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Cookies By Design

Cookies Franchise Holdings LLC
https://www.cookiesbydesign.com
1-908-264-2054
110 Hillside Avenue, Suite 304, Springfield, New Jersey 07081

How much does Cookies By Design cost?

Initial Investment Range

$159,500 to $374,500

Franchise Fee

$30,000 to $60,000

You will operate a retail “shop” under the tradename COOKIES BY DESIGN that produces decorated cookies, gourmet cookies, fanciful cookie arrangements, and related products for retail sale to the general public.

Enjoy our partial free risk analysis below

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Cookies By Design January 2, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: August 19, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
4
2
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor explicitly warns of its financial condition and a “Going Concern” notice from its auditor. The parent company’s audited financials in Exhibit E show a net loss of over $599,000 for the fiscal year ended May 31, 2024, and a negative members' equity (deficit). This indicates a significant risk that Cookies Franchise Holdings LLC (Cookies LLC) may lack the financial resources to provide ongoing support, invest in the brand, or even remain in business, jeopardizing your investment.

Potential Mitigations

  • Your accountant must conduct a thorough analysis of the parent company's audited financial statements, including the 'going concern' note and the parent guarantee.
  • A business advisor can help you assess if the franchisor has a viable plan to achieve profitability and financially support its franchisees.
  • It is critical to discuss with your attorney the potential implications of investing in a franchise with a documented 'going concern' risk.
Citations: Item 4, Item 21, Exhibit E, Special Risks to Consider About This Franchise

High Franchisee Turnover

High Risk

Explanation

The franchisor highlights a high turnover rate as a special risk, stating over 27% of franchised outlets were terminated, not renewed, or ceased operations in the last three years. Item 20 data confirms this, showing a net loss of 13 franchised units from a starting base of 50 over that period. This high rate of franchisee exit is a critical warning sign that may indicate systemic problems, such as lack of profitability, franchisee dissatisfaction, or inadequate support.

Potential Mitigations

  • A detailed analysis of the Item 20 tables with your accountant is essential to understand the full scope of franchisee turnover.
  • You should contact a significant number of former franchisees listed in Exhibit G to understand their reasons for leaving the system.
  • Discussing the high turnover rate directly with the franchisor, with guidance from your business advisor, may provide additional context.
Citations: Item 20, Special Risks to Consider About This Franchise

Rapid System Growth

Low Risk

Explanation

This risk was not identified. The FDD does not indicate rapid system growth; in fact, Item 20 data shows the franchise system has been shrinking in size over the last three years. While this avoids the risks of outpacing support infrastructure, it presents the opposite risk of a declining brand presence.

Potential Mitigations

  • In any franchise, it is wise to have a business advisor help you assess the franchisor's growth strategy and its capacity to support the existing system.
  • Your accountant should review the franchisor's financial investment in franchisee support services relative to its size and growth.
  • Legal counsel can help you understand the franchisor's contractual obligations for support, regardless of system size.
Citations: Not applicable

New/Unproven Franchise System

High Risk

Explanation

The franchisor, Cookies LLC, is a new entity formed in July 2023 and explicitly states in Item 1 it has never operated a cookie shop itself. It relies on the experience of a predecessor and its newly hired management. A new, unproven franchisor, even one taking over an existing system, presents a higher risk due to a lack of its own track record in providing support, managing the brand, and maintaining franchisee relations.

Potential Mitigations

  • It is crucial to perform extensive due diligence on the new management's specific plans for the system with your business advisor.
  • Your attorney should scrutinize the transfer of assets and obligations from the predecessor to the new franchisor.
  • Speaking with long-term franchisees who have experienced the transition from the predecessor can provide valuable insight.
Citations: Item 1, Item 2, Item 21, Special Risks to Consider About This Franchise

Possible Fad Business

Low Risk

Explanation

This specific risk was not identified in the FDD package. The core business of selling decorated cookies and cookie arrangements has a long history through the predecessor franchisor, which operated for 16 years. This suggests a level of sustained consumer demand rather than a business model based on a recent or potentially fleeting trend.

