All 7 pending litigation cases show the franchisor as defendant—what are the primary allegations or claims being made against the company, and what is the expected timeline for resolution?
#1
The transfer fee of $20,000 is notably higher than industry norms for automotive franchises. Is this fee negotiable, and what does it cover in the transfer process?
#2
Your transfer rate of 8.8% is significantly above typical range. Can you provide insight into why franchisees are transferring units at this rate, and whether transfers are primarily voluntary sales or franchisor-facilitated?
#3
Given the 7-pending litigation cases, has the franchisor made any changes to its policies, training, or support systems in response to these legal challenges?
#4
The royalty rate of 8.0% exceeds typical automotive franchise rates. How does this rate compare to your direct competitors, and is there any negotiation flexibility for high-performing units?
#5
Your renewal conditions list 7 specific requirements for the 20-year renewal term. Can you clarify what 'then-current qualifications and standards' means, and whether these standards can change substantially between the initial term and renewal?
#6
The renewal and transfer fees are both $20,000. If a franchisee renews and then later transfers the unit, would they pay both fees, or is there a combined fee structure?
#7
Your non-compete clause is 2 years/25 miles. Has the franchisor enforced this restriction in past transfers or terminations, and has this clause been litigated in any of your 7 current cases?
#8
The initial term of 20 years is significantly longer than the typical 10-15 year term. What is the rationale for this extended commitment, and what flexibility exists if a franchisee needs to exit before the 20-year term?
#9
Your territory is protected but not exclusive. How does the franchisor define 'encroachment,' and have there been disputes about territory boundaries or overlap with neighboring franchisees?
#10
Item 19 shows average gross sales of $1,894,524, but the median is $1,473,568. Can you explain the distribution and whether this includes break-even or struggling units?
#11
Termination rate of 0.5% is unusually low compared to the typical range of 0.7-5.7%. Does this reflect strict compliance by franchisees, or does the franchisor pursue voluntary transfers and non-renewal rather than formal terminations?
#12
The technology fee of $145/month is below the typical range. What specific technology services does this cover, and are there any additional tech or system costs not included in this monthly fee?
#13
Of the 7 pending litigation cases, how many involve individual franchisees versus class action claims, and what is the aggregate exposure to the franchisor?
#14
Your net unit growth is -1 over the past year despite encroachment protections and a protected territory. What marketing or expansion initiatives is the franchisor undertaking to grow the system?
#15
The required exclusive purchasing agreement with franchisor-approved suppliers—can you provide examples of suppliers and typical markups or price controls that franchisees should expect?
#16
Personal guarantees require 'all principals' to provide joint and several liability. Does this include spouses, and are there any caps on personal liability exposure?
#17
What percentage of units in your system have transferred in the past 3 years, and of those transfers, how many were to new franchisees versus existing franchisees purchasing additional units?
#18