Notice to Attorneys:
This website seeks relationships with law firms having expertise in Canadian securities and franchising law as well as U.S. securities law. The purpose is to provide guidance to us in drafting regulatory complaints on these subjects within the stated jurisdictions. If you have such expertise and would like to assist, please contact us. ~ Thank you!

The Forbes Article

Updated December 6, 2020

I. Introduction

This website is currently under construction. The underlying—substantive content is therefore not yet available to the public. We are currently restructuring the website and also updating it to include information related to the “whistleblower employee” accusations. Those events are the subject of the March 9, 2020 Forbes article.

Numerous individuals from the investment and legal communities have requested access to since the Forbes article. While we’re not able to do so until the development and publication process has been completed, we are able to provide a description below—pending publication of the complete website.

We want to make it clear to the investment and legal community that we have heard very clearly your interest in the detailed information regarding the subjects addressed on this website. WE WANT TO ASSURE YOU, WE WILL ABSOLUTELY PUBLISH THE UNDERYLYING CONTENT TO THIS WEBSITE AS SOON AS IT IS COMPLETED.

II. General Description of

This website includes a central webpage that provides excerpts and information related to the U.S. Franchise Rule (Franchise Rule) and MTY Food Group’s Code of Ethics (MTY’s COE) as regulatory guidance for readers.1,2 The same webpage then lists numerous documents published by or related to MTY Food Group, MTY Food Group CEO Eric Lefebvre, Cold Stone Creamery, Kahala Brands and/or third parties (e.g., federal disclosures, news articles, government reports, transcripts, documents produced by MTY Food Group subsidiaries in the course of litigation, etc.) Due to the professional, legal, ethical and other standards associated with these documents, they appear to have an indicia of reliability.

Finally, there are seven additional webpages that provide other information by or on behalf of MTY Food Group, Cold Stone Creamery or Kahala Brands that allow the reader to subjectively form an opinion of whether there is compliance with the Franchise Rule and/or MTY’s COE.2 The content on the website ranges from 2004 through 2020. This gives the reader the opportunity to identify patterns and trends over time and compare data from the company’s more distant past—for example, when Cold Stone Creamery’s franchise SBA loan failure rates were front and center—to more recent statistics that may provide insight to better gauge current franchisee financial success (e.g., similar to the Mrs. Sparks’ use of data from 2010 through 2019 to question the accuracy of CEO Eric Lefebvre’s statements in the Forbes article as detailed below).

Statements regarding Cold Stone Creamery’s U.S. locations growth, store closures and franchisee profitability were raised in the Forbes article and are two of the many topics highlighted on this website. We can therefore use those statements as an example to provide a general overview of the data and documents available on this website and how they may be applied to provide greater investor insight.

III. Whistleblower Issue – Growth, Store Closures & Other Topics

A. Background

In January 2020, our attorney provided MTY Food Group, Cold Stone Creamery and Kahala Brands with access to all areas of this website to review and contest the content. On February 13, 2020, a U.S. law firm speaking on behalf of the companies responded, stating, the website included inaccurate portrayals and warned of potential consequences resulting from its publication, but specifically declined to identify any false or misleading statements. The following day, MTY Food Group issued its February 14, 2020 press release announcing the postponement of the publication of its fourth quarter results based on allegations it said had been recently made by a “whistleblower employee”. (For the record, no one associated with this website is a current or past MTY Food Group employee.) The press release also stated, the company believed the allegations were “baseless and frivolous”. The same day, Bloomberg Securities Law published an article titled “Pinkberry Owner Plunges Amid ‘Information Void’ on Whistleblower”. (Restaurant Business also issued an article titled “PAPA MURPHY’S OWNER DELAYS EARNINGS OVER AN EMPLOYEE’S ALLEGATIONS”.)

On February 24, 2020, MTY Food Group issued a press release related to its fourth quarter results stating the company confirmed the allegations were “baseless and the matters raised are all topics that MTY had evaluated and dealt with in the past (emphasis added).” That same morning, MTY Food Group held a hastily announced fourth quarter conference call. During his opening remarks, CEO Eric Lefebvre again asserted that the allegations were made by an active employee, characterized them as “baseless” and stated that MTY Food Group had evaluated and dealt with the topics previously. Despite stating he would not respond to any questions regarding the whistleblower allegations during the Q&A session, four of five financial analysts asked questions on the topic. One prefaced his question on the range of whistleblower topics by characterizing the allegations as an obvious “huge talking point.” In response, CEO Eric Lefebvre stated, “it was a wide area of allegations, so it’s not only one topic (emphasis added).” In response to a question about company initiatives to address store closures for any of the company’s brands, CEO Eric Lefebvre responded, they are working with their stakeholders to “try to make the stores as profitable as possible and have the best condition possible for our stores to remain open and do good business.”

