Ben & Jerry’s Bitter Crunch

Disgruntled franchisees say not long after, the trouble started as Unilever began rapidly expanding its newly acquired brand. Chief executive Walt Freese says that when the expansion started in 2003, the market for ice-cream shops looked strong. Between 2003 and 2006, the number of stores Ben & Jerry's competes with tripled. Other brands, including Cold Stone Creamery and Marble Slab, flooded the marketplace. But overall ice-cream sales remained relatively flat. Last year 38 of Ben & Jerry's 456 North American shops, or about 8 percent, closed their doors. That compares with 71 Cold Stone Creamery shops that shut down, or about 5 percent of the total.

Many Ben & Jerry's franchisees have no complaints, and say that a vocal minority of unsuccessful owners are attacking the company for their own failures.

Meantime, Ben & Jerry's officials say they are taking measures to help struggling shop owners stay in business by waiving royalty fees, helping to renegotiate store leases and increasing marketing support. "It is Ben & Jerry's ethic," CEO Freese says, "how we believe in treating each other." Lesson to "socially conscious" companies: charity begins at home.

© 2007