The Silver Tsunami: Issue No. 005

Welcome to The Silver Tsunami. Every Thursday: the biggest stories in America and the lore behind them. We break it all down on our podcast every week. Let’s get into it.

Crumbl built a $1 billion cookie brand in six years. This August, according to an internal company document reviewed by Restaurant Business, its sales were 70 percent lower than two years earlier. Foot traffic across its more than 1,000 stores fell 32 percent year over year, per Placer.ai, and at least 57 stores have closed this year. The CEO told franchisees the buck stops with him.

The replies to Eric's post split into two camps: people who love the cookies, and people who own the stores. The second group is the story.

The brand and the business are not the same thing. By the brand's measure, Crumbl is still a giant: system sales reached about $1.3 billion in 2025, Fast Company reports. By the owner's measure, it looks different. Crumbl's average annual store sales fell from about $1.84 million in 2022 to $1.14 million in 2025. And the profitability data has a wrinkle worth understanding: Crumbl's original 2025 disclosure reported median store net profit below $80,000, but the company later said that figure was a miscalculation and amended the median to $223,236. The 2026 disclosure removed store-profit figures altogether. Behind those numbers are franchisees who put substantial personal capital, guarantees, leases, and years of work behind the brand.

Then the company asked them to spend more. Franchisees were asked to put $30,000 to $50,000 into equipment for a new line of dirty sodas, with company projections of $20,000 to $70,000 in added sales per store per year. Instead, CEO Jason McGowan later called August's Soda Week "the worst week in company history."

And the exit can be expensive. Restaurant Business reports that Crumbl has stopped approving additional early closures, and that franchisees who shut down without approval may face liquidated damages under their agreements. In other words, an owner losing money cannot assume the remedy is simply to turn off the lights. The contract can make leaving costly too.

It is not just cookies. In late September, Starbucks closed roughly 250 North American stores that it said were not delivering acceptable results, including one in St. George, Utah. Eric shared a developer's account of building a Starbucks there, by his count about his 12th. The brand made a portfolio decision after roughly 19 months. The developer still owns a building whose economics now depend on what the lease says and what happens next.

The lawyer's read. The FTC's Franchise Rule generally requires that a prospective franchisee receive the disclosure document at least 14 calendar days before signing a binding agreement or paying the franchisor. Start with Item 17, for renewal, termination, and transfer rights. Item 19 is where any financial performance representation the franchisor chooses to make must appear; read the median and the population behind it, not just the average. Item 20 shows system growth and turnover (openings, closures, transfers, terminations) and gives you current and former franchisees to call. It tells you what happened, not why. Item 21 contains the franchisor's financial statements. Then read the franchise agreement for four things: what you owe if you close early, whether you signed a personal guaranty, whether the lease is in your name, and how much new equipment or remodeling the franchisor can require. That last category is where a $30,000-to-$50,000 equipment mandate suddenly matters.

Where we land. Eric put the alternative in one line this week: people are begging to pay a plumber who answers the phone and actually shows up. An independent business has no famous logo to lean on, but it also has no franchisor collecting royalties, mandating a soda machine, or treating an early shutdown as a breach of the franchise agreement. That is not a ranking. It is a different set of risks, the same lesson as last week. A billion-dollar brand can be a fine business to own. It is just a different question.

One provision a week, from people who draft them for a living.

This week: "business time" and "best efforts."

Mike Tomlin coached the Steelers for 19 seasons without a losing record. On October 1, months after stepping down, he revealed a Minecraft city he has been building for more than 12 years, a hobby he says started as a way to spend time with his kids. The internet immediately did the obvious math against Pittsburgh's playoff drought. Eric did too, then walked it back. A hobby is not evidence of neglect: nobody outside the building knows how Tomlin spent his time, and his contract terms were never made public.

But it raises a real drafting question every buyer should care about: what exactly does a person owe you in time? The standard language looks like this:

"Executive shall devote substantially all of Executive's business time, attention, skill, and best efforts to the performance of Executive's duties."

Two phrases do the work. "Business time" is not the same thing as every waking hour; an outside hobby ordinarily is not a breach on its own unless it interferes with the person's contractual duties. "Best efforts" is trickier. Lawyers often negotiate "best," "reasonable," and "commercially reasonable" efforts as though they sit neatly on a ladder, but courts do not interpret those labels uniformly. If the distinction matters, define the conduct, deadline, or benchmark instead of trusting the adjective.

Where this shows up in small business deals. In a seller's transition or consulting agreement after closing. In an operator's employment agreement when investors back a searcher. In an operating agreement when one partner runs the business and the others write checks. In each of those, the person's time is a big part of what you are paying for.

What to do about it. Replace adjectives with numbers and deliverables. A seller who agrees only to "use best efforts to assist with the transition" has promised an elastic standard that may be difficult to enforce cleanly. A seller who will be available up to 20 hours a week for 90 days, introduce the buyer to the top 25 customers, and train a named employee on estimating has promised something you can measure. Then list what is allowed: board seats, passive investments, charity work. Carve-outs prevent fights. Vague clauses start them.

Same question to Grok, ChatGPT, and Claude: Is buying a franchise a better bet than buying an independent business? One word, then three sentences. Answers are verbatim.

GROK: NO. "A franchise buys you a brand and an operating manual, but it also locks in royalties, advertising fees, and franchisor control that permanently skim cash flow an independent owner keeps. The failure-rate edge franchises advertise shrinks once you adjust for survivor bias and the fact that many independents fail from operator incompetence, not the model itself. For a buyer who can actually diligence customers, margins, and the seller, an independent business is usually the higher-return bet because price is negotiated on real earnings and nothing is owed to a corporate parent after close."

