MTY BEGAN 2020 WITH 6,989 FRANCHISES. IT CLOSED 1,324 (18.3%) LOCATIONS IN 2020 AND A TOTAL OF 1,769 IN THE FOUR YEARS BEFORE THE PANDEMIC (AVERAGE 442 OR 9.3% PER YEAR). THAT’S A TOTAL OF 3,093 LOCATIONS CLOSED IN THE LAST FIVE YEARS. IF YOU ARE CONSIDERING BUYING ANY MTY OR KAHALA FRANCHISE LISTED BELOW, WE STRONGLY SUGGEST YOU LEARN ABOUT SOME OF THE RISKS OF OWNING AN MTY FRANCHISE. YOU SHOULD ALSO KNOW THAT MTY RECEIVED $64 MILLION IN KICKBACKS IN 2019—AN INCREASE OF MORE THAN $8 MILLION FROM THE PRIOR YEAR.
KICKBACKS CAUSE FRANCHISES TO FAIL!
MTY/Cold Stone Reported False Data & Information to Entrepreneur.com
Updated on June 20, 2021
MTY/Cold Stone reported 1,252 total franchises to Entrepreneur.com. We think this data is grossly overstated!
Pinning down MTY/Cold Stone’s global franchise totals is challenging. Consider this: within a span of weeks and as recently as April 5, 2021, the company reported it had “nearly 1,500”, “1,252” and “nearly 1,000” global locations in various mediums that speak to potential investors.
We believe MTY/Cold Stone has published false locations data to various federal disclosures (see Item 3). As a result, we think its federal disclosures are an unreliable and misleading resource for location totals. (This article suggests that making or using certain documents containing false statements may be a federal violation. This law was used to convict Martha Stewart and Bernie Madoff.)
Because MTY/Cold Stone has recently admitted it has fewer than 1,000 locations—we know the company has 999 global locations or less. Therefore, having reported a total of 1,252 global locations to Entrepreneur.com, we know the company reported false data that overstates its global locations by at least 253 locations.
MTY/Cold Stone’s growth data also varies widely depending on the source. MTY/Cold Stone has reported to Entrepreneur.com that it grew its franchise network by 44 global franchise locations during the 2020 pandemic year. MTY/Cold Stone also published an article to its franchisee recruitment website titled “Cold Stone Creamery® Ice Cream Franchise Celebrates Growth in 2020” claiming “the iconic ice cream franchise, experienced growth in 2020 despite the pandemic.”
How unlikely that MTY/Cold Stone grew its franchise network after it failed to grow in the U.S. during a 13-year span beginning in 2007. Such a feat is even more unbelievable when one considers the financial impact of the pandemic, numerous 2020 U.S. MTY/Cold Stone closures (e.g. here, here, here, etc.), the Singapore franchisee folded, MTY/Cold Stone’s closest competitors lost double-digit and triple-digit locations in 2020 (here and here), etc.
In fact, MTY/Cold Stone’s most recent federal disclosures reflect that the company did not grow during 2020 but declined in locations. According to these documents, the company had “1,239 franchises” at the end of 2019 (PDF pg. 8), and “1,227 franchises” at the end of 2020 (PDF pg. 8). Thus, the company’s own federal disclosures confirm that it did not grow by 44 locations as it reported to Entrepreneur.com, but instead, loss a net 12 franchises during 2020—a difference of 56 locations.