Cold Stone Creamery Franchise Cost & Fees

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Description

Donald and Susan Sutherland opened the first Cold Stone Creamery in 1988 in Tempe, Arizona. Franchising began in 1994, and the company is now owned by Kahala, which also franchises Blimpie, Surf City Squeeze, TacoTime and other concepts. Each Cold Stone store makes its ice cream fresh daily, and the ice cream is blended by hand with fruits, nuts, candy, cookies and more according to customers’ requests.

Year Began Business: 1992

Franchising Since: 1994

Headquarters: Scottsdale, Arizona

Estimated Number of Units: 1,250

Franchise Description: The franchisor of Cold Stone Creamery is Kahala Franchising, L.L.C. Cold Stone Creamery restaurants specialize in super-premium fresh made ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages, soft drinks and other frozen dessert products (prepared using proprietary recipes) and an assortment of complementary toppings and mix-ins on a take-out or eat-in basis, soup and branded, licensed products. Franchisees also have the option of having a yogurt bar and selling Cold Stone Yogurt Bar products in their restaurant. If qualified, the franchisee may (i) construct a new Cold Stone Creamery restaurant; (ii) purchase one of the franchisor’s Cold Stone Creamery franchises by acquiring an existing business from another franchisee or from the franchisor; or (iii) convert all of the franchisee’s existing retail operations from another brand to the Cold Stone Creamery brand.Training Overview: A training program is available to franchisees and their designated representative. The program consists of 40 hours of classroom training and 80 hours of on-the-job training. The classroom portion of the Training Program will be held at KTEC, which is located at the franchisor’s corporate offices in Scottsdale, Arizona, and the in-store portion of the training program will be held at one of the franchisor’s affiliated restaurants in the metropolitan Phoenix, Arizona area, or at such other location(s) as the franchisor may designate in its sole discretion. The franchisor will provide one of its representatives to come to the restaurant during opening week for up to five days at its expense to work with the franchisee and manager on their grand opening, and on operating and marketing the restaurant. The franchisor may, in the future, hold refresher or additional training programs, conferences and seminars. The franchisee’s attendance at these programs is mandatory.

Territory Granted: The franchise is granted only for the location specified in the Franchise Agreement or a location to be approved by the franchisor. Franchisees will not receive an exclusive territory. The franchisor (and/or affiliates) may establish other franchised or company-owned Cold Stone Creamery restaurants that may compete with the franchisee’s location, including across the street from the location or in the same building or shopping center as the franchisee’s location. Obligations and Restrictions: While the Franchise Agreement does not specifically require franchisees or their principals to personally participate in the direct operation of the franchise, it is the franchisor’s intention to select as Cold Stone Creamery franchisees only those who plan to actively participate in the direct operation and daily affairs of the Cold Stone Creamery restaurant. The franchise must be personally managed with on-premises supervision and directly operated by franchisees or another partner, shareholder or member of the business organization, or a manager who must have successfully completed the Training Program.

The franchisor strongly recommends that franchisees devote a substantial amount of time to the Cold Stone Creamery restaurant. Additionally, the franchisee must employ on a full time basis at least one on-premises supervisor (Manager) for the restaurant. The franchisor requires that the business is solely that of a Cold Stone Creamery restaurant, and franchisees may not conduct any other business or activity at the site of the restaurant without prior written approval. For traditional restaurants, franchisees must offer the full menu prescribed by the franchisor, subject to change from time to time in its sole discretion. Non-traditional restaurants may offer a more limited menu than the traditional restaurant, as detailed in the Operations Manual. Term of Agreement and Renewal: For a new or existing non-operating Cold Stone Creamery restaurant, the length of the initial franchise term is the earlier of the following: (i) 10 years from the date the restaurant opens to the public if franchisees own the property, or enter into a lease directly with the landlord or other third party, or (ii) the term of the sublease if they enter into a sublease with a Kahala Franchising affiliate, excluding any extensions and renewal options. If franchisees are not in default and satisfy certain conditions, they may renew for a single renewal term of five years, with no further right to renew at the end of the renewal term.

