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Crispy Cones

Crispy Cones Franchising, LLC
https://www.thecrispycones.com
1-208-479-7238
3878 Jake Way, Suite 101, Rexburg, ID 83440

Initial Investment Range

$350,650 to $594,900

Franchise Fee

$46,500 to $62,000

Crispy Cones® began in Rexburg, Idaho with the goal of reinventing the soft serve cone by incorporating unique flavors and European-style recipes.

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Crispy Cones April 1, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: July 16, 2025

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

1

Franchisor Stability Risks

Start Here
Total: 10
3
3
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor's 2024 audited financial statements show a Member's Deficit (negative net worth) of ($108,566), meaning liabilities exceed assets. The FDD explicitly warns that this financial condition “calls into question the Franchisor's financial ability to provide services and support to you.” Several state regulators have mandated that the franchisor defer collecting initial fees due to this financial weakness. This presents a significant risk to their long-term viability and ability to support franchisees.

Potential Mitigations

  • A franchise accountant must thoroughly analyze the franchisor's complete financial statements, including all notes and the auditor's report.
  • Discuss the specific risks associated with a franchisor having negative net worth and its reliance on franchise fees for cash flow with your accountant.
  • Your attorney should review the state-mandated fee deferral provisions to understand what limited protections they may offer.
Citations: Item 21, Exhibit F, FDD Page iii ('Special Risks'), Exhibit G

High Franchisee Turnover

High Risk

Explanation

In 2024, the franchisor reacquired one franchised outlet. As the system only began that year with three franchised outlets, this represents a turnover of a significant portion of the initial franchisee base. The FDD provides no explanation for this reacquisition. High turnover, especially in a young system, can be an indicator of potential issues with the business model, franchisee profitability, or the franchisor-franchisee relationship, posing a considerable risk to your potential success.

Potential Mitigations

  • It is critical to contact the former franchisee who left the system (listed in Exhibit E) to understand their experience and reasons for leaving; your attorney can help frame questions.
  • Ask the franchisor directly for a detailed explanation of why the franchisee was reacquired rather than transferred to another operator.
  • Your business advisor can help you assess if this turnover rate is a sign of systemic problems.
Citations: Item 20, Exhibit E

Rapid System Growth

Medium Risk

Explanation

Item 20 data shows extremely rapid projected growth, with 27 franchise agreements signed and 30 new outlets projected for the next fiscal year. This aggressive expansion, for a very young franchisor with a documented negative net worth, creates a risk that its support infrastructure (training, site selection, ongoing assistance) may not be able to keep pace. This could lead to a dilution of support quality for all franchisees, including you.

Potential Mitigations

  • You should question the franchisor about their specific plans and budget for scaling up their support staff and infrastructure to match this projected growth.
  • Engaging a business advisor to evaluate the franchisor's capacity to manage this expansion is a prudent step.
  • Speaking with the most recent franchisees to open can provide insight into the current quality of franchisor support.
Citations: Item 20, Item 21

New/Unproven Franchise System

High Risk

Explanation

The franchisor, Crispy Cones Franchising, LLC (Crispy Cones LLC), was formed in late 2021 and only began selling franchises in July 2022. The FDD explicitly highlights its “Short Operating History” as a special risk. Investing in a new, unproven franchise system is inherently riskier. The business model, support systems, and brand recognition are not yet well-established, which could impact your potential for success and the long-term viability of the brand.

Potential Mitigations

  • With your business advisor, conduct extensive due diligence on the backgrounds of the management team listed in Item 2, focusing on their prior industry and franchising experience.
  • Your accountant should perform a very cautious analysis of any financial projections, given the lack of a long-term performance track record.
  • Speaking with the initial group of franchisees is critical to understand the early-stage challenges and the quality of the franchisor's support.
Citations: Item 1, Item 2, FDD Page iii ('Special Risks')

Possible Fad Business

Medium Risk

Explanation

The business centers on a specialty dessert item: gourmet European-style ice cream cones. While such concepts can be popular, there is a risk that the product could be tied to a passing consumer trend rather than sustained, long-term demand. If the novelty fades, your business could face declining sales, even if your contractual obligations to the franchisor for fees and operations continue for the full 10-year term.

