A Sam’s Club customer with first-hand knowledge of how private equity affects franchisees took the opportunity to teach a lesson in the frozen food aisles.
Creator Tiffany Cianci, covered by the New York Times in January for her battle with a private-equity firm, used a Pillsbury box of cinnamon rolls with a Cinnabon logo on it to illustrate the dynamics she sees at work.
Specifically, she used it on her TikTok account (@tiffanycianci), using the slogan, “Just a mom & her slingshot, fighting against all odds!” The video went up this past Saturday, generating more than 56,000 views to date.
The video starts with her saying, “So I’m standing in a Sam’s Club and I want to show you what private equity greed in franchising really looks like.
She then explains, “Because when they first get in, they immediately seek to extract additional revenue. The problem is the only way you can get more revenue is from the franchisees. And after a certain point, the franchisees can’t bear any more loss. So they’ll start looking for other ways to get money by circumventing the franchisees and all you have to do is look at situations like this.”
@tiffanycianci #PrivateEquity and Alternative Revenue Extraction metgods that harm #smallbusinesses #Franchisees. Dikuting the pool pf potential revenue for franchisees that already run slim margins is a kick in the teeth to hard working franchisees everywhere. @Cinnabon @Krispy Kreme @Cold Stone Creamery @Carvel Ice Cream #FightPrivateEquity #supportsmallbusinesses #richstayricher #FranchiseesNeedHelp #wealthgap ♬ original sound – TiffanyCianci
That’s where the box of cinnamon rolls enters the conversation.
“See these Pillsbury Cinnamon Rolls? See how that says Cinnabon right there? You think there’s a single Cinnabon franchisee on earth that wants Cinnabon cinnamon rolls available in a grocery store?”
She goes on to say, “But you have to understand that a Cinnabon franchisee is only paying 5% back to the corporate office and the corporate office is getting 100% of those licensing fees.”
She then went on to cite other companies with similar arrangements with grocery stores, like Carvel, Coldstone, and Krispy Kreme.
“That’s what happens with private equity gets involved and they started looking for ways to extract additional revenue,” she concluded. “Not only do they circumvent the franchisees to get more revenue, but they have harmed them in the process.”
Commenters had thoughts.
“How is that not brand dilution?” someone wondered.
Cianci was ready, saying, “It absolutely dilutes,” before specifying, “The individual values of their intellectual property.”
Another asked, “Do you have any data to support the hypothesis that this harms franchisees? Has anyone ever canceled a trip to Cinnabon to buy this instead?”
She responded, “There have been multiple litigations filed after a significant [drop] in revenue subsequent to grocery placements. The statistics [are] staggering.”
Someone else wondered, “Can’t franchises sue?”
Cianci, drawing from her experience as a franchise owner of The Little Gym, as chronicled in the Times article, reported, “You can, but you’re up against insurmountable odds. When I sued for retaliation, they spent 3,000,000+ dollars to destroy me.”
The Daily Dot has reached out to the creator via TikTok comment and to Cinnabon via email.
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Source: https://www.dailydot.com/news/sams-club-pillsbury-rolls-hurt-cinnabon-stores/