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Why Cold Stone's 2020 Franchise

Disclosures Should Matter to Investors

Updated January 26, 2021

On March 9, 2020, Forbes published an article, including questions that were asked by the writer, but not answered by MTY Food Group or CEO, Eric Lefebvre. The article addressed whistleblower allegations1 that were announced by MTY Food Group on February 14, 2020. It also addressed three of the many subjects of whistleblower allegations that were reported by to MTY Food Group in January 2020. Those subjects include franchise network growth, total locations in operation and franchisee profitability.

Cold Stone Creamery’s 2020 U.S. Franchise Disclosure Document (FDD) sheds some light on each of these subjects. will publish three articles that examine some of the disclosures contained in Cold Stone Creamery’s new FDD as they relate to each of the three subjects. The first of the three articles address the company’s franchise network growth (Growth). The second article will similarly discuss the FDD information relating to the company’s total locations in operation (Total Locations). The third article will address franchisee profitability (Franchisee Profitability). These articles will point out several of the whistleblower allegations that were reported to MTY Food Group by along with any visible changes that the company has quietly made to address them—despite claiming they are “baseless” and have been previously “evaluated and dealt with”.

Why does this matter? Why should MTY Food Group investors care?

  • MTY Food Group paid $394.2 million, in part, for Cold Stone Creamery despite that the price tag and shrinking franchise-network were questioned from the very start.
  • Cold Stone Creamery is MTY Food Group’s perennial largest sales contributor.
  • Cold Stone Creamery’s fiscal year ended on November 30, 2019, therefore, the data discussed from the 2020 FDD relates to the company’s operations before the impact of COVID-19. If, after reading the three articles and other materials published to this website, the investor comes to believe that Cold Stone Creamery’s franchise network is in decline or that there are other unaccounted for risks, any anticipated impacts related to COVID-19 should also be considered.
  • Historically, Cold Stone Creamery franchisees have complained that the company’s kickbacks2 caused them to become unprofitable and suffer financial difficulties. We’ll discuss MTY USA’s 2019 kickbacks in the Franchisee Profitability article.3
  • In 2018, a total of 97 franchisees—10.5% of all Cold Stone Creamery franchisees that year—ceased to do business with the company4 and in 2017, another 84 franchisees ceased to do business with the company4. Thus, a total of 181 franchisees in the two-year period before 2019 ceased to do business with the company. Referencing Cold Stone Creamery’s “past franchisee profitability issues” (e.g., here), Forbes asked, “does profitability continue to be an issue?” In the Growth article, we’ll discuss whether this trend continued in 2019 and, if so, at what rate.
  • CEO Eric Lefebvre spoke repeatedly of prioritizing MTY Food Group franchisee profitability over acquisitions in the company’s February 24, 2020 earnings conference. For example, he stated the following.

For 2020, we plan on reducing the amount of investing in acquiring new businesses as we do not anticipate major acquisitions….” “[W]e 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…. [W]e have a number of initiatives that we are putting in place now to work with our franchisees… and 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…”. [Emphasis added.]

We’ll discuss various clues the 2020 FDD may offer on this subject in the Franchisee Profitability and Growth articles.