B. Forbes Article

On March 9, 2020, Forbes published an article titled “MTY’s Delayed Earnings Call Leaves Analysts Baffled With Few Answers On ‘Whistleblower’ Claims” written by Janet Sparks, which principally covered the topics discussed above. Unlike earlier articles such as the one published by The Canadian Press, however, Mrs. Sparks requested clarifying comments from CEO Eric Lefebvre prior to publishing her article and listed seven questions that were submitted to him by email within the article. According to the article, CEO Eric Lefebvre did not respond to the questions nor did he return a follow up voice message from Mrs. Sparks.

One of Mrs. Sparks’ questions asked if the allegations referenced in MTY Food Group’s February 14, 2020 press release and the February 24, 2020 fourth quarter results press release, relate to this website. Another inquired about the pace of Cold Stone Creamery’s recent store closures, to which CEO Eric Lefebvre replied, “There’s always going to be more store openings than more store closures for Cold Stone just because it’s such a big brand.” According to the article, Mrs. Sparks interpreted the statement “to say that Cold Stone Creamery is always going to grow.” She then challenged the accuracy of CEO Eric Lefebvre’s statement by offering evidence from Cold Stone Creamery’s own 2019 and 2018 U.S. federal disclosures, as well as the company’s webpage, which collectively reflected that Cold Stone Creamery “hasn’t had positive growth in the U.S. since at least 2010”. (This website goes one step further by providing evidence from Cold Stone Creamery’s 2011 Franchise Disclosure Documents that reflects “Total Outlets” growth for 2010, 2009 and 2008 were -61, -101 and -104, respectively and highlights that the company closed more than 500 U.S. locations since 2007.) Mrs. Sparks then asked CEO Eric Lefebvre: “Given this contrary information, was your statement to the investment community during the conference call accurate?” Again, according to the article, he did not respond.

C. Why the Content on this Website May Matter to Investors

According to MTY Food Group’s 2018 Annual Report, Cold Stone Creamery was the “only concept that represented more than 10% of system sales, generating approximately 21% of the total sales of MTY’s network during the year.” Therefore, even given the 2019 acquisition of Papa Murphy, some investors may see Cold Stone Creamery’s U.S. locations growth, store closures and franchisee profitability,  as principal to MTY Food Group’s overall success—particularly given the company’s $394.2 million price tag for Kahala Brands—Cold Stone Creamery’s parent company.

Among the many excerpts from the Franchise Rule included on this website is the prohibition of a franchisor from “making statements that contradict” the required elements of the Federal Trade Commission’s mandated disclosures.1 In addition, the Franchise Rule requires certain historical and projected U.S. store growth data.1 This website also quotes MTY’s COE, which commands its employees and certain others to “[e]xercise honesty”, “[m]aintain high standards of integrity, morality…”, “[n]ot contravene laws and relevant regulations…”, etc.1 Therefore, in combination, the Franchise Rule and MTY’s COE seem to support a franchisor’s distribution of relevant information consistent with its honest and accurate disclosures. Some investors may feel this is principal to their ability to make informed buy, hold and sell decisions.

D. Statements by CEO Eric Lefebvre, MTY Food Group & Cold Stone Creamery

First, CEO Eric Lefebvre has repeatedly characterized the allegations referenced in MTY Food Group’s February 14, 2020 and February 24, 2020 press releases and later discussed by him during the conference call as “baseless”. During the February 24, 2020, he said the allegations were made by an “active employee”. The investment community has expressed an interest in knowing additional details related to the whistleblower report and how CEO Eric Lefebvre and the other board members arrived at the conclusion that allegations were “baseless”. Therefore, Mrs. Spark’s questions posed in the Forbes article are worthy of a response from CEO Eric Lefebvre.

Second, consistent with MTY Food Group’s message to investors touting its purported “Track record of growth” in various forms, CEO Eric Lefebvre claimed: “There’s always going to be more store openings than more store closures for Cold Stone just because it’s such a big brand.” This statement also echoes Cold Stone Creamery’s repeated claims over the years that the company is growing its locations (e.g., “we expect the brand’s system wide performance will continue its upward trajectory as we continue to grow”, “We’ve been growing for years, and we’re not slowing down anytime soon”, etc.). According to the Forbes article, Mrs. Sparks challenged the truthfulness of CEO Eric Lefebvre’s statement in an email to him using, in part, data produced by Cold Stone Creamery from its U.S. federal disclosures. CEO Eric Lefebvre failed to respond with an explanation of how his statement could have been true given the disparity in the data disclosed by Mrs. Sparks.

Either Cold Stone Creamery is growing its total locations as the company and CEO Eric Lefebvre have claimed or it is not growing. Whichever is true, it seems investors want an honest response and that their position is supported by the Franchise Rule and  MTY’s COE.1,2 As CEO of MTY Food Group, it would seem that Eric Lefebvre is among the chief enforcers of the honesty, integrity and other standards expressed in MTY’s COE and should therefore respond to Mrs. Sparks in order to explain the substantial disparities between his statements and Cold Stone Creamery’s statements seemingly claiming the company is growing its locations, and the data presented by Mrs. Sparks’ demonstrating the company hasn’t grown its U.S. locations in at least a decade.

