Rogue Yogurt

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But it turns out that sometime around 1990, ICBIY jiggled its recipes and started using primarily powdered milk to make its yogurt, says attorney Steve Khoury, who is representing the Gunns in their lawsuit against ICBIY.

During a deposition taken in the case, Khoury says, the head of the company's factory acknowledged that ICBIY decided to save some money by replacing much of the fresh milk it used with powdered milk mixed with water.

"They claimed basically to all the franchisees and the world generally that they were making their product with the highest-quality ingredients, specifically including farm-fresh milk. Milk straight from East Texas farms," Khoury says. "We have found out that approximately since 1990 they have been manufacturing the product with milk powder and water. Basically, Carrollton tap water."

With milk being the biggest ingredient in yogurt, Khoury says, the company's switcheroo violated the Texas Deceptive Trade Practices Act, and forms the basis of the fraud allegations that the Gunns have now leveled against ICBIY.

Tom Herskowitz, the company's executive vice president and chief financial officer, acknowledges that the company has increased the amount of powdered milk it uses, although he doesn't like calling it "powdered milk."

"That is a term that their attorney keeps throwing up to give the illusion of boxes of powdered milk that you buy in the store and people have tasted and they have a negative connotation on it," Herskowitz says. "I shy away from saying powdered milk because it leaves a connotation that is not accurate. It is reconstituted milk, and it is properly labeled on all our containers."

ICBIY honchos vehemently deny that the "reconstituted milk" has made any difference in the quality of their yogurt. They say they have not misled anyone.

Some dry milk has always been used in the ICBIY recipes, company officials say. In fact, you can't make frozen yogurt without some dry milk, and you can't use any fresh milk at all to make nonfat frozen yogurt, they claim.

"There is absolutely no difference in taste, quality, or nutrition between using a powdered milk versus a liquid milk," Herskowitz says.

Brice calls the powdered-milk hubbub issue a "tempest in a teapot," and predicts that the Gunn brothers "will be made to look silly when this case gets to court. Their claims are ridiculous."

But in the frozen yogurt business, public opinion can be as fickle as the weather. The questions swirling about ICBIY are not welcome at a company already struggling with a steady meltdown of its frozen yogurt business.

The story of ICBIY's birth is now a small legend in the annals of Dallas business. Bill and Julie Brice, then teenage students at Southern Methodist University, purchased two ailing frozen yogurt stores in 1977 for $10,000.

They educated themselves in both business and yogurt making, and slowly built a mini-empire that, at its peak, counted 400 stores across the country.

Timing and hard work paid off for the brother-sister team. They managed to catch the wave of the growing popularity of frozen yogurt in the 1980s. By 1983, they began offering franchises. For a fee, would-be store owners could sign up, use the ICBIY name, and sell the company's patented yogurt products.

Franchise holders pay the parent company a five percent royalty on all the yogurt they sell, and contribute another two percent of their sales to a special fund that is supposed to pay for the costs of advertising and promoting ICBIY products.

Competition in the field became stiff over the years, but ICBIY persevered. Although it never reached the size and success of arch-rival TCBY, the company did well, and was often honored as one of the best-run franchise operations in the country.

The Brices cultivated a warm and fuzzy corporate image. Franchise owners were all referred to as "family" in company literature, which abounded with glowing affirmations of the company's dedication to the virtues of honesty, integrity, and quality. The company set up its own "Yogurt University" in Dallas, a one-room affair where new store owners came to be inculcated in the ICBIY way of doing business.

The Brices' success ultimately led them to create The Brice Group, an umbrella company that runs ICBIY and is also dabbling in new ventures, such as chicken and sandwich restaurants. ICBIY is trying to take its yogurt to the world, granting franchises in foreign countries where the frozen yogurt markets remain untapped.

The company remains headquartered in an industrial park near Addison Airport, a maze of cubicles and gray, textured hallways next to the manufacturing plant that churns out frozen yogurt mix in half-gallon cartons. Displayed on shelves in the building's lobby are the various awards Bill and Julie Brice have garnered over the years for their business acumen--a couple of eagle statues, a gold apple, an obelisk, and several inscribed wedges of glass.

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David Pasztor