UFOC

Sample UFOC

Oept. of Corporations-PSS UNIT-San Francisco Office

JUN 2 9 2006

DISCLOSURE DOCUMENT

Required by the

FEDERAL TRADE COMMISSION

for COLD STONE CREAMERY, INC

June 15,2006

INFORMATION FOR PROSPECTIVE FRANCHISEES REQUIREDBYTHE FEDERAL TRADE COMMISSION

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There may also be laws on franchising in your state. Ask your state agencies about them.

FEDERAL TRADE COMMISSION Washington, D.C. 20580

061506

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Oept. of Corporations-PSS UNIT-San Francisco Office

JUN 2 9 2006

DISCLOSURE DOCUMENT

Required by the

FEDERAL TRADE COMMISSION

for

COLD STONE CREAMERY, INC.

June 15,2006

INFORMATION FOR PROSPECTIVE FRANCHISEES SMD BY THE FEDERAL TRADE COMMISSION

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it includes some information about 7°- -n^t do^ rdy^n rt ^ ^^

contract. Read all of your cont^c c*refuy. ^^"^ information to an advisor, Take your time to decide. ^ P^^/ ^g _you think may be wrong or anything

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There may also be laws on franchising in your state. Ask your state agencies about them.

FEDERAL TRADE COMMISSION Washington, D.C. 20580

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_i^Mj> FRANCHISE OFFERING CIRCULAR

#1AT II OVAIfflwl?* COLD STONE CREAMERY, INC.

I .UliD o 1UJN Wk W^ ^a"iVi?°"^a ^cpor^ati«»ⁿ

V -rsrX mXjCI ■ **^ ⁹³¹¹ ^E- ^Via ^De Ventura

Scottsdale, AZ 85258

(480) 362-4800

www.coldstonecreamery.com

The Ucense is a non-traditional Cold Stone Creamery® restaurant featuring super-premium fresh made ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages and other frozen dessert products (prepared using proprietary recipes) and an assortment of complementary toppings and mix-ins on a take-out or eat-in basis.

The initial Ucense fee will vary between $9,000 and $21,000, depending upon the type of non-traditional Cold Stone Creamery® restaurant you wiU operate and the term of your License Agreement. You must also pay an appUcation fee of up to $75. Also, you must use us as the broker for the purchase of your equipment and signage for your non-traditional Cold Stone Creamery® restaurant. You wul deposit with us the cost of that equipment and signage (estimated to be between $68,000 and $130,000) and pay us an Equipment and Signage Fee in the amount of 4% of the cost of that equipment and signage (estimated to be between $2,750 and $5,200). See ITEM 5 (Initial Franchise Fee).

In addition, if your Cold Stone Creamery® restaurant wiU be operated pursuant to a concession agreement that requires a security deposit, you will pay us a security deposit in the amount required under that agreement. If your Cold Stone Creamery® restaurant will be leased, you must pay us a lease administration fee of between 2% and 5% of the base rent under the Master Lease, an amount of between $2,000 and $6,000 to pay for our attorney's review of the Master Lease on our behalf and an amount equal to the initial monthly rent, estimated monthly operating expenses and security deposit under the Master Lease.

Your estimated Initial Investment, including the above amounts, wiU be between $132,250 and $417,850, depending upon the type of non-traditional Cold Stone Creamery® restaurant you will operate and the term of your License Agreement (except for hcenses in Alaska, Hawau and the Caribbean, where most costs wiU be up to 50% higher and for Ucenses in the New York metropoUtan area, where most costs wiU be up to 300% higher). These figures are estimates only and it is possible to significantly exceed costs in any of the areas listed. Your costs wiU depend upon several factors. See ITEM 7 (Initial Investment).

If your non-traditional Cold Stone Creamery restaurant® is a Proactive Unit, upon signing the License Agreement you will be required to pay us for the costs and expenses incurred by us in connection with buUding out your non-traditional Cold Stone Creamery® restaurant (in Ueu of paying those amounts directly to the appUcable vendors and other parties) plus a Development Fee in an amount up to 25% of our cost of leasing, building out, developing, equipping and stocking your Proactive Unit. See ITEM 5 (Initial Franchise Fee).

Risk Factors:

THE LICENSE AGREEMENT AND THE OTHER DOCUMENTS TO BE SIGNED BY THE LICENSEE PERMIT THE LICENSEE TO LITIGATE WITH THE LICENSOR ONLY IN THE STATE OF ARIZONA. OUT OF STATE LITIGATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST MORE TO LITIGATE WITH THE LICENSOR IN THE STATE OF ARIZONA THAN IN YOUR HOME STATE.

THE LICENSE AGREEMENT AND THE OTHER DOCUMENTS TO BE SIGNED BY THE LICENSEE STATE THAT ARIZONA LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS.

THE LICENSOR WILL NOT GRANT AN EXCLUSIVE TERRITORY TO THE LICENSEE.

EACH PRINCIPAL OF THE FRANCHISEE AND HIS SPOUSE MUST JOINTLY AND SEVERALLY GUARANTEE THE FRANCHISEE'S OBLIGATIONS UNDER THE FRANCHISE AND OTHER AGREEMENTS. THAT GUARANTEE PLACES THE PRINCIPALS' AND HIS SPOUSE'S PERSONAL ASSETS AT RISK.

THERE MAY BE OTHER RISKS CONCERNING THIS LICENSE.

Information comparing franchisors is available. Call the state administrators listed in Exhibit L or your pubUc Ubrary for sources of information.

Registration of this franchise by a state does not mean that the state recommends it or has verified the information in this Franchise Offering Circular. If you learn that anything in this Franchise Offering Circular is untrue, contact the Federal Trade Commission, Washington, D.C 20580 and the appropriate state administrator listed in Exhibit L.

Issuance Date: June 15,2006 (For state-specific effective dates, see Exhibit L of this Franchise Offering Circular.) 061506 Non-traditional FOC.2006

TABLE OF CONTENTS

ITEM PAGE

1. The Franchisor, its Predecessors and Affiliates..........................'......................................................1

2. Business Experience..............................................................................................................................3

3. Litigation................................................................................................................................................9

4. Bankruptcy...........................................................................................................................................11

5. Initial Franchise Fee............................................................................................................................11

6. Other Fees............................................................................................................................................14

7. Initial Investment................................................................................................................................21

8. Restrictions on Sources of Products and Services..........................................................................27

9. Franchisee's Obligations....................................................................................................................32

10. Financing.............................................................................................................................................34

11. Franchisor's Obligations...................................................................................................................37

12. Territory...............................................................................................................................................48

13. Trademarks.........................................................................................................................................49

14. Patents, Copyrights and Proprietary Information........................................................................52

15. Obligation to Participate in the Actual Operation of the Franchise Business...........................53

16. Restrictions on What the Franchisee May Sell...............................................................................55

17. Renewal, Termination, Transfer and Dispute Resolution............................................................56

18. Public Figures.....................................................................................................................................64

19. Earnings Claims.................................................................................................................................64

20. List of Outlets.....................................................................................................................................64

21. Financial Statements..........................................................................................................................73

22. Contracts.............................................................................................................................................73

23. Receipt.................................................................................................................................................73

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EXHIBITS

A Audited Financial Statements as of December 31, 2005, 2004 and 2003 A-l

Al Unaudited Financial Statements as of March 31, 2006 Al-1

B Application for License B-l

C Form of License Agreement C-l

D Form of Agreement to be Bound and to Guarantee D-l

E Form of Preauthorization to Permit Cold Stone Creamery, Inc. to

Draw Drafts on the Licensee's Account E-l

F Form of Restrictive Covenant F-l

Gl Form of Agreement of intent to Sublet Gl-1

G2 Form of Sublease ' G2-1

G3 Form of Master Lease G3-1

G4 Form of Lease Addendum G4-1

H Form of Assignment of Concession Agreement H-l

I Form of Equipment and Signage Agreement 1-1

J Specimen of General Release J-l

K Table of Contents of Operating Manual K-l

L List of Agents for Service of Process/State Administrators and

State-specific Effective Dates L-l

M List of Franchisees, Licensees and Area Developers M-l

N Item 2 Disclosure for Area Developers N-l

0 List of Former Franchisees and Licensees O-l P Specimen Preferred Lender Loan Documents P-l

ATTACHMENTS

1 Additional Disclosures Required by Certain State Laws 1-1

California

Hawaii

Illinois

Indiana

Maryland

Michigan

Minnesota

New York

North Dakota

Rhode Island

Washington

2 Notices of Negotiated Sale (if any) 2-1

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ITEM1 THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES

Cold Stone Creamery and its Affiliates

The Licensor is Cold Stone Creamery, Inc., which is referred to in this Offering Circular as "Cold Stone Creamery," "we," "us" and "our." A person or entity that buys a franchise from us is referred to in this Offering Circular as "you," "your," or "Licensee." If you are a corporation, limited liability company, partnership or other entity, certain provisions of Cold Stone Creamery's License Agreement will also apply to your shareholders, partners, members and owners that directly or indirectly own 5% or greater equity interest in Licensee ("Principals").

Cold Stone Creamery is an Arizona corporation incorporated on March 3,1992. The only name under which we do business is Cold Stone Creamery, Inc. Our principal business address is 9311 E. Via De Ventura, Scottsdale, Arizona 85258. Our agents for service of process are identified in Exhibit L.

We are in the business of selling franchises and licenses to operate Cold Stone Creamery® restaurants. We began offering franchises to operate traditional Cold Stone Creamery restaurants® in April 1994 and licenses to operate non-traditional Cold Stone Creamery® restaurants in November 2002. (Franchises for traditional Cold Stone Creamery® restaurants are offered by a separate franchise offering circular.) We presently own one traditional Cold Stone Creamery® restaurant and one non-traditional Cold Stone Creamery® restaurant.

Our affiliate, SDS Enterprises, Inc., an Arizona corporation, operated traditional Cold Stone Creamery® restaurants between 1988 and 2004. Cold Stone Creamery Restaurants, L.L.C., an Arizona limited liability company ("CSC Restaurants"), presently operates 32 traditional Cold Stone Creamery® restaurants. See ITEM 20 (List of Outlets). Neither SDS Enterprises, Inc. nor CSC Restaurants offers or sells franchises or licenses of Cold Stone Creamery® restaurants.

Another affiliate of ours, Cold Stone Creamery Leasing Company, Inc., an Arizona corporation ("Cold Stone Leasing"), was incorporated for the purpose of leasing sites for Cold Stone Creamery® restaurants and subleasing them to franchisees and licensees. CSC Equipment Company, LLC, an Arizona limited liability company ("CSC Equipment"), was organized for the purpose of assisting franchisees and licensees with the purchase of equipment and signage required for their Cold Stone Creamery® restaurants. Neither Cold Stone Leasing nor CSC Equipment operates businesses of the type being franchised or licensed or offers or sells franchises or licenses of Cold Stone Creamery® restaurants.

Another affiliate of ours is Cold Stone Creamery International, LLC ("International"), an Arizona limited liability company organized on April 14, 2004, which was organized for our international expansion and franchises outside of the United States. Cold Stone Creamery Asia, LLC ("CSC Asia"), an Arizona limited liability company organized on April 14, 2004, is International's subsidiary. CSC Asia licenses the right to use the Cold Stone Creamery® concept for the operation of restaurants in Japan and Korea. Neither International nor CSC Asia

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operates businesses of the type being franchised or offers or sells franchises or licenses of Cold Stone Creamery® restaurants in the United States.

Neither we nor any of our affiliates has offered, or currently offers, any franchise or license in any other line of business. We do not have any predecessors and do not conduct any other business activities, other than offering area developer rights to develop Cold Stone Creamery® restaurants in certain geographical areas and supervising the franchisees and licensees within those areas. The principal business address of all of our affiliates is 9311 E. Via De Ventura, Scottsdale, Arizona 85258.

The License

Under the License Agreement, you will have the right, subject to certain conditions, to open and operate one non-traditional Cold Stone Creamery® restaurant (the "Licensed Business"). Cold Stone Creamery® restaurants feature super-premium fresh made ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages and other frozen dessert products (prepared using proprietary recipes) and an assortment of complementary toppings and mix-ins on a takeout basis. (As stated below, non-traditional Cold Stone Creamery® restaurants may not offer all of the above products.) The ice cream and frozen yogurt are made daily and hardened overnight to be served in the following one to three days. The ice cream and frozen yogurt are used to prepare cakes, pies, smoothies, shakes, specialty beverages and other frozen dessert products.

There are three types of non-traditional Cold Stone Creamery® restaurants:

"Gotta Have It" Cold Stone Creamery® restaurant (full menu licensed store) - has permanent fixtures within a venue and may be similar to a traditional Cold Stone Creamery® restaurant, except that it typically has between 700 and 1,200 square feet (excluding up to 200 square feet of secured commissary space, some of which may be shared) and is located in a non-traditional location, such as an airport, shopping mall, stadium, entertainment pavilion, amusement park, sports or entertainment venue, train station, travel plaza, toll roads, cafeteria, retail store, military base, prison, hospital, hotel, casino or high school or college campus. Alternatively, it may differ from a traditional Cold Stone Creamery® restaurant in that production and storage facilities may be located in a remote location within the venue. Menu offerings typically include 32 Cold Stone Originals® (Creations®), waffle cones and bowls, Signature Cakes^SM, shakes, smoothies and specialty beverages.

"Love It" Cold Stone Creamery® restaurant (limited menu licensed store) - has permanent fixtures within a venue, typically has between 300 and 700 square feet (excluding up to 200 square feet of secured commissary space, some of which may be share) and is located in a non-traditional location, such as an airport, shopping mall, stadium, entertainment pavilion, amusement park, sports or entertainment venue, train station, travel plaza, toll roads, cafeteria, retail store, military base, prison, hospital, hotel, casino, high school or college campus or convenience store. Production and storage facilities may be located in a remote location within the venue. Menu offerings

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typically include a minimum of six Ready-To-Love Originals®, French vanilla, chocolate and strawberry ice cream, waffle cones and bowls and specialty beverages.

"Like It" Cold Stone Creamery® restaurant (licensed kiosk) - the kiosk typically has a

12' x 12' footprint, with a minimum of 6' queuing space from the front counter outside of the footprint and a minimum of 200-350 square feet of remote production and storage space. The kiosks are located in a non-traditional location, such as an airport, shopping mall, stadium, entertainment pavilion, amusement park, sports or entertainment venue, train station, travel plaza, toll roads, cafeteria, retail store, military base, prison, hospital, hotel, casino, high school or college campus or convenience store. There are typically multiple point of sale (POS) stations. Menu offerings typically include Ready-To-Love Originals®, French vanilla, chocolate and strawberry ice cream, waffle cones and bowls and specialty beverages.

The right to open and operate a traditional Cold Stone Creamery restaurant and area developer rights are not offered by this Franchise Offering Circular, but are offered by separate franchise offering circulars.

People of all ages consume the products offered by Cold Stone Creamery® restaurants. The restaurant market for the products offered by Cold Stone Creamery® restaurants is seasonal, as consumption of ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages and other frozen dessert products is higher in the summer and lower in the winter.

You will have to compete with other restaurants, fast food outlets, supermarkets and other food retailers located in your venue or other market area. Some of your competitors may include Cold Stone Creamery® restaurants operated by other franchisees or licensees or by us or our affiliates. See ITEM 12 (Territory).

There are no regulations specific to the fast food industry in which Cold Stone Creamery® restaurants operate, although you will be required to comply with all local, state and federal laws and regulations that apply to restaurant operations, including health, sanitation, food safety, non-smoking, EEOC, OSHA, discrimination, employment and wage and hour statutes, Family Medical Leave Act, and the federal Americans with Disability Act of 1990. You will need to understand and comply with those and other laws in operating your non-traditional Cold Stone Creamery® restaurant. You should consult with your attorney to determine what federal, state and local laws may affect your non-traditional Cold Stone Creamery® restaurant operations. We also require your compliance with all provisions of the USA Patriot Act and Executive Order 13224. You should talk to an advisor or your attorney regarding compliance with these laws.

ITEM 2 BUSINESS EXPERIENCE

Douglas A. Ducey, Chairman, Chief Executive Officer, Treasurer and Director

Douglas A. Ducey has been the Chairman, CEO and Treasurer of Cold Stone Creamery since April 2004, January 2001 and September 1997, respectively. He has also been a director of Cold

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Stone Creamery since September 1997. Between September 1997 and April 2004, he was the President of Cold Stone Creamery. He joined Cold Stone Creamery in February 1996 as a Vice President. He has also been the President, the Treasurer and a Director of Cold Stone Leasing since January 1998; on January 2002, he also became the Chief Executive Officer. In addition, he has been a member of CSC Restaurants since its organization in August 1997; he has been the Managing Member since April 2004. He has been a member of CSC Equipment since its organization in September 2003. He has been a member of International since its organization in April 2004.

Sheldon Harris, President

Sheldon Harris has been the President of Cold Stone Creamery since June 2004. He was the Chief Operating Officer of Cold Stone Creamery between September 2001 and May 2004. He joined Cold Stone Creamery in January 1999 as the Vice President of Development. Since January 2002, he has been the Chief Operating Officer of Cold Stone Leasing; between January 1999 and January 2002, he was a Vice President of Cold Stone Leasing. He has been the President of CSC Restaurants since July 2004.

Donald W. Sutherland, Founder and Director

Through SDS Enterprises, Inc., an Arizona corporation, Mr. Sutherland opened the original Cold Stone Creamery restaurant in 1988 and operated it until February 2004, at which time he sold it to CSC Restaurants. He has been the President, the Treasurer and a Director of SDS Enterprises, Inc. since its incorporation in 1988. He has been a Director of Cold Stone Creamery since its incorporation in March 1992 and Founder since January 2001. He was the Chairman of the Board of Cold Stone Creamery between September 1997 and January 2001. He has been a Director of Cold Stone Leasing since its incorporation in December 1994, and has been the Founder since January 2002. He was the Chairman of the Board of Cold Stone Leasing between January 1998 and January 2002. He has been a member of CSC Restaurants since its organization in August 1997. He has been a member of CSC Equipment since its organization in September 2003. He has been a member of International since its organization in April 2004.

Lee E. Knowlton, Senior Vice President

Lee E. Knowlton has been the Senior Vice President of Cold Stone Creamery since February 2005. He was Vice President of Area Developer Support between January 2002 and February 2005. Between May 1997 and December 2001, he was Vice President of Operations for Perfect Line LLC (dba NASCAR Silicon Motor Speedway) in San Jose, California. He has been the Senior Vice President of International since August 2005.

Melanie K. Hansen, General Counsel

Melanie K. Hansen has been the General Counsel of Cold Stone Creamery since January 2004. She has also been General Counsel of Cold Stone Leasing and Cold Stone Creamery Restaurants since April 2004. Between November 2003 and January 2004, Ms. Hansen was an attorney in the Phoenix, Arizona office of the Washington, D.C.- based law firm of Steptoe and Johnson. From July 1999 to November 2003, Ms. Hansen was an attorney with Gallagher & Kennedy, in

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Phoenix, Arizona. She has been the General Counsel of International and CSC Asia since their respective organizations in April 2004 and she has been a director of CSC Japan KK.

Donald "D.T." Cole, Vice President of Finance

Donald "D.J." Cole has been the Vice President of Finance of Cold Stone Creamery since June 2005. From February 2005 through May 2005 he was the Director of Finance of Cold Stone Creamery. Between October 2003 and April 2004 he was the Senior Vice President and Controller of Vital Processing Services in Tempe, Arizona. From December 1983 and April 2003 he was the Chef Financial Office and Vice President-Administration of AG Communications Systems Corporation, located in Northlake, Illinois and Phoenix, Arizona.

Kevin M. Myers, Vice President of Marketing

Kevin M. Myers became the Vice President of Marketing of Cold Stone Creamery in October 2005. Between September 2004 and September 2005, he was the Managing Partner and a Principal of TopLine Strategies in Scottsdale, Arizona. Between December 2003 and September 2004, he was a Partner with SpinSix, a creative design firm in Scottsdale, Arizona. Between May 2001 and December 2003, he was the Vice President of Marketing for Sage Software in Scottsdale, Arizona.

David P. Daniels, Vice President-Human Resources, Training and Diversity

David P. Daniels has been the Vice President-Human Resources, Training and Diversity of Cold Stone Creamery since August 2005. Between January 2004 and December 2005 he was the Owner/Operator of Sona MedSpa in Grand Rapids, Michigan and Indianapolis, Indiana. From January 2001 to February 2004 he was the Vice President of Field HR, Training and Operations of Boston Market Corporation in Golden, Colorado. From May 1999 to January 2001 he was the Senior Regional Manager-Nashville area for McDonald's Corporation in Brentwood, Tennessee.

Sally Bell, Vice President of Store Transfers and Renewals

Sally Bell has been Vice President of Store Transfers and Renewals of Cold Stone Creamery since January 2006. Between October 2004 and January 2006, she was the Vice President of Special Projects of Cold Stone Creamery. Between August 2002 and October 2004, Ms. Bell was Chief of Staff-Legal for BellSouth Corporation located in Atlanta, Georgia. From December 1987 until August 2002, she held various positions, including Senior Manager-Corporate Relations/Legal, at McDonald's Corporation located in Oak Brook, Illinois.

Tuliet R. Peters, Assistant General Counsel

Juliet R. Peters has been the Assistant General Counsel of Cold Stone Creamery and Cold Stone Leasing since October 2005. She was the Associate Counsel of Cold Stone Creamery and Cold Stone Leasing from October 2004 until October 2005. From February 2004 through October 2004, she was Special Counsel for Strategic Communications with the Arizona Attorney General's Office, based in Phoenix. From September 1998 through February 2004 she was an attorney with Gallagher & Kennedy.

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Tohn M. Wuycheck, Vice President of Franchise Development

John Wuycheck became the Vice President of Franchise Development for Cold Stone Creamery in September 2003. He joined Cold Stone Creamery in March 2001 as a Development Manager and was promoted to Director of Development in June 2002. From September 1996 until March 2001, he was Vice President and Operations Manager for Pegasus Window Corporation, of Phoenix, Arizona.