Financial Assistance: The franchisor does not offer any direct or indirect financing or financing arrangement, nor will it guaranty the franchisee’s obligations under any note or other obligation, except potentially for the lease for the site or if the franchisee purchases a restaurant corporate-owned “as-is” by one of the franchisor’s affiliates, and only in its sole and absolute discretion. If, in order to obtain the lease agreement for the site of a Cold Stone Creamery restaurant, the landlord requires the franchisee to obtain a third party lease guarantee, and the franchisor or one of its affiliates agrees to serve as such guarantor (with such determination to be made in the franchisor’s sole and absolute discretion), the franchisee will pay a lease guarantee fee. If franchisees purchase a corporate restaurant “as-is” that is owned and operated by one of the franchisor’s affiliates, it may finance up to 100% of the purchase price, at its sole discretion.

 

Investment Tables: Estimated Initial Investment Name of Fee Low High Initial Franchise Fee $8,000 $27,000 Rent/Security Deposit (for 3 months) $0 $26,000 Travel and Living Expenses (2 people) while training, not including salaries, if any $3,000 $7,500 Real Estate Varies Lease Review Fee $0 $1,250 Architectural Fees $1,000 $10,000 Leasehold Improvements $0 $200,000 Exterior Signage $1,500 $12,000 Equipment $8,000 $130,000 PCI Compliance Costs $150 $1,300 Opening Inventory $1,000 $8,000 Employee Uniforms $200 $800 Grand Opening Advertising $2,000 $10,000 Insurance Premiums $500 $2,500 Permits and Licenses $500 $3,000 Telephone and Utility Deposits and Hookups $250 $1,000 Computer Training and Food Safety Certification Course $100 $250 Miscellaneous $1,000 $3,925 Depository Account $3,000 $3,000 Additional Funds – 3 month initial period $20,000 $20,000 Estimated Total (Does not include real estate costs and/or rent for the business location except for the initial security deposit) $50,200 $467,525 *The estimated initial investment range covers from Non-Traditional to Traditional restaurant types, including Kiosks. For more details, see FDD.

Other Fees Type of Fee Amount Royalty Fee and Surcharge 6% of Gross Sales plus a maximum Surcharge of $10 per week. Advertising Fees (Excluding Cold Stone Express Kiosk) 3% of weekly Gross Sales. Advertising Fees (for Cold Stone Express Kiosk ONLY) 1% of weekly Gross Sales. Additional People Training Fee $1,500 per person ($750 per person for the In-Store portion of the Training Program, and $750 per person for the New Owner Training portion of the Training Program). Additional Training $300 per person per day. Annual Meeting Registration Fee Up to $1,000 plus incidental costs to attend Depository Account $3,000 (Must be replenished on a regular basis) Charitable Contributions To be determined by the franchisor. Data Fees Up to $75 per month (subject to reasonable annual and/or service enhancement increases) POS Help Desk Phone Support Maintenance Contract Fee Up to $55 per month Gift Card Redemption Fee 11% of the amount of the gift card redemption. Renewal Fee – Traditional Restaurant 50% of the then-current Initial Franchise Fee Renewal Fee – Non-Traditional Restaurant (excluding Cold Stone Express Kiosk) 50% of the then-current Initial Franchise Fee for a non-traditional location Renewal Fee for Cold Stone Express Kiosk ONLY 50% of the then-current Initial Franchise Fee for a Express kiosk ONLY Transfer Fee – Traditional Restaurant $17,500 Transfer Fee – Non-Traditional Restaurant (excluding Cold Stone Express Kiosk) $5,000 Transfer Fee for Cold Stone Express Kiosk ONLY $1,000 Relocation Fee $500 Non-participation Fee $100 per day if the franchisee fails or refuses to participate in any required national, local, regional, seasonal, promotional or other program, initiative and campaign or in any new or modified product or service test or offering. Document Administration Fee (if redraft is requested by franchisee) $500 Default Interest $50 plus interest at 1.5% per month or maximum legal rate, if less Document Late Charge $100 per week or partial week. Draft Draw Charge $100 per day. Late Charge 5% of the unpaid amount or $100, whichever is greater, on royalties, advertising payments, and other amounts unpaid within 10 days. Sublease Late Charge 5% of the late or unpaid amount plus any late charges and interest incurred under the Master Lease as a result of the late payment (where applicable) Collection Costs All collection costs including reasonable attorneys’ fees. Non-Sufficient Funds $50 for each electronic funds transfer returned for non-sufficient funds; $25 for each check or draft returned for non-sufficient funds. Audit Cost of Audit plus interest at Default Rate on underpayments or the maximum rate permissible by law. Early Termination Fee The average monthly Royalty and Advertising Fees during the preceding 12-month period multiplied by the number of months remaining in the term of the Franchise Agreement, and the product is divided by 2 Attorneys’ Fees and Costs Will vary under the circumstances. Indemnification of the franchisor and/or affiliates for damages suffered or incurred for the franchisee’s actions or omissions, including amounts paid on the franchisee’s behalf or to cure the breaches under the Franchise Agreement Will vary under the circumstances. Liquidated Damages for Breach of Non-Compete Obligations under the Franchise Agreement Will vary under the circumstances. Management Fee 6% of the Franchised Business’ Gross Sales (in addition to the Royalty Fee and Advertising Fee) plus our direct out-of-pocket costs and expenses.

