CNBC: Behind the Counter

CNBC: Behind the Counter
   Dec 15, 2010

NEXT Showing on CNBC:   CNBC has pulled this show from it's regular rotation.

One-Hour Documentary Reported by CNBC’s Darren Rovell to Premiere on CNBC on Wednesday, December 15th at 9PM ET/PT

" The documentary also examines the dark side of the franchising business showing how the American Dream can very quickly become a nightmare. Rovell tells the cautionary tale of Camp Bow Wow, a franchise built around America’s love affair with its pets and reveals some of the potential pit falls of the franchising industry.

Rovell also uncovers how a well-known franchise like Cold Stone Creamery may not be what it seems. With little protection or support from the Federal Trade Commission along with hidden expenses, steep nonrefundable franchise fees and more, even some of the most successful franchisees can’t get out of the red. "  

Article source:

CNBC Site:

11/03/11  Update from the Legal Minds behind the Cold Stone - CNBC showdown:

Cold Stone Creamery and Its Franchisees Take Joint Action Against Negative Publicity: A Behind-the-Scenes Look
This article provides a behind-the-scenes look at how Cold Stone Creamery and its franchisees did just that in response to CNBC’s Behind the Counter: The Untold Story of Franchising.


Watch V1.0 (December 15, 2010) here:

Behind the Counter - Cold Stone Creamery V1.0

Notable Points from V1.0 BTC:

At 0:27 - Cold Stone depends on "Fans of the Brand" to become franchisees
At 0:45 - "what you see is not always what you get"

At 01:25 - the underbelly of Cold Stone and the franchise industry as a whole can be exposed.
At 01:50 - cecil explains the 3 levels of profiteering by Cold Stone

At 02:24 - Kahala reported revenues of $70.4 Million in 2009 - 18.5% came from kickbacks
At 02:31 - Cold Stone requires 2% to service the store's lease - "wait a second here! you are telling me..."

At 03:06 - up to $140,000 in equipment from a company controlled by Cold Stone
At 03:55 - Cold Stone's eroding store base - from 1402 stores in 2008 to 1198 in 2009 (see below for 2010 figure)

At 04:06 - Cold Stone's response: "CSC's primary focus is creating the best conditions and opportunities for franchise owner success"
At 04:46 - Second best store in the nation in sales - but still could not turn a profit

At 5:01 - Cold Stone franchisees SBA failure rate from 2000-2009 was 30.6%, "one of the highest rates among well known franchises"
At 5:18 - the FTC "non-answer", Q: "what is the obligation by the franchiser, if any, to make sure they succeed?"
                                               A: "I don't think anyone out there legitimately wants the franchisee to fail"

At 5:40 - the deck is stacked against the franchisees from the start - the business model is a failure

Watch V2.0 (March 14, 2011) it here:

Behind the Stone - Cold Stone Creamery

Notable Points from V2.0 BTC:

At 01:22 -  Cold Stone web site claims that CS franchise opportunity is "about as solid as they come".
At 01:30 -  Dan Beem says Cold Stone franchising allows the franchisee to spend "quality" time with family and kids while making a good living.

At 02:08 - ExFranchisee:  "not all the costs were what they were project to be, and there was not room for profits"
At 03:20 - Question to Dan Beem: "So you don't know on an individual basis how your franchisees are doing on a net basis?"  Dan Beem: "No, they are independent business owners"

At 03:48 - Franchise Attorney: "Reality is that every aspect of your business is controlled by the Franchiser"
At 04:16 - Franchise Attorney: "I call them kickbacks"

At 05:09 - Cold Stone profiteering on proprietary Kohler cream is explained on 3 levels of distribution.
At 06:20 - One time second largest grossing store still could not make a profit

At 07:31 - NIACCF and Cold Stone Corporate Attorney "believes that rebates are fine"
At 07:57 - Cold Stone attorney Zarco blames theft by franchise employees for lack of profitability - "product going out the backdoor is substantial"