Brett K. Sheets, Vice President of Real Estate

From October 1999 to October 2002, Mr. Sheets was Director of Leasing for The Rubin Companies, Inc., in Phoenix, Arizona. He joined Cold Stone Creamery in January 2003 as Director of Real Estate and became Vice President of Real Estate in January 2005. He has been the Director of Real Estate of Cold Stone Leasing since April 2004.

Bruce O. Burnham, Vice President, Supply Chain Management New Store Construction and Logistics

Bruce O. Burnham has been the Vice President, Supply Chain Management, New Store Construction and Logistics of Cold Stone Creamery since June 2004. In addition, since September 2003 he has been the President of Burnham & Tillinghast, LLC, in Key Largo, Florida. Between April 2000 and September 2003, he was the Vice President, North American Supply Chain Management in Miami, Florida for Burger King Corporation.

lenny L. King, Regional Director of Real Estate

Jenny King joined Cold Stone Creamery in May of 2003 as a Real Estate Manager and was promoted to Regional Director of Real Estate in March 2005. From July 2001 through January 2003, she worked as an Associate Broker with CB Richard Ellis in the Downtown Boston Brokerage Group. Ms. King's responsibilities included all aspects of landlord and tenant representation. She conducted all facets of the due diligence process, including site surveys, property tours, financial pro formas and lease negotiations. From January 1988 through May 2000 she worked for Vistoso Partners in Tempe, Arizona specializing in office leasing with an emphasis on the entitlement, preliminary and final plat processing.

Shelby Yastrow, Director

Shelby Yastrow became a Director of Cold Stone Creamery in December 2004. He is also currently a director of Spirit Finance, Inc. (since August 2003), Great Clips, Inc. (since May 1996), Sonoran Desert Council for the Arts (since November 2002) and The Greater Phoenix Jewish Federation (since May 2004). In addition, within the past five years he was a Director of Martin Engineering Company (since October 1985), Of Counsel to the Chicago Law firm Sonnenschein, Nath & Rosenthal (from January 1998 to January 2001) and Of Counsel to the Phoenix law firm of Gallagher & Kennedy (from June 2001 to June 2004).

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Renee McWenie, Director of Training

Renee McWenie became the Director of Training in January 2004. She joined Cold Stone Creamery in December 2002 as a Training Store Manager and was promoted to Curriculum Design Manager in June 2003. From June 1980 to December 1987, Ms. McWenie was a Training Store Manager and Director of Training for Swensen's Ice Cream Restaurants, Inc. From June 1988 to June 1989, she was a Regional Supervisor for Eegee's Restaurants.

Susan H. Boresow, Senior Director of Field Marketing

Susan H. Boresow has been the Senior Director of Field Marketing of Cold Stone Creamery since August 2005. From February 2004 to July 2005 she was the Chief Marketing Officer of Daddio's in Omaha, Nebraska. From June 2002 to February 2004 she was the Vice President of Marketing of Godfather's Pizza in Omaha, Nebraska. From November 2001 to June 2002, she was the Vice President of Marketing of Mr. Goodcents Pastas and Subs in Desoto, Kansas. From 1985 to November 2001 she held various positions with McDonald's Corporation in St. Louis, Missouri, Portland, Oregon, Seattle, Washington and Kansas City, Missouri.

Bradley A. Nielsen, Director of Creamery Operations-Utah

Bradley A. Nielsen became the Director of Creamery Operations-Utah of Cold Stone Creamery in July 2005. Between September 2004 and July 2005 he was a Field Consultant for Utah. Between May 2003 and September 2004 he was a partner of Lone Peak Marketing in Salt Lake City, Utah. Between May 2001 and May 2003, he was an Area Manager with Jack in the Box Corporation in Sacramento, California. He was the Director of Outsourced Call Centers for RightNow Technology from July 2000 to May 2001.

Tohn D. Tones, Tr., Real Estate Manager-Southeast Region

John D. Jones, Jr. became the Real Estate Manager-Southeast Region of Cold Stone Creamery in August 2005. Between January 2000 and August 2005 he was the Director of Development (Real Estate and Construction) with Barwie's Coffee and Tea Company, Inc. in Orlando, Florida.

Daniel Beem, Vice President of Store Profitability and Franchise Financing

Daniel Beem became the Vice President of Store Profitability and Franchise Financing of Cold Stone Creamery in October 2003. Between January 2001 and October 2003 he was the Director of Business Development of Interactive Motorsports and Entertainment in Indianapolis, Indiana.

Sean Bock, Co-counsel

Sean Bock has been a Co-counsel of Cold Stone Creamery since April 2005. From July 2004 until April 2005 he was a Senior Associate with PricewaterhouseCoopers in Phoenix, Arizona. Between May 2002 and October 2003 he was a Senior Associate with Deloitte & Touche in Chicago, Illinois. From September 2000 until May 2002 he was an Associate with Arthur Andersen in Chicago, Illinois.

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Toshua Becker, Co-counsel

Joshua Becker has been a Co-counsel of Cold Stone Creamery since April 2005. From April 2004 through April 2005 he was an associate attorney with Fennemore Craig, in Phoenix, Arizona. From June 2001 until April 2004 he as an associate attorney with Kutak Rock LLP in Scottsdale, Arizona.

Tay D. Goldstein, Franchise Development Manager

Jay D. Goldstein has been the Franchise Development Manager of Cold Stone Creamery since October 2005. Between April 2004 and October 2005 he was a Franchise Consultant for Cold Stone Creamery. In those positions, he has been based in Syracuse, New York. Between October 2002 and April 2004 he was a General Manager for Chucky Cheese in Albany and Middletown, New York. Between December 1999 and October 2002 he held various positions, including Regional General Manager, with NASCAR Silicon Motor Speedway in Albany, New York.

Michael T. McGill, Director of Southeast Creamery Operations

Michael J. McGill has been the Director of Southeast Creamery Operations since February 2004. He joined Cold Stone Creamery in November 2003 as the Regional Director of Operations. In those positions, he was located in Rock Hill, South Carolina and Scottsdale, Arizona. Between October 1998 and November 2003, Mr. McGill was the Director of Operations for Silicon Entertainment and NASCAR Silicon Motor Speedway, in Charlotte, North Carolina.

Frank Spano, Lease Administration Manager

Frank Spano joined Cold Stone Creamery in October 2003 as a Lease Administrator and was promoted to Lease Administration Manager in September 2005. From June 2002 to October 2003, Mr. Spano was an insurance adjuster with DM & A in Phoenix, Arizona. In addition, from September 2002 through October 2003 he was employed by MAS Real Estate Services, a consultant to Cold Stone Creamery based in Scottsdale, Arizona; in that capacity, Mr. Spano reviewed Cold Stone Creamery leases. From August 2000 through April 2002, he worked at Allied Packaging, in Los Angeles, California, as a software developer. From September 1999 through June 2000, he worked at General Network Corporation, in Glendale, Arizona as a software consultant. Mr. Spano also worked at Software Works, in Glendale, Arizona, as a software developer from April 1994 through September 1999. Mr. Spano attended Grumman Data Systems Institute in Bethpage, New York, where we earned a certificate in programming in 1979. He also attended Nassau Community College in Westbury, New York, where he received an AA degree in Accounting in 1977.

Rob Streett, Senior Director of Strategic Development

Rob Streett has been the Senior Director of Strategic Development of Cold Stone Creamery since April 2006. Between June 2005 and April 2006 he was Director of Non-traditional Development. Between April 2003 and May 2005 he was the Director, North America-Strategic Sales and

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Development with R. Torre & Co/Torani Brands, located in South San Francisco, California. Between December 1997 and September 2002, he was Director of Strategic Sales and Development with Starbucks Coffee Company/Seattle's Best Coffee located iii Seattle, Washington.

Pierro Hazrati, Director of Business Development-Southeast Region

Pierro Hazrati became the Director of Business Development-Southeast Region for Cold Stone Creamery in April 2004. Between January 1, 2001 and February 2004, he was a Principal and Vice President of Development, based in Lake Worth, Florida, for Nuts on Top, Inc., then an Area Developer for Cold Stone Creamery. From August 1993 through January 2001, he managed Barcelino, a men's clothing store located in San Francisco, California.

Michael Patch, Construction Manager - SE

Michael Patch has been the Construction Manager - SE for Cold Stone Creamery since August 1, 2004. In that capacity, he has been based in Jupiter, Florida. From April 1993 through December 2003, he was the Business Manager of FPL Energy, Inc. in Juno Beach, Florida.

Kenneth R. Burk, Director

Kenneth R. Burk has been a director of Cold Stone Creamery since November 1994. He was the Chairman of the Board of Cold Stone Creamery between January 2001 and January 2002, the Chief Executive Officer between September 1997 and January 2001. Since July 2001, he has been the owner of KB&M LLC, in Las Vegas, Nevada. He was the Chief Executive Officer and a Director of Cold Stone Leasing between January 1998 and January 2002 and was a member of CSC Restaurants between August 1997 and January 2002.

For information with respect to our area developers, see Exhibit N.

ITEM 3 LITIGATION

Other than the following four actions, no litigation is required to be disclosed in this Franchise Offering Circular.

Cold Stone Creamery, Inc. v. Lone Cone Creamery, LLC, (American Arbitration Association Case No. 76 114 Y 00008 05 MAGE). On January 7, 2005, we filed a Demand for Arbitration seeking to confirm the expiration of the Franchise Agreement associated with one of Lone Cone's stores (store 10), and seeking an Award ordering Lone Cone to cease its operation of that store. We contended that Lone Cone had been in breach of that Franchise Agreement by repeatedly failing inspections. In March 2005, Lone Cone counterclaimed, alleging that we had wrongfully terminated both the store 10 Franchise Agreement and another Franchise Agreement associated with a store that Lone Cone had closed some months earlier (store 6). Lone Cone claimed breach of contract and bad faith termination for our allegedly wrongful termination of the franchise agreements for Stores #6, #10 and #127, and for tortious interference with prospective business advantage. During the pendency of the arbitration, we terminated Lone Cone's final

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remaining Franchise Agreement (store 127) for, among other things, breach of the store 10 Franchise Agreement by continuing to operate store 10 after the agreement expired. We added a claim for confirmation of that termination in the arbitration. The Arbitrator found that we acted in good faith and in fair dealing with Lone Cone. The Arbitrator found that Lone Cone, on the other hand, repeatedly failed to adhere to franchisee standards and those continual failures were appropriate grounds for not renewing Lone Cone's two stores. The Arbitrator ordered Lone Cone to turn over store 10, and gave Lone Cone approximately six months to sell store 127, or that store would also be forfeited. The Arbitrator also ordered Lone Cone to pay all arbitration expenses and most of our attorneys' fees.

Cold Stone Creamery, Inc. and Cold Stone Creamery Leasing Company v. Culbreath, (American Arbitration Association Case No. 76 114 00935 05). In August 2005, we filed a Demand for Arbitration seeking to terminate Culbreath's three Franchise Agreements. We alleged that Culbreath had failed to comply with the required operating standards and had failed to meet certain financial obligations. Culbreath filed a counterclaim alleging that we failed to provide promised assistance and consulting, failed to provide tenant improvement monies and interfered with Culbreath's attempt to open his third store. Culbreath is seeking unspecified damages. We intend to vigorously contest Culbreath's claims.

The Hickman Group v. Cold Stone Creamery, Inc. (Maricopa County (Arizona) Superior Court, Case No. CV2001-018257). On October 18, 2001, the Hickman Group, a franchisee, filed suit against us for intentional interference with contract, seeking damages in excess of $500,000. The Hickman Group alleged that the Balelos (one of our area developers) persuaded a prospective purchaser not to purchase one of the Hickman Group's Cold Stone Creamery restaurants and, as the Balelos' principal, we are liable for that conduct. We answered that Balelos did not interfere with that transaction and, therefore, that we are not liable for any damages. We asserted that the sale did not proceed due to the unit's poor performance and/or the alleged prospective purchaser's inability to finance the transaction. (We learned that the alleged prospective purchaser filed a petition in bankruptcy shortly after deciding not to purchase the Hickman Group's Cold Stone Creamery restaurant.) On November 15, 2002, we and the Hickman Group entered into a Mutual Release and Settlement Agreement, in which the parties agreed to dismiss the litigation, the Hickman Group was given the right to sell their Cold Stone Creamery restaurant for a limited period of time, the franchise agreement would be terminated and we would pay the Hickman Group $35,000. Balelos indemnified us in the litigation and the settlement and reimbursed us in that amount. The lawsuit was dismissed on November 26, 2002.

Todd A. Ferrante vs. Gregory V. Ferrante, Kathleen O. Ferrante and Patrick O'Malley (Case No. MJG-97-2143), U.S. District Court for the District of Maryland. The Plaintiff brought an action against Mr. Gregory V. Ferrante (one of the principals of Phoenix Partners Development, Ltd., one of our area developers). The amended complaint, filed December 9,1997, alleged violations of the antitrust and RICO laws in connection with alleged breaches of photography franchises and sought compensatory and punitive damages. The action was discharged in connection with Mr. Ferrante's bankruptcy proceeding. See Item 4 (Bankruptcy).

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ITEM 4 BANKRUPTCY

Except for the three persons identified below, no person previously identified in Item 1 or 2 of this Franchise Offering Circular or identified in Exhibit N to this Franchise Offering Circular has been involved as a debtor in proceedings under the United States Bankruptcy Code required to be disclosed in this Item.

Lee E. Knowlton, Senior Vice President of Cold Stone Creamery, filed as debtor a petition to start an action under Chapter 7 of the United States Bankruptcy Code on December 11, 2003 in the United States Bankruptcy Court for the District of Arizona (In re Lee Edward Knowlton, debtor, Case No. 2:03-bk-2166) and obtained a discharge of his debts under the United States Bankruptcy Code as of April 6,2004.

Gregory V. Ferrante, one of the principals of Phoenix Partners Development, Ltd., one of our area developers, filed as debtor a petition under Chapter 7 of the United States Bankruptcy Code on September 15,1999 in the United States Bankruptcy Court for the District of Maryland (Baltimore) (In re Gregory V. and Kathleen O. Ferrante, debtors, Case No. 99-6-2058) and obtained a discharge of his debts under the United States Bankruptcy Code as of December 27,1999.

Dean A. Johnson, who is in charge of Area Developer Support for All Mixed Up, Inc. one of our area developers, filed as debtor a petition under Chapter 7 of the United States Bankruptcy Code on November 30, 2000 in the United States Bankruptcy Court for the District of Arizona (In re Dean A. Johnson and Delia P. Johnson, debtors, Case No. 00-13059-ECF-EWH) and obtained a discharge of his debts under the United States Bankruptcy Code as of March 21, 2001.

ITEM 5 INITIAL FRANCHISE FEE

Initial License Fee.

The initial license fee (the "Initial License Fee") for your non-traditional Cold Stone Creamery restaurant is as follows:

Type of Cold Stone Creamery Restaurant	License Fee Per Year	Minimum License Fee (3 years)	Maximum License Fee (5 years)
"Gotta Have It"	$4,200	$12,600	$21,000
."Love It"	$3,600	$10,800	$18,000
"Like It"	$3,000	$9,000	$15,000

The Initial License Fee is payable by certified or cashiers' check, and is due in full upon your signing the license agreement (the "License Agreement"). The Initial License Fee is not a deposit and is not refundable under any circumstances, except in connection with the expiration of the License Agreement at the end of the Probationary Period (as defined below), in which case the Initial License Fee (less our expenses) will be refunded to you, provided that you satisfy

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certain requirements. The initial franchise fee for traditional Cold Stone Creamery restaurants is presently $42,000 ($32,000 for second or subsequent units). The Initial License Fee will be used for our general purposes. The term "Probationary Period" means the period beginning on the effective date of the License Agreement and ending on the date on which we notify you that the License Agreement will expire as of the end of the Probationary Period because we believe in good faith that you may not be a good fit within the Cold Stone Creamery system or may adversely affect the goodwill or reputation of us, our products or the Service Marks (as defined below), but not later than the date on which your Licensed Business opens to the public for business.

If we permit you to open and operate additional non-traditional Cold Stone Creamery restaurant locations, the Initial License Fee for each additional non-traditional Cold Stone Creamery restaurant will be the initial license fee in effect at the time you sign the subsequent license agreements. Note that we may increase the initial license fee at any time and the initial license fee that you will pay for additional licenses will be the fee contained in the Franchise Offering Circular in effect at the time you deliver your signed license agreement (in the then-current form) for additional licenses to us. If the License Agreement is signed in connection with a renewal or relocation, you will not pay the Initial License Fee. See ITEM 12 (Territory) and ITEM 17 (Renewal, Termination, Transfer and Dispute Resolution).

Application Fee.

All prospective licensees (other than licensees that have previously executed license agreements with us) will be required to pay us a non-refundable application fee of up to $75 to cover the costs of the English proficiency and personality tests required in connection with their applications.

Master Concession Agreement.

If your Cold Stone Creamery® restaurant will be operated pursuant to a Master Concession Agreement (as defined below) that requires a security deposit, you will pay to us a security deposit in the amount required under the Master Concession Agreement.

Master Lease.

If your Cold Stone Creamery® restaurant will be leased, you must pay to us (1) a lease administration fee ("Lease Administration Fee") in an amount equal to between 2% and 5% of the base rent under the Master Lease, as determined by us, to compensate us for serving as the tenant under the Master Lease (and the related risk of loss) and administering the Master Lease and the Sublease (as defined below) (including, without limitation, collecting and paying rent) and (2) an amount between $2,000 and $6,000, as determined by us, to pay for our attorney's review of the Master Lease on our behalf. (If you submit more than one Master Lease for our review, the fee for our attorney's review of the Master Lease will be charged for each Master Lease submitted.) Our attorney may be our employee or an independent contractor. If you engage an attorney to review the Master Lease and/or Sublease on your behalf, those fees will be payable directly by you to that attorney. The Lease Administration Fee will not eliminate any of your obligations to us under the Sublease. In addition, when you sign the Sublease, you

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must pay to us an amount equal to the first month's base rent and estimated operating expenses under the Master Lease, plus a security deposit in an amount equal to the security deposit required under the Master Lease. (We reserve the right, however, to require a greater security deposit, based upon your creditworthiness.) We will pay to the Master Landlord the first month's base rent, the first monthly installment of estimated operating expenses and the security deposit under the Master Lease (if any) and will retain the Lease Administration Fee and the fee for our attorney's review of the Master Lease. The amount of the total initial payment (including the Lease Administration Fee and the fee for our attorney's review of the Master Lease) will vary, depending upon the rent anticipated to be paid under the Master Lease for your site, but is expected to range between $6,500 and $36,000. However, the amount will be up to 50% higher in Alaska, Hawaii and the Caribbean and will be up to 300% higher in the New York metropolitan area.

You are also required to engage a real estate broker on our approved list to assist you in selecting a site and negotiating the letter of intent for the Master Lease. The cost is estimated to be between $2,000 and $10,000, but all or part of the real estate broker's fee may be paid by the Master Landlord. However, the amount will be up to 50% higher in Alaska, Hawaii and the Caribbean and will be up to 300% higher in the New York metropolitan area. If you use a real estate broker not on our approved list, you must pay us a fee in an amount up to $5,000 in connection with training your real estate broker regarding our requirements and reviewing the letter of intent.

Equipment and Signage Fee.

You must use us as a broker for the purchase of,your equipment and signage for your non-traditional Cold Stone Creamery restaurant. At the time you sign the License Agreement, you must sign and deliver to us an Equipment and Signage Agreement, in substantially the form attached to this Franchise Offering Circular as Exhibit I. You will be required to deposit with us the cost of that equipment, signage shipping and sales tax (if charged by the vendor) by certified or cashiers' check before we place your order with those vendors. That deposit is not refundable and will be placed in an equipment brokerage account. We will act as your equipment broker and coordinate the ordering and delivery of your equipment and signage. We have established this policy due to previous difficulties franchisees and licenses have experienced in receiving their equipment and signage. In addition, you will pay to us an equipment and signage fee (the "Equipment and Signage Fee") in the amount of 4% of the cost of that equipment and signage (including shipping, but excluding taxes). The estimated deposit for the equipment and signage is between $68,000-$130,000 (including shipping and sales taxes). We will pass on your payment of any sales tax charge by any individual vendor, but you are responsible for any use tax associated with the use of your equipment. The amount of use tax you must pay will vary from state to state, but it is estimated to be between $1,500 and $9,000. The estimated Equipment and Signage Fee is between $2,750 and $5,200. See ITEM 8 (Restrictions on Sources of Products and Services).

Equipment.

We may acquire certain used equipment and offer it for sale to prospective or existing licensees at a price that we believe to be equal to or less than the fair market value of that equipment. If

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we make that offer to you, you have the option of purchasing that equipment from us. In addition, we may offer to sell to prospective or existing licensees an existing operational non-traditional Cold Stone Creamery restaurant (including the equipment, fixtures, inventory and other items necessary to operate the restaurant) at a price that we believe to be equal to or less than the fair market value of the restaurant. If we make that offer to you, you have the option of purchasing the existing operational non-traditional Cold Stone Creamery restaurant or starting your own non-traditional Cold Stone Creamery restaurant.

Development Fee.

We may lease, build out, acquire permits and/or purchase signage, equipment and/ or inventory for one or more non-traditional Cold Stone Creamery restaurants ("Proactive Units") and, at some point during the build-out period, sign a License Agreement with a particular licensee to own and operate one of those non-traditional Cold Stone Creamery restaurants. If you are one of those licensees, upon signing the License Agreement, you will be required to pay us for the costs and expenses incurred by us in connection with building out your non-traditional Cold Stone Creamery restaurant (in lieu of paying such amounts directly to the applicable vendors and other parties) plus a development fee (the "Development Fee") in an amount up to 25% of our cost of leasing, building out, developing, equipping and stocking your Proactive Unit. The amount will vary, based upon the extent of the build-out that has been completed before you acquire your Proactive Unit, the amount expended by us in connection with the build-out and other factors that we may determine. The Development Fee is not refundable.

