Christa Hoyland writes in QSR.com that Marianne Cintron of Glendora, Calif., thought she had done her homework. When she and her husband looked into buying a Cold Stone Creamery store from a franchisee last year, she started by trying to talk to a number of current franchisees.
Of the five who returned her calls, four were selling their stores. Despite the unusually high percentage of sellers, Cintron was reassured by the good things most of them had to say about the concept.
When she investigated her potential location, she was concerned about several empty storefronts nearby. But the franchise broker assured her that leases had been signed.
She believed the seller — a ranked local fireman whom she respected — when he said she was receiving a successful store with equipment in good condition and a well trained staff.
Although Cintron and her husband had good credit, several banks turned them down because the selling price was too high. Still, the couple was sure they were getting a good deal and eventually received a $350,000 loan to take over the store in Claremont, Calif.
Once inside the store, the rosy picture that had been painted turned out to be a smokescreen hiding a harsh reality.
When the economy turned sour, not only did those leases for nearby stores not materialize, but more stores along the thoroughfare also closed. The store turned out to have a display case full of expired cakes and a broken refrigerator — and was one bad report away from having its franchise revoked.
And the experienced staff? The hourly workers were all ready to leave for college, and the manager left because the Cintrons couldn’t cover the cost of her daycare expenses, as the previous owner had.
“They gave us this great story,” she said. “But really we were set up to fail.”
The Cintrons tried for six months to get the store going, turning to their retirement to pay the bills. But the unexpected challenges couldn’t be overcome. They declared bankruptcy and are still fighting a lien on their home. As a result, they hold a deep bitterness toward Cold Stone and the seller. They are now working with Cecil Rolle of Alachua, Fla., another former Cold Stone franchisee, who is trying to organize a class action lawsuit against Cold Stone.
The Cintrons’ experience is certainly disheartening — and a hard lesson to learn from. Others can save themselves such heartache by making sure to dig a little deeper.
Christine Friedberg, director of sales innovation for franchise information services provider FRANData, said that doing one’s due diligence before buying into a franchise is necessary. It requires a lot of time and effort, but ending up with a successful concept is worth it.
“Every business opportunity is going to advertise it and give you a sense that this is a beautiful business opportunity that you’re getting into,” she said. “But you really need to know no one’s going to give you all the details.
Read more at: QSR.com