At 08:11 - Question to Beem: "Have you ever told the franchisees how much you make on the sweet cream, how much you make on other parts of the rebates?"  Answer: "No, that's competitive advantage"
At 08:36 - "Cold Stone does NOT provide information regarding projected food costs, or any other detailed financial information"

At 09:14 - "Puig is a current franchise with whom Cold Stone ALLOWED us to speak"  (Gag order lifted)
At 09:53 - "In the US their store count has fallen from 1163 stores in 2009 to 1102 stores by the end of 2010"

At 10:41
- ExFranchisee "I know many people that have gone bankrupt, lost there homes, lost their 401k ..."
At 11:09 - "there is a level of desperation in these people [ExFranchsees]"
At 11:19 - Beem blames it on the econony (again)

Robert Zarco, Rudy Puig, Dan Beem

Zarco with a smile on his face, spending the Cold Stone NIACCF retainer on the "Legal Eagle"


Links to read:  

Cold Stone flies blind... and Obfuscates with a 700+ page FDD

posted Apr 7, 2011, 3:57 PM by Cold Stone Facts   [ updated Apr 7, 2011, 4:07 PM ]

Blue Mau Mau's Don Sniegowski analyzes the Cold Stone Behind The Counter Segment:

Don is referring to minute 3:20 of Version #2 of Behind the Counter:

At 03:20 - Question to Dan Beem: "So you don't know on an individual basis how your franchisees are doing on a net basis?"  Dan Beem: "No, they are independent business owners"

12/26/10 - Cold Stone forces CNBC to shut it down

posted Mar 23, 2011, 4:51 AM by Cold Stone Facts   [ updated Mar 25, 2011, 9:01 PM ]

CNBC Shelves Cold Stone Story after Zarco Attacks

Posted Sun, 2010/12/26 - 18:15 by Janet Sparks

Cold Stone complains to CNBC that there show wasn't fair and   CNBC pulls show
CNBC films a Cold Stone ice cream mix being made, source/CNBC

SCOTTSDALE, AZ –  CNBC unexpectedly pulled its documentary Behind the Counter: The Untold Story of Franchising after receiving a threatening letter from Kahala’s newly retained counsel Robert Zarco.

In an email bulletin sent out throughout the system on December 23, the franchisor executive team updated the Cold Stone Creamery franchise community on its strategy “to defend and protect” its brand against “inaccuracies” of the CNBC documentary, which the network has repeatedly aired since December 15. In addition to hiring Zarco, identified as "the leading franchise attorney in the country,"  to represent franchisees on Cold Stone’s behalf, they also retained Snell and Wilmer as franchisor counsel.

Read it all:

Insight from a current franchisee about having Cold Stone as a Business partner:

The Truth Strikes Again

By The Truth    2010-12-31 14:48

Anyone who has been a franchisee for the past 7 years knows that the CNBC report was misleading only in that it reported a 30.6% failure rate at Colstone Creamery. If we were to go through the records of the franchisees who bought Coldstone Creamery Stores as first time locations, the truth would come out that the actual failure rate is upwards of 75%. They have blown over as a house of cards in a cold wind one after the other through the entire country. Every store in the city of Chicago failed and was sold or given to a new franchisee for pennies on the dollar! All across our region I have known other franchisees who have been so devastated by losing hundreds of thousands of dollars and years of their lives, that by the time they collapse they are so happy to be done with the ordeal that they don’t have the strength to take action. There are many more who collapsed than those who are left in the system which is now totally dominated by bottom feeders. The corporate people at Coldstone are very sharp tongued and have never shied away from making insults about franchisees as they fail. Once they have failed, the franchisee gets to suffer the repercussions of bankruptcy and Coldstone moves on with a debt free new franchisee and considers the episode a TRANSFER! This is why you see the laughably low failure rate published by CNBC at 30.6%. The actual rate is so, so much higher.