Potential Mitigations

  • Research the long-term market trends for specialty dessert concepts with your business advisor, beyond the initial hype.
  • Ask the franchisor about their research and development plans for new products to keep the menu fresh and relevant over time.
  • Developing your own independent market analysis with a business consultant can help gauge the local, long-term viability of the concept.
Citations: Item 1

Inexperienced Management

Medium Risk

Explanation

While the key executives in Item 2 have operated corporate locations since 2018 or 2019, their experience in managing a national franchise system is very limited, beginning only in mid-2022. Managing a franchise system requires different skills than running a few local stores, such as managing supply chains, franchisee relations, and multi-state legal compliance. This relative inexperience in franchising, coupled with rapid growth plans, presents a risk to the quality of system-wide support.

Potential Mitigations

  • A thorough review of the professional backgrounds in Item 2 with your business advisor is important to assess their specific franchising expertise.
  • During calls with existing franchisees, ask specific questions about the management team's effectiveness in providing franchise support.
  • It is wise to ask the franchisor if they have retained experienced franchise consultants to guide their growth.
Citations: Item 2, Item 1

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. Private equity ownership can sometimes lead to a focus on short-term profits over the long-term health of the brand and its franchisees. This can manifest as increased fees, reduced support, or a quick sale of the franchise system. The ownership structure disclosed in Item 1 does not indicate control by a private equity firm.

Potential Mitigations

  • Your attorney should always verify the ownership structure detailed in Item 1 of the FDD.
  • A business advisor can help research the track record of any parent company or major investor.
  • Understanding the franchisor's long-term goals is a key topic to discuss with your business advisor.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD package. The franchisor clearly discloses its parent company, Crispy Cones Holdings, LLC, in Item 1. When a franchisor is a subsidiary, the financial health of its parent can be material, especially if the franchisor relies on it for financial or operational support. There is no indication that required parent company financials have been omitted here.

Potential Mitigations

  • An attorney can help determine if a parent company's financial statements should have been included under franchise law.
  • An accountant's review of the relationship between a parent and a subsidiary is crucial for understanding the true financial backing of the franchisor.
  • Engaging legal counsel to investigate the corporate structure is a prudent step if you suspect an undisclosed parent entity.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

This risk was not identified. Item 1 of the FDD states that the franchisor has no predecessors. A predecessor is a company from which the franchisor acquired the main assets of the business. A history of predecessors with financial or legal troubles could be a warning sign of inherited systemic problems.

Potential Mitigations

  • Your attorney should always review Item 1 for any mention of predecessors and their history.
  • If predecessors are listed, a business advisor can assist in researching their public records and reputation.
  • In discussions with long-term franchisees, asking about their experience under any previous ownership is important.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

This risk was not identified. Item 3 of the FDD states there is no litigation that requires disclosure. A pattern of lawsuits, especially those initiated by franchisees alleging fraud or misrepresentation, can be a significant red flag indicating systemic problems with the franchisor or its business model. A high volume of litigation initiated by the franchisor against franchisees can also indicate an overly aggressive relationship.

Potential Mitigations

  • A thorough review of Item 3 with your franchise attorney is a critical due diligence step.
  • Your attorney can conduct public record searches for litigation that may not have been disclosed.
  • Discussing any disclosed litigation with the franchisees involved can provide valuable context.
Citations: Not applicable
2

Disclosure & Representation Risks

Total: 15
5
2
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

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3

Financial & Fee Risks

Total: 10
4
4
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

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4

Legal & Contract Risks

Total: 16
6
5
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.

5

Territory & Competition Risks

Total: 5
2
2
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.

6

Regulatory & Compliance 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.

7

Franchisor Support Risks

Total: 4
2
2
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.

8

Operational Control Risks

Total: 12
4
7
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.

9

Term & Exit Risks

Total: 18
7
8
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.

10

Miscellaneous Risks

Total: 1
1
0
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.