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Litigation Updates

LItigation Update: November 24, 2013

posted Nov 25, 2013, 1:15 PM by Cold Stone Facts

November 24, 2013

 Table of Contents:

 I.          Introduction

II.        Media Update.

III.       Robertzarcofacts.org Has Been Updated.

IV.       Zarco’s Litigation Failures Continue to Mount.

V.        Zarco Criticized by Yet Another Distinguished Federal Judge.

VI.       Zarcolawfacts.org & alejandrobritofacts.org Now Under Construction.

VII.     Robert Zarco’s Unsuccessful Attempt to Remove robertzarcofacts.org.

VIII.    Calling all NIACCF Members; Time is Running Out on Your Potential Claims Against Zarco.

IX.       Serruyas Faced with Key Strategic Decisions.

X.        Cold Stone’s High Rate of Store Closures Continue.

XI.       Don’t Spend another Holiday Season in Cold Stone Creamery Misery.

XII.     Conclusion

 Dear Cold Stone Creamery Franchisees,

 The statements contained in this document are my opinion:

 I.          Introduction

 I have heard from so many of you that I am overdue for an update.  Please excuse my absence but I assure you, it was not without progress.  You may have noticed in the past that prior to our major media events—the Wall Street Journal, the WSJ Blog and the CNBC documentary—my frequency of communication tends to wane until the publication is nearly upon us.  This, along with two other projects that will become more apparent in the future, have largely dominated my time of late.

 The cold weather is here—as is the Holiday Season.  Now is the time for franchisees to plan their store closures and there is no shortage of takers.  Some franchisees have communicated that they emerged from last summer so leveraged and were unable to place themselves in the position to outlast the upcoming fall and winter seasons. More on this later.

 II.        Media Update.

 As I announced in my previous email, we have major media coming.  On the heels of the Wall Street Journal, the Wall Street Journal blog, followed by the CNBC documentary, this is a very big deal for our franchisees.  At the time of the original production of the CNBC documentary, Robert Zarco had not yet signed onto the Kahala-Cold Stone Creamery Legal Defense Team.  This feature will be primary about Zarco, Alejandro Brito and the Zarco Einhorn Salkowski & Brito, P.A.  It includes the disclosure of new information and of course, their affiliation and defense of Kahala-Cold Stone Creamery while purporting to represent the franchisees.  It will be reported on likely after the Holidays by what I am guessing has to be one of the top five media conglomerates in the nation.

 I will keep you informed as we near publication.

 III.       Robertzarcofacts.org Has Been Updated.

 Robertzarcofacts.org has been updated.  A page titled “Questionable Honesty & Integrity” has been added to the website.  Some of the photographs and captions throughout the website have been replaced as well.

 I have a lot of time off over the next month and a half.  I hope to update the website frequently.  Some of the future titles include: Judicial Criticism for Poor Performance, Potential Florida Bar Violations, False or Misleading Court Filings, Why the NIACCF Should Sue Zarco, Why Moe’s Franchisees Should Sue Zarco, Questionable Financial Dealings, Why NIACCF Should File a Bar Complaint Against Zarco, Zarco’s Failed Attempt to Remove This Website and Zarco’s Lavished Lifestyle.

 

IV.       Zarco’s Litigation Failures Continue to Mount.

In recent months, I have repeatedly discussed the poor professional performance of Robert Zarco and/or Zarco Einhorn Salkowski & Brito, P.A. (collectively or individually “Zarco”).  Specifically, I’ve discussed his poor professional responsibility in the Moe’s case including how patently irresponsible it was for him to outright ignore his duty to respond to opposing counsel’s legal arguments, which resulted in Moe’s franchisees having their claims dismissed.  (I cannot imagine that the Moe’s franchisees will not sue him for malpractice at some point, but I hope their legal counsel not named Zarco has advised them that they have a limit amount of time to bring those charges.)  I have also previously discussed how, in a separate case, Zarco’s inexcusably low quality of professional service resulted in Cold Stone Creamery franchisees being shown the door by a Federal Court.  (I would be shocked if they too are not planning to sue Zarco for malpractice.  It’s as if the judge is begging them to do so.)  Zarco has now had yet another case dismissed for lack of quality performance.

Zarco’s Marine Group case was dismissed from Federal Court earlier this month because Zarco’s complaint was so poorly constructed; it could not withstand the legal threshold the court requires.  According to the distinguished Federal Judge that was presiding over the case, these flaws were “found throughout the Amended Complaint.”  There is no excusing such an extraordinarily poor work product from a firm that states on its website, “[w]e provide our franchise clients with dedicated and skilled representation….”  That’s why they teach this stuff in law school so that attorneys know it even in their first year of practice, but it’s as if Zarco slept his way through Legal Drafting.

According to the Florida Bar, Zarco has been in practice for more than 28 years.  Just as in the Moe’s and the Cold Stone cases, this quality of work would not be satisfactory even for a first year attorney, let alone a 28 year veteran.  Filing a complaint is the first step to initiating a lawsuit.  If after 28 years of practicing law, Zarco cannot properly prepare a complaint, that is nothing short of incompetence and he should be embarrassed by such poor performance.  As if that is not embarrassing enough, an examination of the docket reveals that the defendant in the case warned Zarco that the complaint was defective by filing a “Motion to Dismiss for Failure to State a Claim” way back in March.  Zarco amended the complaint and still failed to get it right as the judge ruled eight months later.  That’s like the teacher giving a high school student one simple math problem and several months to figure it out, and in Zarco’s case, he still flunked the test.

This is but another demonstration of the poor professional standards that in my view, define Robert Zarco’s and ZESB’s brand of practice.  I will update the Poor Professional Standards page on the website to include this information.

 

V.        Zarco Criticized by Yet Another Distinguished Federal Judge.

I have previously discussed how Zarco was criticized by a distinguished Federal Judge in the Moe’s lawsuit as he dismissed Zarco clients from the case.  I have also discussed how a different distinguished Federal Judge in the Cold Stone Creamery case publically criticized Zarco’s performance.  Believe it or not, in Zarco’s Marine Group case, yet another highly respected Federal Judge criticized Zarco while throwing his case out of court.

When was the last time Zarco’s firm had a big win?  Yet we continue to hear of one big loss after another including the cases mentioned above and in other cases as well.  Even in looking at the way Zarco has botched his large cases of late (e.g. the Moe’s, Cold Stone Creamery and other cases), is now in a legal battle with the United States Trustee’s Office, is likely to defend against serious complaints that may be filed with the Florida Bar in the future and may face lawsuits from NIACCF and Moe’s former clients, you have to wonder if sophisticated clients and potential clients that may have knocked on his door several years ago are now looking to the far more reputable and competent franchise law firms for assistance, leaving Zarco as the attorney of last resort.

It seems it’s all falling apart for Robert Zarco and his firm.  It’s a shame how far this firm has fallen.  It’s clear to me that Robert Zarco and his firm are well below average and are dragging the bottom when compared to so very many of the other franchise law firms out there.

VI.       Zarcolawfacts.org & alejandrobritofacts.org Now Under Construction.

Back in June of this year, I announced that we had registered domains for alejandrobritofacts.org and zesbfacts.org.  We have now registered the domain zarcolawfacts.org as well.  Zarcolawfacts.org will replace zesbfacts.org as our information portal for Zarco Einhorn Salkowski & Brito, P.A. (ZESB).

To be clear, zarcolawfacts.org, coldstonefact.org, robertzarcofacts.org and alejandrobritofacts.org are not commercial hubs.  The goal of these websites is therefore not to attract a million hits.  Instead, the objective for example for zarcolawfacts.org is when someone takes to Google, Bing or some other search engine looking for Zarco, Alejandro Brito or Zarco Einhorn Salkowski & Brito, P.A., zarcolawfacts.org places second in the list of options—immediately after zarcolaw.com—ZESB’s official website.  The hope is that individuals interested in ZESB also click on zarcolawfacts.org to peruse the information available there as well before coming to any conclusions.

I have a close college friend who is an expert in driving internet traffic to businesses.  He’s been assisting me with more closely associating robertzarcofacts.org and the new websites to zarcolaw.com, through various means.  Zarcolawfacts.org along with various promotional tools that we are employing, will increase the likelihood of a one, two search engine ranking between ZESB’s official website and zarcolawfacts.org, respectively, more quickly and create a more natural association between the two websites than would be likely with the domain name zesbfacts.org.  Therefore, we will use our new name, zarcolawfacts.org as opposed to zesbfacts.org.

Zarcolawfacts.org and alejandrobritofacts.org are each now under construction.  The goal is to have both websites completed in time to leverage our media opportunity and to drive individuals interested in ZESB or Alejandro Brito to the appropriate site.  We will of course cross reference the websites as well.

Finally, those of you who have contacted me know I don’t ask many personal questions when I receive communications through our websites unless it is necessary to respond to that individual’s personal situation, and then only to the extent necessary.  I realize that individuals are often nervous about their situation and/or of being found out by Kahala-Cold Stone Creamery, Zarco, Brito or ZESB.  I try to do everything reasonably possible to mitigate those concerns.

However, because my communications from coldstonefacts.org are nearly exclusively from potential franchisees who are conducting due diligence on Kahala-Cold Stone Creamery for franchising purposes, I anticipated that communications through robertzarcofacts.org would follow suit.  However, while I sense that the overwhelming number of communications from robertzarcofacts.org are from existing or potential clients of Zarco’s firm, a large number of firms specializing in franchise law have reached out to us as well.  We greatly appreciate their interest and support.

Please know that you are invited to reference robertzarcofacts.org as a resource whenever making an online comment regarding Zarco, Brito or ZESB.  The Consumer Comment titled “Robert Zarco’s Continued Reputation Makeover Effort” left on Zarco’s ripoffreport.com commentary titled “Robert Zarco, Attorney In my experience Mr Zarco was grossly unprepared, fast talker, made promises, stole settlement money.. Miami, Florida” serves as a good example.

VII.     Robert Zarco’s Unsuccessful Attempt to Remove robertzarcofacts.org.

Zarco recently made a failed attempt to remove robertzarcofacts.org from the internet.  In response, I wrote and filed this affidavit.

VIII.    Calling all NIACCF Members; Time is Running Out on Your Potential Claims Against Zarco.

As NIACCF members may know, Robert Zarco was hired and paid by Kahala to supposedly represent Cold Stone Creamery and the franchisees.  Zarco was heavily criticized by members of the Franchise Bar and the franchise industry for the conflict of interest and for taking what turned out to be such a large amount of money from Kahala.  In response to criticism, Zarco repeatedly affirmed his commitment to the franchisees over that of Kahala-Cold Stone Creamery.

Despite his flimsy words, Zarco defended Kahala-Cold Stone Creamery repeatedly.  More than a year after he was retained, he filed a declaratory complaint against Cold Stone Creamery that, like so much of his recent litigation, quickly fell flat.  (The question is, if Zarco did not have the information that was the subject of his declaratory complaint at the time that he blessed Kahala’s kickback scheme, what information did he use to conclude that Kahala’s kickbacks were okay with him?; or was it the loads of cash that Kahala was showering him with that bought Kahala the highly coveted legal blessing of its infamous kickback scheme?  I can’t imagine the Florida Bar won’t want to know the answer to these questions as well.)

NIACCF members should be aware that they have potential legal claims against Robert Zarco and his law firm.  NIACCF members however also need to be aware that, according to a Florida attorney, you have a limited amount of time to bring these charges before the statute of limits runs out.  NIACCF members can contact their own attorney and file suit against Robert Zarco and his firm.  However, there is a Florida firm that is organizing a group lawsuit against Zarco and his firm that you may join in on.  There is no upfront charge to join and you will only have to pay the attorneys if they are successful in recovering a cash award in the case.

If you are interested in joining this impending lawsuit or you would like to learn more, I would be happy to put you in touch with the law firm.  Don’t hesitate to contact me, but again, time is running out so you should act immediately.

IX.       Serruyas Faced with Key Strategic Decisions.

As you may recall, on March 1, 2013, Dan Beem distributed a rah-rah email to the franchisees touting numerous supposed 2012 statistical accomplishments without disclosing one number.  Despite his veiled descriptions, it was apparent that whatever numbers he was attempting to interpret, they had little or no affect on franchisee profitability if they had any basis in truth at all.  After Dan Beem claimed Cold Stone “saw positive same store sales growth… and for the first time in several years we are seeing a trend of new stores opening….” in 2012, only four months later, Nation’s Restaurant News came out with its 2012 assessment of the second 100 restaurants in the Beverage-Snack category which started out as follows.