Except as stated above, the Initial License Fee presently is the same for all new licensees of non-traditional Cold Stone Creamery restaurants.

See also ITEM 10 (Financing).

ITEM 6 OTHER FEES

Fee¹	Amount	Due Date
Royalties²	6% of Gross Sales³	Weekly*
Brand Building & Support	3% of Gross Sales³	Weekly*
Sublease Rent	See ITEM 5 (Initial Franchise Fee) and ITEM 8 (Restrictions on Sources of Products and Services)	Weekly*
Charitable Contribution⁵	To be determined by us	As determined by us
Renewal	Then-current renewal fee for licensees of the type of Licensed Business that you operate	Upon request for renewal (See ITEM 17 (Renewal, Termination, Transfer and Dispute Resolution))

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Fee¹	Amount	Due Date
Relocation	$5,000	Upon approval of relocation of business premises
	Lease Administration Fee in an amount equal to between 2% and 5% of the base rent under the Master Lease	Upon signing Sublease (See ITEM 5 (Initial Franchise Fee) and ITEM 8 (Restrictions on Sources of Products and Services))
	An amount between $2,000 and $6,000, as determined by us, to pay for our attorney's review of the Master Lease on our behalf	Upon request for our review of Master Lease (See ITEM 5 (Initial Franchise Fee) and ITEM 8 (Restrictions on Sources of Products and Services))
Additional Training⁶	$1,500 per additional training program per person	Prior to attendance
No-show Fee	$500, if you fail to cancel any portion of the teaming program on less than 14 days' notice	Upon failure to cancel
Hours Violation Fee	$100 per occurrence, if you fail to keep your non-traditional Cold Stone Creamery restaurant open during the Required Hours or the Posted Hours	Upon failing to comply with Required Hours or Posted Hours (See ITEM 15 (Obligation to Participate in the Actual Operation of the Franchise Business))
Non-participation Fee	$100 per day if you fail or refuse to participate in any required local, regional, seasonal, promotional or other program, initiative and campaign or in any new or modified product or service test or offering	Upon failing or refusing to participate
Continuing Training, Annual & Other Meetings⁷	To be determined by us	Prior to attendance
On-site Consultation⁸	$45 per hour (including consultation & travel time) plus travel, lodging & meals	As incurred
Interest	18% per annum on royalties, Brand Building & Support fees, Development Fees, rent and other amounts unpaid within 10 days; on amounts paid by us on your behalf	As incurred
Document Late Charge⁹	$100 per week or part of a week	As incurred
Draft Draw Charge¹⁰	$100 per day	As incurred
Late Charge	5% of the unpaid amount or $100, whichever is greater, on royalties and Brand Building & Support fees, Development Fees, and other amounts unpaid within 10 days	As incurred

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Fee¹	Amount	Due Date
Sublease Late Charge	5% of the late or unpaid amount plus any late charges and interest incurred under the Master Lease as a result of the late payment (See ITEM 5 (Initial Franchise Fee) and ITEM 8 (Restrictions on Sources of Products and Services))	As incurred
Audit	Costs & expenses of the audit plus 18% per annum interest on the underpayment	Promptly after the audit if the audit reveals an underpayment, from the due date
Interim Operating Fee plus Reimbursement of any Operating Loss	To be determined by us; payable if you abandon or fail to operate your non-traditional Cold Stone Creamery restaurant and we (or our designee) operate your non-traditional Cold Stone Creamery restaurant	As incurred
Premiums and Other Amounts paid by us if you Fail to Purchase Required Insurance	Premium and other amounts paid by us, plus interest (see above)	As incurred
Liquidated Damages upon Breach of Restrictive Covenant	An amount equal to the Initial License Fee for each site operated in breach plus 10% of Gross Sales	As incurred
Attorneys' Fees and Costs	Will vary under the circumstances	As incurred
Indemnification of us for damages suffered or incurred for your actions or omissions, including amounts paid on your behalf to cure your breaches under the License Agreement	Will vary under the circumstances	As incurred
Currency¹¹	Costs of conversion to U.S. dollars	As incurred
Taxes	Sales, use, gross receipts & similar taxes payable by us with respect to the Initial License Fee, royalties, Brand Building & Support fees, Lease Administration Fee, Development Fee, Equipment and Signage Fee, equipment and signage purchases, rent & other amounts paid by you to us	Within 10 days of invoice

Footnotes

¹ All fees payable to us or our affiliates may be modified by us from time to time without your approval. Such fees will be no greater than the fees then being charged to new licensees.

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All fees in the above table are payable to us or our affiliates, other than the Muzak® Fee (which is payable to the Muzak® service provider), the Equipment Maintenance Fee (which is payable to the approved vendor that will provide maintenance) and insurance premiums, which are payable to your insurance carrier, agent or broker). All fees in the above table are not refundable.

We require you to sign a pre-authorization form to enable us to draw against your bank account for the full amount of the royalties, advertising payments, Development Fees, equipment fees, payments due under the Sublease and for any other amounts that you owe to us or our affiliates or your cooperative advertising association (for example, for promotional materials). The form of that authorization is contained in Exhibit E to this Franchise Offering Circular.

If you are a married individual, your spouse must sign the Spousal Consent to the License Agreement. Each person (and his/her spouse), corporation, partnership, limited liability company or other entity that owns, directly or indirectly, a five percent or greater equity interest in the licensed entity (a "Principal") must sign an agreement, in the form of Exhibit D, in which he agrees to perform, and guarantees, all of the licensee's obligations to us and our affiliates (including the obligations under the License Agreement and the Sublease) and agrees to be bound by the restrictive covenants, the confidentiality provisions and certain other provisions contained in the License Agreement.

² Royalties will be increased to up to 18% of Gross Sales with respect to any period during which you are in breach of your obligations under the License Agreement. (The royalties paid or owing to us with respect to the period during which you are in breach are referred to as "Breaching Royalties"). Breaching Royalties will be charged for a minimum 14-day period, regardless of the length of the actual breach.

If you do not open your Licensed Business to the public within one year after the date of the License Agreement, 150 days after the Master Landlord makes the site for your non-traditional Cold Stone Creamery restaurant available to you (as determined by us) or the deadline in the Master Concession Agreement, whichever occurs first, in addition to our other rights, you will pay royalties ("Late Opening Royalties"), from that date until the date that your non-traditional Cold Stone Creamery restaurant is open to the public for business or your Franchise Agreement has been terminated, at the rate of 6%, calculated based upon the average unit volume for all Cold Stone Creamery restaurants open for business, as calculated by us from time to time. This deadline will apply even if we have not approved the site that you have chosen for your non-traditional Cold Stone Creamery restaurant and even if we have delayed the opening of your non-traditional Cold Stone Creamery restaurant because you have not satisfied the Continuing Working Capital Requirement.

³ The term "Gross Sales" means sales from all products and services sold at your non-traditional Cold Stone Creamery restaurant, whether for on-site or off-site consumption, including, without limitation, sales from products and services delivered to customers and/or sold from off-site locations. The term "Gross Sales" also includes the proceeds received or realized by you in connection with any business interruption insurance maintained by you, or for your benefit.

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You must participate in all programs of a charitable nature designated by us from time-to-time, including the obligation to contribute a designated percentage of opening day sales (or sales for other periods) to a charity designated by you or us, as we may elect.

⁴ The weekly period runs from each Wednesday to the following Tuesday (the "Business Week"). Royalties and advertising payments based on Gross Sales during each Business Week are due by the Friday after the end of the Business Week. However, rent due under the Sublease will be due on the day of the Business Week selected by us.

⁵ You must participate in all programs of a charitable nature designated by us from time-to-time, including the obligation to contribute a designated percentage of opening day sales (or sales for other periods) to a charity designated by you or us, as we may elect.

⁶ See ITEM 11 (Franchisor's Obligations) with respect to the training program.

The fee payable to us for more than two people to attend the training program is $1,500 per additional person. Training of the additional people may or may not be held at the same time as training of the initial two people, at our election.

All training program attendees bear their own travel, lodging and meal expenditures in connection with attending the training program.

If you fail to satisfactorily complete our training program, in our sole discretion, we may require or permit you to attend the training program again, at your expense ($1,500 per additional training program per person, plus travel, lodging and meal expenditures in connection with attending the training program).

⁷ Additional training programs and refresher courses may be required upon renewal and from time to time. Although we do not presently intend to charge licensees for attendance, we may elect to do so in the future. In any event, you will be required to bear your own travel, lodging and meal expenditures in connection with attendance. In addition, you must attend, at your expense, all annual and other meetings and conference calls of franchisees that we determine are mandatory for all licensees, or groups of licensees (as designated by us), such as franchisees within a particular geographic region. We may impose a charge for your failure to attend those programs, courses, meetings and conference calls.

⁸ This rate is subject to change from time to time, depending upon our cost of providing consulting services.

⁹ If you fail to deliver or provide to us or your area developer any statement, report or other document or information required to be delivered (for example, sales reports, certificates of insurance and financial statements), by the applicable deadline, you will be assessed a late charge per week, or part thereof (until that statement, document or other information has been delivered or provided), which amount may be increased by us from time to time.

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¹⁰ If you fail to provide us with any necessary information or documentation with respect to our practice of drawing drafts against your bank accounts, you will be assessed a fee in the amount of $100 per day.

¹¹ Computation of any amounts to be paid that require conversion between currencies will be made at the selling rate for United States Dollars quoted by our primary bank on the date on which payment is made.

In addition, the License Agreement requires you to:

1. Deposit with us, within 90 days after the end of each calendar year, $600 per year towards your minor remodel/update or "spruce up" of your non-traditional Cold Stone Creamery restaurant. As and when you perform a minor remodel/update or "spruce up," we will return those funds to you in the amount expended by you.

2. Subscribe to our approved vendor of Muzak® (or other provider of musical programming designated by us) and play our custom programming (or other musical programming designated by us) at your non-traditional Cold Stone Creamery restaurant, unless we waive that requirement.

3. Purchase approved accounting software from our approved vendor and subscribe to its update, upgrade and support program. See ITEM 11 (Franchisor's Obligations).

4. Obtain credit card and gift card processing services from our approved vendors. See ITEM 11 (Franchisor's Obligations).

5. Contract with an approved Internet service provider and establish an e-mail account with our designated provider. See ITEM 11 (Franchisor's Obligations).

6. Obtain annual computer support contracts with our approved vendor for telephone support to you concerning the hardware and software used at your non-traditional Cold Stone Creamery restaurant. See ITEM 11 (Franchisor's Obligations).

7. Contract with our approved vendor to provide maintenance for equipment (other than computers) in your non-traditional Cold Stone Creamery restaurant.

8. Carry insurance of the types and in the amounts contained in our Operating Manual. In addition, you must comply with the insurance requirements of the Master Concession Agreement or Master Lease and applicable worker's compensation laws. These insurance policies must name us (and any of our affiliates that we reasonably require), your area developer (if any) and the site owner or Master Landlord as additional insureds. See ITEM 7 (Initial Investment).

9. Provide all notices, reports and other communications with us and our area developers in the English language. In addition, you must ensure that all employees whose duties include customer service have sufficient literacy and fluency in the English language (or such other

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language that is the primary language in your market) to adequately serve the public at your non-traditional Cold Stone Creamery restaurant.

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ITEM 7 INITIAL INVESTMENT

"Gotta Have It" Cold Stone Creamery Restaurant

Payment	Amount	Method of Payment	When Due	To Whom Payment is to be Made
Initial License Fee	$12,600-$21,000 ($4,200 per year of term-minimum is 3 years; maximum is 5 years)	Lump sum, certified or cashiers' check	Upon signing License Agreement	Us
Travel & Living Expenses While Training	$500-$5,000	As incurred	As incurred	Airlines, hotels & restaurants (see Item 11 (Franchisor's Obligations))
Real Estate-related Expenses¹	$0-$26,000	Lump sum; then drawn from your bank account	Daily or weekly or upon signing Sublease then weekly	Owner of Concession Site or Us
Architectural Fees	$4,000-$10,000	As incurred	As incurred	Architect
Leasehold Improvements²	$90,000-$170,000	As incurred	As incurred	Site owner, Master Landlord or contractor
Exterior & Interior Signage	$9,700-$15,200	Certified or cashiers' check	Before being ordered	Us
Equipment	$91,300-$111,300	Certified or cashiers' check	Before being ordered	Us
Initial Inventory	$8,000	Lump sum	Before opening	Vendors & suppliers
Employee Uniforms	$500-$800	Lump sum	Before opening	Vendors
Grand Opening Advertising³	$100-$5,000	Lump sum	Within one month of grand opening	Media, printing vendors, event planners, celebrities, customers
Insurance Premiums⁴	$500-$2,500	Lump sum	Before opening	Insurance carrier
Permits & Licenses	$2,000-$3,000	Lump sum	Before opening	Governmental entities
Telephone & Utility Deposits & Hookups	$250-$l,000	Lump sum	Before opening	Utility companies
Computer Training and Food Safety Certification Course⁵	$100-$250	As needed	As incurred	Vendors, Suppliers
Miscellaneous⁶	$3,800	As incurred	As incurred	Vendors, etc.
Additional Funds/ Working Capital-3 months⁷	$35,000	As incurred	As incurred	Employees, vendors, suppliers, utilities, etc.
TotaF	$258,350-$417,850

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"Love It" Cold Stone Creamery Restaurant

Payment	Amount	Method of Payment	When Due	To Whom Payment is to be Made
Initial License Fee	$10,800-$18,000 ($3,600 per year of term-minimum is 3 years; maximum is 5 years)	Lump sum, certified or cashiers' check	Upon signing License Agreement	Us
Travel & Living Expenses While Training	$500-$5,000	As incurred	As incurred	Airlines, hotels & restaurants (see Item 11 (Franchisor's Obligations))
Real Estate-related Expenses¹	$0-$26,000	Lump sum; then drawn from your bank account	Daily or weekly or upon signing Sublease then weekly	Us
Architectural Fees	$1,000-$10,000	As incurred	As incurred	Architect
Leasehold Improvements²	$1,000-$100,000	As incurred	As incurred	Site owner, Master Landlord or contractor
Exterior & Interior Signage	$3,000-$10,000	Certified or cashiers' check	Before being ordered	Us
Equipment	$70,000-$125,000	Certified or cashiers' check	Before being ordered	Us
Initial Inventory	$8,000	Lump sum	Before opening	Vendors & suppliers
Employee Uniforms	$500-$800	Lump sum	Before opening	Vendors
Grand Opening Advertising³	$100-$5,000	Lump sum	Within one month of grand opening	Media, printing vendors, event planners, celebrities, customers
Insurance Premiums⁴	$500-$2,500	Lump sum	Before opening	Insurance carrier
Permits & Licenses	$2,000-$3,000	Lump sum	Before opening	Governmental entities
Telephone & Utility Deposits & Hookups	$250-$l,000	Lump sum	Before opening	Utility companies
Computer Training and Food Safety Certification Course⁵	$100-$250	As needed	As incurred	Vendors, Suppliers
Miscellaneous⁶	$3,800	As incurred	As incurred	Vendors, etc.
Additional Funds/ Working Capital-3 months⁷	$35,000	As incurred	As incurred	Employees, vendors, suppliers, utilities, etc.
Total⁸	$136,550-$353,350

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"Like It" Cold Stone Creamery Restaurant

Payment	Amount	Method of Payment	When Due	To Whom Payment is to be Made
Initial License Fee	$9,000-$15,000 ($3,000 per year of term-minimum is 3 years; maximum is 5 years)	Lump sum, certified or cashiers' check	Upon signing License Agreement	Us
Travel & Living Expenses While Training	$500-$5,000	As incurred	As incurred	Airlines, hotels & restaurants (see Item 11 (Franchisor's Obligations))
Real Estate-related Expenses¹	$0-$26,000	Lump sum; then drawn from your bank account	Daily or weekly or upon signing Sublease then weekly	Us
Architectural Fees	$1,000-$10,000	As incurred	As incurred	Architect
Leasehold Improvements²	$1,000-$10,000	As incurred	As incurred	Site owner, Master Landlord or contractor
Exterior & Interior Signage	$500-$l,500	Certified or cashiers' check	Before being ordered	Us
Equipment	$70,000-$125,000	Certified or cashiers' check	Before being ordered	Us
Initial Inventory	$8,000	Lump sum	Before opening	Vendors & suppliers
Employee Uniforms	$500-$800	Lump sum	Before opening	Vendors
Grand Opening Advertising³	$100-$5,000	Lumpsum	Within one month of grand opening	Media, printing vendors, event planners, celebrities, customers
Insurance Premiums⁴	$500-$2,500	Lump sum	Before opening	Insurance carrier
Permits & Licenses	$2,000-$3,000	Lump sum	Before opening	Governmental entities
Telephone & Utility Deposits & Hookups	$250-$l,000	Lump sum	Before opening	Utility companies
Computer Training and Food Safety Certification Course⁵	$100-$250	As needed	As incurred	Vendors, Suppliers
Miscellaneous⁶	$3,800	As incurred	As incurred	Vendors, etc.
Additional Funds/ Working Capital-3 months⁷	$35,000	As incurred	As incurred	Employees, vendors, suppliers, utihties, etc.
Total"	$132,250-$251,850

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The amounts of all of the non-fixed expenditures, other than the permits and hcenses, will be determined when you contact and negotiate with the respective vendor, etc. The costs of permits and licenses will be determined by contacting the appropriate governmental entity.

None of these expenditures, other than the Master Concession Agreement or Master Lease security deposit, the telephone and utility deposits and the insurance premiums, is refundable. In addition, the Initial License Fee (less our expenses) will be refunded only in connection with the expiration of the License Agreement at the end of the Probationary Period, provided that you satisfy certain requirements. The Master Concession Agreement or Master Lease security deposit will be refunded in accordance with the terms of the Master Concession Agreement or the Master Lease and the Sublease, as applicable. The telephone and utility deposits will generally be refundable in accordance with the terms fixed by the telephone company and the utility companies, respectively. The insurance premiums may be refundable for future periods in accordance with the terms fixed by the insurance carrier.

Except as stated in ITEM 10 (Financing), no part of your initial investment in the license will be financed by us.

Footnotes

¹ You must acquire rights to the premises for your non-traditional Cold Stone Creamery restaurant. Typical locations are airports, shopping malls, kiosks, convenience stores, malls, stadiums, entertainment pavilions, amusement parks, sports or entertainment venues, train stations, travel plazas, toll roads, cafeterias, retail stores, military bases, prisons, hospitals, hotels, casinos and high school and college campuses. The typical "Gotta Have It" Cold Stone Creamery restaurant will have between 700 and 1,200 square feet (excluding up to 200 square feet of secured commissary space, some of which may be shared); the typical "Love It" Cold Stone Creamery restaurant will have between 300 and 700 square feet (excluding up to 200 square feet of secured commissary space, some of which may be shared); the typical "Like It" Cold Stone Creamery restaurant will have a 12' x 12' footprint with a minimum of 6' queuing space from the front counter outside of the footprint and a minimum of 200-350 square feet of remote production and storage space.

Typically, the owner of the site upon which you will operate your non-traditional Cold Stone Creamery restaurant will require a Master Concession Agreement that will typically require you to pay the site owner a percentage of Gross Sales on a daily or weekly basis, with no minimum amount due and no security deposit. However, different site owners will have different requirements and may require you to pay a minimum amount and/or a security deposit. Alternatively, the owner of the site will require a Master Lease that will typically require you to pay the owner of the site a fixed amount of rent and will require a security deposit. Payment of the rent and the security deposit will be as set forth in the Master Lease and the Sublease. See ITEM 8 (Restrictions on Sources of Products and Services). If the owner of the site requires a Master Lease, you will also be required to pay us the Lease Administration Fee and an amount between $2,000 and $6,000, as determined by us, to pay for our attorney's review of the Master Lease on our behalf. (If you submit more than one Master Lease for our review, the fee for our attorney's review of the Master Lease will be charged for each Master Lease submitted.) In addition, you will be required to engage a real estate broker on our

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approved list to assist you in selecting a site and negotiating the letter of intent for the Master Lease. The cost for the real estate broker estimated to be between $2,000 and $10,000, but is not included in the table because all or part of the real estate broker's fee is typically paid by the Master Landlord; if all of the real estate broker's fee is not paid by the Master Landlord, your real estate expenses will be increased in the amount that you will pay. In addition, if you use a real estate broker not on our approved list, you must pay us a fee in an amount up to $5,000 in connection with training your real estate broker regarding our requirements and reviewing the letter of intent; that fee is not included in the table and if you use a real estate broker not on our approved list, your real estate expenses will be increased by up to $5,000. See ITEMS 5 (Initial Franchise Fee), 8 (Restrictions on Sources of Products and Services) and 11 (Franchisor's Obligations).

² To avoid excessive construction costs, it is strongly recommended that you choose contractors carefully by obtaining several competitive bids before construction begins. These estimates are based on constructing a 600 square foot vanilla shell, electrical requirements of 400 amps 3-phase and HVAC of one ton per 150 square feet. This amount is based upon a national average for labor costs and does not include extensive exterior renovations.

³ In connection with your grand opening, you must conduct a grand opening marketing and advertising campaign in accordance with a plan approved by us prior to the grand opening.

⁴ The License Agreement requires you to carry insurance of the types and in the amounts contained in our Operating Manual. In addition, you must comply with the insurance requirements of the Concession Agreement or the Master Lease and applicable worker's compensation laws. If your non-traditional Cold Stone Creamery restaurant is in a flood zone or an area subject to earthquakes, hurricanes, tornadoes or other similar hazards, you may want to obtain specific insurance to cover the risks associated with those hazards; those insurance policies may increase your premiums significantly.

