Krispy Kreme mule will be allowed to continue operating
facebook.com
facebook.com
"Hi everyone, here is the next important update! I am pumped to announce that I will be able to continue the business soon, and have the support of Krispy Kreme. They want to ensure I become an independent operator and make sure the brand is represented well. On both ends, there are things that are being worked on right now to achieve that as this is being made as a special exception. But nonetheless, we can get started up again soon once certain things are in place."
Seems like confirmation that this was most likely about trademarks and representation.
Besides the geo-arbitrage, it seems obvious that a huge part of this guy's success was going to 8 different Target parking lots, and splitting the (pretty small) total across them.
Simple envelope math: 100 boxes across 8 lots, that's 12 boxes per lot. Pretty horrible if you're a franchisee, but nice and comfortable if you're a college kid looking to earn extra bucks.
If KK can be flexible with him ("here's a regulated supply, you guarantee and agree to certain food safety/brand provisions, now you can drive around like an ice-cream man and sell this"), it's likely he can continue, but if he's diving headfirst into a typical franchisee arrangement, he should run for the hills.
Crowdfunding is about making people know you and being personal, he got that now. It is not like he would be getting filthy rich never have to work again from that. It is his sudden chance to get a bit better business, so he is trying.
There's a playbook.
There was one post where he talked about how much money he was spending on one of his businesses and for a pretty simple web app it was astounding. Like the exact kind of stuff you see big businesses blowing money on but it’s just one guy.
> Hi everyone, here is the next important update! I am pumped to announce that I will be able to continue the business soon, and have the support of Krispy Kreme. They want to ensure I become an independent operator and make sure the brand is represented well. On both ends, there are things that are being worked on right now to achieve that as this is being made as a special exception. But nonetheless, we can get started up again soon once certain things are in place.
> This being said, I am definitely going to need a bigger vehicle with how much this has grown over the past few days. I know a couple of you have asked about a GoFundMe. I decided to create one because I won't be able to cover the costs on my own I realize. Any donation would mean the world to me, no matter how small. Maybe I can decal it with some donut stickers! I am happy that things turned out positive, and this can continue to strive and grow over the next couple of years. I've said it before, and I will say it again. Thank you from the bottom of my heart to everyone that has supported me on this journey.
[1]: https://www.facebook.com/pg/KrispyKremeRunMinnesota/posts/
I hope everything works out for donut man.
I run a very small scale resell operation and I do my taxes myself.
I commented on the previous post that broke this story, pointing out just how many youth fund raising activities had been doing exactly this for ever. And I really admired the guy and his repeated efforts to make some money for school. This is the classical lemonade stand incarnate. He warmed my heart; big business KK pissed me off.
Day two rolls around. Things are proceeding. An agreement has been struck, and he's soliciting the equivalent of seed money to meet the new anticipated demand. Whereas yesterday I could have seen some additional students using their small cars to also deliver donuts if a) they're willing to put in the effort and b) there's enough demand, today that seems less likely. The sophomore across campus now has to compete against the capital gifted to this guy as well as his "special arrangement" with KK. So, some form of "big business" wins again.
I guess the local health officials will choose to look the other way, as they do when a kid sets up a lemonade stand, at least until someone files a complaint.
https://www.npr.org/sections/thetwo-way/2016/08/29/491824957... [2016]
KK can also just be real dicks and tell the cops about him, and bribe them with, ha, donuts.
https://web.archive.org/web/20110603025320/http://blogs.sfwe...
https://archives.sfweekly.com/thesnitch/2011/02/14/mission-i...
Back in 2015 a little burger shop sues a little known company for ferrying burgers across the Stanford campus.
https://www.mercurynews.com/2015/11/12/in-n-out-burger-sues-...
The suit settlement did shut down Doordash from gray-marketing In n Out.
There are no Krispy Kreme stores in Chiang Mai but the people in Chiang Mai seems to prefer it over other Doughnut shops in the city. So, when locals fly up from Bangkok to Chiang Mai it is fairly common for them to take up a few boxes of Krispy Kreme for their friends and family.
Kristy Kreme undervalued their product, which made it ripe for arbitrage. If not this student, it would have been Uber Eats or some other delivery service.
Retail: the sale of commodities or goods in small quantities to ultimate consumers
I think maybe he was just using the Krispy Kreme branding or trademarks.
Instead, they totally screwed the pooch and hurt their brand, their customers, and the hard working college kid aspiring for the American Dream. Way to go, Krispy Kreme.
I can totally see KK's side of this problem. It's sad to say in the scope of modern society, but how can you trust that this kid is actually selling you legitimate (and, without getting off track, unadulterated) Krispy Kreme donuts when he pulls up in your town?
What damage would this do to the brand if the person turned out to be a bad actor? If you were the CEO of Krispy Kreme, would you err on the side of caution and stop something before it gets out of hand?
A good friend of mine is a restaurant owner and he has a similar gripe about GrubHub and delivery services of this ilk. They bring the food cold, late, and mangled and now the restaurant's reputation is damaged instead of blaming GrubHub for how it was treated in transit.
