As Mrs. Fields Famous Brands LLC publicly warns that it may need to file Chapter 11, its CEO has simultaneously assured franchise owners that he and the company are committed to supporting them during this time of network turmoil. Mrs. Fields Famous Brands LLC warns that it will file Chapter 11 within the next two months if it cannot persuade note holders to cut $145 million in debt by the end of June. CEO Steve Russo reassures franchise owners of both Mrs. Fields and TCBY frozen yogurt, saying, “We will take every measure to ensure that it is business as usual for them during this period.”
Comforting words.
Some analysts argue that it would have been better for the franchisor to invest royalties and revenues directly into improving franchise unit operations instead of a strategy of using $200 million in debt that has the company paying twenty million or more in just interest costs. That’s pretty expensive when revenues are just $98 million.
There are many questions about the dynamics of this franchise system.
How did this large franchise network of owner-operators and corporate executives allow themselves to get into this predicament? Are there just a few senior officers in a bubble and their appointed outside advisors that can easily make strategic mistakes? Or is this a collaborative corporate culture? And would such a culture between small business operators and corporate executives of franchise systems make any difference in the current outcome?
Logo from Mrs. Fields.
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