THERE IS A SUBSTANTIAL RISK OF FAILURE ASSOCIATED WITH MTY FRANCHISES. MTY AVERAGED AN 11% CLOSURE RATE IN FIVE YEARS WHILE CHARGING FRANCHISEES $239 MILLION IN KICKBACKS ON TOP OF REGULAR FEES. THEY CLOSED 2,594 LOCATIONS FROM 2016 THROUGH Q2, 2021. KICKBACKS CAUSE FRANCHISES TO COLLAPSE!

MTY’S BOARD MADE FALSE STATEMENTS TO INVESTORS WHILE ENGAGING IN A COVER-UP TO CONCEAL THAT IT WAS REPORTING FALSE DATA TO HIDE THAT ITS FRANCHISE NETWORK IS COLLAPSING. ITS CHAIRMAN, STANLEY MA, SOLD $43 MILLION OF STOCK WITHOUT CORRECTING THE FALSE STATEMENTS TO INVESTORS—POTENTIALLY COMMITTING INSIDER TRADING. MTY THEN INCREASED KICKBACKS BY $5.3 MILLION ON FRANCHISEES AND AUTHORIZED $3 MILLION IN ANNUAL DIVIDENDS TO STANLEY MA.

MTY/Cold Stone Franchise 500 Ranking

Updated on October 21, 2021

Entrepreneur.com is widely regarded as the premiere resource for potential franchise investors. The website also publishes the Franchise 500—a ranking of franchises based on various data inputs provided by the franchise company. The ranking is influential in many potential franchise investors’ decision-making; therefore, franchisors covet the honor of being listed.

According to an overview of the Franchise 500 methodology, size and growth are top priorities in selecting and ranking the companies. In its 2020 reporting to Entrepreneur.com, MTY/Cold Stone overstated the size of its global franchise network by at least 253 locations. It also overstated the growth of its global franchise network by 56 locations.

According to rankingthebrand.com, MTY/Cold Stone hadn’t been ranked in the Franchise 500 since 2016. In 2020 alone, in addition to declining 12 locations, MTY/Cold Stone had 104 franchisees leave the system (at least 10.4% its network; PDF pgs. 100-105), admitted it has fewer than 1,000 global locations and has therefore been overstating its total stores by as much as more than 500 locations for years (see Item 4).

This is particularly noteworthy when one considers that the company ranked at 390—one spot ahead of MTY/Cold Stone—gained one location during 2020 after gaining 42 locations in the preceding eight years. The company ranked just behind MTY/Cold Stone at 392 lost five locations during 2020 after gaining 48 stores in the preceding two years. In stark contrast, however, based on the information published to Entrepreneur.com and its federal disclosures, MTY/Cold Stone lost 56 locations during 2020 after losing 208 locations in the preceding eight years.

MTY/Cold Stone was not worthy of a 2020 Franchise 500 ranking in our view—let alone a top 400 ranking.

Entrepreneur.com would have known this had MTY/Cold Stone submitted accurate data. If Entrepreneur.com had full knowledge of how poorly the company had performed in 2020, they would have likely come to the same decision they reached since 2016; a company other than MTY/Cold Stone was more deserving of place on the Franchise 500. As it stands, whichever company placed 501 in the ranking was likely cheated of an honor they worked hard for and deserved. That company’s omission was likely because of MTY/Cold Stone’s continued pattern of false statements.

As if MTY/Cold Stone’s cheating weren’t enough, the company then published an article to its franchisee recruitment website to boast that it had a “banner” year. The company also bragged that its ranking proved the company “can measure up”.  Curiously, the article states that MTY/Cold Stone “experienced growth in terms of new locations”. This is the company’s attempt to create a new definition for growth that excludes closures—similar to a measurement of population growth that excludes those who move out of town. The article further takes the  Franchise 500 ranking out of context referring to it as a “list of the top investment opportunities for 2021”, which is entirely inconsistent with the methodology overview which states the list is not intended to “endorse, advertise, or recommend any particular franchise.”

Shamelessly, the company was looking to lure more franchise investors using the trappings of its sleight of hand move after reporting false data to Entrepreneur.com.