Given the 0% turnover rate over 3 years, what is the historical basis for this metric? Are there any documented closures or exits from earlier years that would provide context?
#1
The ad fund rate of 1.0% is notably lower than the typical 2.0-4.0% range for QSR franchises. How is the advertising fund allocated, and what specific marketing initiatives does this rate support?
#2
Can you explain the decision to set an initial term of 5 years versus the typical 10-15 year terms in the QSR category? What are the business reasons for this shorter commitment period?
#3
The non-compete radius of 50 miles significantly exceeds the typical 5-10 mile range. How is this 50-mile restriction enforced, and what geographic markets does this typically affect for franchisees?
#4
With zero litigation cases over 3 years, have there been any disputes with franchisees that were resolved outside of formal litigation? If so, what were the primary issues?
#5
The franchise agreement requires personal guarantees from individuals with 5% or greater ownership interest. How often has this provision been invoked, and what circumstances triggered enforcement?
#6
Can you provide details on the $1,000,000 comprehensive insurance requirement? Does the franchisor require the franchisor to be named as an additional insured, and are there additional coverage requirements beyond this minimum?
#7
What specific performance metrics or sales thresholds could trigger termination under the 12 documented termination causes? Are there grace periods or cure opportunities before termination is exercised?
#8
The system shows 10.42% net unit growth in the past year. What percentage of this growth came from new franchisee units versus franchisee-owned locations, and what is the target growth rate going forward?
#9
How are renewal conditions evaluated? The contract specifies 6 renewal condition requirements—could you detail each condition and explain what happens if a franchisee fails to meet one?
#10
Given that territory is non-exclusive with no encroachment protection, how does the franchisor define market saturation? Can you describe a situation where the franchisor has approved a new unit that overlapped with an existing franchisee's territory?
#11
The transfer fee is $12,500. Are there any restrictions on who a franchisee can sell their unit to, and does the franchisor have a right of first refusal?
#12
With 3 renewal options of 5 years each, what conditions must be met to exercise each renewal? Is renewal automatic if conditions are met, or does the franchisor have discretion to deny renewal?
#13
Can you provide examples of the types of disputes or issues that have arisen in the 53-unit system, even if they didn't result in formal litigation? This would help prospective franchisees understand real-world operational challenges.
#14
The Financial Performance section shows no Item 19 disclosure. Are financial performance representations available through other means, such as AUV (average unit volume) data or case studies from existing franchisees?
#15
What support and training does the 100/100 Support & Training score reflect? Can you detail the initial training program, ongoing support, and any additional training costs beyond the franchise fee?
#16
How does the franchisor handle unit underperformance? Are there specific sales or profitability thresholds that trigger intervention or increased oversight?
#17
The renewal fee is listed as $0. Are there any other fees associated with renewal, such as updated training, system upgrades, or technology modernization costs?
#18
With a 5-year initial term and potential 20-year total term, what is the typical franchisee's exit strategy? Do most franchisees renew, sell, or close their units at the end of the initial term?
#19
Can you explain the personal guarantee requirement that extends to spouses of 5%+ owners? What recourse does the franchisor have if a franchisee's spouse does not sign the personal guarantee?
#20