our store equipment and then have us pay them more money after we were out. They are not nice people at all.

RichardSolomon's picture

Being paid to say nice things is politely called a "Sponsored

Endorsement". People make good money saying that you should positively consider doing business with some of the worst sorts.

What I wonder about is the folks who want to be paid for endorsing beer. Real people would endorse beer just for the free drinks. But I'm so old that I remember good folks endorsing cigarettes - "So round, so firm, so fully packed, so free and easy on the draw." Nowadays that sounds like a description of some guy's genitalia. But back in the day it was about Phillip Morris cigarettes.

Kahala pays franchisees to say good things about Cold Stone.

Things are so bitter between Kahala and the Cold Stone franchisees that Kahala actually started paying franchisees to make positive comments on the franchisee website called Creamery Talk. It’s pretty bad when you have to pay people to say something nice about you.

I beg to differ.

Cold Stone treats its franchisees like kings and queens until they sign the franchise agreement. All bets are off after that. Once you sign their contract and pay the $42,000 franchise fee, you become Cinderella without the glass slipper and the ball.

Cold Stone treats its franchisees extremely harshly.

Barbara writes:

"I understand people who are in the mist of the storm after getting fleeced if they are seeking justice. I do not understand the guest who write that don't come out of the open after they discover that even if they win in arbitration they can still be taken."

The first and the second sentences are not mutually exclusive and I think the answer to your question is in the second sentence. Cold Stone has a well deserved reputation of being EXTREMELY AGGRESSIVE towards franchisees who talk to the media so current franchisees have to be careful. But I agree with you, once I am out of this mess, I plan to sign my name to posts. I want Kahala to know how completely disgusted I am with their management and the way they treat their franchisees.

Barbara Jorgensen's picture

I don't understand why people write as guest.

I understand people who are in the mist of the storm after getting fleeced if they are seeking justice.  I do not understand the guest who write that don't come out of the open after they discover that even if they win in arbitration they can still be taken.  Guest are like ghost.   After I understood we had no chance in arbitration after speaking with people who have experience with arbitration, seeking justice, I did reveal who I was. My goal was to make people understand the playing field between the zee and zor was fixed, and there is no justice in franchising.  It is a premeditated conn job.  It leaves people who have been successful fleeced to the max.  Their lives are changed overnight.  It is so sad and heart-breaking to see strong people who were successful until they were misrepresented, and taken.  It makes me very sad.     

Cold Stone Doesn’t Have a Choice.

I don’t think Cold Stone has a choice at this point. They probably have become so dependent on the kickbacks that they receive from Sysco, Sygma and other franchisee suppliers that they’d have to close their doors if they eliminated them at this point.

Cold Stone is heavy on the kickbacks

You are absolutely correct. Sygma charges twice as much for products that we can buy from other sellers. When it was uncovered that Cold Stone was running a kickback scheme with Sygma, I understood why we were being forced to buy the exact same box of Snickers for $32 from Sygma when warehouse stores were selling it for $16.

Kickbacks, kickbacks, kickbacks!!!

Are you kidding? The Cold Stone franchisees owe Zarco nothing.

I think Zarco totally mislead us. He took a big paycheck from Kahala which was all he came for so the deal was up at that point. I think he was working for Cold Stone from the very beginning. I just watched the CNBC broadcast on youtube and there’s no way you can tell me Zarco wasn’t trying to blame us for being unprofitable and for all the stores closing. Zarco should be fired today before he screws anything else up. We are sleeping with the enemy with Zarco.

Cold Stone did the same thing to me

I know what you mean. They told me a lot of things just to get me to sign the franchise agreement and once I was on the hook, they totally denied it all.

Cold Stone's SCAMS !!!!

I too am an ex-cold stone creamery franchsiee in Texas !! I worked in my store and gave it my ALL only to find out a year&half and $387,000+ dollars later that they knew all along the store would never make it ~ their exact words to another franchisee in a larger community than I was "don't worry about her, the small towns always open big, then fizzle down to nothing " Cold Stone Creamery had the crystal ball and knew darn good and well that I was doomed for failure but NEVER elaborated with me any concerns, or excuse me their LACK of concern !!!
If anyone out there is considering opening a Cold Stone , RUN, RUN , RUN as fast as you can in the opposite direction and if you are thinking your store will make it if you can just hang on a little longer, stop the bleeding now, it does NOT ever get better !!!