These insurance policies must name us (and any of our affiliates that we reasonably require), your area developer (if any) and the site owner or the Master Landlord as additional insureds. The insurance must be placed with an insurance carrier or carriers satisfactory to us and may not be subject to cancellation or any material change except after 30 days' prior written notice to us. The insurance policies must provide that your failure to comply with any term, condition or provision of the contract, and any other conduct by you, will not void or otherwise affect the protection afforded to us, your area developer, the site owner or the Master Landlord under the policy. Certificates of insurance with respect to the insurance policies must be provided to us for all insurance policies in effect during the term of the License Agreement.

If you sustain a loss by reason of fire, flood or other casualty of a type typically covered by insurance, and such casualty is caused wholly or partially by our (or our affiliates') acts or omissions, you must look solely to the proceeds of your insurance policy for reimbursement of the loss, and neither you nor any insurance carrier may recover damages against us (or our affiliates) by way of direct action, subrogation, assignment of claims or otherwise. You will waive all such rights of recovery by you, any insurance carrier or other person, and must notify each insurance carrier of that waiver.

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If you fail to pay any premium when due or any such policy is in default, we may, but are not obligated to, pay any such premium and/or take any action necessary to cure such default. In this event, you must immediately pay to us the amount paid by us or the amount expended by us to cure such default.

⁵ We require that all of our new licensees have basic computer skills, including competence in the software programs that licensees use. See ITEM 11 (Franchisor's Obligations). If you do not have basic computer skills, you will be required to attend appropriate training by a third party of your choice, at your expense, before attending Stage 4 of our training program. In addition, we require that all of our new licensees attend a local food safety certification course. You will be required to attend and satisfactorily complete a local food safety certification course, at your expense, before attending Stage 4 of our training program.

⁶ Includes miscellaneous items, such as the application fee, the Muzak® Fee and the Equipment Maintenance Fee (see ITEM 6 (Other Fees)), computer software set-up fee (see ITEM 11 (Franchisor's Obligations)), office supplies, fees and expenses of incorporation and initial pest control fee.

⁷ Includes payroll costs and other working capital items.

⁸ Does not include the Development Fee, if any. See ITEM 5 (Initial Franchise Fee).

Assuming that you recognize sales in the license during your initial operating period, you must pay royalties (6% of Gross Sales on a weekly basis; up to 18% of Gross Sales with respect to any period during which you are in breach of your obligations under the License Agreement) and Brand Building and Support fees (3% of Gross Sales on a weekly basis) to us. In addition, you may be required to contribute a designated percentage of your opening day sales (or sales for other periods) to a charity designated by you or us, as we may elect. See Item 6 (Other Fees).

All costs (other than the initial license fee, royalties and Brand Building and Support Fees) will be up to 50% higher in Alaska, Hawaii and the Caribbean and will be up to 300% higher in the New York metropolitan area.

Note that we make no representation or warranty regarding the period within which your business will break even and/or have positive cash flow, which may exceed three months.

See ITEM 19 (Earnings Claims).

We relied upon our experience and our affiliates' and franchisees' experience in the ice cream, frozen yogurt and other frozen dessert products business to compile these figures.

These figures are estimates only and it is possible to significantly exceed costs in any of the areas listed. We cannot guarantee that you will not have additional expenses starting the business. Your costs will depend upon such factors as how much you follow our methods and procedures; your management skill, experience and business acumen; whether you personally manage your restaurant or hire a manager; fluctuations in prices of goods; the region in which your non-traditional Cold Stone Creamery restaurant is located; local

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economic conditions; whether the premises is in a new or existing center; the physical size and location of your restaurant; the condition of the premises and the amount and nature of tenant improvements required; the architectural criteria of the center; the HVAC & electrical systems present or necessary; the local market for our product; the prevailing wage rate; competition; and the sales level reached during the initial period. You should review these figures carefully with a business advisor before making any decision to purchase a license.

ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

Except as stated in this ITEM 8, you have no obligation to purchase or lease goods, services, supplies, fixtures, equipment, inventory or computer hardware relating to the establishment or operation of your non-traditional Cold Stone Creamery restaurant from us or from any of our designees.

Your Site.

We have the right to approve, or deny approval of, the site, within the area designated in the License Agreement, that you have chosen for your non-traditional Cold Stone Creamery restaurant. Upon submission of a proposed site, you must provide us with any additional documentation and information that we may require regarding the proposed site, your financial condition and your Principals' financial condition. Within 90 days after we receive notice of your selection (and the additional materials required by us), we will review those materials and will, approve, or deny approval of, your proposed site. We may deny approval of the site because, among other things, we determine that you do not have the financial capacity to perform your obligations with respect to the site (including, without limitation, satisfying the Continuing Working Capital Requirement). In that event, we or our affiliates, licensees or franchisees may operate a Cold Stone Creamery restaurant at the site. We will not unreasonably withhold our approval of the site.

Your Rights to Your Site.

Master Concession Agreement

Typically, the owner of the site upon which you will operate your non-traditional Cold Stone Creamery restaurant will require a concession agreement (the "Master Concession Agreement"). We have the right to approve, or deny approval of, the proposed Master Concession Agreement. Upon submission of a proposed Master Concession Agreement, you must provide us with any additional documentation and information that we may require regarding the proposed Master Concession Agreement, your financial condition and your Principals' financial condition. Within 60 days after we receive a copy of the proposed Master Concession Agreement (and the additional materials required by us), we will review and approve, or deny approval of, the proposed Master Concession Agreement. We may deny approval of the Master Concession Agreement because, among other things, we determine that you do not have the financial capacity to perform your obligations with respect to the proposed Master Concession Agreement (including, without limitation, satisfying the Continuing

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Working Capital Requirement). In that event, we or our affiliates, licensees or franchisees may operate a Cold Stone Creamery restaurant at the site. We, will not unreasonably withhold our approval of the Master Concession Agreement.

We will sign the Master Concession Agreement for your site and assign the site to you. Promptly after we sign the Master Concession Agreement with the site owner, you (and your spouse) must sign and deliver to us an assignment of concession agreement, substantially in the form attached to this Franchise Offering Circular as Exhibit H (the "Assignment of Concession Agreement"), and, if required by the site owner Landlord, you (and your spouse) and your Principals (and their spouses) must sign and deliver to us the form of guaranty of lease that the site owner requires. If the site owner requires the payment of a security deposit, when you sign the Assignment of Concession Agreement, you must pay to us an amount equal to the security deposit required under the Master Concession Agreement. (We reserve the right, however, to have Cold Stone Leasing execute the Master Concession Agreement and the Assignment of concession Agreement in lieu of Cold Stone Creamery and to require a greater security deposit, based upon your creditworthiness.)

See ITEM 5 (Initial Franchise Fee), ITEM 7 (Initial Investment), ITEM 10 (Financing) and ITEM 11 (Franchisor's Obligations).

Master Lease

Although it is unlikely, the owner of the site upon which you will operate your non-traditional Cold Stone Creamery restaurant, (the "Master Landlord") may require a lease (the "Master Lease"). The form of Master Lease preferred by us (substantially in the form attached to this Franchise Offering Circular as Exhibit G3) may or may not be acceptable to the Master Landlord. If not, the terms contained in our Lease Addendum (substantially in the form attached to this Franchise Offering Circular as Exhibit G4) must be included in the Master Lease. We may require other revisions to the Master Lease as well. We have the right to approve, or deny approval of, the proposed Master Lease. Upon submission of a proposed Master Lease, you must provide us with any additional documentation and information that we may require regarding the proposed Master Lease, your financial condition and your Principals' financial condition. Within 60 days after we receive a copy of the proposed Master Lease (and the additional materials required by us), we will review and approve, or deny approval of, the proposed Master Lease. We may deny approval of the Master Lease because, among other things, we determine that you do not have the financial capacity to perform your obligations with respect to the proposed Master Lease (including, without limitation, satisfying the Continuing Working Capital Requirement). In that event, we or our affiliates, licensees or franchisees may operate a Cold Stone Creamery restaurant at the site. We will not unreasonably withhold our approval of the Master Lease.

You will be required to engage a real estate broker on our approved list to assist you in negotiating the letter of intent for the Master Lease. The cost is estimated to be between $2,000 and $15,000, but all or part of the real estate broker's fee may be paid by the Master Landlord. (However, the amount will be up to 50% higher in Alaska, Hawaii

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and the Caribbean and will be up to 300% higher in the New York metropolitan area.) If you use a real estate broker not on our approved list, you must pay us a fee in an amount up to $5,000 in connection with training your real estate broker regarding our requirements and reviewing the letter of intent.

We will sign the Master Lease for your site and sublease the site to you. You must promptly sign and deliver to us an Agreement of Intent to Sublet, substantially in the form attached to this Franchise Offering Circular as Exhibit Gl. Promptly after we sign the Master Lease with the Master Landlord, you (and your spouse) must sign and deliver to us a sublease, substantially in the form attached to this Franchise Offering Circular as Exhibit G2 (the "Sublease"), and, if required by the Master Landlord, you (and your spouse) and your Principals (and their spouses) must sign and deliver to us the form of guaranty of lease that the Master Landlord requires. If we lease your site, you will be subject to a Lease Administration Fee and attorney's fees payable when you sign your Sublease. In addition, when you sign the Sublease, you must pay to us an amount equal to the first month's base rent and estimated operating expenses under the Master Lease, plus a security deposit in an amount equal to the security deposit required under the Master Lease. (We reserve the right, however, to have Cold Stone Leasing execute the Master Lease, the Agreement of Intent to Sublet and the Sublease in lieu of Cold Stone Creamery and to require a greater security deposit, based upon your creditworthiness.)

See ITEM 5 (Initial Franchise Fee), ITEM 7 (Initial Investment), ITEM 10 (Financing) and ITEM 11 (Franchisor's Obligations).

Equipment and Signage.

You must use us as the broker for the purchase of your equipment and signage for your non-traditional Cold Stone Creamery restaurant. That equipment will vary, depending upon the type of non-traditional Cold Stone Creamery restaurant you will own, but will generally include a batch freezer, gelato tubs, a back bar, a convection oven, a waffle cone maker, a walk-in freezer, freezer storage elements, a hardening cabinet, a dip cabinet, a display freezer, a frost top, a granite countertop(s) (a "cold stone"), a point of sale system, graphics and menu boards. (See also ITEM 11 (Franchisor's Obligations).) You will be required to execute an Equipment and Signage Agreement and pay us an Equipment and Signage Fee. (See ITEM 5.) During 2005, licensees and franchisees purchased $34,144,166 of equipment and signage from equipment and signage vendors through us. We received revenues of $1,322,245 as the Equipment and Signage Fee, which represents 3.08% of our $42,951,474 of total revenues.

We may acquire certain used equipment and offer it for sale to prospective or existing licensees at a price that we believe to be equal to or less than the fair market value of that equipment. If we make that offer to you, you have the option of purchasing that equipment or purchasing new equipment through us. In addition, we may offer to sell to prospective or existing licensees an existing operational non-traditional Cold Stone Creamery restaurant (including the equipment, fixtures, inventory and other items necessary to operate the restaurant) at a price that we believe to be equal to or less than the fair market value of the restaurant. If we make that offer to you, you have the option of purchasing the existing operational non-traditional

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Cold Stone Creamery restaurant or starting your own non-traditional Cold Stone Creamery restaurant.

In addition, a number of equipment and signage vendors contribute to us various amounts based upon our and our affiliates', licensees' and franchisees' purchases from those vendors. The basis of the contributions varies, but is generally a percentage of the aggregate purchase price of equipment and signage. We use those funds for our general operating purposes, including, but not limited to, costs and expenses that promote, enhance or further the Cold Stone Creamery brand or system. During 2005, we received $1,378,279 in contributions (3.21% of our $42,951,474 in total revenues).

Except as stated in this ITEM, neither we nor any of our affiliates is a supplier or vendor of any goods, services, supplies, fixtures, equipment, inventory, computer hardware or real estate relating to the establishment or operation of the license, and neither we nor any of our affiliates will derive any revenue or other material consideration as a result of purchases or leases made by you in connection with the establishment or operation of the license.

You must purchase your computer, certain computer software, computer and software support contracts, credit card and gift card processing services, Internet and e-mail services, equipment maintenance services and all food, supplies, equipment, signage, decor and other goods and services from vendors and suppliers on our list of approved vendors and suppliers (as it may be modified periodically). See ITEM 6 (Other Fees) and ITEM 11 (Franchisor's Obligations). These policies are necessary in order to maintain the high standards of product and service quality and consistency associated with the Service Marks (see ITEM 13 (Trademarks)), and the uniformity of the Cold Stone Creamery system.

Approximately 52% to 58% of your purchases and leases of goods and services in establishing your non-traditional Cold Stone Creamery restaurant will be for items purchased or leased through us and approximately 42% to 48% of your purchases and leases of goods and services in establishing your non-traditional Cold Stone Creamery restaurant will be for items purchased or leased directly from approved vendors and suppliers. Approximately 95%-100% of your purchases and leases of goods and services in operating your non-traditional Cold Stone Creamery restaurant will be for items purchased or leased from approved vendors and suppliers.

In addition, you must have your non-traditional Cold Stone Creamery restaurant be consistent in color, design and style with the standards and specifications adopted and approved by us, and as we may modify those standards periodically. You must maintain the appearance and atmosphere of your non-traditional Cold Stone Creamery restaurant, and the equipment and premises used in connection with your non-traditional Cold Stone Creamery restaurant, in accordance with the standards we may adopt from time to time. You must subscribe to our provider of Muzak® (or other provider of musical programming designated by us) and play our custom programming (or other musical programming designated by us) at your non-traditional Cold Stone Creamery restaurant, unless we waive that requirement. Any variations in color, design, style, appearance or atmosphere must be approved in writing by us. Our current standards and specifications are included in our Operating Manual.

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We have negotiated purchase arrangements with various suppliers of food products, paper goods, janitorial supplies and small wares for the benefit of licensees and franchisees. Upon a licensee's establishment of an account with the supplier and the purchase of the licensee's initial stock of small wares, the supplier may provide the licensee a merchandise credit or discounted or free merchandise. In addition, various suppliers contribute to us various amounts based upon our and our affiliates', licensees' and franchisees' purchases from those suppliers. The basis of the contributions varies, ranging from a fixed amount per volume purchased to a percentage of the aggregate purchase price. We use those funds for its general operating purposes, including, but not limited to, costs and expenses that promote, enhance or further the Cold Stone Creamery brand or system. During 2005, we received $5,290,931 in contributions (12.32% of our $42,951,474 in total revenues), approximately $2,400,000 of which was used for specific programs and initiatives, including, but not limited to, salaries of personnel that assist licensees increase their profitability, maintaining the customer service hotline, tracking consumer service hotline trends, product research and development, licensee crew training and supply chain information management systems. During 2005, we also received $980,041 in monetary contributions (2.28% of our total revenues) and in-kind contributions with an approximate value of $200,000 from certain suppliers to defray the costs of our annual licensee and franchisee meeting. We also received during 2005 $3,719,765 in prepaid contributions related to future purchases; this amount was not recognized as revenue in 2005.

We do not provide any material benefits to you based upon your use of designated or approved sources.

If you would like to purchase or lease any food, supplies, equipment signage, decor and other goods or services from a vendor or supplier that is not on our then-current list of approved vendors and suppliers, you must notify us in writing and obtain our approval to do so. We may require you to submit samples or specifications for examination or testing, at your expense, to determine if the equipment, supplies or products meet our specifications in such areas as weight, size, shape, delivery, performance, consistency, warranties, design, appearance, atmosphere and price. We will advise you of our approval or denial of approval within 45 days after receipt of all applicable information. If and when we adopt formal criteria for vendor or supplier approval with respect to each item to be purchased, the criteria may be made available to you.

It is your responsibility to see that your non-traditional Cold Stone Creamery restaurant is constructed, equipped and decorated in strict compliance with our requirements. You must engage licensed contractors and architects, who are subject to our approval, obtain appropriate construction documents, and all mechanical, plumbing, electrical and architectural plans must be sealed and stamped, as we may require, even if the site's local government does not require that those documents be sealed and stamped. We assume no responsibility for delays in obtaining permits, the work of independent contractors or delays or other losses in the construction phase, nor are we responsible for any loss sustained because of building design or construction. You will not be allowed to open your non-traditional Cold Stone Creamery restaurant if the plans and specifications approved by us are not followed in all material respects or if changes were not approved in writing by us before being implemented.

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ITEM 9 FRANCHISEE'S OBLIGATIONS

THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE LICENSE AND OTHER AGREEMENTS. IT WILL HELP YOU FIND MORE DETAILED INFORMATION ABOUT YOUR OBLIGATIONS IN THESE AGREEMENTS AND IN OTHER ITEMS OF THIS FRANCHISE OFFERING CIRCULAR.

Obligation	Section in Agreement*	Item in Offering Circular
a. Site selection and acquisition/lease	3,4(b), 6; Exhibit Gl (Agreement of Intent to Sublet); Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum); Exhibit H (Assignment of Concession Agreement)	5, 6, 7, 8,10,11,12, 17
b. Pre-opening purchases/leases	6, 7; Exhibit Gl (Agreement of Intent to Sublet); Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum); Exhibit H (Assignment of Concession Agreement)Exhibit I (Equipment and Signage Agreement)	5, 6, 7, 8,10,11,16
c. Site development and other pre-opening requirements	4,6, 7; Exhibit Gl (Agreement of Intent to Sublet); Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum); Exhibit H (Assignment of Concession Agreement)	1,5, 6, 7,8,10,11, 12,15
d. Initial and ongoing training	4,5,13(e),14(f)(iii),15(b)(vii), 16(o), 24	6,7,11,15,17
e. Opening	4(b), 7(f), 7(h), 16(1); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum)	1, 7,8,11,15
f. Fees	5,6, 7,9,10,24,36; Exhibit D (Agreement to be Bound and to Guarantee); Exhibit E (Preaufhorization to Permit Cold Stone Creamery, Inc. to Draw Drafts on Licensee's Account); Exhibit Gl (Agreement of Intent to Sublet); Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum); Exhibit I (Equipment and Signage Agreement)	1,5,6,7,8,11,17

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Obligation	Section in Agreement*	Item in Offering Circular
g. Compliance with standards and policies/ Operating Manual	7,24	6,7, 8,11,14,15,16, 17
h. Trademarks and proprietary information	1, 7(t), 8,13	13,14
i. Restrictions on products/services offered	6, 7; Exhibit Gl (Agreement of Intent to Sublet); Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum); Exhibit H (Assignment of Concession Agreement)	8,16
j. Warranty and customer service requirements	4(b), 7	8,11,15
k. Territorial development and sales quotas	3	12
1. Ongoing product/service purchases	7	8,11,16
m. Maintenance, appearance and remodeling requirements	7,14(f)(v), 15(b)(iii); Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum); Exhibit H (Assignment of Concession Agreement)	7,8,13,14,17
n. Insurance	7(q); Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum); Exhibit H (Assignment of Concession Agreement)	6,7
o. Advertising	4(b), 7(n), 7(t), 8,9,10,15(b)(iv), 24	6, 7,11,13,14
p. Indemnification	8(e), 11,12; Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum); Exhibit H (Assignment of Concession Agreement)	6,13,14
q. Owner's participation/management/ staffing	7(h), 13; Exhibit D (Agreement to be Bound and to Guarantee); Exhibit F (Restrictive Covenant)	11,15
r. Records and reports	9(f), 10,16(g), 24; Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum); Exhibit H (Assignment of Concession Agreement)	6,11,17
s. Inspections and audits	7,10,16(g), 24	6,17

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Obligation	Section in Agreement*	Item in Offering Circular
t. Transfer	14,16(m), 16(n), 23; Exhibit Gl (Agreement of Intent to Sublet); Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum); Exhibit H (Assignment of Concession Agreement)	6,17
u. Renewal	9(a), 15; Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit H (Assignment of Concession Agreement)	5,17
v. Post-termination obligations	13,17; Exhibit D (Agreement to be Bound and to Guarantee); Exhibit F (Restrictive Covenant); Exhibit G3 (Master Lease); Exhibit G4 (Lease Addendum)	6,17
w. Non-competition covenants	13; Exhibit D (Agreement to be Bound and to Guarantee); Exhibit F (Restrictive Covenant)	6,17
x. Dispute resolution	30; Exhibit G2 (Sublease); Exhibit I (Equipment and Signage Agreement); Exhibit H (Assignment of Concession Agreement)	17
y. Other
Spousal Consent	Spousal Consent	6,15
Principals' Guarantee	11; Exhibit D (Agreement to be Bound and to Guarantee)	6,15
Amendments	24; Exhibit G2 (Sublease); Exhibit G3 (Master Lease); Exhibit H (Assignment of Concession Agreement)	17

'Section reference is to License Agreement, unless stated otherwise.

ITEM 10 FINANCING

Except as stated below, we do not, directly or indirectly, offer you financing or guarantee any of your obligations.

Master Concession Agreement and Assignment of Master Concession Agreement

Typically, we or Cold Stone Leasing will sign the Master Concession Agreement for your non-traditional Cold Stone Creamery restaurant and assign the site to you. If we lease your site, you

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will be subject to a Lease Administration Fee and attorney's fees payable when you sign your Sublease. See ITEM 5 (Initial Franchise Fees) and ITEM 8 (Restrictions on Sources of Products and Services).

The Assignment of Concession Agreement grants us a security interest in all of your property located or used in your non-traditional Cold Stone Creamery restaurant (Section 4 of Assignment of Concession Agreement). Your failure to make any payment due under the Assignment of Concession Agreement is a default under the License Agreement, which permits us to terminate the License Agreement, take possession of your premises, take possession and sell all of your property located or used in your non-traditional Cold Stone Creamery restaurant, collect a late charge in an amount equal to 5% of the delinquent amount plus any late charges and interest incurred under the Master Concession Agreement as a result of that late payment, interest at the rate of 18% per annum on the delinquent amounts and court costs and attorneys' fees. The Sublease also requires you to waive the right to a jury trial, the right to initiate a class action in any forum, including arbitration, and the right to seek punitive, consequential and special damages.

