“If you look at the portfolio, you could basically build an entire food court with all the brands in Kahala Cold Stone,” Kevin Blackwell, founder of Kahala, told the Associated Press.

Blackwell is the new company’s chairman of the board and chief strategist. Ducey handles the CEO role.

Franchisee Relations

Ducey says the franchisee community on both sides is ecstatic about the merger.

“[This] provides benefits to our franchisees in terms of leverage and purchasing power, and growth potential,” he says.

It’s too early to tell how Kahala Cold Stone will impact franchisee operations, but Ducey hopes to carry over Cold Stone’s strong communication philosophy and outreach system.

“If somebody’s getting the service they believe they deserve and they’re making the money, [things] very rarely result in a lawsuit,” he says. “But if someone is not feeling the love, is not feeling the service and support that they believe their royalty provides them, that causes resentment and frustration, and we’ve been very good about [avoiding] that.”

Despite its success, however, Cold Stone has not escaped franchisee lawsuits. According to its April 2007 Uniform Franchising Offering Circular, Cold Stone faces four separate franchisee litigations, two of which franchisees complain their stores were wrongfully terminated. The company says it intends to vigorously defend itself.

“We have an excellent relationship between franchisor and franchisee,” Ducey says. “Of course, we have our fair share of issues. You always do in this business, and we are very proactive on these.”