Money, Lies, & Ice Cream?

International ice cream franchise Cold Stone Creamery, will face legal action from several local franchise owners for fraud.

Cecil Rolle, general manager for the Tallahassee Cold Stone creameries on West Tennessee and North Monroe streets, both of which are closed, explained that according to franchise owners, Cold Stone Creamery is misleading potential franchisees by promising core values such as “Profit by making people happy” and “Cold Stone’s franchise opportunities are about as solid as they come” in order to solicit new owners and keep the old.

Rolle said although the stores he managed performed above the national average volume, they still could not maintain a profit.

“If our stores, which were together earning more than a quarter of a million dollars more than the average CSC couldn’t earn a profit, what does that say for those stores that are earning average or below average sales,” Rolle said. “I doubt this is what franchisees had in mind when they bought into Cold Stone Creamery’s ‘profit by making people happy’ lie.”

CSC franchises generate an average of $381,985 in annual sales, according to the company’s Web site.

Osama Albibi, Panama City Cold Stone Creamery owner, agreed that he was told that he could make approximately 15-20 percent in profits depending on the store’s efficiency.

“We’re not realizing any of that. We’re running negatively,” Albibi said. “We just finished our numbers for 2007 and we lost nearly $132,000 on the year.”

Aside from misleading company statements, the lawsuit filed by Rolle also alleged the company is negotiating and taking kickbacks from its largest supplier.

“With the company hiking up prices, this in return makes the food cost of the franchisees increase and then lowers the profits for the store and the company, making millions of dollars that were not originally agreed,” Rolle said.

The closings of Tallahassee-area Cold Stone Creamery locations have left several residents confused.

Lauren Watkins, 23 a fourth-year business administration student from Chicago, said she thought the local stores were just closed for renovations and was upset to find that it is permanent.

“I was a big fan of Cold Stone Creamery and now I’m going to have to find another place to satisfy my ice cream crave,” Watkins said.