Master Lease and Sublease

We or Cold Stone Leasing will lease the site approved by us for your non-traditional Cold Stone Creamery restaurant and sublease the site to you. If we lease your site, you will be subject to a Lease Administration Fee and attorney's fees payable when you sign your Sublease. See ITEM 5 (Initial Franchise Fees) and ITEM 7 (Initial Investment).

The form of Master Lease preferred by us (substantially in the form attached to this Franchise Offering Circular as Exhibit G3) may or may not be acceptable to the Master Landlord. If not, the form of Master Lease will be the form of lease submitted by the Master Landlord of your site, subject to negotiation. In addition, the terms contained in our Lease Addendum (substantially in the form attached to this Franchise Offering Circular as Exhibit G4) must be included in the Master Lease. We may require other revisions to the Master Lease as well. See ITEM 8 (Restrictions on Sources of Products and Services). (Section 6(d) of the License Agreement)

The Sublease grants us a security interest in all of your property located or used in your non-traditional Cold Stone Creamery restaurant (Section 4.2 of Sublease). Your failure to make any payment due under the Sublease is a default under the License Agreement, which permits us to terminate the License Agreement, take possession of your premises, take possession and sell all of your property located or used in your non-traditional Cold Stone Creamery restaurant, collect a late charge in an amount equal to 5% of the delinquent amount plus any late charges and interest incurred under the Master Lease as a result of that late payment, interest at the rate of 18% per annum on the delinquent amounts and court costs and attorneys' fees. The Sublease also requires you to waive the right to a jury trial, the right to initiate a class action in any forum, including arbitration, and the right to seek punitive, consequential and special damages.

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Bridge Loans

Many licensees and franchisees obtain SBA-guaranteed loans for the purpose of financing, among other things, site acquisition expenses, construction/remodeling expenses, equipment, fixtures, opening inventory and supplies. We may periodically provide a licensee financing for those purposes, generally on a short-term basis, on terms generally comparable to SBA-guaranteed loans available at that time. The interest rate on those loans will generally be 100 basis points above the rate to be charged on SBA-guaranteed loans available at that time, but may be higher, depending upon your creditworthiness. The loan will be secured by the items acquired with the loan proceeds and/or your equipment, fixtures and/or other tangible property. The due date of the loan will generally be the earlier of the date that your SBA-guaranteed loan is available to be funded or a date within one year of the date that your non-traditional Cold Stone Creamery restaurant is open to the public for business, as determined by us. You may prepay the amount due at any time without any penalty. Your failure to make any such payment would constitute a default under the License Agreement, which would permit us to terminate the License Agreement and take possession of your premises, as well as collect the amount due, interest at the rate of 18% per annum and a late charge in the amount equal to 5% of the late payment or $100 (whichever is greater), together with court costs and attorneys' fees. We may sell, assign or discount to a third party all or part of that financing. Although we have assigned a portion of the financing one time in the past, it is not our practice to do so and we do not presently intend to do so. However, if we sell or assign our rights under the financing, you may lose all your defenses against us as a result of the sale or assignment.

Each Principal (and his spouse) must sign an agreement, in the form of Exhibit D, in which he agrees to perform, and guarantees, all of the licensee's obligations to us and our affiliates (including the obligation to repay any loan made and to pay all amounts due under the License Agreement and the Sublease) and agrees to be bound by the restrictive covenants, the confidentiality provisions and certain other provisions contained in the License Agreement. (See Section 11 of the License Agreement).

Preferred Lender Financing

We have negotiated financing arrangements with Banco Popular North America ("BP"), UPS Capital Business Credit ("UPS") and CIT Small Business Lending Corporation ("CIT") to provide financing to our licensees and franchisees. In connection with establishing a Cold Stone Creamery restaurant, the financing may include the Initial License Fee, real estate, architectural fees, training expenses, equipment, leasehold improvements, initial inventory, uniforms, grand opening advertising, insurance premiums, permits and licenses, telephone and utility deposits and hook-up expenses and travel expenses. In connection with operating a Cold Stone Creamery restaurant, the financing may include up to $30,000 of working capital. The loan amount may range from $75,000 to $2,000,000 and will be based upon actual costs; loan-to-value requirements will apply on amounts above $350,000. (Section 1 of SBA Promissory Note) The interest rate will be the prime rate (as published in The Wall Street Journal) plus 1.5% for loans made by BP and 2.75% for loans made by UPS and CIT, adjusted quarterly. The loan term will be up to 10 years. (Section 3 of SBA Promissory Note) The lenders will typically have a security interest in your equipment, chattel paper, fixtures, general intangibles, inventory, documents, accounts, instruments, deposit accounts and other collateral as the lender deems necessary.

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However, the lender will not have any rights to your license rights, your License Agreement, your Assignment of Concession Agreement, your Sublease or the premises on which you conduct your non-traditional Cold Stone Creamery restaurant (other than fixtures). (Section 9 of SBA Promissory Note and SBA Security Agreement) All equity owners of a 5% or greater interest in the licensee, and their spouses, must guarantee all obligations to the lenders. (SBA Guaranty) All amounts may be prepaid without penalty upon 20 days' prior written notice. (Section 3 of SBA Promissory Note) Upon default, the lenders may accelerate your obligation to pay, and you will be responsible for their expenses of collection, including, without limitation, attorneys' fees. You may also lose possession of, and title to, the collateral. The License Agreement and all other license and other agreements with us and our affiliates may be terminated as well. (Section 5 of SBA Promissory Note; Sections 7(p), 16(b), 16(i) and 16(p) of the License Agreement) Under the loan documents, you waive your legal rights with respect to demand, presentment, protest and dishonor (and notice of them), all suretyship defenses, all defenses based upon any claims that the lenders (a) did not obtain any guaranty, (b) did not obtain, perfect or maintain a lien upon the collateral, (c) impaired the collateral, (d) did not obtain the fair market value of the collateral at a sale. (Section 9 of SBA Promissory Note) Specimens of the loan documents are included as Exhibit P to this Franchise Offering Circular. The lenders may sell, assign or discount to a third party all or part of that financing. To our knowledge, it is not the practice or intent of the lenders to do so, nor is it their present intention to do so. However, if a lender sells or assigns its rights under the financing, you may lose all your defenses against the lender as a result of the sale or assignment. None of the lenders is affiliated with us and we and our affiliates do not receive any compensation in connection with the loans.

ITEM 11 FRANCHISOR'S OBLIGATIONS

Assistance of Cold Stone Creamery

Except as listed below, we need not provide any assistance to you. If your non-traditional Cold Stone Creamery restaurant will be located in an area that is subject to an area developer agreement, the area developer in that area will be responsible for providing to you all of the services required to be provided by us, other than the portion of the training program that will be conducted in the Phoenix, Arizona metropolitan area. However, area developers are not authorized to make promises or agreements on our behalf or to agree to modifications to the License Agreement.

Before Your Non-traditional Cold Stone Creamery Restaurant Opens

1. Site, Master Concession Agreement and Master Lease Approval. It is your responsibility

to locate and evaluate the site for your non-traditional Cold Stone Creamery restaurant. However, we will review and will, in writing, approve, or deny approval of, the site, within the area designated in the License Agreement, you have chosen for your non-traditional Cold Stone Creamery restaurant. We will approve or disapprove your site within 90 days after we receive written notice of your selection (and additional materials required by us). We will consider the potential customer base, the rental costs, competition, traffic patterns, population density and composition, visibility, proximity to other Cold Stone Creamery restaurants and other business

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factors of the site in determining whether to grant our approval of the site. We will not unreasonably withhold our approval of the site.

Typically, the owner of the site upon which you will operate your non-traditional Cold Stone Creamery restaurant will require a Master Concession Agreement. Although it is unlikely, the site owner may require a Master Lease. We have the right to approve, or deny approval of, the proposed Master Concession Agreement or Master Lease. Upon submission of a proposed Master Concession Agreement or Master Lease, you must provide us with any additional documentation and information that we may require, your financial condition and your Principals' financial condition. Within 60 days after we receive a copy of the proposed Master Concession Agreement or Master Lease (and the additional materials required by us), we will review and approve, or deny approval of, the proposed Master Concession Agreement or Master Lease. We may deny approval of the site, the Master Concession Agreement or the Master Lease because, among other things, we determine that you do not have the financial capacity to perform your obligations with respect to the proposed Master Concession Agreement or Master Lease (including, without limitation, satisfying the Continuing Working Capital Requirement). In that event, we or our affiliates, licensees or franchisees may operate a Cold Stone Creamery restaurant at the site. We will not unreasonably withhold our approval of the Master Concession Agreement or the Master Lease. We will sign the Master Concession Agreement or Master Lease for your site and assign or sublease the site to you, pursuant to the assignment of Concession Agreement or the Sublease.

See ITEMS 5 (Initial Franchise Fee), 7 (Initial Investment), 8 (Restrictions on Sources of Products and Services) and 10 (Financing) for a discussion of the Lease Administration Fee and other costs you will incur in connection with acquiring rights to the site for your non-traditional Cold Stone Creamery restaurant.

Although we may approve the site you choose and the Master Concession Agreement or the Master Lease, our approval does not guarantee the success of your non-traditional Cold Stone Creamery restaurant. It will be your responsibility to select the premises in which your non-traditional Cold Stone Creamery restaurant will be established and operated. The decision to establish and operate your non-traditional Cold Stone Creamery restaurant at those premises will be made solely by you, without any reliance upon any information provided (if any), recommendation made (if any) or approval given (if any) by us, any area developer or any of our or their respective shareholders, directors, officers, employees, representatives, agents or affiliates.

The success of your non-traditional Cold Stone Creamery restaurant will depend upon, among other things, the following factors: how much you follow our methods and procedures; your management skill, experience and business acumen; how much time you spend personally managing your restaurant and supervising its operations; local economic conditions; the physical size and location of the restaurant; the amount and nature of tenant improvements required; the local market for Cold Stone Creamery products; the prevailing wage rate; competition and the sales level reached during the initial period. In addition, in the case of non-traditional Cold Stone Creamery restaurants, additional factors would include the nature of the facility in which your non-traditional Cold Stone Creamery restaurant is located, as well as the factors that impact the traffic at that facility. Due to the narrow nature of the customers at facilities in which non-traditional Cold Stone Creamery restaurants are located, the results of

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non-traditional Cold Stone Creamery restaurants are anticipated to be more volatile than the results of traditional Cold Stone Creamery restaurants. (Sections 2 and 6 of the License Agreement)

If your non-traditional Cold Stone Creamery restaurant is not open for business within one year after the date of the License Agreement, 150 days after the Master Landlord makes the site for your non-traditional Cold Stone Creamery restaurant available to you (as determined by us) or the deadline in the Master Concession Agreement, whichever occurs first, in addition to our other rights, you will be required to pay Late Opening Royalties and we will have the right to terminate the License Agreement. See ITEM 5 (Initial Franchise Fee). This deadline will apply even if we have not approved the sites that you have chosen for your non-traditional Cold Stone Creamery restaurant and even if we have delayed the opening of your non-traditional Cold Stone Creamery restaurant because you have not satisfied the Continuing Working Capital Requirement.

You will be responsible for conforming the premises to local ordinances and building codes, obtaining all required permits and licenses and constructing, remodeling and redecorating the premises for your non-traditional Cold Stone Creamery restaurant.

2. Training. Before you open your non-traditional Cold Stone Creamery restaurant, we

will train up to two people to operate a non-traditional Cold Stone Creamery restaurant using our recipes, formulae, food preparation procedures and business policies and practices. The training program will consist of the topics outlined below. However, the number of hours may vary, depending upon your background and your ability to comprehend the information.

Subject	Hours of Instructional Material	Hours of Classroom Training	Hours of Site-based On-the-job Training
Stage 1 - Core Functional Skills	5	0	25
Stage 2 - Shift Leadership	0	0	40
Stage 3 - Store Management	5	0	25
Stage 4 - Business Management	10	45	15
Total	20	45	105

In addition, you must perform at least 20 hours per month of site-based skills practice between the time that you complete Stage 4 of the training program and the date that you open your non-traditional Cold Stone Creamery restaurant for business.

Attendees must satisfactorily complete, in our sole discretion, all stages of the training program. The first three stages and the site-based skills practice are conducted at various Cold Stone Creamery Certified Training Stores throughout the nation over a two- to eight-week period, on a schedule that you and we agree upon. We will use our best efforts to assign you to a training store that is geographically convenient to you. The fourth stage is conducted at Cold Stone University^SM in Scottsdale, Arizona over a one-week period. The fourth stage of the training program is conducted weekly.

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In connection with each stage of the training program, you may be tested and will be evaluated upon, among other things, the results of such tests, whether you are competent in performing the skills necessary to operate your non-traditional Cold Stone Creamery restaurant, whether you can speak English fluently, whether you have an aptitude for the operation of your non-traditional Cold Stone Creamery restaurant, whether you are a good fit within the Cold Stone Creamery system and whether your operation of your non-traditional Cold Stone Creamery restaurant may adversely affect our goodwill or reputation, our products or the Service Marks. If we determine that you have not satisfactorily completed the training program, the License Agreement may expire or be terminated. See ITEM 17 (Renewal, Termination, Transfer and Dispute Resolution).

Before attending Stage 4 of the training program, you must have, in cash or other liquid funds, working capital in an amount equal to $35,000 (the "Continuing Working Capital Requirement"), you must have attended (at your expense) training in basic computer skills by a third party of your choice (if you do not have basic computer skills), satisfactorily completed (at your expense) a local food safety certification course and your Sublease must be signed. You must complete Stage 4 of the training program before beginning build-out of your non-traditional Cold Stone Creamery restaurant and at least eight weeks before you open your non-traditional Cold Stone Creamery restaurant for business.

Neither you, nor anyone else attending the training program, will be deemed to be our employee for any purpose. You will not be entitled to attend the training program at our expense with respect to your second and subsequent Applicant Agreements, unless we determine otherwise.

The first three stages of the training program and the site-based skills practice will be conducted by licensees and/or franchisees that are certified Cold Stone Creamery trainers and have at least one year of experience operating a Cold Stone Creamery restaurant. The fourth stage of the training program will be conducted by Dave Daniels, Renee McWenie and other Cold Stone University^SM personnel. Other Cold Stone Creamery management personnel are also involved in training from time-to-time. All personnel involved in the fourth stage of the training program have a minimum of six months' experience with us training in the areas in which they will be training you. See ITEM 2 (Business Experience) with respect to the business experience of Dave Daniels, Renee McWenie and other Cold Stone Creamery management personnel.

Attendance at our entire training program is mandatory. You, the Licensee (or, if the Licensee is a corporation, partnership, limited liability company or other entity, the Supervising Principal), must attend and complete, to our satisfaction, our training program. If you will not personally supervise your non-traditional Cold Stone Creamery restaurant, you must hire a manager approved by us. Your managers must attend the training program, unless we waive the requirement for subsequent managers to attend the training program if they can obtain satisfactory training from you. Except for attendance at the training program, we will not hire or train your employees, which will be your responsibility. All managers, officers and employees will be subject to a covenant not to compete and confidentiality and other obligations, in the form attached to this Franchise Offering Circular as Exhibit F. The "Supervising Principal" is a Principal selected by you and approved by us.

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Except as stated above, we do not charge a fee for the attendance of up to two people at the training program. The fee payable to us for additional people to attend the training program is $1,500 per additional training program per person. Training of additional people may not be held at the same time as training of the initial two people. All training program attendees bear their own travel, lodging and meal expenditures in connection with attending all stages of the training program. (Section 4 of the License Agreement)

3. Consultation. Before you open your non-traditional Cold Stone Creamery restaurant, we will consult with you by telephone, Monday through Friday, 8:00 a.m. to 5:00 p.m. (Phoenix, Arizona time), with respect to all aspects of starting and operating a non-traditional Cold Stone Creamery restaurant. (Section 5 of the Franchise Agreement)

4. Cold Stone Creamery's Operating Manual. Before you open your non-traditional Cold Stone Creamery restaurant, we will loan to you a copy of our operating manual (the "Operating Manual"), which contains standards of operations, the equipment and fixtures required to operate the Licensed Business, operating procedures and our policies. Our Operating Manual presently contains 794 pages. The table of contents of our Operating Manual is contained in Exhibit K to this Franchise Offering Circular.

You must operate your non-traditional Cold Stone Creamery restaurant strictly in accordance with the operating procedures and our policies, as contained in our Operating Manual, as it may be amended from time to time. Our Operating Manual is strictly confidential and must be returned promptly to us upon the termination of the license. (Section 7(a) of the License Agreement)

5. List of Approved Vendors and Suppliers; Coordinating Ordering and Delivery of Equipment and Signage. Before you open your non-traditional Cold Stone Creamery restaurant, we will provide you with a copy of our list of approved vendors and suppliers for all food, supplies, equipment, signage, decor and other goods and services. In addition, we will coordinate the ordering and delivery of equipment and signage. See ITEM 5 (Initial Franchise Fee). (Section 7(e) of the License Agreement)

At any time that you or any of your affiliates are in breach of the obligations under the License Agreement (for example, your failure to pay for the equipment and signage when required), or any other agreement with us or any of our affiliates, we or our affiliate may defer the performance of our obligations under the License Agreement (for example, our obligation to approve your site in a timely manner) or such other agreement, or defer the opening of your non-traditional Cold Stone Creamery restaurant, until your (or your affiliate's) breach has been cured. Our (or our affiliate's) exercise of that right will not constitute a waiver of our rights under the License Agreement or such other agreement, including, without limitation, our (or our affiliate's) right to terminate the License Agreement or such other agreement.

During the Operation of Your Non-traditional Cold Stone Creamery Restaurant

1. Consultation. After you open your non-traditional Cold Stone Creamery restaurant, we

will consult with you by telephone, Monday through Friday, 8:00 a.m. to 5:00 p.m. (Phoenix,

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Arizona time), with respect to all aspects of operating a non-traditional Cold Stone Creamery restaurant. (Section 5 of the License Agreement)

We may, in our sole discretion, offer additional assistance to you. For example, depending upon the geographic proximity between you and us, if our time permits, on-site consultation may be provided by us at your request at our then-current hourly rate (including consultation and travel time), plus travel, lodging and meal expenditures, at times agreed upon between you and us.

2. Cold Stone Creamery's Operating Manual. See above.

3. List of Approved Vendors and Suppliers. See above.

Additional training programs and refresher courses may be required from time to time. Although we do not presently intend to charge licensees for attendance, you will be required to attend and bear your own travel, lodging and meal expenditures in connection with attendance. In addition, you must attend, at your expense, all annual and other meetings and conference calls of licensees and/or franchisees that we determine are mandatory for all licensees and/or franchisees, or groups of licensees and/or franchisees (as designated by us). Market meetings are mandatory. We may impose a charge for your failure to attend those programs, courses, meetings and conference calls.

Time Between License Agreement Signing and the Opening of Your Non-traditional Cold Stone Creamery Restaurant

The typical length of time between signing the License Agreement and the opening of a non-traditional Cold Stone Creamery restaurant is anticipated to be between four and six months. (The typical length of time between signing a license or franchise agreement and the opening of a Cold Stone Creamery restaurant is between four and 12 months.) The factors that will affect the length of time for your non-traditional Cold Stone Creamery restaurant to open include, among other things, whether the site is built or needs to be completed, the difficulty of obtaining and negotiating a Master Concession Agreement or Master Lease for a satisfactory site, delivery and installation of equipment and signage, the amount and nature of leasehold improvements required, the length of time necessary to complete leasehold improvements, compliance with local ordinances and building codes, obtaining all required permits and licenses, scheduling and completion of our training program and your own time commitments.

Advertising

Brand Building and Support fees (the "Brand Building and Support Fees") will be collected from you and other licensees will be deposited into our brand building and support fund (the "Brand Building and Support Fund") and used by us for expenditures that, in our sole discretion, promote, enhance or further the Cold Stone Creamery brand or system, including, without limitation, promotional, marketing, public relations and advertising expenses, hiring marketing, public relations and advertising agencies and pin-house personnel to assist in developing the Cold Stone Creamery brand name and average unit volumes, expenses associated with listings in telephone books, subsidies of premiere/marquis Cold Stone

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Creamery restaurants designed to garner media attention and promote the Cold Stone Creamery brand name, travel expenses in connection with promotions and market meetings, training, development of trademarks and trademarked materials, production of circulars, media, advertisements, coupons and promotional materials (including point of purchase materials) and for any other purposes we may determine.

The Brand Building and Support Fee is 3% of Gross Sales on a weekly basis. See ITEM 6 (Other Fees). Other licensees' Brand Building and Support Fees (or advertising fees^ may be calculated at a different rate or on a different basis, and under limited circumstances, certain licensees may not be required to pay Brand Building and Support Fees (or advertising fees). We are not required to contribute funds for brand building and support or advertising, but may do so if we desire. Brand Building and Support Fees may be used for advertising that is principally for soliciting new licensees and franchisees; during 2005, no funds were used for such purposes.

We will administer the Brand Building and Support Fees fund. We are not required to prepare audited or other financial statements for the Brand Building and Support Fees fund. An accounting of the use of the Brand Building and Support Fees fund during each calendar year will be made available to you within a reasonable period of time after your request. Any amounts in the Brand Building and Support Fees fund not spent during the fiscal year during which they were collected will be used during the following fiscal years; any amounts expended for advertising purposes in excess of the amount in the Brand Building and Support Fees fund during any fiscal year (together with amounts not expended during prior fiscal years) will be debited from the following years' or the prior years' Brand Building and Support Fees fund. Any amounts in the Brand Building and Support Fees fund not spent during the fiscal year during which they were collected may be used by us for other purposes on a short-term basis provided that that use does not impair the availability of those amounts for expenditures that, in our sole discretion, promote, enhance or further the Cold Stone Creamery brand or system advertising purposes. We may receive monies from the Brand Building and Support Fees fund in connection with providing goods and services for advertising, public relations or marketing. No Brand Building and Support fees were collected during 2005.