 

Save for Cold Stone Creamery, all of the chains in the Beverage-Snack segment of the Second 100 report registered domestic sales and new unit growth for 2012….

(Who do you believe, Dan Beem or Nation’s Restaurant News?)

I have often remarked that I feel strongly that the untalented trio of Kevin Blackwell, David Guarino and Dan Beem have caused so many franchisees’ families to reach disastrous consequences.

In looking back at some of Cold Stone’s published information around the time that Sean Bock, Kahala’s former legal counsel, made the errant decision that he could threaten, intimidate and embarrass me, Cold Stone’s growth was apparent and impressive despite that there were early indications of widespread franchisee profitability issues.  This of course was just prior to the time that I began to write to other franchisees and we began to generate some of our very first media opportunities.  Later came coldstonefacts.org.

Based on data from that period, I would estimate that Cold Stone was awarding 1,000 to 1,500 new stores each year.  With a $40,000 per unit franchise fee, that comes to $40 million to $60 million in revenue per year that Cold Stone has lost out on, to use Dan Beem’s words, in the past “several years”.

Over the past six or seven years, Cold Stone has become the poster child of bad franchises.  (It’s hard to ignore the statement on the hyperlinked document: “Inversely, our top 3 worst franchises ignore the needs of their franchisees.”  Powerful words!)  But to be clear, there are franchises with far worst failure rates that grow at a significantly higher rate than Cold Stone including most, if not all, within the ice cream sector.  However, perhaps due to the fact that Cold Stone’s failures have been better publicized, the result is, Kahala-Cold Stone Creamery has been in a constant decline despite their ability to add units overseas and through co-brand relationships.

Cold Stone’s current management’s failure to address its relationship issues with its franchisees and to recuperate even a significant portion of the potentially $60 million the company loses out on each year, is inexcusable. 

With new management in place, Cold Stone could begin to mend its relationship with its franchisees before it’s too late.  It can begin to cut food costs, generate franchisee profits and ROI—establish positive franchisor-to-franchisee public relations, attract new franchisees and grow the franchise base.  Even if the company is only able to regenerate 50% of the low range of it former franchise awards, $20 million would go a long way towards eliminating kickbacks and establishing a viable business model that franchisees will want to invest in over and over again.  This will restore the value to existing stores and make a Cold Stone franchise highly coveted once again.  But this all goes back to the ability to mend and manage relationships.  Kevin Blackwell, David Guarino and Dan Beem have proven to me they either do not see the value in forging a solid relationship with the company’s franchisees or they are incapable of doing so, in which case either is inexcusable.

So it’s been three months now since the Serruyas were announced as the new owners.  Let’s see where they go from here.

X.        Cold Stone’s High Rate of Store Closures Continue.

Cold Stone stores continue to close at a high rate.  Quite a few franchisees are planning to close between now and the Holidays.  Even Kahala-Cold Stone Creamery is trying to get out the business.  If you believe their story, they are “looking to focus on the franchising of the brand only”.  Frankly, I think they are not able to earn a profit in these stores just as franchisees aren’t and they don’t even have the burden of kickbacks. 

Personally, I think there is no substitute for being free of all the mess that is associated with owning a Cold Stone before the Holidays.  This is for the sake of your own personal health and enjoyment.                                                                                                                                                                                                                                     

I have communicated with several franchisees who said they emerged from the winter months with barely their clothes on their back.  In order to keep their stores afloat during the cold weather months, they had to borrow and beg from family and friends.  All but one expressed that the warm weather months were not enough to even consider making it through yet another long and chilly fall and winter weather season, so they are closing.  All stated they should have closed this time last year.  They would be one year ahead in their recovery plan.

XI.       Don’t Spend another Holiday Season in Cold Stone Creamery Misery.

Franchisees should make it a point to close their stores before the Holidays.  It makes for a much more enjoyable Holiday Season.  Most of all however, come January 1st, you’ll have a new lease on life.  Life after Cold Stone will be just beginning and you can start the New Year on a positive note.

Plan to close your store before the Holidays so that you can have a relaxing and enjoyable Holiday Season for a change.  I am happy to assist you with this process.

XII.     Conclusion.

Please contact me if I can be of any assistance to you especially in helping you exit the Kahala-Cold Stone Creamery system.  If I do not answer, please leave your name and a telephone number and I will return the call.  All information shared with me is absolutely confidential.  I will be in touch with you in the future.

 Cecil Rolle

Cold Stone, Robert Zarco, Alejandro Brito & ZESB Litigation Effort (09-06-13)

posted Sep 14, 2013, 4:06 PM by Cold Stone Facts   [ updated Sep 14, 2013, 4:06 PM ]

September 6, 2013

Table of Contents:

I.          Introduction

II.        Major Media is Coming!!!

III.       robertzarcofacts.org & coldstonefacts.org Have Been Updated.

IV.       Kahala Purchased.

V.        Live the Good Life Just in Time for the Holidays.

VI.       Conclusion

Dear Cold Stone Creamery Franchisees,

The statements contained in this document are my opinion:

I.          Introduction

The air is beginning to cool even here in Tallahassee, Florida.  Summer is beginning to lose its grip and franchisees are ramping up their plans to close their stores.  Now is the time for franchisees to plan their store closures.  More on this later.

II.        Major Media is Coming!!!

First there was the Wall Street Journal, shortly followed by the Wall Street Journal blog.  Then came the CNBC documentary.

In my August 10, 2013 email I mentioned that we had discovered some information about Robert Zarco that we thought was worthy of national media.  Well folks, we have done it again.  We again have attracted the attention of one of the most highly recognized—international news organizations to run a feature story based on this information.  The early estimate is a publication date around the third week in September.

I cannot tell you how excited I am about this piece, but obviously I cannot say too much in this medium.  In any case, I will provide you with greater detail at the appropriate time.

III.       robertzarcofacts.org & coldstonefacts.org Have Been Updated.

robertzarcofacts.org has been updated to include a webpage titled Questionable Ethical Standards.  coldstonefacts.org has also been updated.

IV.       Kahala Purchased.

As you probably know by now, Kahala-Cold Stone Creamery has been purchased.  However, as long as Kevin Blackwell, David Guarino and Dan Beem remain with the company, I expect nothing to change.

V.        Live the Good Life Just in Time for the Holidays.

Though there is a slight chill in the air even in Northern Florida, summer has not yet ended.  You would never know as the Cold Stone stores continue to close down.

I have heard from quite a few franchisees who are planning to close within the next two months.  One franchisee mentioned that he will close each of his stores so that he can enjoy the Holidays for the first time in several years without worrying about rent, payroll, utilities, taxes, etc. throughout the cold weather months.  He says he has no money remaining to pay a lawyer so he’ll remove his equipment, sell it for cash, close his doors, and walk away.  He says he plans to enjoy the fall weather and the football season without the headache of operating his stores.

Then there’s this email that I received from a franchisee who begrudgingly closed his store and now realizes it was the very best thing that could have happened to him.

If you are ready to end the nightmare, please do not hesitate to contact me.  I will be happy to assist you in getting your store closed.

VI.       Conclusion.

Please contact me if I can be of any assistance to you especially in helping you exit the Kahala-Cold Stone Creamery system.  If I do not answer, please leave your name and a telephone number and I will return the call.  All information shared with me is absolutely confidential.  I will be in touch with you in the future.

Cecil Rolle

(352) 682-2101

cdrolle@cox.net

Cold Stone, Robert Zarco, Alejandro Brito & ZESB Litigation Effort (08-16-13)

posted Sep 14, 2013, 4:03 PM by Cold Stone Facts

August 16, 2013

Dear Cold Stone Creamery Franchisees,

The statements contained in this document are my opinion:

I just wanted to inform you that robertzarcofacts.org has been updated to include a webpage titled Poor Professional Performance.  Pages titled Questionable Integrity and Questionable Ethics are currently being edited and will be posted shortly.  We have also added to the Zarco Web Comments page.

Have a great weekend!

Cecil Rolle

(352) 682-2101

cdrolle@cox.net

Cold Stone, Robert Zarco, Alejandro Brito & ZESB Litigation Effort (08-10-13)

posted Sep 14, 2013, 4:01 PM by Cold Stone Facts

August 10, 2013

Table of Contents:

 I.          Introduction

II.        Cold Stone Creamery’s Untalented Management Fighting to Keep the Company Afloat?

III.       Cold Stone Creamery is Losing Stores in Large Numbers; Isn’t this the Middle of Summer?

IV.       Great to See Franchisees Taking Back Their Lives.

V.        Robertzarcofacts.org Demonstrating the same type of Early Effectiveness Demonstrated by coldstonefacts.org.

VI.       Robert Zarco, Alejandro Brito & Zarco Einhorn Salkowski & Brito PA Update.

VII.     An Invitation to All NIACCF Members—Past and Present.

VIII.    Conclusion

 

Dear Cold Stone Creamery Franchisees,

 The statements contained in this document are my opinion:

 I.          Introduction

 I think Kahala-Cold Stone Creamery is now in a deep vertical nose dive.  There are tons of stores closing and franchisees planning to abandon their stores within months.  That has made for a busy summer for me, but I welcome your questions.  I am happy to assist you in planning your exit from the franchising system.   I remember what a miserable existence it was and how overjoyed I was once I made it out.  More on store closures later.

 Also, we have only recently found more information on Robert Zarco and his firm.  We feel franchisees and visitors to robertzarcofacts.org will find a great interest—particularly those who are considering a future relationship with Zarco or his firm.  More on that later in this email.

 II.        Cold Stone Creamery’s Untalented Management Fighting to Keep the Company Afloat?

 Kahala-Cold Stone Creamery’s untalented trio of Kevin Blackwell, David Guarino and Dan Beem are once again showing why I think they are the worst corporate executives in franchising.  Despite Dan Beem’s rah-rah email back on March 31, 2013 announcing: “for the first time in several years we are seeing a trend of new stores opening…”, Nation’s Restaurant News recently published an article that tells you in just the first sentence, all you need to know about Cold Stone Creamery and Dan Beem’s “trend”.

Save for Cold Stone Creamery, all of the chains in the Beverage-Snack segment of the Second 100 report registered domestic sales and new unit growth for 2012….

 So out of the second 100 brands in the magazine’s Beverage-Snack category, Cold Stone Creamery was the one and only brand that failed to grow domestic sales and failed to grow in new units.

The first thing you should take note of is that Cold Stone is currently in the Second 100 as opposed to the First 100 of the Beverage-Snack category.  The article goes on to announce that Cold Stone had the “Lowest Estimated Sales Per Unit” of the 100 brands.  Cold Stone’s per unit sales were nearly $200,000 below the category average and nearly $500,000 below the category leader.  This despite that Kahala-Cold Stone Creamery’s focus is on increasing sales and the company no longer so much as pretends to care about franchisee profitability as a major focus, based on their recent franchisee communications. 

Finally, as if to solidify Kahala-Cold Stone Creamery’s management’s grip on supreme incompetence, the publication announced that Cold Stone had the Largest Sales Decline at 3.1% among the 100 brands.  To put this into perspective, the largest sales increase among the brands was 13.8% and most importantly, the average sales growth was 7.3%.  So Cold Stone’s abysmal -3.1% sales growth is 10.4% lower than the average and 16.9% off the leader.  That’s embarassing.

The results of this report are statistical proof that Kahala-Cold Stone Creamery’s management is a monumental failure when compared to the performance of their piers.  This persists year-after-year under Kahala’s management, yet it is outrageous that Kevin Blackwell, David Guarino and Dan Beem continue to sit at the top of this company.  I think it should be clear that Kahala-Cold Stone Creamery is no longer trending downward; the company is now in a full on free fall.  Worse of all, there is no hope of a turnaround so long as Kevin Blackwell, David Guarino and Dan Beem are in control.  Shall I remind you, Kahala-Cold Stone Creamery is Kahala Corp’s flagship company?  What does that say for even the short term existence of Kahala Corp?

