Cold Stone Creamery®
Date of Incorporation: 1992
Franchising Since: 1994
Headquarters: Scottsdale, Arizona
Country: U.S.
Description: Cold Stone Creamery Inc. does not presently own any Cold Stone Creamery restaurants. An affiliate, Cold Stone Creamery Restaurants, Llc, an Arizona limited liability company operates Cold Stone Creamery restaurants. The restaurant market for the products offered by Cold Stone Creamery® restaurants is seasonal, as consumption of ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages, soft drinks and other frozen dessert products is typically higher in the summer and lower in the winter.
Franchise Offer: Cold Stone Creamery Inc. is offering to franchise a restaurant featuring super-premium fresh made ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages, soft drinks and other frozen dessert products (prepared using proprietary recipes) and an assortment of complementary toppings and mix-ins on a take-out or eat-in basis.
Financial Assistance:
Master Lease and Sublease:
The franchisor or Cold Stone Leasing will lease the site approved by the franchisor for the Cold Stone Creamery restaurant and sublease the site to the franchisee. If the franchisor leases the site, the franchisee will be subject to a Lease Administration Fee and attorney's fees payable when they sign the Sublease.
Bridge Loans:
Many franchisees obtain SBA-guaranteed loans for the purpose of financing, among other things, site acquisition expenses, construction/remodeling expenses, equipment, fixtures, opening inventory and supplies. The franchisor may periodically provide a franchisee financing for those purposes, generally on a short-term basis, on terms generally comparable to SBA-guaranteed loans available at that time. The interest rate on those loans will generally be 100 basis points above the rate to be charged on SBA-guaranteed loans available at that time, but may be higher, depending upon the franchisee’s creditworthiness.
Preferred Lender Financing:
The franchisor has negotiated financing arrangements with Business Lenders and Community South to provide financing to the franchisees in connection with establishing their Cold Stone Creamery restaurants. The financing may include the initial franchise fee, real estate, architectural fees, training expenses, equipment, leasehold improvements, initial inventory, uniforms, grand opening advertising, insurance premiums, permits and licenses, telephone and utility deposits and hook-up expenses, travel expenses and up to $30,000 of initial working capital.
Financial Assistance Program:
The franchisor may occasionally provide short-term (between 30 days and 12 months) financing in an amount up to $30,000 to franchisees who are experiencing short-term cash flow deficits.
Rent Caps:
The franchisor may occasionally agree that the rent (as well as common area maintenance, taxes and other lease payments) payable with respect to Cold Stone Creamery restaurants that are acquired from CSC Restaurants will be limited for a stated period of time.
Training and Assistance: Before the franchisee opens their Cold Stone Creamery restaurant, the franchisor will train up to two people to operate a Cold Stone Creamery restaurant using the franchisors recipes, formulae, food preparation procedures and business policies and practices. The training will consist of up to 20 hours of instructional material, up to 45 hours of classroom training and up to 105 hours of on-the-job training.
Territory: The franchisee will not receive an exclusive territory. Cold Stone Creamery Inc. may establish other franchised or company-owned Cold Stone Creamery restaurants that may compete with the franchisee’s location, including across the street from the location or in the same building or shopping center as the franchisee’s location.
Term of Agreement and Renewal: The term of the franchise agreement is 10 years with an option to renew for 4 additional terms of 5 years. The fee for renewal is half of the then current franchise fee.
Obligations and Restrictions: The franchisor does not require that the franchisee personally supervise the Cold Stone Creamery restaurant on an ongoing basis. However, if the franchisee does not personally supervise the Cold Stone Creamery restaurant, the business must be directly supervised "on-premises" by a manager who has satisfactorily completed the training program. The manager must spend at least 40 hours per week on the restaurant premises overseeing the operation of the restaurant.
