Allegra

Can you provide details on the 2 litigation cases filed in the past 3 years, including their nature, outcome or current status, and any impact on franchise operations?

What specific factors have contributed to the decline of 14 units (7.4%) over the past 3 years, and what is management's strategy to stabilize or grow the unit base?

The closure rate increased to 7 units in 2024 compared to 3 in 2022. Can you explain this increase and identify whether specific geographic regions or franchisee profiles are experiencing higher closures?

Your minimum annual gross sales requirement is $300,000, but your bottom quartile performing units reported $441,244 in sales. How many franchisees are currently below the $300,000 threshold, and what happens if they remain below this level?

The 20-year initial term and 20-year renewal option (40-year total potential term) are significantly longer than the typical 5-10 years for initial terms in this category. What is the rationale for these extended terms, and how does this affect franchisee flexibility?

You have 23 termination causes in the agreement versus the typical 12-21 for comparable franchises. Can you provide the complete list and clarify which causes are non-curable versus curable?

The dispute resolution clause requires binding arbitration within 50 miles of Plymouth, Michigan headquarters and prohibits class actions and jury trials. For franchisees located far from Michigan, what are the estimated costs and logistics of pursuing disputes?

The agreement mandates mandatory remodeling and expansion of the center upon renewal with no cost cap specified. What is the typical cost franchisees should budget for renewal compliance, and are there circumstances where the remodeling requirement can be waived?

Your non-compete restriction extends 2 years and 10 miles from the former franchisee's location, plus 5 miles from any other center. Given your current 176-unit footprint, can you identify how this restriction affects franchisee mobility in densely populated regions?

The technology fee of $50 monthly is below the industry range of $100-$500. Does this fee cover all technology services, or are there additional technology costs not captured in this monthly fee?

You have a $6,250 transfer fee plus the potential for renewal conditions to be rejected. What percentage of transfer requests are approved, and what are the most common reasons transfers have been denied?

Late payment interest is set at 1.5% monthly (18% annually). How frequently do franchisees incur these charges, and are there any payment plans or hardship provisions available?

The Item 19 financial performance statement reports median sales of $734,952, but with significant variance shown between average ($1,096,275) and bottom quartile ($441,244). What percentage of franchisees operate at or below the bottom quartile level?

Can you provide a detailed breakdown of the 7 unit closures in 2024 (2 more than 2023), including whether these were franchisee-initiated or franchisor-initiated?

The termination rate is 0.0% for 2024, yet closures increased. Does this indicate all closures are voluntary, and what support programs exist if a franchisee wishes to exit?

Territory protection is listed as not exclusive. How does the franchisor define territory, what controls prevent encroachment within your protected area, and can you provide examples of how encroachment disputes have been resolved?

Personal guarantees are required from all owners and spouses must acknowledge guaranty requirements. What happens to spousal guarantees in the event of divorce or separation?

You require a $45,000 franchise fee upfront. What is included in this fee, and are there any upfront costs beyond the franchise fee that franchisees should budget for before opening (equipment, inventory, working capital)?

The non-renewal rate is 1.6% annually. What are the primary reasons franchisees do not renew, and how many franchisees have been unable to meet the 8 renewal conditions?