Dan Beem blamed Kahala-Cold Stone Creamery’s decline on a bad economy during his interview on CNBC.  However, Cold Stone is the only company out of 100 brands competing in the same bad economy that Dan Beem tried to blame, operating in the same food category as the remaining 99 brands, yet only Cold Stone failed to grow domestic sales and failed to grow new units.  The blame for such an apparent failure can only be placed squarely upon Kahala-Cold Stone Creamery’s completely inept management team of Kevin Blackwell, David Guarino and Dan Beem.

III.       Cold Stone Creamery is Losing Stores in Large Numbers; Isn’t this the Middle of Summer?

It appears that franchisees are abandoning their stores in large numbers.  This seems to be verified by an examination of Kahala-Cold Stone Creamery’s own website.  In the middle of a summer that has seen temperatures soar into the 100’s and numerous cities challenge all time heat records, an examination of Kahala-Cold Stone Creamery’s own website revealed that the company has at least 16 stores listed as temporarily closed:

  1. Lake Oswego, OR
  2. Newark, DE
  3. Stone Harbor, NJ
  4. Mays Landing, NJ
  5. West Linn, OR
  6. McMinnville, OR
  7. Rehoboth Beach, DE
  8. Charlotte, NC
  9. Dearborn, MI
  10. Bellingham, MA
  11. Oak Creek, WI
  12. Plainfield, IN
  13. Emeryville, CA
  14. Sacramento, CA
  15. Westbury, NY
  16. Leawood, KS

Perhaps more so now than ever in the past, franchisees have communicated that they have either closed their stores or are planning to finally make their exit from Kahala-Cold Stone Creamery.  Kahala has taken over some of these stores and is attempting to sell them to unsuspecting investors who are attracted to a store’s long line of customers during peak hours.  Despite all the negative publicity surrounding Cold Stone, these investors often believe they can earn a profit in these stores because Kahala has offered to sell at a deep discount or perhaps for no charge at all.  Some of these investors were only first introduced to Kahala’s kickback scheme on coldstonefacts.org and do not at first recognize the devastating affect such a sinister tactic can have of franchisees.  The truth is, I’m aware of franchisees even in high volume stores who were not able to earn a profit, despite paying no debt service.

I wouldn’t be surprised if Cold Stone is closing dozens of stores each month by the end of the year.  In fact, given that Cold Stone has at least 16 stores that were recently closed listed on their own website and that there are many more closed stores listed on other websites, I suppose it’s possibilities that Cold Stone is currently losing more than a dozen stores each month.

IV.       Great to See Franchisees Taking Back Their Lives.

Operating a Cold Stone Creamery franchise is not fun.  It’s not hard work.  It’s torturous work because Kahala-Cold Stone Creamery’s business model is broken and in desperate need of repair.  No matter how hard you work, you continue to have to dump more and more cash into the store(s) just to keep the doors open.  Once the savings is gone, franchisees often start borrowing from friends and family for the sole purpose of sustaining a business that is destined to fail.  That often has the affect of diminishing close relationships.  That’s not a business; that’s an expensive habit.

As a franchisee, there is this constant worry about kickbacks, payroll, rent, Sygma, utilities, sales tax, payroll taxes, etc.  This says nothing of the health consequences due to the worry and stress.  There are also of course the setbacks in accomplishing overall financial objectives and progression towards a family’s fiscal goals (e.g. home purchase, kids’ college fund, savings, investments, retirement, vacations, etc.).  Being a Cold Stone franchisee is not a healthy lifestyle.

To make matters worse, in the past Cold Stone at least pretended to recognize and address franchise profitability in many of their communications to the franchisees.  Because there is such a large number of temporarily closed stores listed on Cold Stone’s own website in the middle of a very hot summer, Cold Stone is consistently listed as one of the worst franchises in the entire country and for many other reasons, it’s obvious that Kahala-Cold Stone Creamery is aware of the enormity of their franchisee profitability issue.  When you consider the information provided in earlier sections of this email, it’s easy to come to the conclusion that Kahala-Cold Stone Creamery will continue to decline at an accelerated pace.  Before you know it, I predict the company will either close their doors or become predominantly an international franchising company.

Franchisees who are holding out for hope against hope must come to terms with reality.  It’s just not going to work out.

The most efficient means of ending the Kahala-Cold Stone Creamery nightmare is to simply close your store.  Feel free to contact me and I will gladly walk you through the steps.

V.        Robertzarcofacts.org Demonstrating the same type of Early Effectiveness Exhibited by coldstonefacts.org.

Throughout its existence, coldstonefacts.org has attracted the interests of those who have a more than passive interest in Kahala-Cold Stone Creamery, particularly investors looking to venture into franchising.  I would image some such visitors read the material and simply factor the information into their decision making process. However a large number of investors—those who seem to have emotionally embraced the idea of becoming a Cold Stone Creamery franchisee prior to due diligence—take the time to contact me directly.  (Many of these individuals express extreme disappointment in the transfer of information and seem to be looking for even a tacit approval of their proposed investment decision.  Such inquiries have substantially increased as the economy continues to recover.)  This past week alone, I have received several communications relating to investor interest in purchasing existing stores that have now been taken over by Kahala-Cold Stone Creamery. 

In any case, I am happy to announce that we are now beginning to receive the same type of communications and inquiries from those who have visited robertzarcofacts.org.  In speaking with these individuals, my objective is only to paint a more accurate representation of Robert Zarco and his firm Zarco Einhorn Salkowski & Brito P.A.  For example, the Federal Judge’s comments in the Moe’s case criticizing Robert Zarco and his firm for their poor performance and deficient pleading for (1) failing to respond to a pleading, (2) failing to cite relevant law, (3) failing to respond appropriately to arguments set forth by Moe’s’ attorneys, and (4) a lack of diligence—serves as an objective assessment of Zarco’s, Brito’s and their firm’s lack of professional competence. 

I would also think that an individual or corporation who is considering a relationship with Robert Zarco, Alejandro Brito and their firm would want to read the comments of yet another Federal Judge criticized Zarco and his firm in the Cold Stone franchisee case for (1) failing to reply to a pleading, (2) failing to cite relevant law, (3) asserting irrelevant and off topic arguments, and (4) misapplying the law.  This serves as an additional objective assessment of Zarco’s, Brito’s and their firm’s poor professional standards.

If that is not enough, the ethics claims raised in the U.S. Trustee papers filed against Robert Zarco, Alejandro Brito and their firm are both serious and concerning.  I cannot imagine that Zarco’s existing clients are not concerned about the nature of these accusations, by a U.S. Trustee nonetheless.  The U.S. Trustee file papers against Zarco, Brito and their firm for among other things, (1) making money transfers with the “intent to hinder, delay, or defraud” their ex-clients creditors, (2) professional malpractice, (3) breach of fiduciary duty, and (4) “failing to provide independent legal counsel that was in the best interests of [their client]”, and (5) unjust enrichment (i.e., Zarco, Brito and their firm were enriched at the expense of another).

The issues raised in the papers filed by the U.S. Trustee against Robert Zarco, Alejandro Brito and their firm are similar to the complaints that our franchisee group has with Zarco, Brito and their firm.  These behaviors as well as some of the issues raised in the Moe’s case and the Cold Stone franchisee case go to the heart of the practice of law.  While I am not sure whether a regulatory complaint has been filed in any of these cases, rest assured, the Florida Bar takes these matters very seriously.

In addition, Robert Zarco’s false or misleading statements in an attempt to shine a more favorable light on his Kahala fees call his integrity into question.  Zarco was caught making false or misleading statements in an attempt to misinform the public as to his compensation from Kahala.  Also, after stating he had only received $50,000 that flowed from one Kahala engagement agreement, according to an attorney who was easily Zarco’s most ardent defender throughout his handling of the Cold Stone debacle, that statement too was false

Then there’s the question of the August 8, 2012 post to bluemaumau.org, which clearly supports Zarco at the expense of Rudy Puig, Zarco’s client

cid:image001.png@01CE95FE.37F3CF00

Some have speculated this was written by Zarco.  Of course we won’t know the answer until the analytics becomes discoverable.  I’ll inform you of the outcome once it’s available.

The severity of repeated criticism from Federal Judges directed at Robert Zarco, Alejandro Brito and their firm leads me to believe they are a third tier law group that rose to prominence largely on their marketing skills.  I also believe Kahala-Cold Stone Creamery’s mismanagement of the CNBC documentary—including hiring Robert Zarco, who promptly turned a challenge into a disastrous circus side show that continues to negatively impact the company—exposed Zarco, Brito and their firm for the lack of quality legal services being provided by the firm.  It also shed light on the numerous integrity and ethics issues associated with Robert Zarco discussed in this email.  Of course, robertzarcofacts.org is the glue that marshals all of Zarco’s, Brito’s and their firm’s client experiences in one place for easy public access. 

In any case, we feel that individuals and companies who have an interest in Robert Zarco, Alejandro Brito and their firm, should have the opportunity to review this material as well as the material that is available on Zarco’s website.  Frankly, we believe the information on robertzarcofacts.org is a more accurate reflection of the true client experience and therefore is at least worthy of consideration.  So long as these individuals have the opportunity to make an informed decision, robertzarcofacts.org has served its purpose.

Some of the mistakes and misjudgments committed by Zarco, Brito and their firm in the Cold Stone Creamery franchisee case and the Moe’s case strike me as the result of poor work ethic.  I suspect the clients who suffered due to Zarco’s, Brito’s and their firm’s poor professional performance have or will hire attorneys to come after Zarco and company to recover the money damages due them.  Such mistakes would not be expected or tolerated from a first year lawyer—let alone a firm that holds itself out as “renowned for providing the highest caliber of legal services, expertise, and professionalism….”  But those are just sanitized words of course and Zarco is masterful at talking a good game.  But try to tell the Cold Stone and Moe’s franchisees who lost so much at the hands of Zarco Einhorn Salkowski & Brito PA about “highest caliber” anything associated with that firm.  I doubt they’re feeling it.  Robertzarcofacts.org, on the other hand, offers a real life collection of Robert Zarco’s, Alejandro Brito’s and their firm’s practices and professional results.

 

VI.       Robert Zarco, Alejandro Brito & Zarco Einhorn Salkowski & Brito PA Update.

As I mentioned at the beginning of this email, we are excited about the fact that we have found a treasure trove of information regarding Robert Zarco, some of which also relates to his firm.  We have not yet published or disclosed this information because we are still researching it and we feel it is worthy of national media publication.  I will keep you posted.

In addition, I know we are behind on some of the postings to robertzarcofacts.org, particularly on the comments page.  (What’s amazing to me is that we’ve been able to attract so much interest despite that some of our most attention-grabbing material has yet to be posted.)  The good news is, we now have someone who has stepped forward and volunteered to write the narratives, which will certainly speed up our postings so that we can make this information available to those within the public who are searching for it.

Finally, please note that Robert Zarco has been in the news lately.  He authored “The Pros And Cons Of Owning A Franchise” available (here) and he appeared in this Bloomberg video.

When posting comments to any articles related to Robert Zarco and his firm, franchisees should feel free to use robertzarcofacts.org as their website.

VII.     An Invitation to All NIACCF Members—Past and Present.

By his own admission, Robert Zarco represented both Kahala (by way of the National Advisory Board) and the NIACCF.  Kahala paid Zarco a lot of cash to for those services.  I have repeatedly stated, it is clear to me that Robert Zarco represented the interests of Kahala-Cold Stone Creamery and blame the Cold Stone Creamery franchisees (his clients) for their own financial struggles.

A law firm has stepped forward and is interested in filing a lawsuit on behalf of current and/or past NIACCF members.  According to this firm, these are individual claims that all past and present members of the NIACCF may have, therefore, it is not necessary that these members act as a group.  According to those attorneys, you may act in your individual capacity.

If you are a current or past NIACCF member and you are interested in discussing your case with an attorney, please contact me and I will put you in touch with these attorneys.

VIII.    Conclusion.

Please contact me if I can be of any assistance to you especially in helping you exit the Kahala-Cold Stone Creamery system.  If I do not answer, please leave your name and a telephone number and I will return the call.  All information shared with me is confidential.  I will be in touch with you in the future.

