Rocky Mountain Chocolate Factory Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$126,297 - $824,888
Total US Locations
152
Business Summary
Rocky Mountain Chocolate Factory offers franchises for retail stores that specialize in selling premium chocolates and other confectionery products. These stores feature both branded candies manufactured by Rocky Mountain Chocolate Factory and confectionery items prepared fresh in the store, such as caramel apples. Stores also sell non-confectionery items like gifts and small toys. Locations are typically found in high-foot-traffic areas like malls, airports, and tourist centers, with options for full-sized stores averaging 1,000 square feet or smaller kiosk-sized stores ranging from 100 to 260 square feet.
Corporate History
Rocky Mountain Chocolate Factory, Inc. was founded and began operating its retail and manufacturing business in May 1981 in Colorado. The company was incorporated on November 30, 1982, and started offering franchises for its ROCKY MOUNTAIN CHOCOLATE FACTORY Stores in 1982. From 1996 to 1998, Rocky Mountain Chocolate Factory also offered franchises for 'FUZZIWIG'S CANDY FACTORY' stores, which sold bulk candy. In August 2009, Rocky Mountain Chocolate Factory entered a Master License Agreement with Cold Stone Creamery, Inc. to integrate its products into COLD STONE CREAMERY stores.
Financial Overview
Investment Range
$126,297 - $824,888
Franchise Fee (High)
$35,000
Royalty %
6%
Marketing %
1%
Equipment Costs (Low)
$48,655
Equipment Costs (High)
$196,095
Working Capital
$44,704
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion, Going concern qualification
Financial Health Notes
The independent auditors for Rocky Mountain Chocolate Factory have noted substantial doubt about the company's ability to continue as a going concern. This concern stems from the company incurring a net loss of $4.2 million and using $2.4 million in cash from operating activities during the fiscal year ended February 29, 2024. Additionally, Rocky Mountain Chocolate Factory was not in compliance with a credit agreement requirement to maintain a current ratio of at least 1.5 to 1, with its ratio being 1.19 to 1 as of February 29, 2024. While a waiver for this non-compliance was obtained, the credit agreement is set to expire on September 30, 2024. Management is actively working to strengthen liquidity by exploring waivers/amendments to its credit line, considering supplemental debt facilities, planning to sell an unused parcel of land, reducing manufacturing overhead, increasing profit margins through chocolate price sales, and benefiting from holiday sales. The company also intends to hire a CFO.
Financing Details
Rocky Mountain Chocolate Factory does not offer direct or indirect financing to its franchisees, nor does it guarantee their notes, leases, or other obligations.
Performance Metrics
Total US Locations
152
Franchised Units
150
Corporate Units
2
Avg Square Footage
1,000
Franchising Since
1982
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
2
Litigation Summary
Rocky Mountain Chocolate Factory has disclosed two litigation cases. The first case, Tomco LLC v. Aspen Leaf Yogurt, LLC, Rocky Mountain Chocolate Factory, Inc. and U-Swirl, Inc., was filed on October 29, 2014, and settled and dismissed on July 20, 2016. It involved allegations of breach of lease, property damage, and misrepresentation related to an asset transfer to avoid liability. The second case, Immaculate Confection, Ltd. v. Rocky Mountain Chocolate Factory, Inc., was filed on July 20, 2021, and dismissed on October 27, 2021. This case involved allegations of defamation, breach of good faith and fair dealing, intentional interference with contracts, and civil conspiracy, all in connection with an earlier lawsuit initiated by Rocky Mountain Chocolate Factory.
Bankruptcy History
Rocky Mountain Chocolate Factory has no bankruptcy history to report for the franchisor or its key personnel.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise, Rocky Mountain Chocolate Factory franchisees must pay a renewal fee, sign a general release of claims, maintain possession of their store, and upgrade or remodel it to meet current brand standards. They must also sign the franchisor's then-current franchise agreement, which may contain materially different terms. Franchisees must be in full compliance with their current agreement at the time of giving written notice of their election to renew and at the start of the renewal term.
Training & Support Program
Franchisor Assistance
Before opening, Rocky Mountain Chocolate Factory assists franchisees with lease approval, site approval, and provides advice on store conversion, design, decoration, and supplier selection. They also conduct initial training in Durango, Colorado (or via remote transmission/existing location) and loan an Operations Manual covering various aspects of store operation. Up to five days of on-site opening assistance is provided, beginning approximately three days before opening. During operation, Rocky Mountain Chocolate Factory guides franchisees on standards, purchasing, advertising, marketing, employee training, administration, bookkeeping, accounting, and inventory control. Additional on-site assistance can be requested, for which the franchisee may be charged for expenses and fees.
Initial Training Hours
45
Training Location
Durango, Colorado, or via webinar or other remote transmission, or at an existing franchised location, at our discretion
Ongoing Support
Rocky Mountain Chocolate Factory provides ongoing guidance to franchisees on operating standards, specifications, and procedures, as well as assistance with purchasing required products and services. They also offer guidance on advertising and marketing materials and programs, employee training, administrative, bookkeeping, accounting, and inventory control procedures. The franchisor makes its employees or designated agents available for advice and assistance regarding the ongoing operation of the store. Franchisees may be required to attend national, regional, or local meetings, training seminars, or conferences (up to three days in length, notified 30 days in advance) at their own expense, and may also be required to attend occasional webinars. An annual meeting of all franchisees may also be organized.
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
Staffing Notes
Rocky Mountain Chocolate Factory requires the franchisee to be responsible for training all personnel who work in the store. All employees and the franchisee must adhere to dress code guidelines and purchase specified apparel. If the owner does not participate in day-to-day operations, a General Manager must be designated to provide direct on-premises supervision of the store at all times during its hours of operation.