Anago Cleaning Systems

The franchise experienced a 26.7% one-year turnover rate compared to the typical 0.0%-8.53% for this category. What are the primary reasons franchisees are exiting, and what percentage would you characterize as voluntary versus performance-related?

Can you provide detailed exit data for 2024 that resulted in 12 closures? What was the average tenure of units that closed, and at what point in their franchise term did they typically exit?

The three-year turnover rate of 55.6% suggests roughly half the system turns over every three years. How does this compare to your 5-year contract term, and what percentage of units renew when their initial term expires?

Your franchise fee of $8,750 is significantly lower than the typical $30,000-$60,000 for cleaning franchises. Does this lower fee reflect lower support costs, or does it correlate with the higher exit rates observed?

The royalty rate of 10.0% exceeds the typical 6.0%-8.13% range. Given the high turnover rate, can you explain how you justify this above-market royalty structure and whether it contributes to unit profitability challenges?

With no territory exclusivity and no encroachment protection, how do you prevent the franchisor or other franchisees from competing directly with existing unit locations?

The contract allows termination with only 3-day cure periods for health/safety violations and lists 24 non-curable default conditions. Can you provide examples of the non-curable defaults that would result in immediate termination without opportunity to cure?

Post-term restrictions include a 2-year non-compete in 13 Minnesota counties. Are franchisees operating outside Minnesota subject to different non-compete restrictions, and how are these restrictions enforced?

All disputes are subject to binding arbitration in Edina, Minnesota. What is the typical cost and duration of arbitration cases under your franchise agreement, and have any arbitration disputes been filed in the past 3 years?

The franchise agreement requires $1,000,000 commercial general liability insurance. Can you provide details on average insurance costs for franchisees and whether this requirement has impacted unit economics or franchisee ability to maintain coverage?

With a 5-year initial term and no renewal options listed, what happens at the end of the 5-year term? Can units renew, and if so, on what terms?

The transfer fee of $2,000 is below market at $5,500-$15,000. What is included in this transfer fee, and are there additional approval requirements or costs when franchisees sell their units?

Can you provide Item 19 financial performance data showing average revenues, costs, and profitability for franchisees? Without this, prospective franchisees cannot accurately assess return on investment.

The system grew from 32 units three years ago to 45 units currently. What percentage of this growth came from new franchise sales versus existing unit expansion, and how many of the original 32 units remain active?

Of the 24 termination cause conditions, how many have been invoked against franchisees in the past 3 years, and what were the outcomes?

You must purchase from approved suppliers only. How many suppliers are approved per product category, and do you derive revenue from supplier relationships through rebates, commissions, or other arrangements?

The franchise requires spouse consent binding marital assets as part of the personal guarantee. How does this affect franchisees in community property states, and has this requirement created complications in any past disputes?

What support, training, and ongoing services does the franchisor provide to justify the 10.0% royalty rate, especially given the significantly lower franchise fee compared to industry standards?

Can you clarify whether the 26.7% closure rate reflects units exiting naturally at end-of-term, being acquired by other franchisees, or shutting down due to poor performance?

With zero terminations recorded but 26.7% annual turnover, does the franchisor have data on why units are choosing not to renew or transfer their licenses rather than terminate?