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.
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?