The transfer fee of $3,000 is substantially lower than the typical range of $5,000-$15,000 for quick service restaurants. Can you explain the rationale for this lower fee and whether it applies to all transfer scenarios?
#1
With zero terminations, closures, and transfers over the past 3 years, what specific factors do you attribute to this perfect retention rate, and how does this compare to your performance before 2022?
#2
Your non-compete restriction extends 20 miles, which is above the typical range of 5-10 miles for this category. Can you explain the business justification for this extended geographic radius?
#3
The franchise agreement lists only 8 termination causes compared to the typical 15-20 for this type of franchise. Which typical termination causes are excluded from your agreement, and why?
#4
Your Risk Factors score of 80 is above the typical range of 60-78. What specific factors contributed to this elevated risk score?
#5
Investment Costs score of 37 is significantly below the typical range of 69-78. Can you provide a detailed breakdown of all startup costs, including real estate, equipment, inventory, and working capital requirements?
#6
You do not provide Item 19 financial performance data. Will you voluntarily provide sample profit and loss statements or unit-level financial information to prospective franchisees?
#7
With only 12 units in the system, how long has B-Bop's been franchising, and what were your unit growth targets for the past 3 years versus actual performance?
#8
The post-term non-compete clause requires franchisees to stay out of any B-Bop's location nationwide for 2 years. How is compliance monitored, and what remedies does the franchisor pursue for violations?
#9
Personal guarantees are required from controlling interest holders. If a franchisee files bankruptcy, will the franchisor pursue the personal guarantee, and under what circumstances?
#10
Can you provide specific examples of how the indemnification clause has been applied in past disputes, and what types of claims franchisees have been asked to cover?
#11
What support and training is provided post-opening, and how frequently do you conduct quality control visits or audits of franchised locations?
#12
Are there any undisclosed litigation matters, regulatory investigations, or disputes with franchisees that have been resolved but not reported in public filings?
#13
How is the exclusive territory defined—by address, radius, street boundaries, or other criteria—and what happens if population density or demographics change significantly during the franchise term?
#14
The renewal fee of $5,000 plus a 10-year renewal term means significant ongoing commitment. What are the approval criteria for renewal, and under what circumstances would you decline to renew?
#15
Given the small system size, what is your financial stability and capitalization, and how do you ensure franchisees have ongoing corporate support if the company faces financial difficulties?
#16
Can you provide references from all 12 current franchisees, and are there any former franchisees who exited the system that I can speak with?
#17
The Ongoing Fees score of 65 is slightly above the typical 60-62 range. Besides the 5% royalty and 3% ad fund, are there any other required fees, assessments, or mandatory purchases?
#18
What is included in the advertising fund, how is it spent, and can franchisees opt out or request an audit of fund usage?
#19
Are there territorial encroachment protections in the franchise agreement, and what remedies do you provide if company-owned or other franchised locations open within your protected territory?
#20