Some US stock market investors must be feeling fat and happy after their Dunkin’ Donuts shares rose 47% on their first day of trading. I wonder what will happen after their donut-induced sugar high wears off a in a few weeks. The reason that I’m throwing a little water on this fire is because of what happened a few years ago to another donut franchise;
Do you remember Krispy Kreme?
Krispy Kreme’s woes were blamed on super-fast expansion, (in franchising, that’s almost never a good thing) and rather aggressive accounting practices. Shares are down almost 15% from their first-day closing price and off 83% from their all-time high.
It’s pretty easy to find information on the Krispy Kreme headaches. One thing that contributed to them was the sudden appearance of Atkins-style low-carb diets. Read
Of course, an informal investigation into Krispy Kreme’s franchise repurchase program didn’t help matters too much either. Read the USA Today post.
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And, it’s not like some of the Dunkin’ Donuts executives haven’t had a few court appearances themselves.
So, do you think that buying some Dunkin’ Donuts…the stock, folks…….makes sense?
Are you about to buy a franchise?
Do you feel that you may have missed something?