Print, radio, television, Internet and other advertising media (for example, billboards, movie screens, buses and bus shelters) may be used, depending upon the total volume of Brand Building and support Fees generated by licensees. Advertising media coverage may be local, regional and/or national. Advertising has been generated in-house by us and by local, regional and national public relations and advertising firms.

In connection with your grand opening, you must conduct a grand opening marketing and advertising campaign in accordance with a plan approved by us prior to the grand opening. You may be required to spend up to $5,000 in connection with that grand opening and advertising campaign.

You are encouraged to spend additional funds for advertising.

You may use your own advertising and promotional materials, provided that your use of the Service Marks is in accordance with the License Agreement. In addition, all advertising and

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promotional materials generated by or for you will be subject to our prior approval, must be completely factual and must conform to the highest standards of ethical advertising.

We will not require you to participate in local or regional advertising cooperatives.

See ITEMS 6 (Other Fees), 8 (Restrictions on Sources of Products and Services) and 9 (Franchisee's Obligations). (Sections 7, 8 and 9 of the License Agreement)

Electronic Cash Register, the Internet and E-mail

You will be required to purchase and use certain hardware and software at your non-traditional Cold Stone Creamery restaurant. You will also be required to purchase certain service and support agreements.

You must purchase and use:

Hardware:

One Netgear 8-port fast ethernet switch

Two Epson TM-T88III Thermal Receipt Printers

Two Panasonic 7900 Series Point of Sale (POS) Workstations (or other point of sale workstations approved by us), each with one mag card reader, one Panasonic Integrated Cash Drawer, one Panasonic rear display and one power conditioner

One UPS 500 battery backup

One DSL/cable line for access to Creamery Connection, electronic sales reporting and remote support software - if neither DSL or cable is available at the time of your request, dial-up Internet access can be used until DSL or cable service becomes available in your area.

One 4-port router and DSL/cable modem, or 4-port router/DSL modem combination for access to the Internet

One Dell tower PC, to include the following:

1GB RAM, P4 2.8 GHz, 2 Hard Drives Capacity, CD-RW, Modem, RAID Card, etc!, as specified by us

15" LCD Monitor

Keyboard, Mouse and Speakers

Additional 10/100 NIC for high speed Internet connection

One Verifone Omni 3750 Credit Card/Gift Card System

Software:

Microsoft Windows Operating System

Microsoft Office Basic

Panasonic System Manager Pro (SMP) software

Panasonic Communication software

Symantec Norton's System Works software

Symantec PC Anywhere Host

My Profit Keeper accounting software

Adobe Acrobat and other integrated software packages

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The Netgear 8-port fast ethernet switch is used for communication between the POS workstations and the back office PC. It enables reporting of sales and franchise business management, and collects and generates sales, labor and inventory data. The printers are used to issue receipts to your customers and to print daily sales data. The POS workstations record customer transactions and transfer data to the back office Dell tower PC. They generate sales, PLU marketing, inventory and product cost data. The UPS 500 battery backup provides emergency power to the back office PC in the event of a power outage. The router and the DSL/cable line or modem are used to communicate with us and your area developer and for access to the Internet and your e-mail account. The back office PC is used for accounting, sales reporting, labor management and reporting, inventory tracking, computer-based crew training, communication with us and your area developer and access to the Internet and your e-mail account.

The Panasonic System Manager Pro (SMP) software is used for accounting, sales reporting, labor management and reports, inventory tracking, computer-based crew training and communicating with us. The Panasonic Communication software is used to communicate sales data and PLU information to us and your area developer and to update the POS systems when necessary. Symantec Norton's System Works software is an anti-virus software. Symantec PC Anywhere Host provides off-site remote access to the back office PC, including access for technical support. My Profit Keeper accounting software helps you track your expenses, revenue and profitability. Adobe Acrobat and other integrated software packages enable you to view marketing and training materials that we may provide to you.

The required hardware and software are proprietary to:

Name of Company	Address	Phone Number/Website
Panasonic Information Systems Co.	1701 N. Randall Road, El-D Elgin IL 60123-7820	(847) 468-4600 pos
Netgear, Inc.	4500 Great America Parkway Santa Clara CA 95054	(408) 907-8000
Epson America, Inc.	P.O., Box 93012 Long Beach CA 90806-2469	(800) 463-7766 www.epson.com
Powervar	14520 Lakeside Drive Waukegan IL 60085	(800) 369-7179 www.powervar.com
Microsoft Corporation	One Microsoft Way Redmond WA 98052	(425) 625-3311 www.microsoft.com
Symantec Corporation	20330 Stevens Creek Blvd. Cupertino CA 95014	(408) 517-8000 www.symantec.com
Adobe Systems Incorporated	345 Park Avenue San Jose CA 95110-2704	(408) 536-6000 www.adobe.com
Dell Computer Corporation	One Dell Way Round Rock TX 78682	(877) 773-3355 www.dell.com
VeriFone, Inc.	2099 Gateway Place, Suite 600 San Jose, CA, 95110	(800) VeriFone; (408) 232-7800 www.verifone.com
My Profit Keeper LLC	P.O. Box 21898 Mesa AZ 85277-1898	(480) 471-8227 www.myprofitkeeper.com

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Currently, you must purchase a Verifone Omni 3750 for your non-traditional Cold Stone Creamery restaurant. The Verifone Omni 3750 will be used to process credit card and gift card transactions at your non-traditional Cold Stone Creamery restaurant. At some point in the future, we may authorize the use of integrated card systems to process gift card transactions. Currently, the integrated systems are only authorized to process credit card transactions. You must obtain credit card and gift card processing services from our approved vendors. The charges associated with credit card and gift card transactions are compiled per transaction and therefore will vary from store to store. We estimate that the costs associated with credit card transactions will be between 1% and 2% of your gross sales. Gift card transactions will cost you between 29 cents and 35 cents per redemption.

We do not require the purchase of the Panasonic Integrated Dial Up Credit Card Point of Sale System. However, if you decide to purchase Panasonic Integrated Dial up Credit Card Systems, you will also be required to provide a dedicated phone line and purchase a credit card modem. In addition, you will be required to purchase the necessary software, staging/installation support, training and help desk services estimated to be $2,275 for the first year and $500 per year thereafter.

We do not require the purchase of the Panasonic High Speed Integrated Credit Card Point of Sale Systems. However, if you decide to purchase Panasonic High Speed Integrated Credit Card Systems you will also be required to provide a high speed (DSL or cable) data line. In addition, you will be required to purchase the necessary software, staging/installation support, training and help desk services estimated at $2,250 for the first year and $500 per year thereafter.

While not required, you may purchase one or two Telequip integrated coin dispensers, a security camera and/or a digital camera. Some of that equipment may require that a second personal computer be purchased and installed.

You may not install any hardware or software onto the Dell Tower PC without our express consent.

The approved vendors, including, but not limited to, Dell Computer Corporation, Panasonic, Emerald Business Solutions and Southwest Business Systems, do not support or warrant software or hardware not packaged with the original configuration from a vendor approved by us.

There are certain additional charges that the creators of required proprietary software will charge you as part of your use of their proprietary software. My Profit Keeper LLC charges a $285 set-up fee for its software and charges $62 per month for updates, upgrades and monthly support. None of the other software or hardware companies above is obligated as part of your purchase of the required hardware or software to provide ongoing maintenance, repairs, upgrades or updates.

We require you to obtain an annual computer support contract with an approved vendor, the cost of which is estimated to be $600-800 per year (with the first year being included in the purchase price of the equipment). The approved vendor will provide telephone support to you

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concerning the hardware and software used at your non-traditional Cold Stone Creamery restaurant.

You will be required to upgrade or update the software and programming for the equipment, and/or the equipment itself, at your expense, when we believe that it is necessary. There is no contractual limitation on the frequency and cost of that obligation. We cannot presently quantify the cost of necessary upgrades or updates.

All POS data is our property.

You must maintain a dedicated email account from an Internet service provider (ISP) approved by us as part of the sales gathering process and also to provide a means of communicating with us and your area developer. The fees associated with acquiring and maintaining a dedicated email account and access to the Internet by an approved ISP are your responsibility. Your system may come pre-configured with an e-mail account and dial up internet access from providers selected by us. We may change our list of approved ISPs at any time and may enter into an exclusive agreement with a High Speed ISP and require you to utilize the services of that specific provider. In the event you need dial-up Internet services until DSL or cable is available in your area, it is your responsibility to verify with your telephone provider that the Earthlink access number, selected at the time of your PC's configuration, is a non-toll call and will not result in toll charges. Any toll charges incurred through this process will be the responsibility of the franchisee. You must inform us and your area developer of your e-mail address promptly upon signing the Franchise Agreement and if your e-mail address is changed. You should check and respond to your e-mail on a daily basis (except for weekends); provided, however, that the timeliness of your e-mail review and responses must be consistent with reasonable business practices and must not cause iis, area developers or other franchisees to be unable to communicate with you in a timely manner.

We will also have independent access to the information and data generated by your Panasonic Workstation via your Dell tower PC. We will have access to gather any appropriate information it deems necessary and to download new menu items, pricing, menu item costs and software upgrades as it sees fit. You will be required to assist and cooperate with us in establishing and maintaining that system, including, at your expense, acquiring any necessary hardware or software and setting the system to automatically transmit data and information designated by us to us and your area developer.

You must obtain and maintain continuous access to our Internet website in a manner that will enable you to download required information (without regard to size) and to otherwise interact with us, your area developer and other persons, in such manner as we may specify. You are solely responsible for protecting yourself from viruses, computer hackers and other computer-related problems, and you may not sue us for any harm caused by such computer-related problems. You may not market your non-traditional Cold Stone Creamery restaurant or use the Service Marks on the Internet.

We are not obligated to provide or to. assist the franchisee to obtain the above items or services, but we may do so.

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Except as stated above, you are not required to purchase or use any computer hardware or software.

ITEM 12 TERRITORY

You will not receive an exclusive territory, option, right of first refusal or other rights under the License Agreement with respect to the area in which your non-traditional Cold Stone Creamery restaurant will be located. We (and/or our affiliates) may establish other licensed, franchised or company-owned Cold Stone Creamery restaurants that may compete with your location, including across the street from your location or in the same venue as your location. We presently intend to develop Cold Stone Creamery restaurants throughout the United States and internationally. One or more future Cold Stone Creamery restaurants may have an adverse effect on the revenues and profitability of existing Cold Stone Creamery restaurants, including your non-traditional Cold Stone Creamery restaurant.

In addition, we (and/or our affiliates) may market, directly or indirectly, Cold Stone Creamery products or services through methods of distribution other than Cold Stone Creamery restaurants operated by us, our affiliates, licensees and franchisees, including the Internet.

The license is granted only for a location within the area designated in the License Agreement. You will have no exclusive, or other, rights with respect to that area. The specific site of your non-traditional Cold Stone Creamery restaurant is subject to our approval. We will not unreasonably withhold its approval of the site. See ITEMS 5 (Initial Franchise Fee) and 8 (Restrictions on Sources of Products and Services).

Any relocation of your non-traditional Cold Stone Creamery restaurant must be for a legitimate business reason, must be within the facility (e.g., the airport or shopping mall) in which Licensee is located), will be subject to a $5,000 relocation fee and will require you to sign the then-current form of license agreement. In addition, you will be subject to t he same requirements regarding your site, the Master Concession Agreement or Master Lease, the Assignment of Concession Agreement or Sublease and the related fees as are applicable to the initial site of your Licensed Business. See ITEM 5 (Initial Franchise Fee). Any relocation of your non-traditional Cold Stone Creamery restaurant will be subject to our approval, which may be granted or withheld, in our sole discretion. In connection with any relocation, your non-traditional Cold Stone Creamery restaurant may not be closed for business for more than 30 days.

Except as expressly limited in the License Agreement, we (for ourselves, our affiliates and our designees) retain all rights with respect to Cold Stone Creamery restaurants, the Service Marks, all confidential and proprietary information, all copyrighted materials and the sale of Cold Stone Creamery products anywhere in the world, including, without limitation, the right to:

a. Establish and/or operate (or license to any other person or entity the right to establish and/or operate) a Cold Stone Creamery restaurant owned or licensed by the us at any location;

b. Develop, market, own, operate and/ or participate in any other business under the Service Marks or any other trademarks;

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c. Develop, lease and/or license the use of, at any location, trademarks other than the Service Marks, in connection with the operation of a system that offers products or services that are the same as, or similar to, those offered by us on any terms or conditions that we deem advisable, in our sole discretion;

d. Merge with, acquire and/or be acquired by any other business, including, without limitation, a business that competes with your non-traditional Cold Stone Creamery restaurant, or acquire and convert any retail stores, including, without limitation, retail stores operated by competitors, or otherwise operated independently or as part of, or in association with, any other system or chain, whether licensed, franchised or corporately owned;

e. Distribute, sell and/or license other persons or entities to distribute and/or sell products through all other channels. "Other Channels" means locations other than Cold Stone Creamery restaurants owned, licensed or franchised by us, and includes, without limitation, sale by or through other channels of trade including, without limitation, kiosks, carts, grocery stores, convenience stores, food chains, electronic mail, Internet sales, malls, universities, schools, hospitals, military bases, casinos, convention centers, arenas, stadiums, health and fitness facilities, office buildings, theme parks, movie theatres, and amusement facilities; and

f. Implement multi-area marketing programs that may allow us or others to solicit or sell to customers anywhere. We also reserve the right to issue mandatory policies to coordinate such multi-area marketing programs.

ITEM 13 TRADEMARKS

We grant you the nonexclusive right to operate a restaurant under the "Cold Stone Creamery" service marks, as well as our other current or future trademarks, service marks, trade names, logotypes, Trade Dress (as defined below), product identifiers, selections and/or designations (collectively, the "Service Marks"), to operate your restaurant. "Trade Dress" is defined as the total appearance and image of Cold Stone Creamery restaurants, the ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages and other frozen dessert products and related products and packaging, all related features such as size, texture, shape, color or color combinations, and graphics of Cold Stone Creamery restaurants and the ice cream> frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages and other frozen dessert products and related products and packaging, and all advertising and marketing techniques used to promote Cold Stone Creamery restaurants, as well as specifically including all signage, menu boards, product and ice cream displays, all product configurations such as the appearance of the ice cream and the ice cream additives and/or "mix-ins," the cone configurations, the "Ice-Cream Pull," all product packaging including any containers, buckets or other packages for containing ice cream, and any color schemes and designs utilized in connection with Cold Stone Creamery restaurants' interior walls, counters, table tops, chairs, and floors.

You must use the Service Marks in connection with the operation of your non-traditional Cold Stone Creamery restaurant. You may not use the Service Marks (or any substantially similar name) in your corporate name. Use of the Service Marks must be accompanied by the

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registration(®), service mark(^SM), trademark() or other symbol, as designated by us, in close proximity to the Service Mark. You must use the Service Marks only in the manner required by us and in no other manner.

You will not have the exclusive right to use Service Marks, nor will you acquire, by use or otherwise, any right, title or interest in or to the Service Marks, other than as expressly contained in, and limited by, the License Agreement. Your right to use the Service Marks is limited and temporary. Upon expiration or termination of the License Agreement, you may not, directly or indirectly, use the Service Marks in any manner or for any purpose whatsoever, and you may be required by us to renovate the premises of your non-traditional Cold Stone Creamery restaurant to eliminate the Service Marks and de-identify such premises to remove all Trade Dress (including, without limitation, the "cold stone"), returning it to a "vanilla shell," at your expense.

Certain Service Marks are registered to us with the United States Patent and Trademark Office (the "USPTO") on the principal register. The principal Service Marks are as follows:

Mark	Registration Number	Registration Date
Cold Stone Creamery (with design)	1968506	April 16,1996
If You Can Dream It We Can Ice Cream It	2160424	May 26,1998
Create Your Own Happiness (words only)	2324231	February 29, 2000
Create Your Own Happiness (stylized)	2345131	April 25, 2000
It's a Great Day for Ice Cream	2492521	September 25, 2001
Cold Stone Creamery (words only)	2542783	February 26, 2002
The Ultimate Ice Cream Experience (words only)	2587847	July 2, 2002
Cold Stone (words only)	2691919	March 4, 2003
Cold Stone Creamery (with design)	2779566	November 4, 2003
Cold Stone Creamery (with design)	2779567	November 4, 2003
Cold Stone Creamery (with design)	2779564	November 4, 2003
Cold Stone Creamery (with design)	2779565	November 4, 2003
Cold Stone Creamery (with design)	2779569	November 4, 2003
Cold Stone Creamery (with design)	2779568	November 4, 2003
Cold Stone Creamery (with design)	2779570	November 4, 2003
Cold Stone	2993039	September 6, 2005
Creations - Cold Stone Originals (stylized)	2789528	December 2, 2003
Medallion Logo	2877683	August 24, 2004
Creations (stylized)	2814796	February 17, 2004

In addition, we have applied to register the following principal Service Marks with the United States Patent and Trademark Office on the principal register:

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Mark	Serial Number	Filing Date
Cake Batter Ice Cream	76570187	January 9, 2004
Sinless	78670989	July 14, 2005
Cold Stone Creamery (words only, Class 35)	78513461	November 8, 2004
Cold Stone Creamery (words only, Class 30)	78513362	November 8,2004
Cold Stone Creamery (words only, Class 25)	78554803	January 27,2005
Red Pan	78485274	September 17, 2004
Everybody's	78799521	January 25,2006
Ours	78799509	January 25,2006
Mine	78799481	January 25, 2006

By not having a Principal Register federal registration for the marks with respect to which registration applications are pending, we do not have certain presumptive legal rights granted by a registration for those marks.

All affidavits of use required to be filed for the principal Service Marks have been filed. There are no (a) presently effective material determinations of the USPTO, the Trademark Trial and Appeal Board, the trademark administrator of any state or any court, (b) pending infringement or cancellation proceedings or (c) pending material litigation involving the principal Service Marks (collectively, "Material Issues"). The only opposition proceeding relates to the mark CAKE BATTER, Opposition No. 91162832, filed by Conopco, Inc. d/b/a Unilever and Ben & Jerry's Homemade, Inc., alleging the mark is merely descriptive.

There are no superior prior rights or infringing uses of the principal Service Marks actually known to us, which rights or uses could materially affect your use of the principal Service Marks in any state. There are no agreements currently in effect that significantly limit the rights of our rights to use or license the use of the principal Service Marks.

You must immediately notify us of any conduct that could constitute infringement of or challenge to the Service Marks. We will decide, in our sole discretion, whether to institute any action in connection with infringement of or challenge to the Service Marks, and will control all proceedings and litigation. We are not required to protect your right to use the Service Marks. We will indemnify you for all damages for which you are held liable in any lawsuit arising out of your use of the Service Marks in compliance with the License Agreement.

We may, in our sole discretion, modify or discontinue use of any of the Service Marks and/or use one or more additional or substitute service marks or trademarks. If it decides to do so, you must do so also, at your expense. However, if we require you to modify or discontinue use of any material Service Mark at a time other than upon renewal of the license, and that requirement is a direct result of Material Issues, we will bear the cost of those modifications or discontinuances.

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ITEM 14 PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION

We own proprietary information and rights in numerous items, such as menu formats, advertising designs, processes, techniques, formulae for Cold Stone Creamery ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages and other frozen dessert products and related products, the method of production and storage of the ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages and other frozen dessert products and related products and information contained in our Operating Manual. Some of those items are suitable for patent and/or copyright protection and/or are protectable as trade secrets. We claim all statutory copyrights that attach to all, or part of, any original materials used in the Cold Stone Creamery system, including our Operating Manual, advertising and promotional materials, and all other written materials we provide you.

To date, we have not registered any items for copyright protection. However, its copyright protection will extend for 100 years from the date of each item's creation or 75 years from the date of each item's publication, whichever is shorter.

We have filed the following design patent applications with the USPTO:

Title	Application Number	Filing Date
Combined Cake and Ice Cream Dessert	29/208,192	June 23, 2004
Combined Cake and Ice Cream Dessert	29/208,192	June 23, 2004

The design patent applications relate to ornamental features and designs included within various ice cream cakes created by us. There are no (a) presently effective material determinations of the USPTO or any state or federal court, (b) pending infringement or cancellation proceedings or (c) pending material litigation involving the design patent applications.

If you or your Principals, officers, managers or employees conceive, invent, create, design and/or develop any ideas, techniques, methods, processes or procedures, recipes, formulae, products, advertising and promotional materials, packaging or other concepts and features relating to store operations, business practices or the manufacturing, production, marketing or sale of ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages and other frozen dessert products or related goods in connection with the Licensed Business (the "Innovations"), they will be deemed works-made-for-hire and you or your Principals will be deemed to have assigned all of your or their rights, title and interest in the Innovations, including any intellectual property rights, to us. You and your Principals, officers, managers and employees also must cooperate with us in connection with protecting the Innovations.

If you reproduce any items or materials suitable for copyright protection, you must make sure that each item bears a copyright notice in the form specified by us. You must use the proprietary information only in the manner required by us and in no other manner. This information is strictly confidential and you may not disclose to any person, or use, any of that information for any purpose, except disclosure to a person who has signed and delivered to us a confidentiality agreement and use as necessary in connection with the operation of your non-

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traditional Cold Stone Creamery restaurant. In addition, you must fully and strictly comply with all security measures required by us for maintaining the confidentiahty of all information designated by us as trade secrets.

You will not have the exclusive right to use the Innovations or any of our patents or patent applications, copyrights or proprietary information, nor will you acquire, by use or otherwise, any right, title or interest in or to the Innovations, the copyrights or the proprietary information, other than as expressly contained in, and limited by, the License Agreement. Your right to use the Innovations, the claimed subject matter of any patents or patent applications, the copyrights and the proprietary information is limited and temporary. Upon expiration or termination of the License Agreement, you may not, directly or indirectly, use the Innovations, the claimed subject matter of any patents or patent applications, the copyrights or the proprietary information in any manner or for any purpose whatsoever.

