Shareholder Activists at Friendly Ice Cream (A1)

Posted: 11 Jun 2009

See all articles by Fabrizio Ferri

Fabrizio Ferri

University of Miami - Miami Business School; European Corporate Governance Institute

V. G. Narayanan

Harvard University - Accounting & Control Unit

James Weber

affiliation not provided to SSRN

Date Written: October 16, 2008


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.

JEL Classification: G32, G34, D82, K22, A23

Suggested Citation

Ferri, Fabrizio and Narayanan, V. G. and Weber, James, Shareholder Activists at Friendly Ice Cream (A1) (October 16, 2008). HBS Case No. 109-013, Harvard Business School Accounting & Management Unit Paper, Available at SSRN:

Fabrizio Ferri (Contact Author)

University of Miami - Miami Business School ( email )

Coral Gables, FL 33146-6531
United States

European Corporate Governance Institute ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

V. G. Narayanan

Harvard University - Accounting & Control Unit ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-6359 (Phone)
617-496-7363 (Fax)

James Weber

affiliation not provided to SSRN ( email )

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