Cecil Rolle

(352) 682-2101

cdrolle@cox.net

Litigation Update - August 10, 2013

posted Aug 11, 2013, 5:20 PM by Cold Stone Facts

August 10, 2013

 Table of Contents:

 I.          Introduction

II.        Cold Stone Creamery’s Untalented Management Fighting to Keep the Company Afloat?

III.       Cold Stone Creamery is Losing Stores in Large Numbers; Isn’t this the Middle of Summer?

IV.       Great to See Franchisees Taking Back Their Lives.

V.        Robertzarcofacts.org Demonstrating the same type of Early Effectiveness Demonstrated by coldstonefacts.org.

VI.       Robert Zarco, Alejandro Brito & Zarco Einhorn Salkowski & Brito PA Update.

VII.     An Invitation to All NIACCF Members—Past and Present.

VIII.    Conclusion

 Dear Cold Stone Creamery Franchisees,

 The statements contained in this document are my opinion:

 I.          Introduction

 I think Kahala-Cold Stone Creamery is now in a deep vertical nose dive.  There are tons of stores closing and franchisees planning to abandon their stores within months.  That has made for a busy summer for me, but I welcome your questions.  I am happy to assist you in planning your exit from the franchising system.   I remember what a miserable existence it was and how overjoyed I was once I made it out.  More on store closures later.

 Also, we have only recently found more information on Robert Zarco and his firm.  We feel franchisees and visitors to robertzarcofacts.org will find a great interest—particularly those who are considering a future relationship with Zarco or his firm.  More on that later in this email.

 II.        Cold Stone Creamery’s Untalented Management Fighting to Keep the Company Afloat?

 Kahala-Cold Stone Creamery’s untalented trio of Kevin Blackwell, David Guarino and Dan Beem are once again showing why I think they are the worst corporate executives in franchising.  Despite Dan Beem’s rah-rah email back on March 31, 2013 announcing: “for the first time in several years we are seeing a trend of new stores opening…”, Nation’s Restaurant News recently published an article that tells you in just the first sentence, all you need to know about Cold Stone Creamery and Dan Beem’s “trend”.

 Save for Cold Stone Creamery, all of the chains in the Beverage-Snack segment of the Second 100 report registered domestic sales and new unit growth for 2012….

 So out of the second 100 brands in the magazine’s Beverage-Snack category, Cold Stone Creamery was the one and only brand that failed to grow domestic sales and failed to grow in new units.

 The first thing you should take note of is that Cold Stone is currently in the Second 100 as opposed to the First 100 of the Beverage-Snack category.  The article goes on to announce that Cold Stone had the “Lowest Estimated Sales Per Unit” of the 100 brands.  Cold Stone’s per unit sales were nearly $200,000 below the category average and nearly $500,000 below the category leader.  This despite that Kahala-Cold Stone Creamery’s focus is on increasing sales and the company no longer so much as pretends to care about franchisee profitability as a major focus, based on their recent franchisee communications. 

 Finally, as if to solidify Kahala-Cold Stone Creamery’s management’s grip on supreme incompetence, the publication announced that Cold Stone had the Largest Sales Decline at 3.1% among the 100 brands.  To put this into perspective, the largest sales increase among the brands was 13.8% and most importantly, the average sales growth was 7.3%.  So Cold Stone’s abysmal -3.1% sales growth is 10.4% lower than the average and 16.9% off the leader.  That’s embarassing.

 The results of this report are statistical proof that Kahala-Cold Stone Creamery’s management is a monumental failure when compared to the performance of their piers.  This persists year-after-year under Kahala’s management, yet it is outrageous that Kevin Blackwell, David Guarino and Dan Beem continue to sit at the top of this company.  I think it should be clear that Kahala-Cold Stone Creamery is no longer trending downward; the company is now in a full on free fall.  Worse of all, there is no hope of a turnaround so long as Kevin Blackwell, David Guarino and Dan Beem are in control.  Shall I remind you, Kahala-Cold Stone Creamery is Kahala Corp’s flagship company?  What does that say for even the short term existence of Kahala Corp?

 Dan Beem blamed Kahala-Cold Stone Creamery’s decline on a bad economy during his interview on CNBC.  However, Cold Stone is the only company out of 100 brands competing in the same bad economy that Dan Beem tried to blame, operating in the same food category as the remaining 99 brands, yet only Cold Stone failed to grow domestic sales and failed to grow new units.  The blame for such an apparent failure can only be placed squarely upon Kahala-Cold Stone Creamery’s completely inept management team of Kevin Blackwell, David Guarino and Dan Beem.

 III.       Cold Stone Creamery is Losing Stores in Large Numbers; Isn’t this the Middle of Summer?

 It appears that franchisees are abandoning their stores in large numbers.  This seems to be verified by an examination of Kahala-Cold Stone Creamery’s own website.  In the middle of a summer that has seen temperatures soar into the 100’s and numerous cities challenge all time heat records, an examination of Kahala-Cold Stone Creamery’s own website revealed that the company has at least 16 stores listed as temporarily closed:

  1. Lake Oswego, OR
  2. Newark, DE
  3. Stone Harbor, NJ
  4. Mays Landing, NJ
  5. West Linn, OR
  6. McMinnville, OR
  7. Rehoboth Beach, DE
  8. Charlotte, NC
  9. Dearborn, MI
  10. Bellingham, MA
  11. Oak Creek, WI
  12. Plainfield, IN
  13. Emeryville, CA
  14. Sacramento, CA
  15. Westbury, NY
  16. Leawood, KS

 Perhaps more so now than ever in the past, franchisees have communicated that they have either closed their stores or are planning to finally make their exit from Kahala-Cold Stone Creamery.  Kahala has taken over some of these stores and is attempting to sell them to unsuspecting investors who are attracted to a store’s long line of customers during peak hours.  Despite all the negative publicity surrounding Cold Stone, these investors often believe they can earn a profit in these stores because Kahala has offered to sell at a deep discount or perhaps for no charge at all.  Some of these investors were only first introduced to Kahala’s kickback scheme on coldstonefacts.org and do not at first recognize the devastating affect such a sinister tactic can have of franchisees.  The truth is, I’m aware of franchisees even in high volume stores who were not able to earn a profit, despite paying no debt service.

 I wouldn’t be surprised if Cold Stone is closing dozens of stores each month by the end of the year.  In fact, given that Cold Stone has at least 16 stores that were recently closed listed on their own website and that there are many more closed stores listed on other websites, I suppose it’s possibilities that Cold Stone is currently losing more than a dozen stores each month.

 IV.       Great to See Franchisees Taking Back Their Lives.

 Operating a Cold Stone Creamery franchise is not fun.  It’s not hard work.  It’s torturous work because Kahala-Cold Stone Creamery’s business model is broken and in desperate need of repair.  No matter how hard you work, you continue to have to dump more and more cash into the store(s) just to keep the doors open.  Once the savings is gone, franchisees often start borrowing from friends and family for the sole purpose of sustaining a business that is destined to fail.  That often has the affect of diminishing close relationships.  That’s not a business; that’s an expensive habit.

 As a franchisee, there is this constant worry about kickbacks, payroll, rent, Sygma, utilities, sales tax, payroll taxes, etc.  This says nothing of the health consequences due to the worry and stress.  There are also of course the setbacks in accomplishing overall financial objectives and progression towards a family’s fiscal goals (e.g. home purchase, kids’ college fund, savings, investments, retirement, vacations, etc.).  Being a Cold Stone franchisee is not a healthy lifestyle.

 To make matters worse, in the past Cold Stone at least pretended to recognize and address franchise profitability in many of their communications to the franchisees.  Because there is such a large number of temporarily closed stores listed on Cold Stone’s own website in the middle of a very hot summer, Cold Stone is consistently listed as one of the worst franchises in the entire country and for many other reasons, it’s obvious that Kahala-Cold Stone Creamery is aware of the enormity of their franchisee profitability issue.  When you consider the information provided in earlier sections of this email, it’s easy to come to the conclusion that Kahala-Cold Stone Creamery will continue to decline at an accelerated pace.  Before you know it, I predict the company will either close their doors or become predominantly an international franchising company.

 Franchisees who are holding out for hope against hope must come to terms with reality.  It’s just not going to work out.

 The most efficient means of ending the Kahala-Cold Stone Creamery nightmare is to simply close your store.  Feel free to contact me and I will gladly walk you through the steps.

 V.        Robertzarcofacts.org Demonstrating the same type of Early Effectiveness Exhibited by coldstonefacts.org.

 Throughout its existence, coldstonefacts.org has attracted the interests of those who have a more than passive interest in Kahala-Cold Stone Creamery, particularly investors looking to venture into franchising.  I would image some such visitors read the material and simply factor the information into their decision making process. However a large number of investors—those who seem to have emotionally embraced the idea of becoming a Cold Stone Creamery franchisee prior to due diligence—take the time to contact me directly.  (Many of these individuals express extreme disappointment in the transfer of information and seem to be looking for even a tacit approval of their proposed investment decision.  Such inquiries have substantially increased as the economy continues to recover.)  This past week alone, I have received several communications relating to investor interest in purchasing existing stores that have now been taken over by Kahala-Cold Stone Creamery. 

In any case, I am happy to announce that we are now beginning to receive the same type of communications and inquiries from those who have visited robertzarcofacts.org.  In speaking with these individuals, my objective is only to paint a more accurate representation of Robert Zarco and his firm Zarco Einhorn Salkowski & Brito P.A.  For example, the Federal Judge’s comments in the Moe’s case criticizing Robert Zarco and his firm for their poor performance and deficient pleading for (1) failing to respond to a pleading, (2) failing to cite relevant law, (3) failing to respond appropriately to arguments set forth by Moe’s’ attorneys, and (4) a lack of diligence—serves as an objective assessment of Zarco’s, Brito’s and their firm’s lack of professional competence. 

I would also think that an individual or corporation who is considering a relationship with Robert Zarco, Alejandro Brito and their firm would want to read the comments of yet another Federal Judge criticized Zarco and his firm in the Cold Stone franchisee case for (1) failing to reply to a pleading, (2) failing to cite relevant law, (3) asserting irrelevant and off topic arguments, and (4) misapplying the law.  This serves as an additional objective assessment of Zarco’s, Brito’s and their firm’s poor professional standards.

If that is not enough, the ethics claims raised in the U.S. Trustee papers filed against Robert Zarco, Alejandro Brito and their firm are both serious and concerning.  I cannot imagine that Zarco’s existing clients are not concerned about the nature of these accusations, by a U.S. Trustee nonetheless.  The U.S. Trustee file papers against Zarco, Brito and their firm for among other things, (1) making money transfers with the “intent to hinder, delay, or defraud” their ex-clients creditors, (2) professional malpractice, (3) breach of fiduciary duty, and (4) “failing to provide independent legal counsel that was in the best interests of [their client]”, and (5) unjust enrichment (i.e., Zarco, Brito and their firm were enriched at the expense of another).

The issues raised in the papers filed by the U.S. Trustee against Robert Zarco, Alejandro Brito and their firm are similar to the complaints that our franchisee group has with Zarco, Brito and their firm.  These behaviors as well as some of the issues raised in the Moe’s case and the Cold Stone franchisee case go to the heart of the practice of law.  While I am not sure whether a regulatory complaint has been filed in any of these cases, rest assured, the Florida Bar takes these matters very seriously.

In addition, Robert Zarco’s false or misleading statements in an attempt to shine a more favorable light on his Kahala fees call his integrity into question.  Zarco was caught making false or misleading statements in an attempt to misinform the public as to his compensation from Kahala.  Also, after stating he had only received $50,000 that flowed from one Kahala engagement agreement, according to an attorney who was easily Zarco’s most ardent defender throughout his handling of the Cold Stone debacle, that statement too was false

Then there’s the question of the August 8, 2012 post to bluemaumau.org, which clearly supports Zarco at the expense of Rudy Puig, Zarco’s client

cid:image001.png@01CE95FE.37F3CF00

 

Some have speculated this was written by Zarco.  Of course we won’t know the answer until the analytics becomes discoverable.  I’ll inform you of the outcome once it’s available.

The severity of repeated criticism from Federal Judges directed at Robert Zarco, Alejandro Brito and their firm leads me to believe they are a third tier law group that rose to prominence largely on their marketing skills.  I also believe Kahala-Cold Stone Creamery’s mismanagement of the CNBC documentary—including hiring Robert Zarco, who promptly turned a challenge into a disastrous circus side show that continues to negatively impact the company—exposed Zarco, Brito and their firm for the lack of quality legal services being provided by the firm.  It also shed light on the numerous integrity and ethics issues associated with Robert Zarco discussed in this email.  Of course, robertzarcofacts.org is the glue that marshals all of Zarco’s, Brito’s and their firm’s client experiences in one place for easy public access. 