Fair point, but people already trust strangers to deliver their food by using GrubHub, Postmates, Uber Eats, etc.
Anyway, maybe the "right thing to do" for KK was not to just turn a blind eye and ignore the whole thing, but one can't help but suspect that they could have found a better way to deal with this, that would have been more of a "win-win". Worst case, buy the kid off behind the scenes, pay him to appear in an ad or two, and then quietly shut down his service. Surely they could have some up with something that didn't portray this "$BIGCORP uses it's army of lawyers to smash the little guy" pattern...
Sure, it's brand-damaging as well, but we all have short memories these days when it comes to the Global TCP/IP Outrage Generator.
It probably would piss off the franchisees too. They're the ones that paid big money for exclusive sales territories and (contractually) don't want those boundaries crossed by others.
Can't have it both ways I guess, although I am probably most often on the side of those who see opportunity that tendency has come back to bite me at times.
> He’d established a friendly relationship with Mary Paredes, the manager of the Krispy Kreme in Clive, Iowa, who admired his entrepreneurial spirit and would have the doughnuts ready when he arrived
Hell yes, a guy who buys 100 boxes off you every time he shows up is a guy you want to work with.
The issue is that this is obviously not controlled by KK, including when it comes to using their trademarks.
IMO, their classic glazed rings are the best glazed rings you can get anywhere.
All their other options are garbage. The creme they use in their cream filled donuts is disgusting.
I can't stand KK's, Tim Horton's, or Grocery store donuts. They're all horrible. I'm in utah now, and around 2200/state street in Salt lake has an amazing donut shop as well...
All hole in the walls, mom/pop shops. Corporations make horrible donuts. period.
"pączki are made from especially rich dough containing eggs, fats, sugar, yeast and sometimes milk.
...
The traditional reason for making pączki was to use up all the lard, sugar, eggs and fruit in the house, because their consumption was forbidden by Christian fasting practices during the season of Lent. "
The stores left the area after 6 years. Sounds like they should’ve downsized instead of left the area completely.
Done.
How in the hell would Krispy Kreme be responsible for this guy reselling doughnuts? He's literally filling a niche market that the company chose not to fill.
Their agent, the franchisee, has actual knowledge of his intent for the 100 boxes of donuts he routinely buys. Now that they know that, they can't un-know that.
There's a real risk that, in the event of a controversy, serious people will not describe this as "a niche Krispy Kreme chose not to full" but "the mechanism by which Krispy Kreme chose to fill the niche." Which is not totally unfair; their agent is taking active steps to facilitate this.
If I buy some waffles from the (definitely not sanctioned by any corp) random waffle stand next to the local bar who do I blame with the syrup is bad? Not Aunt Jemima, I blame the guy running the waffle stand.
Same if I go to Walmart and buy bananas that turn out to be rotten. I don't blame whoever grew the bananas, I blame the local Walmart.
If you don't trust that the kid is selling legit donuts then don't buy from him, its pretty simple. I don't think KK should have any say in the matter, hes just buying donuts. What he does with them after that is none of their business as far as I am concerned. You can buy and resell anything you want if the market for it exists.
I've noticed I see less of that now, as the number of stores has gone way up and novelty of importing the cool rare donut has worn off. But I still see it a little. If food safety were ever an issue, this company would have died a long time ago.
https://s3.amazonaws.com/Fundraising_KKD/2015KKCIFUNDRAISING...
I wouldn't even be worried about intentional poisoning - just pathogens introduced by improper food handling.
In a "rogue donut man" scenario, I think Krispy Kreme would do fine because it already has employees or contractors who talk to the press and argue with the public on corporate social media.
As for your friend's opinions about grubhub, if his restaurant is a similar size to Krispy Kreme - i.e. international franchise, over $500 million revenue - then I could have an easier time imagining that his fears align perfectly with the fears of c-level execs at Krispy Kreme; right now I just don't know if your friend really reflects the conciousness of Krispy Kreme's high-muck-a-mucks because I don't know if the two companies are equally vulnerable to internet slander.
And when something goes wrong, anyone could blame the donut shop. It doesn't matter if those people are right or wrong -- the donut shop could lose business either way.
What do you mean by this?
I assume you’re not into drugs - I’m not either - but no one is sneaking free cocaine into donuts, I guarantee it
Liability
They are so obsessed that something could go wrong it takes a team of lawyers.
I hope they can’t stop him. That would be really nice.
And no, they shouldn't be able to use trademark law against him, any more than Microsoft should be able to stop me from selling legitimate new-in-box copies of Windows or Office on eBay.
https://www.marketwatch.com/story/rise-and-fall-of-biggest-k...
https://en.wikipedia.org/wiki/Krispy_Kreme
>Krispy Kreme also had supermarkets and gas stations carry their donuts, which soon contributed up to half of the chain's sales, creating further market saturation as well as increasing competition to its franchisees. All this expansion devalued Krispy Kreme brand's novelty, by making the once-specialty donuts ubiquitous, particularly as the newer sales outlets required pre-made donuts as opposed to the ones made fresh in factory stores, which alienated brand devotees.
