Late last month, the fast-growing Salt Lake City-based Crumbl Cookies filed a lawsuit against another Utah-based cookie company called Crave Cookies, accusing the company of violating Crumbl’s intellectual property rights by developing a concept that is awfully similar in style and substance.
In short: Crumbl says Crave is entirely too similar a concept to be an accident.
It’s not the only such lawsuit. Crumbl has filed a few of them recently, including two others in May, one against a New Mexico company called Crumble & Cream and another one against an Arizona company called Dirty Dough—whose founder apparently once worked with Crumbl, according to the lawsuit. Another one was filed in February against a New Jersey concept called Crumble Cookie Bar.
To be sure, restaurant brands file trademark lawsuits constantly, meaning Crumbl is joining a long line of brands that aggressively defend their intellectual property.
Yet it also goes to the heart of one of Crumbl’s biggest risks: Its business model is relatively simple in scope and can be easily copied, which could flood the market with competitors and hurt the market over the long term.
The restaurant industry has a long and not-so-illustrious history of mimicry. No idea in this business is too good not to be copied over and over again—from 24-hour diners to bar and grill chains with “flare” to burritos to fast-casual pizza.
In some respects, this sort of thing is an important part of capitalism. If an entrepreneur sees an idea and thinks they can improve on it, that can force the other business to stay on its toes and give customers what they want. Over time, it has driven considerable improvement in the restaurant space. Restaurants today must have a certain level of quality or convenience. Most of them have to take credit cards, and they increasingly need wireless apps. The food is generally a higher quality and the packaging is far more sustainable.
At the same time, the potential flood of copycats can doom much of the entire sector. When we wrote about Crumbl earlier this year, many observers kept saying “frozen yogurt” as they expressed their doubts. Both frozen yogurt crazes, in the 1990s and 2010s, were marked by copycat concepts that quickly flooded the market with similar types of ideas beyond the apparent demand for the product.
In 2005, a pair of entrepreneurs founded Pinkberry. It generated a following of Hollywood A-listers and soon began spreading all over. Eventually, other people got the same idea. Then some frozen yogurt makers held classes on how to start your own frozen yogurt concept. The market was flooded with similar style froyo concepts and the entire segment has struggled ever since. Pinkberry’s unit count has been cut in half since peaking in 2014.
Crumbl was founded in 2017 and has largely taken the world by storm. It has been one of the fastest-growing chains in the U.S. over that period. Sales have increased by 463% over the past two years. Only Dave’s Hot Chicken has grown by more. Demand for its franchise is so great that it is mostly sold out in the U.S., which could ignite demand for similar kinds of concepts.
The company sells large-sized cookies from elongated boxes and has a weekly, rotating menu of a few cookies. It has a massive social media following and its franchisees make a lot of money. It also defends its model: It makes employees sign non-disclosure agreements so they do not reveal the cookie recipes before they’re announced each week.
In its lawsuit against Crave, Crumbl argues that it denied an application by that concept’s founder to become a franchisee. It then said that “Crave began selling and promoting its copycat gourmet cookies using packaging, decor and presentation that is substantially and confusingly similar to Crumbl’s established and successful trade dress and brand identity.” Crave was founded in Utah in 2019.
Among the similarities Crumbl accuses Crave of making: a simple black-and-white logo with chocolate chip cookies with a bite out of them facing toward 2 o’clock. Here’s a screenshot of the company’s comparison of the two logos:
Crumbl argues that Crave uses similar presentations of cookies and decor, packaging and other marketing. And it says that Crave mimicked the company’s weekly rotating menu.
In its response, Crave denied that it applied to become a franchisee and says it was not in violation of any trademarks, arguing in part that much of what Crumbl says in its trade dress “is not protectable.”
On the same day that it sued Crave, Crumbl sued an Arizona company called Dirty Dough, making similar arguments. Crumbl argues that one of its former employees left to help form Dirty Dough, “which sells and promotes cookies using packaging, decor and presentation that is confusingly similar to Crumbl’s established and successful trade dress and brand identity.”
Dirty Dough uses elongated boxes with whimsical decorations (in its case orange rather than Crumbl’s pink), similar to Crumbl. Its logo features a cookie with a bite out of it at 2 o’clock, and it, too has a weekly rotating menu. Crumbl says that Dirty Dough was founded in May of 2019 by Bennett and Bradley Maxwell, brothers who lived in Utah.
The company says that Bennett applied to be a franchise salesman but wasn’t hired. But Bradley was a process engineer between March and June of 2019. “At the time that Dirty Dough was founded in May of 2019, its founder Bradley Maxwell was a process engineer at Crumbl,” the lawsuit states.
Dirty Dough, which is franchising and says it has locations opening in Utah, has yet to file a response. But Bennett Maxwell, the chain’s CEO, said in a LinkedIn post that the allegations “baseless and untrue” arguing that “apparently if you put sprinkles on your cookies, Crumbl thinks they own that.” He also said the company was founded in 2018, not 2019, and Arizona state business filings show that the registration for Dirty Dough LLC was indeed filed in 2018.
Then again, perhaps companies selling franchises might consider logos that turn the bite toward a different spot on the clock and come up with something other than a “weekly rotating menu” when developing their allegedly original concepts.