THERE IS A SUBSTANTIAL RISK OF FAILURE ASSOCIATED WITH MTY FRANCHISES. MTY AVERAGED AN 11% CLOSURE RATE IN FIVE YEARS WHILE CHARGING FRANCHISEES $239 MILLION IN KICKBACKS ON TOP OF REGULAR FEES. THEY CLOSED 2,594 LOCATIONS FROM 2016 THROUGH Q2, 2021. KICKBACKS CAUSE FRANCHISES TO COLLAPSE!
MTY’S BOARD MADE FALSE STATEMENTS TO INVESTORS WHILE ENGAGING IN A COVER-UP TO CONCEAL THAT IT WAS REPORTING FALSE DATA TO HIDE THAT ITS FRANCHISE NETWORK IS COLLAPSING. ITS CHAIRMAN, STANLEY MA, SOLD $43 MILLION OF STOCK WITHOUT CORRECTING THE FALSE STATEMENTS TO INVESTORS—POTENTIALLY COMMITTING INSIDER TRADING. MTY THEN INCREASED KICKBACKS BY $5.3 MILLION ON FRANCHISEES AND AUTHORIZED $3 MILLION IN ANNUAL DIVIDENDS TO STANLEY MA.
MTY/Cold Stone Reported False Data to Entrepreneur.com
Updated on December 8, 2021
MTY/Cold Stone reported 1,252 total franchises to Entrepreneur.com for 2020. This data is inaccurate and grossly overstated! This false report was later used to propel the ice cream concept to a top 400 ranking on the prestigious Franchise 500 after failing to qualify for the list since 2016.
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, one of the most important categories used by prospective franchisees to measure a franchisor’s success. (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.