Now to address the matter of our corporate president Dan Beem. It seems if Mr. Beem had studied at the collegiate level, he may have taken a course in ethics and we might be on an entirely different track here. In ethics class we learn the difference between right and wrong and how to apply that knowledge in our daily affairs and our business transactions. I really must say that all of our franchisees are at a considerable disadvantage having an uneducated corporate president. Anyone who has personally met with Mr. Beem can see clearly that he is none other than a slick salesman and a corporate figurehead who will never discuss anything that has not been pre approved for conversation by the legal staff. Now after years of horrible decision-making he has created his signature opus by hiring Robert Zarco to “represent the franchisees.” So now he is spending huge piles of our money defending the lies that have gotten him in so much trouble in the first place. Does he want to be the Macbeth of the franchise business world? Does he even know who Macbeth is?

In reading Mr. Zarco’s letter to CNBC, which caused the network to shut the program down, many things are very clear. First, Mr. Zarco doesn’t know anything about our business at Coldstone. He has no idea what it is like to run one of these operations, how there is no money in the stores, how difficult it is to manage your huge loan at Coldstone and how pitifully inept the entire corporate support staff is at aiding you in doing so. For Mr. Zarco to suggest it is outrageous that Cecil Rolle said in the interview that he had talked five franchisees out of suicide is way off base and inappropriate. It’s exactly the type of heartless, demonstrative treatment corporate has been involved in for so long that leads people to desperation and suicidal tendencies in the first place. Inherent in that statement is the notion that what people FEEL as the result of the evil actions of their business partners and financial ruin is irrelevant. I would like to see Mr. Zarco in the shape he is in, try to run one of our stores with the extremely labor intensive nature of our business. He would never make it and he is unqualified to open his mouth on the subject.

Mr. Zarco claims he is representing the National Independent Association of Coldstone Creamery Franchisees. The existence of such a group is news to me and I have been suffering through life at Coldstone for many years. I have never even heard of such a group. Perhaps they are a group of second-generation franchisee’s that got their stores for free and are looking to improve the reputation of the brand? Again I have never heard of this group.

For Robert Zarco to suggest Mr. Rolle is “neither indicative nor representative of the typical Coldstone franchisee” is categorically false and shows Mr. Zarco has not done any homework. Do your research Mr. Zarco and you will find that I am speaking the truth. The failure rate is upwards of 75%. You claim in your letter that CNBC’s irresponsible reporting “deprives consumers of the truth regarding the relationship that exists between Coldstone as the franchisor, and its franchisees.” If the chain of events that have unfolded over the past years at Coldstone weren’t tragic and criminally fraudulent I would be tempted to laugh at that statement. It seems the business of fraud is alive and well at Coldstone Corporate now that you are claiming to represent US!!! If anything you should thank CNBC that they published 30.6% as the failure rate.

And now to my brothers and sisters who have suffered through bankruptcy, poverty, wasted years, divorce, and insult at the hands of this company who willfully has done this to you. I say let us be one. Let us come out of the woodwork and stand for what is right. Contact Cecil and get to know your rights. As we come together we can defeat these people. Our suffering will eat the insides of our oppressors out and they will bend to our demands. Pray and be bold. Never surrender!

12/28/10 - Cold Stone is not happy about the truth...

posted Mar 8, 2011, 7:20 AM by Cold Stone Facts   [ updated Mar 8, 2011, 8:23 AM ]

Cold Stone Creamery burning mad at CNBC


Last Updated: 2:35 AM, December 28, 2010

Posted: 12:52 AM, December 28, 2010

A new CNBC documentary on franchising has one Scottsdale, Ariz., company ice-screaming mad.

Cold Stone Creamery and a franchisee group are threatening legal action against the business cable network, claiming this month's documentary, "Behind the Counter: The Untold Story of Franchising," incorrectly portrayed the company as a cold-hearted firm that charges franchisees hidden expenses, relies on kickbacks from vendors and requires franchisees to purchase equipment from a company it controls.

Lawyer Robert Zarco, who represents the Cold Stone franchisees, said the program unfairly put the big chill on their businesses by relying solely on a former Florida franchisee Cecil Rolle, who already lost a legal battle against the company making similar, if not identical, charges.