In any case, we feel that individuals and companies who have an interest in Robert Zarco, Alejandro Brito and their firm, should have the opportunity to review this material as well as the material that is available on Zarco’s website.  Frankly, we believe the information on robertzarcofacts.org is a more accurate reflection of the true client experience and therefore is at least worthy of consideration.  So long as these individuals have the opportunity to make an informed decision, robertzarcofacts.org has served its purpose.

Some of the mistakes and misjudgments committed by Zarco, Brito and their firm in the Cold Stone Creamery franchisee case and the Moe’s case strike me as the result of poor work ethic.  I suspect the clients who suffered due to Zarco’s, Brito’s and their firm’s poor professional performance have or will hire attorneys to come after Zarco and company to recover the money damages due them.  Such mistakes would not be expected or tolerated from a first year lawyer—let alone a firm that holds itself out as “renowned for providing the highest caliber of legal services, expertise, and professionalism….”  But those are just sanitized words of course and Zarco is masterful at talking a good game.  But try to tell the Cold Stone and Moe’s franchisees who lost so much at the hands of Zarco Einhorn Salkowski & Brito PA about “highest caliber” anything associated with that firm.  I doubt they’re feeling it.  Robertzarcofacts.org, on the other hand, offers a real life collection of Robert Zarco’s, Alejandro Brito’s and their firm’s practices and professional results.

VI.       Robert Zarco, Alejandro Brito & Zarco Einhorn Salkowski & Brito PA Update.

As I mentioned at the beginning of this email, we are excited about the fact that we have found a treasure trove of information regarding Robert Zarco, some of which also relates to his firm.  We have not yet published or disclosed this information because we are still researching it and we feel it is worthy of national media publication.  I will keep you posted.

In addition, I know we are behind on some of the postings to robertzarcofacts.org, particularly on the comments page.  (What’s amazing to me is that we’ve been able to attract so much interest despite that some of our most attention-grabbing material has yet to be posted.)  The good news is, we now have someone who has stepped forward and volunteered to write the narratives, which will certainly speed up our postings so that we can make this information available to those within the public who are searching for it.

Finally, please note that Robert Zarco has been in the news lately.  He authored “The Pros And Cons Of Owning A Franchise” available (here) and he appeared in this Bloomberg video.

When posting comments to any articles related to Robert Zarco and his firm, franchisees should feel free to use robertzarcofacts.org as their website.

VII.     An Invitation to All NIACCF Members—Past and Present.

By his own admission, Robert Zarco represented both Kahala (by way of the National Advisory Board) and the NIACCF.  Kahala paid Zarco a lot of cash to for those services.  I have repeatedly stated, it is clear to me that Robert Zarco represented the interests of Kahala-Cold Stone Creamery and blame the Cold Stone Creamery franchisees (his clients) for their own financial struggles.

A law firm has stepped forward and is interested in filing a lawsuit on behalf of current and/or past NIACCF members.  According to this firm, these are individual claims that all past and present members of the NIACCF may have, therefore, it is not necessary that these members act as a group.  According to those attorneys, you may act in your individual capacity.

If you are a current or past NIACCF member and you are interested in discussing your case with an attorney, please contact me and I will put you in touch with these attorneys.

VIII.    Conclusion.

Please contact me if I can be of any assistance to you especially in helping you exit the Kahala-Cold Stone Creamery system.  If I do not answer, please leave your name and a telephone number and I will return the call.  All information shared with me is confidential.  I will be in touch with you in the future.

Cecil Rolle

(352) 682-2101

Litigation Update: March 10, 2013

posted Apr 17, 2013, 8:59 AM by Cold Stone Facts

March 10, 2013

Table of Contents:

I.          Introduction

II.        Robert Zarco Online.

III.       Robert Zarco/Zarco Einhorn Salkowski & Brito PA & Website Update.

IV.       Dan Beem’s March 1, 2013 Email

V.        Dan Beem’s Email is an Admission of the Effectiveness of coldstonefacts.org

VI.       Kahala-Cold Stone Creamery is Living in the Past.

VII.     Conclusion

Dear Cold Stone Creamery Franchisees,

The following statements constitute my opinion:

I.          Introduction

Thank you to those who responded to my recent offline requests and also to those who provided me with Dan Beem’s laughable email.  When I opened my email and saw the volume of communications from franchises, I knew there would be something interesting there.  Dan Beem’s email is comedy at its best.

II.        Robert Zarco Online.

A franchisee recently directed me to this video of Robert Zarco speaking at a Koc Holdings executive meeting in Istanbul, Turkey.  Koc is a highly respected international company based in Istanbul.  During his speech, Robert Zarco of course talks about how wealthy he is.  However, prior to that, he has a rather in depth discussion about the importance of ethics, credibility, “excellent reputation”, honesty, integrity.  He goes on to discuss zealous representation of the client, how every client is entitled to a defense, how other lawyers don’t have the reputation that he does and how it all inures to his advantage.

Franchisees, particularly those who have registered to sue Kahala-Cold Stone Creamery and Robert Zarco as well as whatever NIACCF members remain, if any, should carefully listen to this speech.  It is fascinating to me when you compare his words to the Koc executives—and they are nothing but words—to his fall on his face routine in dealing with the Cold Stone franchisees.  I would love to hear any comments that you have.  There is an in depth discussion of this topic on the new Robert Zarco website (see below).

I also wanted to bring this Lawyer Rating website to your attention.  I have created a profile for Robert Zarco and will do the same in the near future for Alejandro Brito.  This and other similar lawyer rating websites will be linked to his and Alejandro Brito’s new websites.  Franchisees should feel free to rate Robert Zarco’s performance.

III.       Robert Zarco/Zarco Einhorn Salkowski & Brito PA & Website Update.

My sincere thanks and appreciation to all of you who provided content and suggestions regarding the development of robertzarcofacts.org.  We were able to immediately incorporate some of those contributions.  Others will be acted upon in the future.

I expect to launch the new website next week.  Although it will evolve over time as we incorporate additional content and features, the initial launch format and content is complete.  We are only awaiting legal clearance at this point.  Franchisees should expect an email from me within the next week announcing its live status.  As a point of information, we have also reserved the domains alejandrobritofacts.org and zesbfacts.org.  We will develop the alejandrobritofacts.org website in the coming months, however, we feel it is important to focus on fully developing the Robert Zarco website at this point.  There’s a lot of potential there.

The purpose of this website is to create a centralized repository of concerns about Robert Zarco’s and ZESB’s practices and performance.  Robertzarcofacts.org will provide unity to the scattered and most importantly, undocumented voices of Robert Zarco’s critics, Cold Stone related and otherwise.  In addition, similar to coldstonefacts.org, robertzarcofacts.org will give the public access to the perspectives of those who have actual prior experience in dealing with Robert Zarco and/or his firm.  This way, the public is not forced to rely solely upon the information gleaned from Robert Zarco’s public relations pieces such as the words in his Koc presentation or on his propaganda machine.  They can instead weigh that material against the information available on robertzarcofacts.org and later, alejandrobritofacts.org and zesbfacts.org.  In short, this will enable the public to make a truly informed decision.

Since the airing of the CNBC documentary, I continue to receive communications from individuals both within and outside of Cold Stone, who identify themselves as having a prior relationship with Robert Zarco and are absolutely furious with him.  Some of them feel they got poor representation from him and his firm.  Some believe he is neither honest nor ethical.  Judging from their comments, I feel safe in assuming that they would agree that many of his words to the Koc executives are not reflective of their experience.

IV.       Dan Beem’s March 1, 2013 Email.

Dan Beem issued a rah-rah email earlier this week that was intended to lift the broken spirits of franchisee community that is justifiably morale challenged and to give them the impression that Kahala-Cold Stone Creamery’s management team is not the inept group they’ve proven themselves to be over the past six years or so.  In a business sense, how does one make a compelling argument for potential future success without mentioning one business metric?  You don’t, which is exactly why Dan Beem’s email was not worth the bandwidth it consumed.  I feel his attempt at doing so is an insult to the intelligence of our franchise community.  That said, I do feel some of his comments deserve discussion.

In his email, Dan Beem said: “We saw positive same store sales growth last year as a system.”  You would expect to see a sizable SSS increase because as stores close, dedicated customers are forced into the remaining stores, which generates increased SSS from those stores.  Eventually though, a steady decline in overall sales will likely overtake the bump in SSS.  The fact that the number was not impressive enough to compel Dan Beem to disclose it implies the increase was very small, possibly a fraction of a percentage point.  This is a very disappointing result given all the stores that have closed in 2012 alone.  If only a small number of the customers from the high number of closed stores flock to the remaining stores, where did all the other Cold Stone customers go?  Baskin Robbins, Froyos, Italian Ice; where did they go if they didn’t go to Cold Stone?  That’s really a question for Dan Beem and the Kahala-Cold Stone Creamery management team because SSS is only of interest to franchisees when the business is profitable.  Otherwise, increased SSS could be more damaging to the store because they may exacerbate financial losses.

What’s missing from Dan Beem’s logic is that SSS do not compute to store profits.  Cold Stone would like for you to think that, but it simply is not true.  It is store profits that matter to franchisees, while SSS in an unprofitable business only matter to the franchisor.  Franchisees in unprofitable stores would be happy to have their SSS drop dramatically in exchange for Kahala-Cold Stone Creamery fixing its business model so that the franchisees could earn a profit.  That is why it is so baffling to me that a group of franchisees can travel to Arizona, sit a room with Cold Stone executive for days and then send out a rah-rah letter to the franchisees that says nothing about the prospects of fixing Kahala-Cold Stone Creamery’s broken business model.

Considering the business model as it is though, if a store earned $300,000 in revenue in 2011 and Cold Stone’s SSS increased five percent (though again, I would be willing to bet the number is less than one percent) that would bring revenues to $315,000 for 2012.  Is a $315,000 store anymore likely to be profitable under Kahala-Cold Stone Creamery’s broken business model than a $300,000 store?  If you apply a more likely SSS number, for example, one percent, that computes to 2012 sales of $303,000 for a store that survived the year. 

From a corporate perspective, if you take the total dollar amount represented by the small increase in SSS and multiply it by the kickbacks, royalty and advertising rates that franchisees would pay to Kahala-Cold Stone Creamery, the number is very meaningful.  Obviously, all of that cash benefits Kahala-Cold Stone Creamery.  Therefore, Dan Beem has reason to be happy.  Franchisees on the other hand don’t because it is meaningless in terms of store profit.

Dan Beem says “we found that a large percentage of our store transfers are going to existing owners”.  Cold Stone made a similar comment during the CNBC documentary: “40% of all transferred locations go to current franchisees”.

You should first know that when a store fails, Cold Stone often takes over the operation of the store or reopens the store as corporate unit and then sells or sometimes gives that store away to a franchisee or potential franchisee.  (I would imagine this is simply to keep the store open or to get a closed store reopened so that it continues to pay kickbacks, royalty and advertising to Kahala-Cold Stone Creamery.)  That’s right, stores that may have cost the original owner $450,000 or more are given away by Cold Stone for no value.  If Cold Stone then turns around and labels that store as transferred to an existing franchisee, should that even count as a transfer?

For a franchisor to brag of the number of transfers to franchisees is highly insulting to me.  Franchisees should be offended by not only Dan Beem having the audacity to boast about such a high percentage, but that the percentage is so high.  Wikipedia offers the following warning as to franchise transfer statistics.  (This information should be strongly considered by franchisees in the context of Dan Beem’s comment.  Also, it is important to note that the only positive number on Cold Stone’s Item 20 chart in their 2012 FDD below is in the “Company-Owned” section.  Twelve (12) is an enormously large number when you consider Cold Stone’s otherwise substantial store closure numbers.  Franchisees who purchased existing units but did not receive the information highlighted in green may wish to raise this issue with their attorney.)

The sale-transfer columns can obscure churning of units through fire sales to third parties by failed or failing franchisees. Some companies may repurchase failed outlets and list them as company-owned outlets.