You must immediately notify us of any conduct that could constitute infringement of or challenge to the Innovations, the patents or patent applications, the copyrights and the proprietary information. We will decide, in our sole discretion, whether to institute any action in connection with infringement of or challenge to the Innovations, the patents or patent applications, the copyrights and the proprietary information, and will control all proceedings and litigation. We are not required to protect your right to use the Innovations, the patent or patent applications, the copyrights or the proprietary information. We will indemnify you for all damages for which you are held liable in any lawsuit arising out of your use of our Innovations, the claimed subject matter of any patents or patent applications, the copyrights and proprietary information in compliance with the License Agreement.

We may, in our sole discretion, modify or discontinue use of the Innovations, the claimed subject matter of any patents or patent applications, the copyrights and the proprietary information and/or use other information and/or rights in their place. If we decide to do so, you must do so also, at your expense. However, if we require you to modify or discontinue use of any material Innovation, the claimed subject matter of any patents or patent applications, the copyrights or proprietary information and/or use other information and/or rights in their place at any time other than upon renewal of the license, and that requirement is a direct result of proceedings or litigation that determined that our and our licensees' and franchisees' use of such Innovation, the claimed subject matter of any patents or patent applications, copyright or proprietary information infringed upon a third party's rights, we will bear the cost of those modifications or discontinuances.

The licensee and each Principal, officer, manager and employee will be bound by certain provisions protecting our proprietary rights. See ITEM 9 (Franchisee's Obligations).

ITEM 15

OBLIGATION TO PARTICIPATE IN THE

ACTUAL OPERATION OF THE FRANCHISE BUSINESS

You, the licensee (or, if the licensee is a corporation, partnership, limited liability company or other entity, a Principal), and your manager, if you have one, must be present and work at your non-traditional Cold Stone Creamery restaurant during the restaurant's grand opening (at least

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two to four days before the opening and the first two to three days after the opening). Your Supervising Principal and your managers must be approved by us.

You, the licensee (or, if the licensee is a corporation, partnership, limited liability company or other entity, a Principal), must attend and complete, to our satisfaction, our training program. If more than one person signs the License Agreement, both or all must attend and complete, to our satisfaction, our training program. Your managers must attend the training program, unless we waive the requirement for subsequent managers to attend the training program if he/she can obtain satisfactory training from you. See ITEM 11 (Franchisor's Obligations).

We do not require that you personally supervise your non-traditional Cold Stone Creamery restaurant on an ongoing basis. However, if you (or a Principal of the licensee) do not personally supervise your non-traditional Cold Stone Creamery restaurant, the business must be directly supervised "on-premises" by a manager who has satisfactorily completed our training program. The manager must spend at least 40 hours per week on the restaurant premises overseeing the operation of the restaurant. Each manager (and each officer and employee) must sign and deliver to us an agreement, in the form attached to this Franchise Offering Circular as Exhibit F, in which the manager agrees to maintain the confidentiality of our proprietary information, be bound by a covenant not to compete similar to the one by which you and your Principals are bound and be subject to certain other provisions contained in the License Agreement. See ITEM 17 (Renewal, Termination, Transfer and Dispute Resolution). The manager is not required to be a Principal in, or equity owner of, the licensee.

We strongly recommend that you devote a substantial amount of time to your non-traditional Cold Stone Creamery restaurant, whether or not you hire a manager. Licensees who do not devote their full time efforts to the establishment and operation of their restaurants may have lower gross sales, higher operating costs and lesser name recognition in their areas than those licensees who do devote their full efforts to the business. Examples of the types of functions which you might perform include supervision of employees, inventory checks, review of sales and food costs, bookkeeping and all reasonable efforts to ensure smooth and efficient operations.

You must keep your non-traditional Cold Stone Creamery restaurant open to the public the days and hours that we require, as provided in the Operating Manual. All of those requirements are referred to as the "Required Hours.") We may waive the Required Hours, in our sole discretion. In addition, you must keep your non-traditional Cold Stone Creamery restaurant open during your Posted Hours (as defined below). If you fail to keep your non-traditional Cold Stone Creamery restaurant open during the Required Hours or the Posted Hours, you must pay us an Hours Violation Fee in the amount of $100 per occurrence. The term "Posted Hours" means the hours of operation of your non-traditional Cold Stone Creamery restaurant posted on or about the restaurant premises or otherwise advertised to the public.

If you are a married individual, your spouse must sign the Spousal Consent to the License Agreement. Each Principal must sign an agreement, in the form of Exhibit D, in which the Principal agrees to perform, and guarantees, all of your obligations to us and our affiliates (including the obligations under the License Agreement, the Assignment of Concession

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Agreement and the Sublease) and agrees to be bound by the restrictive covenants, the confidentiality provisions and certain other provisions contained in the License Agreement.

All personnel employed by you in connection with the operation of your non-traditional Cold Stone Creamery restaurant must maintain standards of sanitation, cleanliness and demeanor as may be established by us. All personnel must wear a uniform or other clothing approved by us. In addition, you must ensure that all employees whose duties include customer service have sufficient literacy and fluency in the English language (or such other language that is the primary language in your market) to adequately serve the public at your non-traditional Cold Stone Creamery restaurant.

ITEM 16 RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL

You must offer and sell at your non-traditional Cold Stone Creamery restaurant super premium fresh made ice cream and yogurt, an assortment of complementary toppings and mix-ins and the other products selected by us for your type of non-traditional Cold Stone Creamery restaurant (which may include cakes, pies, smoothies, shakes, specialty beverages and other frozen dessert products (prepared using proprietary recipes), in a manner consistent with our comprehensive standards and requirements. Depending upon the type of non-traditional Cold Stone Creamery restaurant that you operate, the space and facilities available at your non-traditional Cold Stone Creamery restaurant and the nature of the location of your non-traditional Cold Stone Creamery restaurant, there may fewer product flavors and mix-ins and product selections may exclude yogurt, sorbet, shakes, smoothies, soda, cakes, pies, bulk packaging and other items that a traditional Cold Stone Creamery restaurant may serve.

In addition, we may incorporate into the Cold Stone Creamery program new products and services that we believe will be successful. You will be obligated to offer and sell those new products and to participate in all local, regional and promotional programs, initiatives and campaigns adopted by us that we require you to participate in. We reserve the right to designate which of our licensees or franchisees may, or will be required to, participate in new product or service tests, new or modified product or service offerings and other programs and initiatives that we may periodically develop. If we designate you for participation in any such program, initiative or campaign, you must participate when and as required by us. There are no limits on our right to require you to offer and sell those new products or to participate in those programs, initiatives and campaigns.

You may not offer or sell any other products or services at or from your non-traditional Cold Stone Creamery restaurant, or conduct any other business at or from your non-traditional Cold Stone Creamery restaurant, unless we specifically approve the offering and sale of those products or services in writing. In addition, you may not offer or sell any products or services specified by us in any configuration, form or manner (including items for resale) other than that specifically approved by us. You may not market your non-traditional Cold Stone Creamery restaurant or use the Service Marks on the Internet.

If we believe in good faith that any product offered by you may be unhealthy, unsafe or unsanitary, and we request that you discard that product, you must do so immediately. In

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addition, we may require you to close your non-traditional Cold Stone Creamery restaurant until we are satisfied that any unhealthy, unsafe or unsanitary condition has been completely corrected.

ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION

This table lists important provisions of the license and related agreements pertaining to renewal, termination, transfer and dispute resolution. You should read these provisions in the agreements attached to this Franchise Offering Circular.

Provision	Section in Agreement*	Summary
a. Term of the franchise	15(a)	Probationary Period until your non-traditional Cold Stone Creamery restaurant opens to the public for business; will be automatically extended through the third or fifth (as agreed to between you and us) anniversary of the License Agreement unless we provide to you, prior to the end of the Probationary Period, written notice that the License Agreement will expire as of the end of the Probationary Period (based upon our good faith belief that you (i) may not be a good fit within the Cold Stone Creamery system or (ii) may adversely affect our goodwill or reputation, our products or the Service Marks); see also (m)
a. Term of the franchise	Exhibit G2 (Sublease) -2.1; Exhibit H (Assignment of Concession Agreement) -2.1	Term of the Master Concession Agreement or Master Lease, as applicable, minus one day
b. Renewal or extension of the term	15(b)	3 additional periods, each equal in length to the initial term; see (a)
	Exhibit G2 (Sublease) -2.2,2.3;; Exhibit H (Assignment of Concession Agreement) - 2.2,2.3	Same as Master Concession Agreement or Master Lease, as applicable, minus one day (term must match renewal term of License Agreement)
	Exhibit G3 (Master Lease) - 2.2	3 additional periods, each equal in length to the initial term (term must match renewal term of License Agreement)

'Section reference is to License Agreement, unless stated otherwise.

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Provision	Section in Agreement*	Summary
c. Requirements for you to renew or extend	15(b); Exhibit J (Specimen of General Release)	You must be in good standing; you must not have a history of repeated breaches; provide timely notice of intent to renew; pay renewal fee; we have not notified you that we object to the renewal and returned the renewal fee to you; remodel; sign the then-current form of license agreement; sign a general release of us and our affiliates; attend additional training programs or refresher courses
	Exhibit G2 (Sublease) -2.2,2.3; Exhibit H (Assignment of Concession Agreement) - 2.2,2.3	You must be in good standing and you must notify us of your intent to renew at least 60 (but not more than 90) days before we are required to notify the site owner or the Master Landlord, as applicable, of our intent to renew; see also (a)
	Exhibit G3 (Master Lease) - 2.2	No event of default exists; timely notice of intent to renew given to Master Landlord
d. Termination by you	Not applicable	You may not terminate the License Agreement without our written consent
	Exhibit G3 (Master Lease) -11.4,11.5	One-time right to terminate the Master Lease 60 months after the commencement date of the Master Lease; if Master Landlord breaches certain conditions and does not timely cure
	Exhibit G4 (Lease Addendum) - 6.2	One-time right to terminate the Master Lease 60 months after the commencement date of the Master Lease
e. Termination by the Franchisor without cause	None	But see (a) with respect to the expiration at the end of the Probationary Period
f. Termination by the Franchisor with cause	16	See (g) and (h)
	Exhibit G2 (Sublease) -4,16; Exhibit H (Assignment of Concession Agreement) -4,15	If you default under the License Agreement, the Assignment of Concession Agreement (or the Master Concession Agreement) or the Sublease (or the Master Lease), we may exercise our remedies, including the loss of possession of your restaurant site, which will result in the loss of the license
	Exhibit G3 (Master Lease) -11.1	See(g)

"Section reference is to License Agreement, unless stated otherwise.

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Provision	Section in Agreement*	Summary
g. "Cause" defined-defaults which can be cured	16(a), (b),(d),(e),(f),(j), (k), (m), (t) and (x)	Failure to pay us or an affiliate money owed; Breach of curable non-monetary provisions; Breach of Assignment of Concession Agreement (or the Master Concession Agreement) or the Sublease (or the Master Lease); Failure to satisfy Continuing Working Capital Requirements; Involuntary lien placed on your business assets; Conduct of business in a manner adverse to us, if curable; Loss of restaurant site; Loss of permit or license; Unapproved transfers; Violation of any health, safety or sanitation law, regulation, rule or ordinance; Refusal or failure to allow us access to the premises of your non-traditional Cold Stone Creamery restaurant
	Exhibit G2 (Sublease) -16; Exhibit H (Assignment of Concession Agreement) -15	Failure to pay amounts due under Assignment of Concession Agreement (or the Master Concession Agreement) or the Sublease (or the Master Lease); Failure to perform any other obligation under the Assignment of Concession Agreement (or the Master Concession Agreement) or the Sublease (or the Master Lease); Defaults in any obligation under the License Agreement or any other agreement between you or your affiliates and us or our affiliates
	Exhibit G3 (Master Lease) -11.1	Failure to pay rent or other monies due; breach of any other obligation under the Master Lease

"Section reference is to License Agreement, unless stated otherwise.

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Provision

Section in Agreement*

Summary

h. "Cause" defined-defaults which cannot be cured

4(d); 14(h); 16(b), (c), (d),(f),(g),(h),(i),(k), (l),(m),(n),(o),(p),(q), (s), (u), (v) and (w)

Breach of non-curable non-monetary provisions; Underreporting of Gross Sales; Repetitive breaches; Bankruptcy or insolvency of Licensee or Principal; Failure to open restaurant within one year, 150 days after the Master Landlord makes the site for your Licensed Business available to you (as determined by us) or the deadline in the Master Concession Agreement (whichever occurs first); Conduct of business in manner adverse to us; Transfer; Loss of restaurant site; Loss of permit or license; Failure to satisfactorily complete the training program (based upon, among other things, the results of tests, whether you are competent in performing the skills necessary to operate your non-traditional Cold Stone Creamery restaurant, whether you can speak English fluently and whether you have an aptitude for the operation of your non-traditional Cold Stone Creamery restaurant) or refusal to attend the training program a second time; Termination of another License Agreement or any other agreement; Damage to equipment, premises or our goodwill, reputation or products or the Service Marks or any other breach of the License Agreement at any time after you have received notice of termination of the License Agreement; You misrepresent or commit fraud in connection with any information contained in your application for a license of in any other oral or written information communicated to us; Abandonment of your non-traditional Cold Stone Creamery restaurant; Conviction of, or pleading guilty or no contest to, a felony or other crime or offense that may adversely affect our goodwill or reputation, our products or the Service Marks; Conduct that may adversely affect our goodwill or reputation, our products or the Service Marks; Conduct that violates any law, regulation or ordinance; commission of an act of moral turpitude; Your use, or permitting the use of, your non-traditional Cold Stone Creamery restaurant for any illegal or unauthorized purpose

Exhibit G2 (Sublease) -16; Exhibit H (Assignment of Concession Agreement) -15

Failure to pay amounts due under the Assignment of Concession Agreement (or the Master Concession Agreement) or the Sublease (or the Master Lease); Bankruptcy of, or general assignment for the benefit of creditors by, Licensee; Defaults under the Master Concession Agreement or the Master Lease that are not curable

'Section reference is to License Agreement, unless stated otherwise.

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Provision	Section in Agreement*	Summary
i. Your obligations on termination/ nonrenewal	15(d); 17	Except for expiration at the end of the Probationary Period, you will forfeit all fees paid; Will receive no payment for good will; Must return Operating Manual, materials relating to Service Marks, Copyrights, Innovations and Proprietary Information and other property of ours (we may enter site to obtain); Must cease using (directly and indirectly) the Service Marks, Copyrights, Innovations and Proprietary Information and if, necessary, renovate the site to remove the Service Marks and the Trade Dress (we will have the right, by power-of-attorney, to do so if you do not do so); and pay all amounts outstanding to us and our affiliates within 10 days; also see (o)
	Exhibit G2 (Sublease) -16; Exhibit H (Assignment of Concession Agreement) -15	Pay amounts due under the Assignment of Concession Agreement (and the Master Concession Agreement) and the Sublease (and the Master Lease)
	Exhibit G3 (Master Lease) -11.2,11.3	Pay Master Landlord amounts due under the Master Lease
j. Assignment of contract by the franchisor	23	No restrictions; however, no assignment will be made except to an assignee who, in our good faith and judgment, is willing and able to assume our obligations under the License Agreement
	Exhibit G2 (Sublease) -23; Exhibit H (Assignment of Concession Agreement) -22	No restrictions
	Exhibit G3 (Master Lease) - 20.10	No restrictions on Master Landlord

"Section reference is to License Agreement, unless stated otherwise.

061506

Non-traditional FOC.2006

Provision	Section in Agreement*	Summary
k. "Transfer" by you-definition	14,23	Sublicensing is prohibited; Sales or transfers of your non-traditional Cold Stone Creamery restaurant's assets (other than in the ordinary course of business) are prohibited; Any sale or other transfer of the Licensed business or Licensee's rights under the License Agreement, including mergers, stock purchases and bankruptcy, is prohibited
	Exhibit Gl (Agreement of Intent to Sublet) - 3	Our approval is required
	Exhibit G2 (Sublease) -10,23; Exhibit H (Assignment of Concession Agreement) -22	Our approval is required
1. Franchisor approval of transfer by you	14; 23	No transfers are permitted
m. Conditions for the Franchisor's approval of transfer	14; 23	No transfers are permitted
n. Franchisor's right of first refusal to acquire your business	14; 23	No transfers are permitted
o. Franchisor's option to purchase your business	15(d); 17(b)	Upon expiration of the License Agreement at the end of the Probationary Period, if you comply with certain requirements, we will refund to you the Initial License Fee (less our expenses) and, if you have completed Stage 4 of our training program, we will purchase the equipment, signage and fixtures purchased by you in connection with the establishment of your Licensed Business in accordance with our standards and specifications at a stated price; Upon other expiration or termination of the License Agreement, we may purchase your equipment, signage and other tangible assets and/or assume the Master Lease; If required, we will purchase your tangible assets; The purchase price will be based upon a stated formula
p. Your death or disability	14	See (k), (1) and (m)
q. Non-competition covenants during the term of the franchise	13; Exhibit D (Agreement to be Bound and to Guarantee); Exhibit F (Restrictive Covenant)	You and your Principals, officers, managers and employees may not operate a business that manufactures, produces, markets or sells ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages or other frozen dessert products within or outside of, or for consumption within or outside of, the United States; liquidated damages

061506

Non-traditional FOC2006

Provision

Section in Agreement*

Summary

r. Non-competition covenants after the franchise is terminated or expires

13; (Exhibit D (Agreement to be Bound and to Guarantee; Exhibit F (Restrictive Covenant)

You and your Principals, officers, managers and employees may not operate a business that manufactures, produces, markets or sells ice cream, frozen yogurt, cakes, pies, smoothies, shakes, specialty beverages or any other frozen dessert products within or outside of, or for consumption within or outside of, the United States; liquidated damages____________________________________

s. Modification of the agreement

Exhibit G3 Lease) - 20.16

(Master

If you or an affiliate subsequently sign a license agreement with us, the License Agreement and all license agreements (and all documents signed in connection with those license agreements) previously signed by you or an affiliate will be automatically amended to be identical to the License Agreement (and all documents signed in connection with the License Agreement) you subsequently sign, except that the term of the License Agreement and all previously signed license agreements will be the periods remaining under the License Agreement and those license agreements and the renewal fee contained in the License Agreement and the previously-signed license agreements will be the renewal fee in the License Agreement and those license agreements; Upon signing the License Agreement, all license agreements (and all documents signed in connection with those license agreements) previously signed by you or an affiliate will be automatically amended to be identical to the License Agreement (and all documents signed in connection with the License Agreement), except that the term of previously-signed license agreements will be the periods remaining under those license agreements and the renewal fee contained in the previously-signed license agreements will be the renewal fee in those license agreements; We may modify the Operating Manual without your approval; Fees payable to us or our affiliates (including initial license fees for subsequent units, royalties, Brand Building & Support fees and payments relating to audits, additional training, consulting, interest, late payments or reports and liquidated damages) may be modified without your approval; Otherwise, no modifications may be made without both parties' approval__________

Written agreement of both parties to Master Lease

'Section reference is to License Agreement, unless stated otherwise.

061506

Non-traditional FOC.2006

Provision	Section in Agreement*	Summary
t. Integration/Merger Clause	2; 24; 26	See (s). Only the terms of the agreements contained in this Franchise Offering Circular are binding (subject to state law); There have been no oral representations, warranties or agreements, nor any claims or representations regarding potential sales, profits or earnings achievable by you
	Exhibit G2 (Sublease) -25; Exhibit H (Assignment of Concession Agreement) -24	Only the terms of the agreements contained in this Franchise Offering Circular are binding
	Exhibit G3 (Master Lease) - 20.16	Only the terms contained in the Master Lease are binding
u. Dispute resolution by arbitration or mediation	30; Exhibit I (Equipment and Signage Agreement) - 8	Mediation required, subject to certain exceptions
v. Choice of Forum	29,30; Exhibit D (Agreement to be Bound and to Guarantee) -15; Exhibit F (Restrictive Covenant) - 9(c); Exhibit I (Equipment and Signage Agreement) - 7	Phoenix, Maricopa County, Arizona, except for claims by us for injunctive relief, which may be brought anywhere; Claims arising under the Maryland Franchise Registration and Disclosure Law may be brought in Maryland
w. Choice of Law	29; Exhibit D (Agreement to be Bound and to Guarantee) -15; Exhibit F (Restrictive Covenant) - 9(c); Exhibit Gl (Agreement of Intent to Sublet) - 5; Exhibit G2 (Sublease) -21; Exhibit G3 (Master Lease) - 20.15; Exhibit H (Assignment of Concession Agreement) -20; Exhibit I (Equipment and Signage Agreement) - 7	Arizona lawThe foregoing choice of law should not be considered a waiver of any right conferred upon us or you by Article 33 of the General Business Law of the State of New York

'Section reference is to License Agreement, unless stated otherwise.

The License Agreement provides for termination upon bankruptcy. These provisions may not be enforceable under federal bankruptcy law (11 U.S.C.A. Section 101, et seq.).

061506

Non-traditional FOC.2006

These states have statutes which may supersede the License Agreement with respect to your relationship with us, including the areas of termination and renewal of your license: ARKANSAS [Stat. Section 70-807], CALIFORNIA [Bus. & Prof. Code Sections 20000-20043], CONNECTICUT [Gen. Stat. Section 42-133e et seq.], DELAWARE [Code, tit], HAWAII [Rev. Stat. Section 482E-1], ILLINOIS [815 ILCS 705/1-44], INDIANA [Stat. Section 23-2-2.7], IOWA [Code Sections 523H.1-523H.17], MICHIGAN [Stat. Section 19.854(27)], MINNESOTA [Stat. Section 80C.14], MISSISSIPPI [Code Section 75-24-51], MISSOURI [Stat. Section 407.400], NEBRASKA [Rev. Stat. Section 87-401], NEW JERSEY [Stat. Section 56:10-1], SOUTH DAKOTA [Codified Laws Section 37-5A-51], VIRGINIA Code 13.1-557-574-13.1-564], WASHINGTON [Code Section 19.100.180], WISCONSIN [Stat. Section 135.03]. These and other states may have court decisions that may supersede the License Agreement with respect to your relationship with us, including the areas of termination and renewal of your license.