>Besides royalty payments from new stores, the parent company also enjoyed significant profits by requiring franchisees to purchase mix and doughnut-making equipment from the parent's Krispy Kreme Manufacturing and Distribution (KKM&D) division. KKM&D earned $152.7 million in 2003, which made up 31 percent of sales, with a reported operating margin of 20 percent or higher, but these mark-ups were largely at the expense of its franchisees.
>Krispy Kreme has been accused of channel stuffing by franchisees, whose stores reportedly "received twice their regular shipments in the final weeks of a quarter so that headquarters could make its numbers".[9] The company was also dogged by questionable transactions and self-dealing accusations over the buybacks of franchisees, including those operated by company insiders.
If it were me, I'd jump on the bandwagon and create some mule services to help grow mules to markets where Krispy's aren't delivered.
It is very plausible that the playbook is excessively limited and excessively costly because of regulatory capture by competitors, because of excessive loss aversion, or because society weights preventing risk-adjusted botulism outbreaks incorrectly against the societal good of an expectant mother being able to eat a donut, but none of those arguments against the playbook are responsive to the brute fact that the playbook exists and that you must follow it or be sanctioned.
Additionally, and Dangerous Professionals will love to remind managers of this: after you have been told the playbook exists, your risk of sanction if you ignore it _increases markedly_, particularly if you do something like cite any of the above rationales as a reason to _ignore_ the playbook.
The risk of foodborne illness on an unopened box of fresh, less than half-day old deep fried sugar crusted doughnuts has got to be stupendously low.
Krispy Kreme literally sells older doughnuts on the shelves of gas stations and grocery stores.
And furthermore, managers at a Krispy Kreme franchise aren't running an abstract game theoretical calculation based off of input from pastry lawyers, they're saying: "cool, $1200 in sales every Saturday!"
When I was in scouts we'd do the same thing: load up the back of the SUV or pickup with boxes, drive street to street, walking door to door selling them to fund summer camp.
Grocery stores are an example. They're professionalized infrastructure! The regulator knows their safety record individually, as a class, and feels regulatory-warm-fuzzies over knowing that there is a named individual at the store responsible for food safety and who files a report weekly saying "Story this week same as the last week; we checked everything you want checked and there were no anomalies, because we made it so."
He's not their employee after all and the playbook does not apply. If there is a food safety issue, it will be on that kid, not the donut shop.
Some people would still blame the donut shop.
The first sale doctrine extends to trademark protections as well, if I buy a thing with a trademark on it, the trademark owner cannot stop me from selling it with that trademark on it.
I don't really know how clearer it can be, that's exactly what they did, and it's totally enforceable because he's calling himself "Krispy Kreme Run Minnesota". Not "2nd Hand Donut Run" or "Donuts R Us".
He's passing himself off as associated with the company. Whether he realises, or intended to, or not. I don't believe he did, but you can't call yourself a name with a branded trademark and be surprised when they shut you down.
Imagine if a bookstore opened calling itself "Amazon Bookstore" with a facebook page plastered with Amazon packaging, just like this guy has done? Think that'd stay open long?
You can say "Nope" again, but you're still wrong.
win win and all that.
My hunch is this has much more to do with franchise laws and boundary enforcement.
And just to reiterate: I'm not necessarily saying that "turn a blind eye" would have been the right response from KK. I'm just suggesting that it would have been possible to construct a scenario that would have been more favorable to everybody.
it seems like maybe they're using the streisand effect to their benefit here - i wouldn't have heard about the original story if not for the controversy. they get the "people want our product so bad they're breaking rules to get it" headlines while also shielding themselves from any potential legal or food-safety issues by being loudly on-record as saying not to do this.
https://www.wfsb.com/krispy-kreme-strikes-deal-with-college-...
As a non-customer I now just think of Krispy Kreme as jerks. And the kind of business people who hate making money.
They would have to add some sort of management structure, make sure he was up to hygiene codes, incorporate the new model in their finance and admin, produce risk assessments, have meetings, do a ton of work I can't even think of.
It would cost them $100,000s, for a few $1,000 revenue.
That they've been forced to adopt him because of an online backlash is an indictment of the irrationality of the internet, not a bad mark against the totally reasonable, and rational, decision an employee made.
And now you're calling for him to be fired. Sad.
Fire someone, reduce bonuses, perhaps a stern look at the next regional meeting. Figure it out people. Good grief. Companies complain about slow revenue growth while leaving obvious money on the table. This example was a business refusing a $1000 or similar per month. That might not be much to you, but I'm fairly sure a franchisee would notice that. $12k/year is measurable for most small businesses even if you wouldn't even notice that amount.
I worked with a guy from Poland who worked for a company in Austria which was based in Monaco. He just got back from Spain after being in France for a while. When he came here to Canada he was shocked at the lack of corner bakeries. It's so common to pop into a corner bakery for a croissant or sandwich made fresh that morning or afternoon.
In Canada the Tim Horton's coffee and doughnut shop is a giant. It has four times as many store per capita than Starbucks in the US.