Some of the former franchisees may have signed confidentiality agreements that prevent them from speaking. Franchisors practicing Franchise fraud may have a high number of former franchisees under a Gag order.

If a franchisee buys an existing outlet that was reacquired by the franchisor, the franchisor must tell the franchisee who owned and operated the outlet for the last five years. Several owners in a short time may indicate that the location isn’t profitable or that the franchisor hasn’t supported that outlet as promised.

(Emphasis added.)

Finally, Dan Beem says there is “a trend of new stores opening”.  If you take the position that there were zero new stores opened in the past several years, as Dan Beem seems to imply, and one or two aberrant investors opt to open new stores in 2012, I suppose that establishes a trend.  It’s obvious, that’s not a meaningful trend, but then again there was nothing meaningful to franchisees in Dan Beem’s email.

There are two things that I think are important for franchisees to take away from Dan Beem’s “a trend of new stores opening” comment.  First, what Dan Beem is saying is without value to any franchisee in the system.  One or even a handful of new stores does nothing to fix store profitability, which is the primary issue for franchisees, though it is rarely if ever addressed by Cold Stone executives.  In fact if anything, new development has the potential of reducing store profitability if the new stores canalize existing stores that are already unprofitable.  So here again, Dan Beem’s point is of value to the Cold Stone executives, but should only generate concern from the franchise community.

Second, if one or two prospective franchisees decide to build a new store, it does nothing to stave the avalanche of store closures that Kahala-Cold Stone Creamery is experiencing each year for the better part of a decade.  Kahala-Cold Stone Creamery’s management obviously does not have the skill to stop this downward spiral.  As proof, Cold Stone’s store closure statistics provided in their 2012 FDD (see below) indicate the brand closed a net 203 stores.  That’s right, that’s 203 stores loss.  Is it therefore even prudent for Dan Beem to make this “trend” comment?  No!  This “trend” is tantamount to fighting a raging inferno with a water pistol.  Water pistol or not, the inferno wins.  This, just as Dan Beem’s other comments, is a grasp at straws by a management team that’s out of ideas and has stayed well beyond its welcome.

As I mentioned earlier, Dan Beem’s email contained zero statistics.  Cold Stone is not a company that has been shy about statistics when those numbers are favorable to the company.  Take this excerpt from a 2005 press release as an example.

Cold Stone Creamery®, the nation’s fastest growing superpremium ice cream franchise, has now opened more than 1,000 stores and has another 1,000+ stores in various stages of development….             Boasting a $405,000 annualized average unit volume, the highest of any super-premium ice cream concept, entrepreneurs have taken notice with 29,000 prospective franchise applications received by Cold Stone Creamery in 2004 alone. Systemwide sales in 2004 exceeded $283 million, up 86% from $152 million in 2003.

So Cold Stone clearly knows how to use the numbers when the numbers are impressive.  Cold Stone easily provided more than a dozen statistics and rankings in this brief one-page press release.  Fast forward to Dan Beem’s March 1, 2013 email.  The fact that Dan Beem put out a five-paragraph letter, but failed to include even one statistical value to support his claims is telling.  Had the numbers been even remotely impressive, Dan Beem would have disclosed them.  You should therefore easily come to the conclusion that Cold Stone’s out-of-control tumble to self destruction persists.  Nothing good will happen so long as the current management is in place.  Year-after-year of declines should prove that to franchisees, even if their negative P&L’s and dwindling savings don’t.

On a final note, when the president of a failing brand has to select such questionable justification to inspire a sense of accomplish among the franchise community—particularly when there is such compelling data to the contrary—isn’t it time to fault the president and his superiors Kevin Blackwell and David Guarino.  Year-after-year they produce one excuse after another as Kahala-Cold Stone Creamery sinks further-and-further towards complete failure.  The solution is obvious.  Kahala-Cold Stone Creamery needs management that knows what they are doing, which clearly is not the case for Kevin Blackwell, David Guarino and Dan Beem.  They have demonstrated over the better part of a decade that they completely lack the skill to fix Kahala-Cold Stone Creamery’s business model.  Your substantial investment is at risk!

V.        Dan Beem’s Email is an Admission to the Effectiveness of coldstonefacts.org

In his email, Dan Beem states “for the first time in several years we are seeing a trend of new stores opening...”  This is an acknowledgement to the franchisees of the effectiveness of coldstonefacts.org.  Prior to the establishment of this website, there was no central repository that communicated the actual lived experience of the Cold Stone Creamery franchisee.  The public’s information source primarily consisted of Cold Stone’s FDD and their propaganda machine, which proclaimed all things good with Cold Stone.

Coldstonefacts.org provides the public with a more balanced perspective of the Kahala-Cold Stone Creamery franchisee experience just as kahalafacts.org provides for prospective franchisees of other Kahala brands.  (Robertzarcofacts.org, alejandrobritofacts.org and zesbfacts.org will likewise provide the public with a more balanced experience as it relates to professional experiences with Robert Zarco and Zarco Einhorn Salkowski & Brito, P.A.  These portals will demonstrate a more realistic client experience to offset Robert Zarco’s propaganda machine.  I deal with this subject extensively in my next email.)

While Dan Beem may only now be willing to acknowledge the effectiveness of coldstonefacts.org, I of course have long known what a useful tool it has served for the public.  I am confident that I hear from far more prospective Cold Stone potential investors than Kahala does.  In communicating with these investors, many of them offer up the same story.  They visited a Cold Stone store, the line was long and the ice cream was tasty and expensive, therefore they assumed the owner is making a profit—and a sizable one at that.  They then go to Cold Stone’s franchise opportunity portal and read about all the wonderful things associated with Cold Stone franchise ownership.  They become very excited about the prospects of becoming a Cold Stone franchisee.  They then google Cold Stone to find out more information about this investment that seems too good to be true.  That’s were coldstonefacts.org comes in. 

By the time I speak to them, many of these individuals have become so ecstatic about the franchise opportunity that they’ve already spoken to Jay Goldstein, often about purchasing an existing store(s).  They are surprised when I am able to guess chapter and verse what Jay Goldstein has told them about the store(s).  That’s when they begin to come back to earth.  They realize the story they’ve been told has been recycled over-and-over again.  At that point, I simply begin to tell my story and point them in the direction of statistics.  From there they make whatever decision they deem prudent.

I strongly believe coldstonefacts.org `is the primary source of Cold Stone’s inability to open new stores.  I am happy that we are able to provide accurate information that potential investors can use to make informed decisions.  Aberrations do not form a meaningful “trend” and I think that kind of information must be challenged.  Therefore, Cold Stone’s inability to open new franchises will persist, because coldstonefacts.org will continue to serve the public’s interest as it has in the past.

VI.       Kahala-Cold Stone Creamery is Living in the Past.

As I previously mentioned, when the statistics are in Cold Stone’s favor, the company is not shy about disclosing them.  After all, this is a company that on this very day, is bragging about having been ranked No. 1 in category by entrepreneur.com way back in 2007—more than half a decade ago.  That’s incredible to me and it should be embarrassing to them.  The reality is though, it might be more embarrassing for Kahala-Cold Stone Creamery to promote the truth as it exists today: No. 9 in category in 2012, repeatedly ranked one of the worst franchises in the country, we sue plenty of our franchisees, including some who just a couple of years ago, were considered leaders in our brand. 

The lack of statistics contained in Dan Beem’s email is remarkable when you compare it to the Cold Stone’s 2005 announcement that the company had 1,000 “profitable locations” in operation.  Contrast that with Dan Beem’s claims during his CNBC interview that he has no knowledge of franchisee profitability because when he requested profit statements from franchisees, they sent them in “written on a napkin” (here).

Kahala-Cold Stone Creamery is in a hopeless state of decline and that decline continued in 2012.  There is an all out attempt to make franchisees feel as if Kahala-Cold Stone Creamery is about to turn the corner and the franchisees should continue to dump good money into their stores because pay dirt is just around the corner.  We have seen this year-after-year and it only gets worse.

VI.       Franchisees Have to See Their Fate by Looking at the Past.

Until Kahala-Cold Stone Creamery undertakes a major overhaul of their broken business model, franchisees have to see their fate by looking at the unsuccessful path of franchisees who have attempted to dump their financially defunct stores by selling them.  That’s a losing strategy and a recipe for severe financial disaster.  Franchisees that continue to dip into their savings and borrow to cover losses in order to keep the stores open are wasting their time let alone their health due to the stress, worry and sleepless nights.

History has demonstrated that it is far better to close your store and maintain any savings that otherwise will almost certainly be loss and avoid taking additional loans.  These actions only forestall the inevitable because once the franchisee runs out of cash and can no longer borrow from others, the store will close.  It more advantageous to close sooner rather than later.  Had the franchisee closed earlier, s/he could have avoided the additional financial burden.

The only way out is to close your store.  Again, the sooner the better therefore you should begin planning today to close your store.  Trying to make it to the summer is simply delaying the inevitable.  I am happy to assist you in planning your exit and there is never any charge.

VII.     Conclusion.

Please contact me if I can be of any assistance to you especially in helping you exit the Kahala-Cold Stone Creamery system.  If I do not answer, please leave your name and a telephone number and I will return the call.  All information shared with me is absolutely confidential.  I will be in touch with you in the future.

Cecil Rolle

Litigation Update: March 12, 2013 - The Zarco Recap

posted Apr 17, 2013, 8:52 AM by Cold Stone Facts

March 12, 2013

Table of Contents:

I.          Introduction

II.        Overview of Our Group’s History with Robert Zarco

III.       Conclusion

Dear Litigation Database Registrant,

The following statements constitute my opinion:

I.          Introduction

Thank you to the franchisee who wrote to me this evening to explain that he felt he did not have a sufficient account of the events that lead to our dispute with Robert Zarco to construct a comment for his lawyer rating.  Assuming others may share his concern, I am writing to provide an overview of our group’s experience with Zarco.

II.        Overview of Our Group’s History with Robert Zarco                                                                    

Prior to CNBC contacting me to interview for their documentary, I was working with Zarco and his partner, Alejandro Brito, on behalf of our group to sue Kahala-Cold Stone Creamery for, among other things, the company’s kickback scheme.  After reviewing a seven-page memorandum outlining our numerous complaints against Kahala-Cold Stone Creamery and more than one hundred pages of evidence to support those legal claims, Zarco stated that he was excited to take on the case, but asked us to fulfill one condition before we got started.  One of my law school classmates and I were in the process of satisfying that condition when I learned from a reporter that Zarco would be defending Kahala-Cold Stone Creamery.  And defend he did.

In that matter, Zarco was sought out and paid by Kahala-Cold Stone Creamery to defend Cold Stone Creamery while purportedly representing the franchisees.  Zarco then cooperated with an article published to bluemaumau.org titled “CNBC Shelves Cold Stone Story after Zarco Attacks”.  This obviously seriously damaged our case because, after we had laid out our entire case to him and provided him with our evidence, he was now working for the other side.  Our attorneys feel this was a conflict of interest in violation of the Rules Regulating the Florida Bar.

We believe that Zarco then provided behind the scenes support to Kahala-Cold Stone Creamery to water down the CNBC documentary.  He then appeared on the documentary and defended Kahala-Cold Stone Creamery (the subject of the case that our group was working with him on) and blamed the franchisees (his stated client) for their own financial demise (here).

Therefore, we feel that our issue with Zarco is very serious and one that attorney regulators take very seriously.

III.       Conclusion

Thank you very much to those of you have responded to yesterday’s request.  Your immediate action is very much appreciated.

Please do not hesitate to contact me with any questions you may have.

Cecil Rolle

Litigation Update: February 3, 2013

posted Apr 17, 2013, 8:43 AM by Cold Stone Facts


February 3, 2013

Table of Contents:

I.          Introduction

II.        Your Landlord could be Holding $25,000 or More of Your Money.

III.       Why Cold Stone Franchisees Should Especially Consider Lease Evaluation.

IV.       The Robert Zarco/Zarco Einhorn Salkowski & Brito PA Problem.

V.        Franchisee Response to Media Opportunities.

VI.       There is no Benefit to Going On.

VII.     Conclusion

Dear Cold Stone Creamery Franchisees,

The following statements constitute my opinion:

I.          Introduction

As you may know, websites dedicated to presenting a more accurate depiction of the franchisee experience have been established for Kahala and Cold Stone Creamery.  I am happy to announce that a similar website dedicated to providing a medium for those who have had interactions or a relationship with Robert Zarco and Zarco Einhorn Salkowski & Brito, is nearly complete.  Unlike the others, however, the website devoted to Zarco and ZESB will include a billboard so as to give a voice to those who would like to post comments.  We are very excited about it and we have heard from others who appear to be equally excited.