ITEM 18 PUBLIC FIGURES

We do not use any public figure to promote the Cold Stone Creamery franchise system.

ITEM 19 EARNINGS CLAIMS

We do not furnish, or authorize its salespeople to furnish, any oral or written information concerning the actual or potential sales, costs, income or profits of non-traditional Cold Stone Creamery restaurants. Actual results vary from unit to unit and we cannot estimate the results of any particular franchise.

ITEM 20 LIST OF OUTLETS

Status of Non-traditional Stores Owned by Cold Stone Creamery and its Affiliates

As of December 31, 2003, 2004 and 2005, neither Cold Stone Creamery nor its affiliates owned any non-traditional Cold Stone Creamery restaurants. As of the date of this Franchise Offering Circular, CSC Restaurants, an affiliate of ours, owned one non-traditional Cold Stone Creamery restaurant. It is located at Chase Field, 401 E. Jefferson, Phoenix, Arizona.

061506

Non-traditional FOC.2006

Status of Traditional Stores Owned by Cold Stone Creamery and its Affiliates

State	*Stores closed during 2003/2004/2005**	Stores opened during 2003/2004/2005**	Total stores operating at 12/31 2003/2004/2005
Alabama	0/0/0	0/2/0	0/2/2
Arizona	0/2/0	2/0/0	6/6/6
California	0/0/0	0/0/1	0/0/1
Florida	0/0/0	1/0/2	0/0/2
Georgia	0/0/1	0/1/3	0/1/4
Idaho	0/0/0	o/i/o	0/1/1
Illinois	0/0/0	0/0/1	0/0/1
Kansas	0/0/0	1/0/0	1/0/0
Kentucky	0/0/0	0/0/1	0/0/1
New Jersey	0/0/0	o/i/o	0/1/0
New York	0/0/0	1/1/1	1/2/2
Ohio	0/0/0	0/0/1	0/0/1
Oklahoma	0/0/0	0/1/0	0/1/1
Oregon	0/0/0	0/0/2	0/0/2
Pennsylvania	0/0/0	0/2/0	0/2/0
Texas	0/0/0	0/0/2	0/0/2
U.S.V.I.	0/0/0	1/1/0	1/2/2
Utah	0/0/0	2/0/0	2/0/0
Washington	0/0/0	0/1/1	0/1/2
Wisconsin	0/0/0	0/0/3	0/0/3
Total	0/2/1	8/12/18	11/19/33

* Units that were acquired by franchisees are not included in this column ** One or more units included in this column were acquired from franchisees

061506

The following are the owners of the traditional Cold Stone Creamery restaurants owned by us and our affiliates as of December 31, 2005, and the addresses of those Cold Stone Creamery restaurants.

Name of Owner	Address of Unit
Ohio
CSC Restaurants	9648 Kenwood Road, Blue Ash
Oklahoma
CSC Restaurants	1901 NW Expressway, Ste 2094, Oklahoma City
Oregon
CSC Restaurants	8261 SW Wilsonville Rd., Ste E, Wilsonville
CSC Restaurants	12288 SW Scholls Ferry Rd., #14, Tigard
Texas
CSC Restaurants	13331 Preston Road, Ste 2042, Dallas
CSC Restaurants	10950 FM1960 West, Ste H, Houston
U.S.V.I.
CSC Restaurants	9100 Havensight, #1, St. Thomas
CSC Restaurants	6100 American Yacht Harbor, Red Hook Qtr #2, St. Thomas
Washington
Cold Stone Creamery	328 Park Place #7, Kirkland
CSC Restaurants	900 Front Street, Ste A, Leavenworth
Wisconsin
CSC Restaurants	1650 Deming Way, Ste 102, Middleton
CSC Restaurants	427 State Street, Madison
CSC Restaurants	2970 Cahil Main, Ste 103, Fitchburg

Name of Owner	Address of Unit
Alabama
CSC Restaurants	114 W. Magnolia Ave., Unit C, Auburn
CSC Restaurants	7240 E. Chase Parkway, Montgomery
Arizona
CSC Restaurants	3330 South McClintock, #1, Tempe
CSC Restaurants	15560 Frank Lloyd Wright, Suite B9, Scottsdale
CSC Restaurants	15034 North Scottsdale Road, Scottsdale
CSC Restaurants	14858 N. Frank Lloyd Wright, #165B, Scottsdale
CSC Restaurants	7000 East Mayo Blvd, #1076, Phoenix
CSC Restaurants	20789 N. Pima Rd. Ste 135, Scottsdale
California
CSC Restaurants	1689 Areden Way, #2010, Sacramento
Florida
CSC Restaurants	655 Grand Blvd., Sandestin
CSC Restaurants	6346 Lantana Road, Ste 63, Lake Worth
Georgia
CSC Restaurants	3500 Peachtree Rd., NE #4834, Atlanta
CSC Restaurants	167 East Broad St., Athens
CSC Restaurants	234 Newnan Crossings By-Pass, Newnan
CSC Restaurants	4910 Jimmy Lee Smith Pkwy., Ste. 105, Hiram
Idaho
CSC Restaurants	3640 S. Findley, Boise
Illinois
CSC Restaurants	2429 Lincoln Avenue, Chicago
Kentucky
CSC Restaurants	976 Baxter Avenue, Louisville
New York
CSC Restaurants	253 W. 42"d Street, New York
CSC Restaurants	139 Flatbrush Ave., Brooklyn

061506

Non-traditional FOC.2006

Status of Non-traditional Stores Owned by Licensees

State	Stores closed during 2003/2004/2005	Stores opened during 2003/2004/2005	Total stores operating at 12/31 2003/2004/2005
Arizona	0/0/0	0/0/1	0/0/1
Total	0/0/0	0/0/1	0/0/1

Status of Traditional Stores Owned by Franchisees

State	*Stores closed during 2003/2004/2005**	Stores opened during 2003/2004/2005**	Total stores operating at 12/31 2003/2004/2005
Alabama	1/0/1	2/3/2	5/6/7
Alaska	0/0/0	i/o/i	6/6/7
Arizona	0/4/1	7/8/9	46/42/51
Arkansas	0/0/0	o/i/o	0/1/1
California	o/i/i	48/45/44	198/242/284
Colorado	0/0/0	10/11/3	26/37/40
Connecticut	0/0/0	1/6/7	2/8/15
Delaware	o/o/o	0/5/0	0/5/5
Florida	2/0/0	12/24/27	22/46/71
Georgia	1/2/1	7/7/6	16/21/25
Guam	0/0/0	o/i/o	o/i/i
Hawaii	0/0/0	3/7/0	8/15/15
Idaho	0/0/0	2/2/1	6/8/9
Illinois	0/0/0	7/19/19	13/32/50
Indiana	0/0/0	0/6/5	2/8/13
Iowa	0/0/0	1/3/4	1/4/8
Kansas	0/0/0	2/2/2	2/5/7
Kentucky	0/0/1	1/1/2	6/7/7
Louisiana	0/0/0	0/2/3	1/3/6
Maine	0/0/0	0/2/0	0/2/2
Massachusetts	0/0/0	0/8/3	0/8/11
Maryland	0/0/0	1/7/7	1/8/15

* Units that were acquired by us from franchisees are not included in this column. Units of franchisees that were terminated are not included in this column if the units did not close for business and were subsequently operated by new franchisees.

061506

Non-traditional FOC.2006

State	*Stores closed during 2003/2004/2005**	Stores opened during 2003/2004/2005**	Total stores operating at 12/31 2003/2004/2005
Michigan	0/0/0	5/12/10	8/20/30
Minnesota	0/0/1	3/14/10	9/23/32
Mississippi	0/0/0	0/0/2	1/1/3
Missouri	0/0/0	2/6/11	2/8/19
Montana	0/0/0	0/0/2	0/0/2
Nebraska	0/0/0	1/1/3	2/3/6
Nevada	1/0/0	5/5/3	11/16/19
New Jersey	0/0/0	7/12/15	7/19/35
New Mexico	0/0/0	3/2/0	9/11/11
New York	0/0/0	6/19/19	7/26/45
North Carolina	0/0/0	4/11/11	10/21/32
North Dakota	0/0/0	1/2/0	2/4/4
Ohio	0/0/2	9/16/15	12/27/39
Oklahoma	0/0/0	1/1/3	1/2/5
Oregon	0/0/0	6/12/1	13/24/23
Pennsylvania	0/0/1	0/10/19	5/15/33
Puerto Rico	0/0/0	0/2/5	1/3/8
Rhode Island	0/0/0	1/0/2	1/1/3
South Carolina	0/0/0	4/5/5	4/9/14
South Dakota	0/0/0	1/1/1	1/2/3
Tennessee	0/0/0	2/0/5	3/3/8
Texas	0/2/2	16/28/24	19/45/65
U.S. Virgin Islands	0/0/0	0/0/0	1/0/0
Utah	o/o/i	4/1/2	13/14/15
Virginia	0/0/1	9/12/10	11/23/32
Washington	0/0/0	11/9/8	18/26/33
Washington, D.C.	0/0/0	0/1/0	0/1/1
West Virginia	0/0/0	0/0/2	0/0/2
Wisconsin	0/0/1	7/10/5	7/17/18
Total	5/9/13	213/344/338	539/879/1190

Our licensees and franchisees (whose units are open for business) and their addresses and telephone numbers are listed in Exhibit M.

061506

Non-traditional FOC.2006

Non-traditional Store Status Summary

(2003/2004/2005)

State

Transfers

Cancelled/ Terminated

Not Renewed

Reacquired

by Franchisor

Left the

System/

Other

Total From Left Columns

Franchises Operating at 12/31

Arizona

0/0/0

0/0/0

0/0/0

0/0/1

Total

Traditional Store Status Summary

(2003/2004/2005)

State	Transfers	Cancelled/ Terminated	Not Renewed	Reacquired by Franchisor	Left the System/ Other	Total From Left Columns	Franchises Operating at 12/31
Alabama	1/0/0	0/1/1	0/0/0	0/2/0	0/0/0	1/3/1	5/6/7
Alaska	0/1/0	0/0/0	0/0/0	0/0/0	0/0/0	0/1/0	6/6/7
Arizona	1/5/2	0/0/0	0/2/1	0/0/0	0/0/0	1/7/3	46/42/51
Arkansas	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/1/1
California	26/23/42	0/1/9	0/0/0	0/0/1	0/0/0	26/24/52	198/242/284
Colorado	3/1/4	o/o/i	0/0/0	0/0/0	0/0/0	3/1/5	26/37/40
Connecticut	0/0/0	0/0/1	0/0/0	0/0/0	0/0/0	o/o/i	2/8/15
Delaware	0/0/1	0/0/0	0/0/0	0/0/0	0/0/0	0/0/1	0/5/5
Florida	0/2/3	0/2/1	0/0/0	3/0/2	0/2/0	3/6/6	22/46/71
Georgia	0/0/5	1/3/1	0/0/0	0/0/2	0/0/0	1/3/8 "	14/21/25
Guam	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	o/i/i
Hawaii	1/0/1	0/0/0	0/0/0	0/0/0	0/0/0	1/0/1	8/15/15
Idaho	0/0/3	0/0/0	0/0/0	0/0/0	0/0/0	0/0/3	6/8/9
Illinois	1/1/1	0/0/8	0/0/0	0/0/1	0/0/0	1/1/10	13/32/50
Indiana	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	2/8/13
Iowa	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/4/8
Kansas	0/0/1	0/0/0	0/0/0	0/0/0	0/0/0 .	0/0/1	2/5/7
Kentucky	0/0/3	0/0/2	0/0/0	0/0/1	0/0/0	0/0/6	6/7/7
Louisiana	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/3/6
Maine	0/0/0	o/o/i	0/0/0	0/0/0	0/0/0	0/0/1	0/2/2
Maryland	0/0/1	0/0/1	0/0/0	0/0/0	0/0/0 .	0/0/2	1/8/15
Massachusetts	0/0/1	0/0/0	0/0/0	0/0/0	0/0/0	0/0/1	0/8/11
Michigan	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	8/20/30

061506 69 Non-traditional FOC.2006

State	Transfers	Cancelled/ Terminated	Not Renewed	Reacquired by Franchisor	Left the System/ Other	Total From Left Columns	Franchises Operating at 12/31
Minnesota	1/1/4	0/0/1	0/0/0	0/0/0	0/0/0	1/1/5	9/23/32
Mississippi	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/1/3
Missouri	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	2/8/19
Montana	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/2
Nebraska	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	2/3/6
Nevada	4/0/5	1/0/0	0/0/0	0/0/0	0/0/0	5/0/5	11/16/19
New Hampshire	0/0/0	0/0/6	0/0/0	0/0/0	0/0/0	0/0/6	0/0/0
New Jersey	0/1/2	0/1/3	0/0/0	0/1/0	0/0/0	0/3/5	7/19/35
New Mexico	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	9/11/11
New York	0/0/4	0/2/0	0/0/0	0/1/1	0/0/0	0/3/5	7/26/45
N. Carolina	0/2/1	0/0/0	0/0/0	0/0/0	0/0/0	0/2/1	11/21/32
N. Dakota	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	2/4/4
Ohio	0/2/3	0/0/3	0/0/0	0/0/1	0/0/0	0/2/7	12/27/39
Oklahoma	0/0/0	0/0/0	0/0/0	0/1/0	0/0/0	0/1/0	1/2/5
Oregon	0/4/2	0/0/2	0/0/0	0/0/2	0/0/0	0/4/6	13/24/23
Pennsylvania	1/0/1	0/1/2	0/0/0	0/0/0	0/0/0	1/1/3	5/15/33
Puerto Rico	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/3/8
Rhode Island	0/0/0	0/0/0	0/0/0	- 0/0/0	0/0/0	0/0/0	1/1/3
S. Carolina	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	4/9/14
S. Dakota	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/2/3
Tennessee	0/0/0	0/0/0	0/0/0	1/0/0	0/0/0	1/0/0	3/3/8
Texas	1/3/4	0/1/3	0/0/0	0/0/2	1/0/0	1/4/9	19/45/65
U.S.V.I.	1/0/0	0/1/0	0/0/0	1/1/0	0/0/0	2/2/0	1/0/0
Utah	1/1/6	0/0/1	0/0/0	0/0/0	0/0/0	1/1/7	13/14/15
Virginia	0/2/2	o/o/i	0/0/0	0/0/0	0/0/0	0/2/3	11/23/32
Washington	0/1/3	0/1/1	0/0/0	0/1/1	0/0/0	0/3/5	18/26/33
Washington DC	0/0/0	0/0/1	0/0/0	o/o/o	0/0/0	o/o/i	0/1/1
West Virginia	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/2
Wisconsin	0/0/3	0/0/4	0/0/0	0/0/3	0/0/0	0/0/10	7/17/18
Total	42/50/108	2/14/54	0/2/1	5/7/17	1/2/0	51/73/180	539/879/1190

*Does not include relocations, transfers among licensee or franchisee shareholders, partners and members or transfers of License or Franchise Agreements if the unit was not open at the time of transfer or terminations of rights under Multi-unit Agreements.

The names, last known home addresses and telephone numbers of persons who transferred their licenses or franchises, had their licenses or franchises cancelled or terminated or otherwise left the system during 2005 are listed in Exhibit O. No licensee or franchisee has failed to communicate with us during the 10-week period prior to the date of this Franchise Offering Circular.

061506

Non-traditional FOC.2006

Projected Non-traditional Openings For the Following Year

(2006)

State	License agreements signed but store not open	Projected licensed new stores to open	Projected company-owned licensed new stores to open
Arizona	1	1	0
Colorado	1	1	0
Oklahoma	1	1	0
State Not Selected	6
Total	9	3	0

Projected Traditional Openings For the Following Year

(2006)

State	Franchise agreements signed but store not open	Projected franchised or franchised new stores to open	Projected company-owned new franchised stores to open
Alabama	2	0	0
Alaska	1	1	0
Arizona	35	14	0
Arkansas	3	1	0
California	103	25	0
Colorado	10	4	0
Connecticut	29	11	0
Delaware	3	0	0
Florida	90	30	0
Georgia	8	4	0
Guam	1	1	0
Hawaii	12	3	0
Idaho	1	1	0
Illinois	46	18	0
Indiana	14	5	0
Iowa	5	5	0
Kansas	4	2	0
Kentucky	4	2	0
Louisiana	7	0	0
Maine	7	1	0

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Non-traditional FOC.2006

State	Franchise agreements signed but store not open	Projected franchised or franchised new stores to open	Projected company-owned new franchised stores to open
Maryland	22	4	0
Massachusetts	19	7	0
Michigan	19	9	0
Minnesota	10	4	0
Mississippi	5	0	0
Missouri	7	2	0
Montana	3	1	0
Nebraska	3	2	0
Nevada	13	6	0
New Hampshire	6	2	0
New Jersey	55	14	0
New Mexico	6	0	0
New York	72	15	0
North Carolina	13	7	0
North Dakota	1	1	0
Ohio	17	4	0
Oklahoma	5	1	0
Oregon	9	3	0
Pennsylvania	43	19	0
Puerto Rico	8	5	0
Rhode Island	3	2	0
South Carolina	13	4	0
Tennessee	7	3	0
Texas	90	25	0
Utah	2	2	0
Virginia	28	12	0
Washington	7	4	0
Washington DC	4	0	0
West Virginia	2	1	0
Wisconsin	13	4	0
Wyoming	2	2	0
Total	892	293	0

Figures do not include two Proactive Units (See ITEM 5 (Initial Franchise Fee)) that we are now developing and may sell to franchisees, but which we may operate as company-owned stores on an interim basis.

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Non-traditional FOC.2006

ITEM 21 FINANCIAL STATEMENTS

Our audited financial statements for the fiscal years ended December 31, 2005, 2004 and 2003 are attached to this Franchise Offering Circular as Exhibit A. Our unaudited financial statements for the fiscal period ended March 31, 2006 are attached to this Franchise Offering Circular as Exhibit Al.

ITEM 22 CONTRACTS

Exhibit B -	Application for License
Exhibit C -	License Agreement
Exhibit D -	Agreement to be Bound and to Guarantee
Exhibit E	Preauthorization to Permit Cold Stone Creamery, Inc. to Draw Drafts on the
	Licensee's Account
Exhibit F -	Restrictive Covenant
Exhibit Gl -	Agreement of Intent to Sublet
Exhibit G2 -	Sublease
Exhibit G3 -	Master Lease
Exhibit G4 -	Lease Addendum
Exhibit H -	Form of Assignment of Concession Agreement
Exhibit I -	Equipment and Signage Agreement
Exhibit J -	Specimen of General Release
Exhibit P -	Specimen Preferred Lender Loan Documents

ITEM 23 RECEIPT

Attached to the end of this Franchise Offering Circular are two copies of a Receipt; one should be executed by you and returned to us, and the other is for your files.

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Non-traditional FOC.2006

Exhibit B to Franchise Offering Circular

APPLICATION FOR

COLD STONE CREAMERY® LICENSE

This application must be fully completed in order to be accepted for consideration.

Please print or type.

GENERAL INFORMATION

What prompted you to check out Cold Stone Creamery? (Please specify-if referral, please indicate store

location)_____________________________________________________________________________________

Principal Applicant's Name________________________________________________________

Social Security Number____________________________Date of Birth________________.

Home Phone_____________________________________E-mail__________________________

Residence Address_______________________________________________________________

City_________________________________State__________________________Zip________

How long at present address?______________________________Own?_____________Rent?

Current Employer________________________________Salary__________________________

Position________________________Nature of Duties__________________________________

Employer's Address______________________________________________________________

Business Phone (_____)___________May we contact you at work?______Best time to reach__

Position________________________Nature of Duties__________________________________

Spouse Name____________________________________________________________________

FINANCIAL INFORMATION

*Please attach prepared financial statement to this Application.

Annual Income $___________ Assets $_____________

Spouse's Annual Income $___________ Liabilities $_____________

Interest & Dividends $___________ Net Worth $_____________

Other Income $___________

Total Income $___________

Do you own your own business?________________

Have you ever filed for personal or business bankruptcy?______________

Have you ever had anything repossessed?______________

EDUCATION INFORMATION

College______________________________________.__________________________________

Degree in_______________________________________________________________________

High School__________^_______________________________________________________

Hobbies and Interests_____________________________________________________________

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Non-traditional FOC.2006

LEGAL INFORMATION

Will you have a partner or partners other than your spouse?_

If yes, what will their involvement be?___________________

Please have them fill out a separate application.

Sole Proprietorship ____________ Name__________

Corporation ____________ Name__________

Partnership ________. Name______'

Other ____________ Name__________

Have you ever been the principal owner of a business before?_ If yes, please explain.__________________________________

Have you ever been granted a license/franchise before?_ If yes, please explain. _________________________

Do you or your spouse (if co-applicant) have any felony charges pending, being appealed or are you under indictment?____________

If yes, please explain..

LOCATION INFORMATION Do you have a location in mind?_

If so, in what city and, if known, what county and zip code?

City___________________________County______________________________Zip Code_________________

REFERENCES AND CREDIT CHECK

I hereby authorize Cold Stone Creamery, Inc. to obtain a credit report and to contact the following references

and other sources for information about me. I release Cold Stone Creamery, Inc., its affiliates, agents and

employees from any liability arising from the receipt or use of any information obtained through these

sources. Yes_________No_________

Credit References

Name_____________________________:__________ Name

Address_________________:____________________ Address______

City, State, Zip______________________:________ City, State, Zip_

Business References

Name____________________;__________________ Name

Address _______________________________ Address______

City, State, Zip____________________;__________ City, State, Zip_

Personal References

Name_________________:______________:_________ Name________

Address____________________________________ Address

City, State, Zip_______________________________ City, State, Zip_

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Non-traditional FOC2006

The Free Franchise Resource Center

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