Cookies by Design Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$160,000 - $345,000
Franchise Fee
$30,000
Total US Locations
37
Business Summary
COOKIES BY DESIGN operates a retail 'shop' that produces decorated cookies, gourmet cookies, fanciful cookie arrangements, and related products for retail sale to the general public. The business also includes proprietary methods for operation, merchandising, advertising, and training. Shops are typically 1,200 to 1,400 square feet and located in shopping malls or urban storefronts. COOKIES BY DESIGN franchisees may also operate smaller Satellite or Kiosk locations and offer extended hand delivery and shipping services for products.
Corporate History
COOKIES BY DESIGN was formed on July 27, 2023, as a Delaware limited liability company and is a wholly-owned subsidiary of Cookies USA LLC. It operates solely under its corporate name and the COOKIES BY DESIGN trademark. The current franchisor has never operated a shop of the type offered to franchisees. The predecessor franchisor, Designed Cookies, Inc., a Texas limited liability company, offered franchises for 16 years from December 2007 through June 1, 2023. Designed Cookies, Inc. also operated a COOKIES BY DESIGN shop from 2008 through June 2023.
Financial Overview
Investment Range
$160,000 - $345,000
Franchise Fee (Low)
$30,000
Franchise Fee (High)
$30,000
Royalty %
6%
Marketing %
3%
Equipment Costs (Low)
$72,000
Equipment Costs (High)
$205,000
Working Capital
$30,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Going concern qualification
Financial Health Notes
COOKIES USA LLC, the parent company of COOKIES BY DESIGN, incurred a significant net loss of $599,505 for the fiscal year ending May 31, 2024. The company is also facing low liquidity compared to its short-term obligations, has deficiencies in working capital, and experienced negative cash flows from operations. These issues create substantial doubt about COOKIES USA LLC's ability to continue operating as a going concern. Management plans to address these concerns by modifying operations to increase franchise sales and reduce costs, and the company's members have committed to contributing additional funds if necessary. They have guaranteed the ongoing operation of the company for the next twelve months, barring extraordinary events.
Financing Details
COOKIES BY DESIGN does not offer any direct or indirect financing to franchisees. Franchisees will need to secure their own funding without guarantees from COOKIES BY DESIGN for notes, leases, or other obligations.
Performance Metrics
Total US Locations
37
Franchised Units
37
Corporate Units
1
Avg Square Footage
1,300
Franchising Since
2007
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
Yes
Litigation Count
2
Litigation Summary
COOKIES BY DESIGN's predecessor, Designed Cookies, Inc., is involved in two pending litigation actions. The first case, filed in Canada on April 3, 2024, is from a third party operating a business called CAKES BY DESIGN who claims trademark infringement against the predecessor franchisor and a former franchisee in Toronto. The plaintiff is seeking over $50,000 in monetary relief and attorneys' fees, and the defendants have denied all allegations. COOKIES FRANCHISE HOLDINGS LLC, the current franchisor, is not a party to this complaint. The second case, filed on July 2, 2023, in Texas, involves former franchisees of three shops who are suing the predecessor franchisor and some of its officers and affiliates. These former franchisees allege violations of federal and state business opportunity laws, breach of contract, fraud, negligent misrepresentation, and violations of the Texas Deceptive Trade Practices Act, among other claims. They are seeking over $1,000,000 in monetary relief and attorneys' fees. The defendants have denied all allegations and have filed a motion for summary judgment.
Bankruptcy History
COOKIES BY DESIGN's key personnel, Andrew Berger and David Polonitza, have a history of involvement with companies that filed for Chapter 11 bankruptcy. Andrew Berger and David Polonitza were officers and directors of Cosi, Inc. and its subsidiaries when Cosi, Inc. filed for Chapter 11 bankruptcy on February 24, 2020. This case was initially dismissed in May 2021 but reinstated in July 2022, leading to a Plan of Reorganization becoming effective in August 2022. Separately, Andrew Berger and David Polonitza were also officers of entities investing in Cosi, Inc. when it commenced a Chapter 11 case on September 28, 2016. This resulted in Cosi, Inc.'s stock being delisted and deregistered, and a Plan of Reorganization was approved in April 2017, effective May 2017, leading to a change in ownership.
Agreement Terms
Initial Term
5 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, COOKIES BY DESIGN franchisees must provide written notice between 6 and 12 months before their current term ends. They must be in full compliance with their Franchise Agreement and any other agreements with COOKIES BY DESIGN or its affiliates, have the legal right to occupy their shop for the new term, and have completed all required maintenance and remodeling to meet current standards. Franchisees will also need to sign COOKIES BY DESIGN's then-current form of Franchise Agreement, which may have different terms, and pay a $5,000 renewal fee.
Training & Support Program
Franchisor Assistance
COOKIES BY DESIGN provides franchisees with several forms of assistance. Before opening, COOKIES BY DESIGN will approve or deny a proposed site within 30 days and offers one free on-site evaluation of a potential location. It also provides initial training for two individuals and grants access to its Operations Manuals. For the grand opening, COOKIES BY DESIGN sends one representative for up to three days of on-site assistance at no cost. On an ongoing basis, COOKIES BY DESIGN offers advisory assistance for operating the shop and, upon request and at the franchisee's expense, provides approved local advertising and promotional materials.
Initial Training Hours
82
Training Location
Corporate shop in Plano, Texas
Ongoing Support
COOKIES BY DESIGN provides ongoing advisory assistance to its franchisees for the operation of their shops, as deemed advisable by the franchisor. It also maintains an Advisory Council, comprising franchisees in good standing, which offers advice on areas like advertising, training, and research and development.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Supervisory
Territory Type
Protected
Territory Size Requirements
COOKIES BY DESIGN grants franchisees a Designated Territory that includes a minimum population of 100,000 individuals. This territory is defined by specific U.S. Postal Zip Codes, and its boundaries are further identified by a map attached to the Franchise Agreement.
Staffing Notes
COOKIES BY DESIGN requires that each shop be supervised by a fully trained General Manager who dedicates their full-time efforts to the operation. Franchisees must maintain a competent, trained staff in numbers sufficient to serve customers, with at least a manager or shift leader on duty whenever the shop is open. Staff must also adhere to uniform and dress code requirements. COOKIES BY DESIGN clarifies that it does not control employment matters; franchisees are solely responsible for hiring, wages, benefits, hours, and discipline for their employees.