CHATGPT: NO. "Franchises can reduce execution risk through a proven brand, systems, training, and supplier relationships, but you pay for that protection through franchise fees, royalties, restrictions, and less strategic flexibility. A strong independent business bought at the right price can offer better margins, more control, greater upside, and fewer constraints, although it may require more operational judgment from the buyer. The better bet is usually the business with durable cash flow, defensible economics, a capable management structure, and an attractive purchase price, not whether it has a franchise logo."

CLAUDE: NO. "A franchise sells you a tested system, but you pay for it every month in royalties and give up control over pricing, suppliers, required upgrades, and sometimes your ability to close, as Crumbl franchisees are learning. In exchange, the franchise disclosure document gives you more standardized information than most independent sellers ever will, which is real value if you actually read it. What decides whether either one is a good bet is the price you pay relative to proven cash flow, and that question does not care whether there is a logo on the door."

Three NOs. Last week all three said buying beats starting; this week all three said the logo is not what decides it. The price you pay relative to proven cash flow does.

The headlines said Chick-fil-A will never use AI to take drive-thru orders. What CEO Andrew Cathy actually told CNBC was narrower: the company wants that interaction to stay "human to human," and it is still exploring AI behind the scenes. With approximately $23.9 billion in U.S. systemwide sales last year, this is not a boutique company's nostalgia. It is a meaningful operating choice at enormous scale.

Eric's prediction, posted the same day: Chick-fil-A reverses course within 24 months, and many legal clients who currently tell their lawyers not to use AI eventually will too. Customers want fast, inexpensive, and high quality. Once a tool delivers all three better, preferences tend to follow.

The other side. Chick-fil-A's customer-facing moat has never primarily been technology. It is the "my pleasure" at the window. And a company that has made Sunday closing part of its operating model since Truett Cathy's first restaurant has already shown it will give up revenue to protect what it thinks the brand is. If the human voice is the product, automating it is not an efficiency. It is a different restaurant.

The law firm version. For legal work, the better question is not whether AI touched the draft. It is whether the responsible lawyer verified the output and takes professional responsibility for it. Courts have sanctioned lawyers for filing hallucinated or unsupported AI material, and the underlying duties of competence, candor, and supervision still belong to the lawyer. Clients should ask about those controls instead of simply asking, "Do you use AI?"

On August 3, a 37-year-old barber in Lewisville, Texas, walked up to a Bank of America ATM and found a bag on top of it holding $128,514 in cash, plus a second bag of 19 checks. A label suggested the money might belong to a nearby Chick-fil-A, so he drove it there. It wasn't theirs. With the manager standing there, he called 911, and police matched every dollar to a receipt inside the bag. Police determined the money belonged to Bank of America and said it appeared to have been accidentally left behind during servicing of the ATM by Brink's, NBC DFW reports. The barber asked not to be named.

The lore. "Finders keepers" is not the law, and it never really was. Texas still distinguishes lost property from mislaid property. Lost property is property the owner parted with unintentionally; a finder may have a better claim to it than everyone except the true owner. Mislaid property is property the owner set down on purpose and then forgot; as between the finder and the owner of the premises, Texas law generally favors the premises owner, while the true owner's claim stays superior to both. Abandoned property is property the owner gave up for good. A bank bag sitting on top of an ATM looks much more like mislaid property than abandoned property, and once Bank of America was identified as the owner, the category fight hardly mattered.

Why it matters. Texas theft law separately prohibits unlawfully appropriating property with intent to deprive its owner. With a bank bag, a receipt, and an ATM all pointing toward an identifiable owner, keeping $128,514 would have created obvious legal risk. The barber's instinct, try to identify the owner and then call the police, was both decent and legally smart.

Truett Cathy built the restaurant at the center of this week's Ledger and Undertow, and designed a franchise model that looks almost like the inverse of Crumbl's.

In May 1946, Cathy and his brother Ben opened a tiny diner in Hapeville, Georgia, near a Ford assembly plant, with 10 stools and four tables. They pooled their own savings and, with the help of a bank loan, put roughly $10,600 into it. They named it the Dwarf Grill because it was so small, kept it open 24 hours a day, and closed on Sundays, a practice the company still keeps. Cathy spent years experimenting with a boneless chicken sandwich, landed on the signature recipe in 1964, and opened the first Chick-fil-A restaurant in Atlanta's Greenbriar Mall in 1967.

The part that matters for this week's Wave is the operator agreement. Chick-fil-A does not sell franchises the way most chains do. An approved operator provides $10,000 for the initial franchise fee, while Chick-fil-A funds the restaurant site, building, and equipment. Most operators run one restaurant. They do not own the underlying real estate or a conventional store they can sell, but they also do not finance the buildout themselves.

Compare that with a traditional franchise, where the franchisee supplies far more of the capital and often signs the lease. Chick-fil-A keeps much more of the site and buildout risk while giving operators real economic upside but little transferable equity. Crumbl's model puts much more of that capital risk on the franchisee. When a store struggles, the two models put the pain in very different places. Cathy died in 2014 at 93. His grandson Andrew now runs the company, and is the one who just told CNBC the drive-thru stays human.

Kevin and Sam Rosati are speaking at SMBootcamp LIVE in Denver in a few weeks. If you're in the search, come say hello.

See you next Thursday.

Eric and Kevin