Surfer Rides Wave To Franchise Success

A passion for fitness and some great smoothie recipes started Kevin Blackwell on the path toward his billion-dollar worldwide franchising business 20 years ago.

Blackwell was a surfer and triathlete. Surf City Squeeze, which he started on the beach in San Diego, gave him a way to make a living while surfing and training to run competitively.

A few years later, when Bally's Total Fitness offered him the chance to open his smoothie shops inside three Arizona gyms, he was bitten by the franchising bug. Bitten hard.

advertisement Blackwell's Scottsdale-based Kahala Corp. now is parent to well-known brands such as Cold Stone Creamery, Blimpie and Samurai Sam's Teriyaki Grill. His vision is to have 10,000 franchise stores worldwide by 2010.

The privately held company has been in Scottsdale since 2000 but kept a low profile until May. It then made headlines after acquiring Cold Stone, the popular Scottsdale-based ice-cream franchiser.

Kahala has been quiet about its plans until recently when Blackwell, the chairman and CEO, took time out to answer questions about the future of Kahala since the acquisition of Cold Stone.

Question: Has merging the staffs and cultures of Kahala and Cold Stone been difficult? Answer: Bringing the two teams together has been exciting. Both Kahala Corp. and Cold Stone Creamery had strengths that complemented each other, and both companies brought a wealth of talent. Today, we have 250-plus team members dedicated to reaching the vision of 10,000 units (franchise locations) by the end of 2010.

Q: Tell us about the name Kahala.

A: Everyone asks about it. The name Kahala originates from visits to a favorite beach in Oahu, Hawaii, where my family enjoys surfing, relaxing and rejuvenating. While it may sound cliche, my mind is often its clearest when spending time with family and friends in beautiful and inspiring locations like Kahala Beach.

Q: When Kahala bought Cold Stone last May, you took the role of chairman and chief strategist. Now you are CEO. What made you decide to take a more active role? A: When Kahala and Cold Stone Creamery joined forces, it always was our intention to combine the best of each company. That meant capitalizing on Cold Stone Creamery's brand-building expertise while embracing Kahala's vision for growth. Kahala Corp. had the option to change management and did so as the new structure evolved.

Q: Will you keep the name Kahala-Cold Stone? A: We are operating as Kahala Corp. When Kahala and Cold Stone Creamery combined, the name Kahala-Cold Stone was used to energize both companies. Today, however, we're operating as one cohesive unit. Using the name Kahala Corp. simply makes the most sense.

Q: What personality characteristics make for a good franchise owner? A: Obviously, an entrepreneurial spirit is essential for a franchisee's success. I always like to tell our franchisees that you are in business for yourself, not by yourself. The best franchisees are personally motivated to succeed, and they love the products.

Q: What caveats do you have for inexperienced businesspeople who might want to try running a franchise? A: I began my career running Surf City Squeeze stores and did everything from managing employees to mopping the floors. At the end of the day, the success of the business depends on the owner. People who choose to go into franchising need to be aware that owning a business is hard work. Franchisees who are present and active in their stores become the most successful business owners in our system.

Q: Cold Stone has made global strides in the past several years. Will any of the other brands be going global as well? A: In 2008, we anticipate growing our international footprint by opening over 120 stories in 12 countries . . . Blimpie, Samurai Sam's Taco Time, Great Steak & Potato and Surf City Squeeze.

Cold Stone heads to Scandinavia Scottsdale-based Kahala Corp. will take its Cold Stone Creamery brand into Scandinavia during the next five years with at least 40 stores in Denmark, Norway, Sweden and Finland, company officials said.

Kahala said it will partner with a company called Cold Stone ApS. "They are incredible retail operators," said Lee Knowlton, Kahala's international president.

Kahala said the majority shareholders of Cold Stone ApS are also the majority shareholders of Choose Holdings, which is the largest Build-A-Bear operator in Europe.

The two companies intend to open their first store at Tivoli Gardens in Copenhagen, Denmark later this year.

Kahala also has partnered with other companies overseas to open Cold Stone stores in Japan, South Korea, Taiwan, China, the United Arab Emirates, Bahrain, Indonesia and Mexico. The company says it plans to open 120 new stores in 12 countries in 2008.

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