The franchise fee of $49,000 is $9,000-$14,000 higher than typical for fast casual restaurants. What additional products, training, or support justify this premium pricing compared to competitors?
#1
The royalty rate of 3.5% is 1.5-2.5 percentage points below the typical 5-6% range. How does the franchisor sustain operations and support for franchisees with below-market royalties?
#2
The technology fee of $550 per month exceeds the typical range. What specific technology services and systems are included in this fee, and can it be negotiated or reduced?
#3
What were the specific circumstances and causes of the 2 litigation cases where the franchisor was defendant? What were the outcomes or settlements?
#4
12 units closed in 2024 compared to 5 in 2023 and 8 in 2022. What changed in 2024 that caused the acceleration in closures, and what is the franchisor doing to address this trend?
#5
29 of 32 closures were classified as 'ceased other' rather than terminations. Can the franchisor provide detailed explanations for why these units closed and whether financial performance was a contributing factor?
#6
The system declined from 69 units to 60 units in one year (13% contraction). What is the franchisor's growth plan and target for unit expansion over the next 3-5 years?
#7
The total potential contract term is only 10 years, compared to 20-26 years typical for this category. Why is the contract term shorter, and what happens at the end of 10 years?
#8
Can you provide Item 19 financial performance data (average unit volumes, sales ranges, profitability) for franchisees, either current or historical?
#9
The non-compete clause is 2 years / 10 miles. Has the franchisor enforced this clause against departing franchisees, and what are the typical costs of litigation if disputes arise?
#10
The franchise agreement requires arbitration in Denver, Colorado, with waiver of jury trials and class action participation. What is the typical cost of arbitration, and how many disputes have gone to arbitration in the past 3 years?
#11
The agreement specifies 21 non-curable defaults and only 2 curable defaults with cure periods as short as 48 hours. Can you provide examples of what constitutes a non-curable default and whether franchisees have been terminated under these provisions?
#12
All products must be purchased from the franchisor or approved suppliers. What is the markup or margin the franchisor earns on product sales, and how does this compare to market pricing?
#13
The renewal fee is $15,000 and remodeling is required at the franchisee's expense as determined by the franchisor's sole discretion. What is the typical cost of required remodeling at renewal, and can the franchisee negotiate or decline renewal?
#14
Can you provide contact information for at least 10-15 current franchisees and 5-10 former franchisees who have recently closed or not renewed, so due diligence can include direct conversations about their experiences?
#15
What is the status of the 1 pending litigation case from the 3-year data, and are there any material disputes or regulatory investigations currently underway?
#16
The System Health score is only 7/100. What specific metrics or factors contributed to this very low score, and what corrective actions is the franchisor taking?
#17
Transfer fee and renewal fee are both $15,000. If a franchisee wants to sell their unit or renew at the end of 10 years, what is the total cost and timeline for approval?
#18
The Risk Factors score of 52 is below the typical 64-80 range. What specific risk factors are driving this score, and how does the franchisor mitigate these risks for franchisees?
#19
What percentage of units are currently profitable, and what was the average payback period for initial investment based on franchisee experience over the past 3-5 years?
#20