Total Number of Units: 1,392 units
Investment Tables:
Initial Investment:
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $42,000 | $42,000 |
| Travel and Living Expenses While Training | $500 | $5,000 |
| Real Estate | $2,500 | $12,000 |
| Lease Administration Fee | $2,000 | $8,000 |
| Franchisor Attorney's Fee for Review of the Master Lease | $2,000 | $6,000 |
| Architectural Fees | $4,000 | $10,000 |
| Leasehold Improvements | $88,000 | $170,000 |
| Exterior and Interior Signage | $9,700 | $15,200 |
| Equipment | $91,300 | $111,300 |
| Initial Inventory | $8,000 | $8,000 |
| Employee Uniforms | $500 | $800 |
| Grand Opening Advertising | $100 | $5,000 |
| Insurance Premiums | $500 | $2,500 |
| Permits and Licenses | $2,000 | $3,000 |
| Telephone and Utility Deposits and Hookups | $250 | $1,000 |
| Computer Training and Food Safety Certification Course | $100 | $250 |
| Miscellaneous | $3,925 | $3,925 |
| Additional Funds/Working Capital -3 months | $35,000 | $35,000 |
| Total | $292,375 | $292,375 |
Ongoing Fees:
| Name of Fee | Amount |
|---|---|
| Royalties | 6% of Gross Sales |
| Advertising | 3% of Gross Sales |
| Charitable Contribution | To be determined by the franchisor |
| Transfer | 10% of the then-current franchise fee per year of the Franchise Agreement (+ $10,000 if the transferer's Cold Stone Creamery restaurant is not open); 60% -100% of the then-current franchise fee if the transfer occurs during a renewal term |
| Finder's Fee | Determined on a case-by-case basis |
| Renewal | 1/2 of then-current Initial Franchise Fee (but not more than the Initial Franchise Fee at the time franchisee signs the Franchise Agreement) as well as the Lease Administration Fee and between $2,000 and $6,000, as determined by the franchisor, to pay for attorney's review of the Master Lease |
| Relocation | $5,000 as well as the Lease Administration Fee |
| Lease Administration Fee | Between 2% and 5% of the base rent under the Master Lease and between $2,000 and $6,000, as determined by the franchisor, to pay for attorney's review of the Master Lease |
| Additional Training | $1,500 per additional training program per person |
| No-show Fee | $500, if the franchisee fail to cancel any portion of the training program on less than 14 days' notice |
| Hours Violation Fee | $100 per occurrence, if the franchisee fail to keep their Cold Stone Creamery restaurant open during the Required Hours or the Posted Hours |
| Non-participation Fee | $100 per day if the franchisee fails or refuses to participate in any required local, regional, seasonal, promotional or other program, initiative and campaign or in any new or modified product or service test or offering |
| Continuing Training, Annual & Other Meetings | To be determined by the franchisor |
| On-site Consultation | $45 per hour (including consultation and travel time) plus travel, lodging and meals |
| Interest | 18% per annum on royalties, advertising payments, Development Fees, rent and other amounts unpaid within 10 days; on amounts paid by the franchisor or their affiliates on their behalf |
| Document Late Charge | $100 per week or part thereof |
| Draft Draw Charge | $100 per day |
| Late Charge | 5% of the unpaid amount or $100, whichever is greater, on royalties, advertising payments, Development Fees and other amounts not paid within 10 days |
| Sublease Late Charge | 5% of the late or unpaid amount plus any late charges and interest incurred under the Master Lease as a result of the late payment |
| Audit | Costs and expenses of the audit plus 18% per annum interest on the underpayment |
| Interim Operating Fee plus Reimbursement of any Operating Loss | To be determined by the franchisor; payable if the franchisee abandon or fail to properly operate the Cold Stone Creamery restaurant and the franchisor operates the franchisees Cold Stone Creamery restaurant |
| Premiums and Other Amounts Paid by the franchisor if the franchisee Fail to Purchase Required Insurance | Premium and other amounts paid by the franchisor, plus interest |
| Liquidated Damages upon Breach of Restrictive Covenant | $42,000 for each site operated in breach plus 10% of Gross Sales |
| Attorneys' Fees and Costs | Will vary under the circumstances |
| Indemnification of the franchisor for damages suffered or incurred for the franchisee actions or omissions, including amounts paid on the franchisees behalf or to cure the franchisees breaches under the Franchise Agreement | Will vary under the circumstances |
| Currency | Costs of conversion to U.S. dollars |
| Taxes | Sales, use, gross receipts & similar taxes payable by the franchisor with respect to the Initial Franchise Fee, royalties, advertising payments, Lease Administration Fee, Development Fee, Equipment and Signage Fee, equipment and signage purchases, rent & other amounts paid by the franchisee to the franchisee |
Year of FDD: 2008
The above information has been taken from the UFOC/FDD of Cold Stone Creamery.
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