Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • September 2008 (Revised October 2008)
  • Case
  • HBS Case Collection

Shareholder Activists at Friendly Ice Cream (A1)

By: Fabrizio Ferri, V.G. Narayanan and James Weber
  • Format:Print
  • | Pages:22
ShareBar

Abstract

Two activist investors, one a founder and one a hedge fund manager, seek to improve board oversight at a chain restaurant company. Prestley Blake founded Friendly Ice Cream in 1935 with his brother, and the two created a chain of full-service restaurants. In 1979, they sold the business and retired. In 2000, Blake became concerned that Friendly's CEO, who owned approximately 10% of Friendly and also owned a larger percentage of another restaurant company, was shifting expenses between the businesses in a way detrimental to Friendly shareholders but personally advantageous to the CEO. Further, Blake believed that Friendly's board of directors was not meeting their fiduciary obligations to shareholders by properly overseeing the activities of the CEO and that the directors had conflicts of interest because they were involved with the CEO's non-Friendly business activities. In 2003, Blake filed a lawsuit against the CEO and the company. In 2006, Sardar Biglari, a hedge fund manager who had invested in Friendly, entered into negotiations with Friendly for him to join the board of directors to help improve the management of the business. When these negotiations failed, Biglari launched a proxy fight against Friendly in 2007. While these two activist investors shared similar objectives, they worked independently and chose different strategies. The A1 case ends as activists Sardar Biglari and Phil Cooley prepare to meet with CEO Don Smith at Friendly's headquarters in September 2006.

Keywords

Investment Activism; Governing and Advisory Boards; Lawsuits and Litigation; Business or Company Management; Business and Shareholder Relations; Conflict of Interests; Food and Beverage Industry; United States

Citation

Ferri, Fabrizio, V.G. Narayanan, and James Weber. "Shareholder Activists at Friendly Ice Cream (A1)." Harvard Business School Case 109-013, September 2008. (Revised October 2008.)
  • Educators
  • Purchase

About The Author

V.G. Narayanan

Accounting and Management
→More Publications

More from the Authors

    • October 2023
    • Faculty Research

    Leading Transformation at IHCL

    By: Krishna G. Palepu, V.G. Narayanan and Malini Sen
    • September 2023
    • Faculty Research

    Icahn Enterprises: Ponzi Scheme or Sound Investment

    By: Aiyesha Dey, Jonas Heese and James Weber
    • June 2023
    • Faculty Research

    Accounting for Loan Losses at JPMorgan Chase: Predicting Credit Costs

    By: Jonas Heese, Jung Koo Kang and James Weber
More from the Authors
  • Leading Transformation at IHCL By: Krishna G. Palepu, V.G. Narayanan and Malini Sen
  • Icahn Enterprises: Ponzi Scheme or Sound Investment By: Aiyesha Dey, Jonas Heese and James Weber
  • Accounting for Loan Losses at JPMorgan Chase: Predicting Credit Costs By: Jonas Heese, Jung Koo Kang and James Weber
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College