What is the significance of the absence of franchised outlet data in Cream's Item 19?

According to Cream's 2025 Franchise Disclosure Document, the absence of financial performance representations for franchised outlets in Item 19 is due to the fact that Cream had no franchised outlets operating as of December 31, 2024. Therefore, Cream is unable to provide financial results specifically for franchised locations. Instead, the financial performance data presented in Item 19 is based on the performance of 83 corporate-owned Jeni's Ice Creams Scoop Shops that operated for the entirety of the 2024 calendar year. Two corporate-owned shops opened during 2024 and two operated on a limited seasonal basis, and were excluded from the data. The financial data of the 83 corporate-owned shops is divided into quartiles based on annual Net Profit for the 2024 calendar year.

For a prospective Cream franchisee, this means they will not have access to historical financial data from existing franchised locations to help them evaluate the potential financial performance of a Cream franchise. Instead, they must rely on the data from corporate-owned stores, which may operate under different conditions or management styles than a franchised outlet. It is important to note that the FTC's Franchise Rule allows 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.

Given the lack of franchised outlet data, prospective franchisees should conduct thorough due diligence. This includes carefully reviewing the financial performance data of the corporate-owned stores, considering the differences between corporate-owned and franchised operations, and potentially visiting and interviewing current corporate store managers to gain insights into the business. Additionally, prospective franchisees should seek professional advice from a franchise attorney or consultant to help them evaluate the opportunity and understand the potential risks and rewards. Cream does state in the FDD that if you receive any other financial performance information or projections of your future income, you should report it to Cream's management.

While Cream does not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets, if you are purchasing an existing outlet, Cream may provide you with the actual records of that outlet. The FDD also states, "Some outlets have earned this amount. Your individual results may differ. There is no assurance that you'll earn as much." Written substantiation for the financial performance representation will be made available upon reasonable request.