  • We’ve previously discussed that Cold Stone Creamery has not had one positive year of growth in its U.S. locations since at least 2007, 500+ U.S. stores closed in the same period and, again, 181 franchisees ceased to do business with the company in 2017 and 2018 alone. We should also note that CEO Eric Lefebvre’s comment that MTY Food Group needs “to take a breather…” was specifically in reference to stabilizing Imvescor, Papa Murphy’s and other brands acquired within the past two years. MTY Food Group acquired Cold Stone Creamery four years ago. Cold Stone Creamery and Papa Murphy’s are MTY Food Group’s largest concepts—accounting for nearly one third of the company’s sales. CEO Eric Lefebvre acknowledges there is profit instability within its franchise network acquired within the past two years and calls out Papa Murphy’s, but omits Cold Stone Creamery from the conversation by name and or period of acquisition. In addition, other than MTY Food Group, CEO Eric Lefebvre and or Cold Stone Creamery’s practice of making false statements to securities and franchise investors that inflate the size and or growth rate of the franchise network, we challenge MTY Food Group to point to any successful—outward effort to reverse the Cold Stone Creamery trends mentioned above. Has MTY Food Group no plans of addressing Cold Stone Creamery’s trends? Is there franchisee profit instability within the Cold Stone Creamery franchise network, and if so, is MTY Food Group and CEO Eric Lefebvre capable of addressing it? Are MTY USA’s kickbacks2 necessary to make Cold Stone Creamery a profitable entity for MTY Food Group? If so, does that mean Cold Stone Creamery franchisees and their families will have to suffer financial hardship—file bankruptcy, lose their homes—for the sake of MTY Food Group’s profits? Will MTY Food Group allow Cold Stone Creamery’s franchise network to dwindle until there’s nothing left of it? Does MTY USA take kickbacks from other brands, and if so, is it the kickbacks that have fueled MTY Food Group’s overall store closures even before COVID-19? We’ll discuss this in greater detail within the Franchisee Profitability and Growth article.
  • MTY Food Group has proven it can grow its profits by acquisition. Now CEO Eric Lefebvre says the company will table that strategy and instead, maximize “shareholder value by making every effort to generate positive growth from our existing concepts…”. Yet in four years of ownership, MTY Food Group has failed to reverse Cold Stone Creamery’s metrics as discussed above. Is four years not sufficient for MTY Food Group to turnaround its flagship brand in terms of sales? What makes the fifth year special? We read CEO Eric Lefebvre’s comment to say that they are now going to primarily rely on growth of Cold Stone Creamery and other company brands to create shareholder value. Given the data discussed on this website, should investors have confidence in such a strategy?
  • Cold Stone Creamery appears to play a significant role in the operations and profitability of MTY Food Group and therefore may be an MTY Food Group key business segment.
  • org is on record that we believe Cold Stone Creamery repeatedly uses false statements and data to cast a more favorable light on its franchise system while marketing to potential investors. We reported this, among other things, to MTY Food Group in January 2020. The following month, in response to a financial analysts’ question about Cold Stone Creamery store closures over “the past couple of years”, CEO Eric Lefebvre claimed, “[O]bviously, there’s always going to be more store openings than more store closures for Cold Stone just because it’s such a big brand…. [T]hings are going to go well.” (“CEO Eric Lefebvre’s Statement” or “Statement”.) Forbes told the world the Statement was not true four years ago. told MTY Food Group the Statement wasn’t true just a month before CEO Eric Lefebvre made it. Like the many false statements that Cold Stone Creamery makes to potential franchise investors, CEO Eric Lefebvre’s Statement to securities investors is also false.

Importantly, in the Growth article, we’ll take a detailed look at Cold Stone Creamery’s purported 2019 total international locations and international location growth as reported in its 2020 FDD. We’ll also look at newly discovered documents on the totals and growth and compare the differences before and after CEO Eric Lefebvre’s Statement. This is important because whether Cold Stone Creamery’s locations increased or decreased in 2019 potentially has far reaching implications due to CEO Eric Lefebvre’s Statement as well as the company’s failure to issue a retraction of the Statement or material impact statements relating to the whistleblower allegations.3 We’ll therefore devote significant attention to this subject with the objective of allowing investors the opportunity to compare Cold Stone Creamery’s claims regarding their international locations reported in their 2020 FDD to the newly discovered documents so investors can subjectively decide where the truth lies. We suggest that investors discuss this information with their advisers to ensure that all options are given timely—professional consideration.3

  • MTY Food Group’s stock price has declined, there’s evidence the whistleblower allegations may not have been “baseless” nor previously “evaluated and dealt with” and there is a potential for litigation related to MTY Food Group’s board of directors and management’s handling of the whistleblower allegations. Yet, it appears MTY Food Group and CEO Eric Lefebvre have lived up to their intention to “close the book on” the whistleblower allegation and thus have publicly ignored the subject since the February 24, 2020 earnings conference. Perhaps the company is operating from the standpoint that shareholders have attributed the company’s decline in stock value entirely to COVID-19 and have no knowledge of the other events. This, in part5, may explain why the company has issued material impact statements disclosing possible negative financial consequences due to COVID-19, but not retracted CEO Eric Lefebvre’s Statement nor issued material impact statements for MTY Food Group’s board of directors and CEO Eric Lefebvre’s handing of the whistleblower allegations—despite the potential company risks posed by these events.
  • Consider the timeline provided in the “Background” section of the Forbes article—particularly the attorney email to the attorney on behalf of MTY Food Group, Cold Stone Creamery and Kahala just one day before the February 14, 2020 announcement of the whistleblower allegations in light of the following. What if:
    • Following a review of the whistleblower allegations, MTY Food Group found that the allegations are not “baseless” and had not been “evaluated and dealt with in the past” as MTY Food Group and CEO Eric Lefebvre claimed?
    • Instead, MTY Food Group determined that the allegations had merit, had not been previously dealt with, are ongoing, and then claimed they are “baseless” and “dealt with” in order to:
      • Mitigate potential securities and franchise regulatory litigation against MTY Food Group?
      • Mitigate potential litigation against MTY Food Group and or individual board of directors members by shareholders, franchisees and possibly others?
      • Mitigate potential personal liability of MTY Food Group board of director members?
      • Stem the tide of negative press, tumbling stock price, criticism by the investment community following the whistleblower allegations?
      • Avoid embarrassment by the company’s board of directors, CEO Eric Lefebvre and MTY Food Group management?
      • Avoid a loss of confidence in the company’s board of directors, CEO Eric Lefebvre and MTY Food Group management’s ability to manage and their commitment to truthfully communicate with investors?
  • The whistleblower allegations were not reported by one of MTY Food Group’s “active employees6 as CEO Eric Lefebvre claimed but, instead, were reported by
  • MTY Food Group and CEO Eric Lefebvre falsely claimed the allegations were reported by an “active employee”6 to divert attention and credibility away from
  • CEO Eric Lefebvre’s statement during the Q4, 2019 earnings call that “I will not answer any questions on [the whistleblower allegations] topic during the Q&A session” was MTY Food Group and CEO Eric Lefebvre’s attempt to cover up meritorious and ongoing whistleblower allegations to avoid responding to questions similar to those posed by the Forbes writer?
  • A substantial portion of the loss in shareholder value since the announcement of the whistleblower allegations was due to MTY Food Group, CEO Eric Lefebvre and the board of directors’ handling of the whistleblower allegations and not due COVID-19?
  • MTY Food Group publicly and repeatedly claimed the whistleblower allegations are “baseless”, “evaluated and dealt with in the past”, it intended to “close the book on” the matter and publicly avoided any mention of the allegations since February to communicate to the investment community that MTY Food Group, CEO Eric Lefebvre and the board of directors’ course of action was proper and no remediation was indicated in response to the allegations?
  • The whistleblower allegations are true?
  • After claiming the whistleblower allegations are “baseless”, “dealt with” and publicly ignoring them ever since, there is clear evidence that MTY Food Group has quietly gone about correcting whistleblower allegations reported to the company by

