What specific performance standards or breaches led to the 7 terminations in 2024, and how does the franchisor communicate performance expectations to franchisees?
#1
The franchise requires minimum gross service billings of $0.10 per person in territory population—can you provide examples of how this minimum is calculated for different territory sizes and what percentage of current franchisees meet or exceed this threshold?
#2
Given the 5.7% termination rate exceeds the typical range for this category, what is the franchisor's documented process for warning or supporting underperforming franchisees before termination?
#3
The initial contract term is 3 years compared to the typical 5-10 years for this category. What is the rationale for the shorter initial term, and what happens to franchisees who perform well but do not renew after the initial 3-year period?
#4
Can you provide a breakdown of the 2024 closures and terminations by reason (e.g., performance-based, franchisee choice, economic hardship, other)?
#5
The 3-year non-compete restriction is longer than typical (2.0 years). How is this enforced geographically given that territory size is not specified in miles, and what are the actual geographic boundaries of the non-compete?
#6
Franchisees report median gross sales of $239,160, which is significantly below category norms. What marketing support and lead generation does the franchisor provide to help franchisees reach revenue targets?
#7
The technology fee is $0 monthly, which differs from the typical $130-$500 range. Does this mean franchisees receive no software, scheduling systems, or digital tools from the franchisor, or are these costs bundled elsewhere?
#8
Your 5.0% royalty rate is lower than the typical 6.0-8.13% range. Are there any conditions under which the royalty rate could increase, or plans to align with industry standards?
#9
What specific support, training, and operational guidance does the franchisor provide during the 3-year initial term to help franchisees establish sustainable operations and prepare for renewal?
#10
The franchise offers 6 renewal options of 3 years each (21 years total potential term) versus the typical 10-20 year potential. How much flexibility do franchisees have in negotiating renewal terms, and what changes to royalty rates or obligations can occur at renewal?
#11
Can you provide details on the 5 franchisees who transferred their units in 2023 and the 3 who transferred in 2024—were these transfers approved by the franchisor and did transfer fees apply?
#12
With a 3-year non-compete and customer non-solicitation restriction following termination, what remedies does the franchisor have if a terminated franchisee violates these terms?
#13
The franchise requires spouse guarantees and personal guarantees from all owners with 5% or greater interest. Can these guarantees be modified or waived, and are there any circumstances where a spouse would not need to sign?
#14
Late payments incur 1% monthly interest (12% annually). Are there grace periods, payment plans, or other accommodations available if a franchisee experiences temporary cash flow difficulties?
#15
How many of the 124 current franchisees have completed at least one renewal cycle, and what percentage of franchisees chose to renew versus exit at the end of their initial 3-year term?
#16
Does the franchisor provide Item 19 financial performance data broken down by unit age, territory size, or other variables that would help predict profitability for different scenarios?
#17
Given the 2.5% transfer rate and elevated termination rate, what is the franchisor's policy on assisting struggling franchisees with unit sales to qualified buyers before pursuing termination?
#18