I agree that Zarco has made things worse for Cold Stone zees but

he is so far mired in the mess that we have to give him a chance to clean it up. I too expected a lot more from Zarco and never thought that he would screw things up the way they are now. Things are much worse now than when he got involved. He totally chose the wrong tactic but at this point I think we have to give him a little more time. I'm sure some people would say that a year and a half is long enough to show some progress and I agree. But since he made things so much worse for us, isn't it right for us to let/make him fix it better?

coldstone owners are being taken for a ride just like Curves

owners were. He and the franchisor will be the winners and the franchisees will end up scammed and gagged.

My top 10 franchisee lawyers

I’ve been in franchising since the 80s. The Cold Stone franchisees are learning about Zarco what I’ve known for a while now. From a franchisee perspective, even before the CNBC debacle, I would have put dozens of attorneys ahead of Zarco. Here’s my top 10.
1. Eric Karp
2. Michael Dady
3. Ronald Gardner
4. Paul Steinberg
5. Michael Garner
6. Richard Solomon
7. Justin M. Klein
8. Gerald A. Marks
9. Jeffery Haff
10. Jeff Goldstein

There’s always something new with Cold Stone

It just never, ever stops and it's never good. The BOD needs to check the quality of the management because it's been lacking for a while.

Says something about the franchise bar

Both sides of the bar need to take a hard look at their profession.

It is sad that those like Zarco and Gruber who say they are representing franchisees are actually representing the franchisor.

But some blame must also be on the franchisor side of the bar. When inhouse counsel and leading outside firms are so willing to dangle money in front of people like Zarco and Gruber, that says something about the franchisor attorneys.

It takes 2 to corrupt.

Robert Zarco was a hitman for Kahala

I believe Robert Zarco was hired by Kahala to take out Cold Stone’s enemies because they knew he was overly aggressive and would push the boundaries of ethics. He did not disappoint because that's exactly what he did. He tried to represent both sides and ended up creating an enormous mess even by Cold Stone's standards. (No one is better at making big messes than Cold Stone. This company always seems to come up with the wrong solution to their problems and Zarco was definitely the wrong choice if they were looking for a solution.) But you can't deny that Zarco and Cold Stone are good bed fellows.

To think that Robert Zarco was once considered one of the best franchise attorneys is just laughable to me. Look how far he has fallen in just a year’s time!

I Think Cold Stone’s Business Model is Kickback Broken

I agree. Nothing adds up with them. I had a very high volume store and we were losing money out of our you know what. We were forced to buy from Kahala at twice the price of what we could have bought for from Costco or Sam’s. There’s a reason they protect the information on those kickbacks so much. It’s “competitive advantage” Dan Beem says in the CNBC video. Competitive advantage didn’t drive me out of business, kickbacks did.

Would someone please explain to me why kickbacks are illegal in every industry except franchising? Cold Stone has thousands of victims showing why they are just as bad in franchising as they are in politics. I'm one of them.

Robert Zarco is the new Craig Gruber…

I don’t know when Aaron and Karin Tzamarot started in the system, but after reading Cecil’s email this morning, it’s obvious this has been a longstanding practice for Cold Stone. I regretfully came into Cold Stone much later, but it’s kinda scary to think that the company has been pursuing this kind of control over their franchisees for so long and its only gotten worse over time. Robert Zarco and his overzealous Wild West tactics prove that.

I believe it’s attorneys like him that give all attorneys a bad name.

Cold Stone disaster

I had a store 1828 which was doomed to failure before I even started. Prior to purchasing the franchise, I was verbally advised by the area developer, I could make certain changes in the store which I felt were needed to have a viable business. The company was wonderful, supportive, informative and helpful, until the contract was signed. I was then denied the right to make the changes I felt were necessary. I realized I was lied to and could not get out of a contract which led me to owning a store with negative cash flow without any hope for improvement. I struggled with high food prices which were caused by a combination of being forced to purchase all food from their designated supplier. The prices were inflated and I was forced to accept them. I was even forced to purchase soda for resale at prices higher than that of the local supermarket. Kahala was also big into having franchises donate money to charity even though they were losing money. When I finally decided I could not continue to sustain the loss, I was threatened with a lawsuit if I did not pay Kahala a fixed sum of money for breaking my lease. They demanded payment from me even though they never paid the landlord ie. they never sustained the loss themselves and had no right to recover damages. I had "attorneys" from their collection agency harassing me at work and at home. When I called the local bar association in Texas, I discovered they were not licensed attorneys.

I thought it was going to be Zarco?????

Seems like dual representation runs rampant at Cold Stone Creamery!

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