01/11/11 - The Cold Stone "GAG ORDER"

posted Mar 8, 2011, 7:06 AM by Cold Stone Facts   [ updated Mar 8, 2011, 7:56 AM ]

Cold Stone Franchisee Groups Urged Not to Respond to Media

Posted Tue, 2011/01/11 - 18:30 by Oscar P Hoot

The ocular owl has spotted an urgent message to Cold Stone Creamery franchisees warning not to respond to requests from CNBC or other media for interviews regarding last month’s "Behind the Counter: Untold Story of Franchising.”  Last week’s email states, “We need to take care of this first step of protecting our investments from a further tarnished reputation,” referring to CNBC’s hour-long expose.

"If you are contacted by CNBC or any other news media, or if you already have been contacted, we urge you to immediately notify either the Michael Goldman of the National Advisory Board (deleted) or the Rudy Puig of the NIACCF (deleted) before engaging in any further conversations or interviews with any member of that news media."  -Cold Stone NAB and NIACCF

Read it all here:

02/12/11 - Cold Stone segment is updated and it's back

posted Mar 8, 2011, 7:00 AM by Cold Stone Facts   [ updated Mar 24, 2011, 8:54 AM ]

CNBC’s Behind the Counter Back on Air

Posted Sat, 2011/02/12 - 14:47 by BMM

ENGLEWOOD CLIFFS, N.J. – CNBC's hour-long program "Behind the Counter: The Untold Story of Franchising" will be back on air after a month and a half absence.The longest television documentary to date on the franchise industry will air on Sunday, February 13 at 10pm, replacing the scheduled "Supermarkets Inc: Inside a $500 billion Money Machine."

The program stopped airing before Christmas when Miami-based attorney Robert Zarco threatened to sue the cable network for its unflattering portrayal of Cold Stone Creamery. Originally, the president of Cold Stone's holding company, Kahala Corp, turned down an interview with the cable news channel because he was concerned the piece would negatively portray the company. After watching the program air, Cold Stone changed course. The franchisor made a surprising move and hired attorney Robert Zarco, regarded as one of the foremost attorneys for franchisees, to go after the news channel.

In answer to a question from Blue MauMau about the program's return to the air Sunday night, CNBC reporter Darren Rovell states, "We encourage viewers to see the additions we have made to the show."

Read it all:


Cold Stone Creamery Ready For The Steel Death Slab?

Last night while watching CNBC I came across a show called “Behind The Counter – The Untold Story of Franchising”. This peaked my attention because I’m not a huge fan of franchises. They talked about 3 different franchises. Camp Bow Wow which is doggy daycare, 5 Guys Burgers and Fries, and Cold Stone Creamery. They praised Camp Bow Wow and 5 Guys Burgers and Fries, but Cold Stone Creamery got ripped a new a new one. A former franchise owner went on camera breaking a contract agreement and made some pretty bad clams against Cold Stone. He said that Cold Stone requires you to buy a whole bunch of expensive equipment. He said that most of the equipment was not needed to run the operation, and on top of that you have to buy the equipment from a business that Cold Stone owns. Another claim he made was that you are required to be a “leassee” of your location. Obviously you will be unless you own the property. But there’s a big catch. You lease the property from Cold Stone. But the bigger catch is that you have to pay Cold Stone fees for this. But wait, there’s more! Cold Stone is not even on the lease!!! So you pretty much pay a bunch of money to Cold Stone for nothing. According to the show, this fee is in the ballpark of $36,000. OUCH!! Anyway this guy going on and on about how horrible Cold Stone Creamery is. Top Top it off, he made the claim that you CAN’T make money owning a Cold Stone Creamery. But wait, there’s more!! The guy making these clain owned the 2nd highest grossing Cold Stone Creamery in the United States. think about that. He has the 2nd highest grossing store in the US and he said he had to shut it down because he could not make money and had to close because Cold Stone was milking him out of business with all their fees. That’s not good. If what he says is true, Cold Stone Creamery’s day are numbered.

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