Why is Cream unable to present financial results for franchised outlets in Item 19?

According to Cream's 2025 Franchise Disclosure Document, Cream is unable to present financial results for franchised outlets in Item 19 because they had no franchised outlets operating as of the end of their most recent fiscal year. Instead, the financial performance representations in Item 19 are based on the performance of 83 corporate-owned Jeni's Ice Creams Scoop Shops that operated for the entirety of the 2024 calendar year. These shops are referred to as the "Item 19 Shops" and their data is divided into quartiles based on annual Net Profit.

Cream's FDD specifies 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, provided there is a reasonable basis for the information and it is included in the disclosure document. However, Cream is only presenting data for company-owned stores due to the absence of franchised operations during the reporting period. This is a common situation for new or emerging franchise systems that may not yet have a significant number of operating franchises.

For a prospective Cream franchisee, this means that the financial performance data provided is based solely on corporate-owned stores, which may operate differently than franchised locations. Factors such as local market conditions, management experience, and operating costs can vary significantly between corporate and franchised outlets. Therefore, it is important for potential franchisees to consider these differences when evaluating the financial performance representations provided in Item 19. Cream does state that if you are purchasing an existing outlet, they may provide you with the actual records of that outlet.

Given the lack of franchised outlet data, prospective franchisees should conduct thorough due diligence, including speaking with existing franchisees of Cream (if any exist), researching local market conditions, and developing a detailed business plan with realistic financial projections. It would be prudent to ask Cream for any internal projections or expectations they have for franchised locations, even if they cannot be formally presented in Item 19. Understanding the assumptions and methodologies behind any financial information, whether from corporate stores or projected for franchises, is crucial for making an informed investment decision.