If you have any content that you would like posted to the website, please get it to me asap.

II.        Your Landlord Could be Holding $25,000 or More of Your Money.

As you may know, many franchisees have bitterly complained about the terms of their Cold Stone leases.  Franchisees who have been occupying their stores for several years may be sitting on a pile of cash and not even know it. 

There are an increasing number of news journals that tout the significant cash benefits for commercial tenants to engage lease audit and abstracting services.  According to this JCK Magazine article, as many as 90% of commercial tenants are being charged for rent in excess of what their lease permits.  Franchisees who have failed to audit and abstract their leases for overpayments may be sitting on a “gold mine” at a time when many franchisees could use a $25,000 or more check.  I recently learned of one franchisee who underwent this process, which purportedly resulted in a claim against his/her landlord for more than $30,000.

Tina Margherio is a highly knowledgeable retail lease professional with more than 25 years experience in lease auditing and lease related services.  She has put together a special offer for lease auditing and abstracting services for Kahala and Cold Stone Creamery franchisees (here).  You may also learn more about Tina on her LinkedIn.com page (here).

I encourage franchisees to contact Tina at LeaseHelp@live.com and explore this opportunity to potentially inject real cash into your business at perhaps the most opportune time.

III.       Why Cold Stone Franchisees Should Especially Consider Lease Evaluation.

When it is to their advantage, Cold Stone has sometimes blurred the lines between their own interests and those of their franchisees or potential franchisees.  As an example, Cold Stone has historically attempted to control franchisees’ engagement of real estate brokers and attorneys by offering disincentive for them to choose their own professional advisors.  In its 2004 FDD, Cold Stone states as follows.

“You will be required to engage a real estate broker and an attorney on Cold Stone Creamery’s approved list to assist you in negotiating the master lease...  If you use a real estate broker or an attorney not on Cold Stone Creamery’s approved list, you must pay Cold Stone Creamery a fee in an amount up to $3,000....

In my view, there are no two professionals more principle to the lease acquisition process than the attorney and the real estate broker.  Yet, under the structure proposed above, Cold Stone is seeking to control this process, despite that their interest is potentially conflicted with the franchisee’s interest and it’s the franchisee who is responsible for the lease payment.  If an attorney and a real estate broker land on Cold Stone’s “approved list”, those individuals have agreed to play by Cold Stone’s rules, right?  In that case, let’s assess the interests.

If a franchisee who is attempting to develop her first store, Cold Stone is likely more interested in getting into a prime location and opening the store as quickly as possible so that the company can begin making money (other than the franchise fee and kickbacks from equipment sales).  They are likely less concerned with how much the franchisee will pay in rent.  For the real estate broker’s part, he is likely being paid on a percentage of rent basis.  Under that scenario, the higher the rent, the more he benefits.  Finally, in looking at the attorney’s interests, Cold Stone clearly has more leverage over the attorney than the franchisee because he is on Cold Stone’s “approved list”.  That means, the more he plays to Cold Stone’s interest, the greater his chances of remaining on the “approved list” and racking up referrals from Cold Stone.  Obviously, if the attorney does not play nice with Cold Stone, he will be jettisoned from the “approved list”.

The franchisee, on the other hand, is also anxious to finalize the lease process, build out the store and sell ice cream.  In all her ingenuousness, however, she wrongly believes her interests are well protected by the attorney and real estate professionals that she has hired and is paying.  She would be wrong.  The lived experience for Cold Stone taking advantage of franchisees and potential franchisees in this manner is often failure in one way or another or highly justified litigation against the attorney

Attorneys hold a high duty to steer clear of such conflicts of interest or otherwise to manage them within the rules established by Bar Regulators.    Bar Regulators take a no nonsense approach to conflicts of interests.  The American Bar Association and State Bar Regulators hand down among the severe penalties to such violators.  Those penalties are supported and even made more severe when deemed insufficient, by State Supreme Courts.

IV.       The Robert Zarco/Zarco Einhorn Salkowski & Brito PA Problem.

As many franchisees know, one of my major complaints regarding Robert Zarco is that he sold his soul by taking large sums of money from Kahala-Cold Stone Creamery when they contacted him to represent the company’s interest.  Afterwards, while purporting to represent the franchisees, he went on national television and defended Kahala-Cold Stone Creamery while blaming the franchisees, his purported very own clients.

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When franchisees and others within the industry began to criticize him for taking Kahala-Cold Stone Creamery’s money, he lied and said his association repaid the fees.  It wasn’t until a franchisee with an inside perspective questioned Zarco’s claim that the money had been repaid, that Zarco came clean and told the truth that the fees had not been repaid.

In my opinion, this is but another example of Cold Stone using its financial might to blur the lines that separate their interest from the franchisee’s interest, for their selfish benefit.

V.        Franchisee Response to Media Opportunities.

I would like remind everyone that there is a small group of franchisees who are committed to publicizing the true Cold Stone franchisee experience.  They develop media opportunities by regularly sharing their experiences and the experiences of other franchisees with a database of media contacts.  These opportunities do not come easily or frequently, especially with media conglomerates.

Understandably, current franchisees may be unwilling to speak candidly on camera about their Cold Stone experience for the legitimate fear of retribution.  (Cold Stone, after all, has a history of overreacting to media.)  The fact that Rudy Puig spoke out in favor of Cold Stone and ended up disgraced (here and here), was sued by Kahala-Cold Stone Creamery and then he and Robert Zarco were bitterly trounced in court, is enough to deter any current franchisee from speaking to the media.

However, if you are called upon to submit to an interview at any time in the future and are reluctant to participate, I would hope you will either cooperate or assist the producer in getting to a more willing participant.

VI.       There is no Benefit to Going On.

As I’ve stated before, Cold Stone is a rapidly sinking business that is going nowhere.  Franchisees hurt their families and themselves by keeping their unprofitable stores open in an attempt to sell them.  These stores have little or no value.  Things are not going to get better; they are going to get worse.

Franchisees should plan to close their unprofitable stores NOW.  I’m happy to assist you

VII.     Conclusion.

Please contact me if I can be of any assistance to you.  If I do not answer, please leave your name and a telephone number and I will return the call.  All information shared with me is absolutely confidential.  I will be in touch with you in the future.

Cecil Rolle

Litigation Update: December 23, 2012

posted Dec 26, 2012, 10:18 AM by Cold Stone Facts

December 23, 2012

Table of Contents:

I.          Introduction

II.        Litigation Update

III.       Kahala is in a Death Spiral.

IV.       Cold Stone Continues It’s Old Tricks.

V.        If a Decade Is Not Enough—What Is?

VI.       Conclusion

Dear Cold Stone Creamery Franchisees,

The following statements constitute my opinion:

I.          Introduction.

Happy Holidays!  Though I think many franchisees would agree that there is not necessarily a good time to be a Cold Stone franchisee, I recognize that the Holiday season can be the most financially challenging period of the year.  Despite that, I hope you are able to get out of your stores and enjoy your friends and family and perhaps put aside the worry of operating such an emotionally challenging franchise during the Holidays.

I’m thrilled to hear from so many franchisees who are coming to the conclusion that there is no future in continuing to pour more money into their stores in an attempt save their substantial investments.  At the same time, I am disheartened to hear that so many franchisees are operating under such severe financial strain that they are already dangerously behind in monthly obligations, in December nonetheless.  For those franchisees, anything short of closing their stores is simply a bad decision.  More on that later.

II.        Litigation Update.

Franchisees who have registered to pursue a litigation solution against Kahala-Cold Stone Creamery and or Robert Zarco should watch their email for a very important communication which will arrive shortly.  It is very important that you respond to the request immediately upon receipt.

III.       Kahala is in a Death Spiral.

Isaac Newton's first law of motion states that an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.

As I demonstrated earlier this year by way of the chart below, which was compiled from data reported by Entrepreneur Magazine, Kahala closed 815 stores during the three-year period from 2008 through 2011.   Of the nine brands listed, only Nrgize Lifestyle Café shows a positive growth pattern.  However even it shows substantial negative growth from 2010 to 2011.  Kahala’s two flagship brands, Cold Stone and Blimpie, have closed more than 700 stores combined during the same three-year period, according to the chart.  Cold Stone has closed 25% of its stores from 2008 to 2011.  Not to be outdone, Blimpie has closed 33% of their restaurants over the same period.  This is significant because according to the brands reflected in the chart, Cold Stone and Blimpie made up nearly 80% of Kahala’s restaurants in 2008.

In addition, recently, Cold Stone and Blimpie seem to make every “worst franchise” list published (here, here, here, and the list goes on).  Just earlier this week, Blimpie was among the franchises that was the subject of an article titled “4 Disappearing Restaurant Franchise Chains”.  The article offers this chilling account of the brand: “Out of 1,853 sub shops, the imploding chain now has 739.  Putting it another way, 60.1 percent of that franchise network is no more.”  To be clear, the article puts Blimpie restaurant closures at 1,114 over an unspecified period.

The industry has such a negative perception of Kahala that it led one commenter to state: “Blimpie is a Kahala brand and not the only one in trouble, so I'm not surprised at that one. . . .  (For Kahala we already have an adequate Cold Stone s*cks topic.)”  Little wonder this is the same company that could not sell franchises for more than six months for financial reasons, yet would like franchisees to purchase additional units.  Kahala is a company that fails at simple things.  For example, how does Kahala tout itself as “one of the fastest growing franchising companies in the world”, when its testimonial page only includes only three tepid narratives that fail to even insinuate they are having a financially successful experience.  It’s even more outstanding to me that one of the franchisees has just one year in the business.  Based on this webpage, it is easy to conclude that the company has very few satisfied franchisees.

I think it’s safe to say that at least since 2008, Kahala is in the midst of a death spiral.  So in Isaac Newton's world, Kahala is a 20 ton piece of space junk freefalling to the Namib Desert.  I submit to you that the only forces that have any opportunity of creating any opposing force is Kevin Blackwell and David Guarino.  However, I find these individuals so hopelessly inept and misguided that there is no chance of Kahala’s survival under the current management.  Point in case, in 2008, Kahala had a goal of operating 10,000 units in 2010.  According to the chart below, they operated fewer than 2,400 stores in 2011, a full one year after the goal target date.  In my view, it is nothing short of a complete failure for a management team to fall that far short of its goal.  If there are two more incompetent franchise executives than Kevin Blackwell and David Guarino, I would like to meet them.

In looking at Kevin Blackwell’s and David Guarino’s record just since 2008, do you have even a modicum of hope that either of these individuals possesses the skill necessary to stop Kahala’s freefall?  I argue that these are among the worst franchise executives in the industry attempting to turnaround one of the most rapidly failing franchising companies.  I believe they have no chance of even slowing, let alone stopping, Kahala’s death spiral.  Therefore, franchisees have no reason to have any faith in Kahala’s future.  Stated differently, every prudent Kahala franchisee should be planning their exit from the system, regardless of their restaurant’s profitability status.

Brand

2008

2009

2010

2011

Stores
Gain/(Lost)

Cold Stone Creamery

1,394

1,221

1,163

1,049

(345)

Blimpie

1,089

1,089

847

733

(356)

Taco Time

170

170

170

164

(6)

Samurai Sam's

70

63

49

37

(33)

Great Steak

190

190

133

122

(68)

Surf City Squeeze

151

151

121

122

(29)

Nrgize Lifestyle Café

47

71

105

99

52

Ranch One

25

25

17

15

(10)

Frullati Café & Bakery

52

46

37

32

(20)

Total




2,373

(815)

IV.       Cold Stone Continues It’s Old Tricks.

Kahala-Cold Stone Creamery recently polled franchisees to gauge their interest in attending an Annual Franchise Meeting (AFM) style gathering.  According to Dan Beem’s recent email, there was very little interest from franchisees.  Kahala’s failed attempt to revive the Las Vegas style AFMs was, I believe, an effort to reconstitute an effective unit growth model that Cold Stone has employed in the past.  As you may recall, in the early to mid 2000’s, Cold Stone’s AFMs were enormous gatherings.  General sessions were held in large ballrooms that were breathtaking in size yet virtually every seat in the room was filled. 