Potential Mitigations

  • For any business investment, a business advisor can help you conduct independent market research to assess long-term consumer demand.
  • You should evaluate the franchisor's plans for innovation and adaptation to stay relevant in the marketplace.
  • An accountant can assist in modeling the financial resilience of the business in various economic scenarios.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

The franchisor's new management team has experience in other industries and with other franchise systems, such as Cosi, Inc. However, their experience with this specific brand is very recent. Item 4 discloses that Cosi, Inc. filed for bankruptcy while the current franchisor's executives were officers and directors there. This history, combined with their newness to the Cookies by Design system, presents a risk regarding their ability to successfully lead this specific brand.

Potential Mitigations

  • A business advisor can help you thoroughly vet the management team's track record, including the context of the prior bankruptcy.
  • It would be beneficial to ask current franchisees about their confidence in the new leadership and the quality of support since the transition.
  • Your attorney can help you understand any ongoing connections or obligations related to the management's prior business activities.
Citations: Item 2, Item 4

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. The disclosures in Item 1 and Item 2 do not indicate that the franchisor is owned by a private equity firm. Ownership appears to be held by Cookies USA LLC, which is managed by individuals.

Potential Mitigations

  • Understanding the ownership structure of any franchisor is a key piece of due diligence that your attorney can assist with.
  • A business advisor can help research the track record of the ownership group, regardless of whether they are a PE firm or private individuals.
  • Always ask current franchisees about any recent changes in ownership and the impact on the system.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This specific risk was not identified. The FDD is transparent about its structure. Item 1 clearly discloses the parent company, Cookies USA LLC, and provides a guarantee of performance from the parent. The parent company's financial statements are included as an exhibit, providing the necessary information for a full risk assessment.

Potential Mitigations

  • Your attorney should always verify the corporate structure of a franchisor to ensure all parent and affiliate relationships are properly disclosed.
  • If a parent company guarantee is provided, an accountant must review the parent's financial statements to assess the real value of that guarantee.
  • A business advisor can help you understand the operational relationship between a franchisor and its parent company.
Citations: Not applicable

Predecessor History Issues

Medium Risk

Explanation

The franchisor is a new entity that acquired the system from a predecessor, Designed Cookies, Inc. Item 3 discloses significant litigation against this predecessor, including a suit from former franchisees alleging fraud and breach of contract. Furthermore, Item 4 discloses that the new management was involved in the bankruptcy of another company. This history suggests potential inherited systemic issues and a management background that includes business distress, creating risk for a new franchisee.

Potential Mitigations

  • A thorough review of the predecessor's litigation history in Item 3 with your attorney is crucial.
  • It is important to discuss with your business advisor how the new management plans to address issues that may have existed under the predecessor.
  • Speaking with franchisees who operated under both the old and new ownership can provide invaluable context.
Citations: Item 1, Item 3, Item 4

Pattern of Litigation

High Risk

Explanation

A significant lawsuit is disclosed in Item 3, initiated by three former franchisees against the predecessor franchisor. The claims are serious and numerous, including fraud, breach of contract, and violations of the FTC Franchise Rule and state law. A lawsuit involving multiple franchisees with such severe allegations may indicate a pattern of systemic problems or deep-seated franchisee dissatisfaction within the system that Cookies LLC has acquired.

Potential Mitigations

  • Your attorney must carefully analyze the specific allegations, status, and potential implications of the multi-franchisee lawsuit disclosed in Item 3.
  • Considering the gravity of the allegations, you should treat this disclosure as a significant red flag in your overall risk assessment.
  • A discussion with your business advisor about how such historical disputes could affect the current franchisor-franchisee relationship is warranted.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
3
1
11

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

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3

Financial & Fee Risks

Total: 10
4
5
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

4

Legal & Contract Risks

Total: 16
4
8
4

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

5

Territory & Competition Risks

Total: 5
3
0
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

6

Regulatory & Compliance Risks

Total: 10
5
2
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

7

Franchisor Support Risks

Total: 4
2
1
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
3
4
5

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
7
3
8

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 2
1
1
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.