International Law

How Much Does the Cold Stone Creamery Really Cost?

Interesting article about due diligence on the costs of owning a Cold Stone Creamery, at Blue Mau Mau, Due Diligence: Cold Stone Creamery Fees

Read the entire article for some good ideas about how to read a UFOC.

"There are 6 major Cold Stone fees that you should be aware of:

Franchise Fee - one time payment - currently at $42000 per franchise and $35,000 for additional franchises.

Equipment Fee - 4% fee charged by CSCorp when purchasing any equipment from CSCorp. Incidentally, all equipment used in the your store is required to be purchased from Corporate.

Transfer Fee - $10,000 fee to transfer your fee to another party.

Royalty Fee - 6% this is a weekly fee drawn directly from you checking account - it is 6% of "adjusted income" which means that it does not apply to the sales tax that you collect, the coupons you redeem or the gift certificates you sell.

Advertising Fees - 3% this is a weekly fee drawn directly from your checking account.
Product Rebates Fees - the rest of the world call these "kickbacks" - the franchise world calls them rebates that are paid to the franchisor.

These are tougher to measure as they are non-published and largely unregulated.

Basically, the product suppliers pay a percentage back to the franchisor based on the number of franchisees purchasing the products."

Good free advice, useful due diligence.

How much more do you need to know?

How much more do you need to spend to figure it out?

Nothing - "Cold Stone Creamery. It is an absolute FRAN WHACK", accorded to the esteemed Richard Solomon.

Fran-Whack is Richard's term for a per se violation of franchise viability - so bad as an investment that no due diligence need be done.

(Disclaimer - Richard and I are working on a due diligence program which will provide first rate franchise disclosure at affordable rates to groups of prospective franchisees. Email me if you are interested in the program.)

Full post as published by Misleading Advertising Law on February 29, 2008 (boomark / email).