The place was crawling with Cold Stone executives like Doug Ducey, Sheldon Harris, Jim Flaum, Bruce Burnham, John Wuycheck, David Andow, Kevin Myers, Michael McGill and many more.  Each would parade onto the stage to the backdrop of blaring music one after another to have their spirited cheer at the mic proclaiming, for example, how Cold Stone was going to accomplish its BHAG: “to open 1,000 profitable stores in the U.S. by 2004.”  The AFMs were well orchestrated—professionally produced presentations held at what was the crown jewel Vegas hotels and casinos at the time.  Most importantly, the conventions did exactly what they were intended to do: excite the franchisees about a franchise that was quietly replete with unprofitable stores in a franchise company that had yet to be exposed as having a flawed business model.

Cold Stone’s past executives have something in common with Kahala’s current management.  Just like the executives of the past, Kevin Blackwell, David Guarino and Dan Beem are attempting to sell franchisees on the basis of a two-step process.  First, just as in the past, because franchisees are not profitable, management is not able to generate excitement by touting profitable stores.  Instead, like their historical counterparts, they attempted to encourage franchisees to purchase stores by painting a rosy picture of the future based on gimmick marketing initiatives.  In the past it was Red Pan, the new Cake Program, the new Shakes & Smoothie Program, etc.  Now it’s the Catering Program, New Cake App, Loyalty Program and all the other programs benefitting Kahala that are summarized in the NAB email.  Franchisees should take careful note that nowhere in the NAB meeting notes is franchisee profitability addressed.

These gimmick initiatives almost always have a common element: the increased use and or waste of sweet cream mix.  This leads me to believe it is all about driving up kickbacks.  Kahala’s three-tier compensation structure for its sweet cream mix (that I spoke of during my CNBC interview) clearly provides an attractive incentive for the company to drive sweet cream case counts.  Even if the ice cream ends up in the garbage, Kahala receives its kickbacks, royalties and advertising and the franchisee must absorb the food cost hit.

As I’ve often stated, I think nothing has been more caustic to franchisee profitability than Kahala’s excessive kickbacks.  I think it is the single most prevailing reason stores cannot turn a profit.  It is therefore the reason that such an enormous number of franchisees fail.  Among these failures are franchisees who have spent nearly $450,000 to open their stores and many who have invested well beyond that to keep those unprofitable stores open—all in a failed attempt to sell the franchise.  The informed public now knows that Kahala-Cold Stone Creamery has a serious profitability issue and that the company has one of  the highest failure rates in the nation, therefore the stores are extremely difficult, if not virtually impossible to sell in many cases.

Second, Cold Stone’s two-step process has relied upon a small number of franchisee NAB members who are used to carry management’s promise of better times just around the corner based upon messages that often only work to serve Cold Stone’s interest.  These messages are intended to condor an image of success and generate enthusiasm among the ranks of the franchisees.  Again, this has been a practice since the early to mid 2000’s, therefore this tactic is a decade old, yet franchisees are still waiting for better times and they only continue to worsen.  Though the strategy is the same, the faces have changed.  Gone are Rudy Puig, Frank Caperino and Edward Reesman.  In steps Chad Eads, Grant Hagen, Karen Harmon, Sam Harris and Joe Moos.  These are your new NAB members—your new messengers of a promise for a better future.

In the past, NAB members have been so Cold Stone friendly it’s unhealthy.  I have often felt their interest was in currying favor with the company.  I think this was confirmed when we learned that Cold Stone had paid at least $32,000 in back rent for Rudy Puig’s store and that Frank Caperino was allowed to sell his stores (can’t imagine who bought them, other than Kahala, and for what price) when other franchisees were forced out of their stores.

Historically, it appears that NAB members are opposed to aggressively challenging Kahala and demanding that the company immediately address its practices that put franchisees out of business.  Yet this group has always been able to do what Cold Stone could never do: speak to the franchisee with the voice of the franchisee.  Cold Stone knows that these individuals have a greater chance of promoting trust in the company’s future pie in the sky plans—even if they have failed miserably over the past decade.

I believe Cold Stone has a firm understanding that the NAB’s voice just might influence struggling franchisees to continue to dump cash they don’t have into their unprofitable stores.  Through the NAB, Cold Stone seeks to engage desperate franchisees in a fantasy that somehow if they are able to borrow just $25,000 more to last another six months, they just might save their nearly $450,000 investment.  I think they would like these franchisees to believe that those additional six months might just give these new ideas raining down from the Creamery Tower sufficient time to take effect and save their store, unlike the decade or so of ideas that preceded them and completely failed to turnaround unprofitable stores.

 

V.        If a Decade Is Not Enough—What Is?

 

A decade of Cold Stone’s failed initiatives proves that the NAB’s email should be ignored.  It is time to face the truth.  If Cold Stone had a solution for making its business model profitable, they would have implemented it years ago.  Therefore, struggling franchisees should not give Kahala another month, week or even day to extract kickbacks, royalties and advertising.  Franchisees must do what’s best for their family and immediately begin planning to close their stores.  There have been many NAB panels that have visited Scottsdale and returned full of zeal, only to later learn that they bought snake oil and worse of all, sold it to their fellow franchisees, perhaps unknowingly.  Oh by the way, did I mention that Rudy Puig, Frank Caperino and Edward Reesman—three previously seemingly faithful NAB members, are now being sued by Cold Stone?

 

Franchisees should tell Kahala they are out of time by simply closing their stores.  I am happy to assist you in that effort.  Please do not hesitate to contact me.

 

VI.       Conclusion.

 

Please contact me if I can be of any assistance to you especially in helping you close your store.  If I do not answer, please leave your name and a telephone number and I will return the call.  All information shared with me is confidential.  I will be in touch with you in the future.

 

Finally, if anyone is looking to sell a catering trailer, I know of a potential buyer.

 

Cecil Rolle

(352) 682-2101

cdrolle@cox.net

Litigation Update: November 21, 2012

posted Dec 26, 2012, 10:16 AM by Cold Stone Facts

November 21, 2012

Table of Contents:

I.          Introduction

II.        Invitation from NIACCF President “The Ken Mogle”

III.       This is Proof the NIACCF Remains Clueless

IV.       Robert Zarco and the NIACCF have Failed to Hold Kahala Legally Liable

V.        Close Your Store Before the Christmas Holiday!

VI.       Conclusion

Dear Cold Stone Creamery Franchisees,

The following statements constitute my opinion:

I.          Introduction

I want to take this moment to wish you and your family a Happy Thanksgiving.  Despite whatever you may be dealing with in your stores, I hope you are able set aside those challenges and enjoy time with your family and/or friends.

II.        Invitation from NIACCF President “[T]he Ken Mogle”

The NIACCF’s new president who refers to himself as “[T]he Ken Mogle”, has distributed an undated letter to franchisees via U.S. Mail.  In the letter he states that the NIACCF was “formed in the fall of 2010 by Franchisees and Area Developers, completely independent of Kahala/Cold Stone….”  He goes on to state that the organization’s original objectives are to: (1) pursue member benefits such as insurance, repair services, etc.; (2) “interface regularly with the Cold Stone Executive Team on vital topics….”; and (3) “[i]f necessary, to hold our franchisor (Kahala/Cold Stone) accountable for any and all legal breaches of the franchise agreement….”.  He then goes on to ask franchisees to join by having their bank accounts drafted $35 per month in exchange for membership.

Ken Mogle’s letter is proof that yet another spineless individual has been tasked with doing not what’s in the best interest of our franchisees, but carrying out the financial and defensive interests of Robert Zarco.

III.       This is Proof the NIACCF Remains Clueless

First Rudy Puig and now The Ken Mogle.

After more than two years in existence, the NIACCF is still begging for membership because franchisees recognize that any money put towards this organization is wasted cash.  Two plus years of operation and The Ken Mogle has the audacity to claim that the NIACCF’s objective is to “interface regularly with the Cold Stone Executive Team” when by their own admission, after only one meeting, Kahala-Cold Stone Creamery refuses to have further discussions with them and that attempts to engage the company have “fallen on deaf ears…”. 

The NIACCF is unable to attract a meaningful membership because franchisees can see that this is a troubled organization that has historically carried out the interest of Zarco and Kahala-Cold Stone Creamery at the expense of our franchisees.  Now those same franchisees are being asked to fester up $35 per month per store to finance Robert Zarco’s failed legal efforts.  Franchisees have no interest in paying $35 per month to finance Robert Zarco’s lifestyle.

IV.       Robert Zarco and the NIACCF have Failed to Hold Kahala Legally Liable

The Ken Mogle further sites one of the NIACCF’s objectives as to hold Kahala-Cold Stone Creamery legally liable if necessary.  The NIACCF has already attempted to hold Kahala-Cold Stone Creamery legally liable, if only for a declaratory judgment.  They have suffered failure after failure NIACCF litigation and in fact, Kahala-Cold Stone Creamery has been on the defensive.  Moreover, Robert Zarco’s firm’s performance raised questions from the court, which in my mind, raises concerns as to the effort that Robert Zarco is putting towards winning this case. 

 

As many franchisees know, following Zarco’s initial assault, some, including those in the legal community, implied that Zarco may be working for the Kahala-Cold Stone Creamery, not the franchisees.  (Cold Stone Creamery has been accused in the past of influencing dual representation of franchisees.)  Those cries grew in volume after Zarco’s CNBC interview during which, he clearly threw his own clients under the bus while representing the interest of Kahala-Cold Stone Creamery.

 

After listening to Zarco’s words, who would say he wasn’t representing Kahala-Cold Stone Creamery?

V.        Close Your Store Before the Christmas Holiday!

I have spoken with numerous franchisees in the past two weeks who are attempting to close their stores before the Holidays.  It’s the perfect goal in my opinion.

Cold Stone has such a defective business model that they are challenging to operate even during the warm weather months, let alone the cold weather months.  However the Holidays are especially challenging I think for two reasons.  First, the fall holidays are such joyous occasions.  Thus the emotional stress associated with operating a Cold Stone store during this time of the year conflicts with the spirit of the Holidays and can therefore easily sap one’s energy.  I talk with a large number of franchisees and the consensus is that being a Cold Stone franchisee dampens the Holidays.  Second, with the exception of theatre and perhaps other specialty stores, this is a particularly challenging time financially.  This is only exasperated by demands for cash due to gift giving.  Finally, the prospect that the franchisee faces several more months of the financial strain before customers begin to trickle back into the stores, is financially devastating.

Several of the franchisees who I have recently advised on closing their stores mentioned that they had loans lined up to get them through the cold weather months.  All were borrowing from family but two mentioned that they had previously borrowed from the same family member earlier and hadn’t repaid those loans.  Most admitted that family members were growing tired of their borrowing and that those same family members were encouraging them to close their stores.  Each of the franchisees with whom I broached the subject, were already behind on their rent, food, sales taxes loan obligations and or other expenses.

It is time to break the cycle and there is no better time than the Holidays to do it.  Imagine how nice it would be if come Christmas, your stores were closed and you were able to relax with your family without worrying about your landlord, utilities, payroll, Sygma and other expenses throughout the winter.  Sure you will have some loose ends to tie up after closing your store, but that will likely be a chip shot to operating a losing store throughout the winter—especially when you are keenly aware that the end is near and you really have no real hope of making it.  Kahala-Cold Stone Creamery is going nowhere but down in my view.  It is more productive to take a step in the right direction by closing your store and begining to reconstruct your life.  Your Holidays will be enjoyable and you will be one step closer to recovering your life and your freedom from Kahala-Cold Stone Creamery.

Set a goal right now to close your store before the Christmas holiday.  I am happy to guide you through this process.  It is the only sensible solution to all the sleepless nights, worry and the stress that comes with operating one of these Cold Stone stores.  But the first step is making the commitment and then picking up the telephone to contact me.  I am happy to assist you and guide you through the process.

VI.       Conclusion.

Please contact me if I can be of any assistance to you.  If I do not answer, please leave your name and a telephone number and I will return the call.  All information shared with me is absolutely confidential.  I will be in touch with you in the future.

Cecil Rolle

(352) 682-2101

cdrolle@cox.net

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