Disclaimer :The above information has been taken from the FDD of Cold Stone Creamery. Year of FDD: 2018

 

Other Fees
Type of Fee Amount
Royalty Fee and Surcharge 6% of Gross Sales plus a maximum Surcharge of $10 per week.
Advertising Fees (Excluding Cold Stone Express Kiosk) 3% of weekly Gross Sales.
Advertising Fees (for Cold Stone Express Kiosk ONLY) 1% of weekly Gross Sales.
Additional People Training Fee $1,500 per person ($750 per person for the In-Store portion of the Training Program, and $750 per person for the New Owner Training portion of the Training Program).
Additional Training $300 per person per day.
Annual Meeting Registration Fee Up to $1,000 plus incidental costs to attend
Depository Account $3,000 (Must be replenished on a regular basis)
Charitable Contributions To be determined by the franchisor.
Data Fees Up to $75 per month (subject to reasonable annual and/or service enhancement increases)
POS Help Desk Phone Support Maintenance Contract Fee Up to $55 per month
Gift Card Redemption Fee 11% of the amount of the gift card redemption.
Renewal Fee – Traditional Restaurant 50% of the then-current Initial Franchise Fee
Renewal Fee – Non-Traditional Restaurant (excluding Cold Stone Express Kiosk) 50% of the then-current Initial Franchise Fee for a non-traditional location
Renewal Fee for Cold Stone Express Kiosk ONLY 50% of the then-current Initial Franchise Fee for a Express kiosk ONLY
Transfer Fee – Traditional Restaurant $17,500
Transfer Fee – Non-Traditional Restaurant (excluding Cold Stone Express Kiosk) $5,000
Transfer Fee for Cold Stone Express Kiosk ONLY $1,000
Relocation Fee $500
Non-participation Fee $100 per day if the franchisee fails or refuses to participate in any required national, local, regional, seasonal, promotional or other program, initiative and campaign or in any new or modified product or service test or offering.
Document Administration Fee (if redraft is requested by franchisee) $500
Default Interest $50 plus interest at 1.5% per month or maximum legal rate, if less
Document Late Charge $100 per week or partial week.
Draft Draw Charge $100 per day.
Late Charge 5% of the unpaid amount or $100, whichever is greater, on royalties, advertising payments, and other amounts unpaid within 10 days.
Sublease Late Charge 5% of the late or unpaid amount plus any late charges and interest incurred under the Master Lease as a result of the late payment (where applicable)
Collection Costs All collection costs including reasonable attorneys’ fees.
Non-Sufficient Funds $50 for each electronic funds transfer returned for non-sufficient funds; $25 for each check or draft returned for non-sufficient funds.
Audit Cost of Audit plus interest at Default Rate on underpayments or the maximum rate permissible by law.
Early Termination Fee The average monthly Royalty and Advertising Fees during the preceding 12-month period multiplied by the number of months remaining in the term of the Franchise Agreement, and the product is divided by 2
Attorneys’ Fees and Costs Will vary under the circumstances.
Indemnification of the franchisor and/or affiliates for damages suffered or incurred for the franchisee’s actions or omissions, including amounts paid on the franchisee’s behalf or to cure the breaches under the Franchise Agreement Will vary under the circumstances.
Liquidated Damages for Breach of Non-Compete Obligations under the Franchise Agreement Will vary under the circumstances.
Management Fee 6% of the Franchised Business’ Gross Sales (in addition to the Royalty Fee and Advertising Fee) plus our direct out-of-pocket costs and expenses.