F79/100FDD 2026
Cold Stone Creamery — Litigation & Risk
Food & Beverage - Quick Service · FDD Items 3, 4 & 5
Elevated Risk
18 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
18
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
79 / 100
FranchiseVerdict composite
Rating
AVOID
STRONG / MODERATE / CAUTION / AVOID
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.
Total 7(a) loans
1,090
Government-backed loans issued
Default rate
31.0%
vs <3% typical · system-wide
5-yr default rate
6.3%
Defaults
286 loans
Loans charged off or defaulted
Total loan volume
$283.7M
Avg loan size
$260K
Participating lenders
209
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Arizona
State whose law governs disputes — relevant if you're not based there
What drove the 79/100 rating
Risk Score Breakdown
- 01MEDNo Item 19 (average unit volume) disclosed - unable to verify if $604k avg revenue translates to profitability
- 02MINORUnprotected territory creates direct competition risk from other Cold Stone locations and cannibalization
- 03HIGHLitigation history shows pattern of franchisor-franchisee disputes including fraud/misrepresentation claims and territory buybacks
- 04MINORSlow unit growth (6.0% YoY) on declining base of 1,054 units suggests mature/saturated market with franchisee struggles
- 05MINORHigh initial investment ($390k-$681k) combined with 6% royalty + $10/week surcharge creates thin margin vulnerability
- 06HIGHGoing concern status is False, indicating potential financial stability concerns at franchisor level
Severity inferred from FDD text — not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.