Whether an investor is a young or novice investor with limited funding making their foray into securities investing, a well-funded institutional investor or a family searching for a growing and financially successful franchise opportunity to establish something better for successive generations—investors deserve truthful information. CEO Eric Lefebvre’s Statement that Cold Stone Creamery’s locations will “always” grow, his and MTY Food Group’s attempts to seemingly point away from as the source of the allegations by claiming they were reported by an “active employee”, their statements that the whistleblower allegations are “baseless” and previously “dealt with”, their quiet remediation of whistleblower allegations, their absence of a retraction of the Statement, their failure to publish material impact statements regarding the whistleblower allegations, the details regarding their total international locations disclosure, and more, will all be tested for truthfulness in this three-part series—and you are the final arbiter.

Finally, following MTY Food Group’s announcement of the whistleblower allegations, Forbes called the truthfulness of CEO Eric Lefebvre’s Statement into question and the stock plummeted. During the time period between MTY Food Group’s February 14, 2020 whistleblower announcement and March 18, 2020, MTY Food Group lost nearly $1.1 billion of its shareholder value.7 Much of that period included an overlap of the market’s reaction to MTY Food Group’s response to the whistleblower allegations and COVID-19. As a result, following the three-part series or perhaps during it, will publish an article that provides an estimate of the losses attributable to each event.


  1. Based on the timeline published in the March 2020 narrative posted to this website, we believe this website, and not one of MTY Food Group’s “active employee’s”, is the original source of the “allegations” purportedly reported to the MTY Food Group by a “whistleblower employee” referenced in MTY Food Group’s February 14, 2020 press release. This website therefore believes the specific allegations reference in the press release are comprised of the content on this website in January 2020 when MTY Food Group was granted access to the then password-protected content. However, MTY Food Group has not confirmed this to us. Therefore, we will refer to the content on this website in January 2020 as the “whistleblower allegations” or “allegations” throughout this website. Cold Stone Creamery has not made a financial performance representation that aligns with this statement in its 2018, 2019 or 2020 FDD’s.
  2. Kickbacks are sometimes referred to as rebates and are not illegal in franchising so long as they are properly disclosed in the franchisor’s FDD.
  3. 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 Food Group’s Code of Ethics, should be referred to your attorney.
  4. Includes “[f]ranchisees who had an outlet terminated, canceled, not renewed, or otherwise voluntarily or involuntarily ceased to do business under the Franchise Agreements…” and transferred outlets.
  5. While we realize there may be other explanations that MTY Food Group and or CEO Eric Lefebvre have not issued a retraction for his statement and material impact statements for the board of directors and management’s handling of the whistleblower allegations, the Growth article will provide additional information on this overall topic based on the purported international locations disclosed in Cold Stone Creamery’s 2020 FDD.
  6. No person affiliated with is a current or past employee of MTY Food Group or its affiliates.
  7. Valuation based on February 13, 2020 and March 18, 2020 unadjusted closing prices of $59.73 and $16.58, respectively, and 24,890,000 shares outstanding. Other than the market price itself, no effect is given to MTY Food Group’s current or expired normal course issuer bid.

CNBC Documentary

In December 2010, CNBC televised a documentary titled “Behind the Counter: The Untold Story of Franchising”. During the program, Cold Stone Creamery was “portrayed in a negative light.” The program was eventually reedited. The final version is available above. For more on this document, visit

Photos from the internet