What is the relevance of the Franchise Rule to the financial performance representations made by Cream?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
igure to promote the franchise system.
ITEM 19 FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about performance at a particular location or under particular circumstances.
As of December 31, 2024, there were a total of 87 corporate-owned Jeni's Ice Creams Scoop Shops operating in the United States. Of the 87 corporate-owned Jeni's Ice Creams Scoop Shops, 2 opened during 2024 and were not operating for the entirety of 2024, and 2 operated on a limited seasonal basis and therefore were not operating for the entirety of 2024. The data presented in this Item 19 is based
on the remaining 83 corporate-owned Jeni's Ice Creams Scoop Shops operating in the United States for the entirety of the 2024 calendar year (the "Item 19 Shops"). We had no franchised outlets operating as of the end of our most recent fiscal year and are therefore not able to present results for franchised outlets.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 51–57)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the FTC's Franchise Rule allows Cream to provide information about the actual or potential financial performance of its franchised and/or company-owned locations, provided that there is a reasonable basis for the information and it is included in the disclosure document. This rule ensures that Cream provides a level of transparency to potential franchisees regarding possible financial outcomes.
The Franchise Rule also stipulates conditions under which financial performance information can differ from what is presented in Item 19 of the FDD. Specifically, differing information may be given if Cream provides the actual records of an existing outlet the franchisee is considering buying, or if Cream supplements the information in Item 19 with details about performance at a specific location or under particular circumstances. This allows for more tailored and specific financial insights beyond the general representations made in the FDD.
Cream states that besides the financial performance representations made in Item 19, it does not make any other representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. Furthermore, Cream does not authorize its employees or representatives to make such representations, either orally or in writing. If a prospective franchisee receives any financial performance information or projections of future income from other sources, they are instructed to report it to Cream's management, the Federal Trade Commission, and the appropriate state regulatory agencies. This is to ensure that all financial information is vetted and compliant with the Franchise Rule, protecting both Cream and the potential franchisee from misleading or unsubstantiated claims.