Finally, during the conference call, CEO Eric Lefebvre claimed, MTY has “evaluated and dealt with” the topics of the allegations in the past. Cold Stone Creamery franchisee profitability is one of the many topics addressed on this website. Mrs. Sparks grazed the surface of this subject in her fourth question by summarizing data listed under the heading “Table No. 5” of Cold Stone Creamery’s 2019 federal disclosures revealing that “a total of 97 franchisees (or 10.5%) of [the company’s] franchisees left the system in 2018” (see PDF page 105). (As an aside, it appears the company’s 2019 and 2018 federal disclosures omit Table No. 5, which, according to the Franchise Rule, is required and “gives prospective franchisees insight into anticipated growth within the system…” (emphasis added).) She then asks, “does [franchisee] profitability continue to be an issue” within Cold Stone Creamery?

If content on this website is related to the whistleblower allegations and CEO Eric Lefebvre’s statement that MTY Food Group has “evaluated and dealt with” the topic of the allegations is intended to apply to Cold Stone Creamery franchisee profitability, investors deserve to know then why 97 franchisees (or 10.5%) of the company’s franchisees left the system. If these allegations are “baseless” and were “dealt with”, investors should hear why CEO Eric Lefebvre repeatedly raised the importance of franchisee profitability being principal to a shift in corporate strategy as explained in CEO Eric Lefebvre’s following comment during the call.

I think at this point, we need to take a breather and to make sure that we stabilize everything before we start acquiring again… We want to make sure that we focus on the assets we have in the portfolio now and make everyone succeed. And once we’ve stabilized everything and that we feel confident, we can move forward. Again, we’ll do it, but at the moment, we’re certainly focusing more on the existing brands than focusing on M&A (emphasis added).

IV. Conclusion

The objective of this website is to put MTY Food Group network investors in a better position to assess risk. The website attempts to accomplish this mostly in the same manner as outlined above using the whistleblower incident. More specifically, the website publishes excerpts from the Franchise Rule and/or MTY’s COE, that the reader may find relevant to particular subjects—store closures, unit growth and franchisee profitability among them.1 It then publishes statements made by MTY Food Group, CEO Eric Lefebvre, Cold Stone Creamery, and/or others (e.g., CEO Eric Lefebvre’s statement: “There’s always going to be more store openings than more store closures for Cold Stone just because it’s such a big brand.” and the allegations were “baseless” and “dealt with”; or Cold Stone Creamery’s statements similar to those above.) It then publishes statements, documents and data from sources with an indicia of reliability. By comparing these various statements, we hope to facilitate investors in their ability to assess risk and make informed decisions.1,2

For example, investors may better determine whether Cold Stone Creamery is growing its franchise locations as CEO Eric Lefebvre stated and Cold Stone Creamery claims on its website or whether the company has not had even so much as a single year of U.S. location growth since 2007. Should the investor find that Cold Stone Creamery is growing, they can then explore whether the company is “rapidly growing”, “one of the fastest growing franchises”, etc.

We cooperated for the March 9, 2020 Forbes article, which revealed only a small portion of the content on this website. There is much more information on the three principal subjects addressed within the article published to this website. There are also many more topics.

The Forbes article was the first in a series of articles. You should hear more shortly—even prior to the publication of the website. In the interim, we welcome your communications.


  1. This website does not provide legal or investment advice. Any questions relating to MTY Food Group or any of its subsidiaries’ compliance with the Federal Trade Commission’s Franchise Rule, Canadian law, U.S. securities law, or any other applicable federal or state laws, including whether any statement by or on behalf of MTY Food Group or its subsidiaries published to this website is potentially materially “misleading” or constitutes a “misrepresentation” under the U.S. Franchise Rule or whether any actions taken by MTY Food Group or its subsidiaries is evidence of a fraudulent inducement or represents a potential violation of MTY’s COE, should be referred to your attorney.
  2. The content on this website is not intended to imply any future negative impact on Cold Stone Creamery store closures, franchisee profitability, “franchisees transfer[ing] out of the system” (see Section “B” above), “Total Outlets” (see Section “A” above), anticipated franchisee growth, international locations in operation, or any other topics discussed on this website. According to MTY Food Group, any affects Covid-19 may have on MTY Food Group’s performance is undetermined. This website does not intended to imply that Covid-19 will have a future negative impact on Cold Stone Creamery’s store closures, franchisee profitability, “franchisees transfer[ing] out of the system”, “Total Outlets”, anticipated franchisee growth, international locations in operation, or any other topics discussed on this website, or any impact to MTY Food Group sales or other performance.

MTY Food Group Executives & Other Photos