The transfer fee of $200,000 is approximately 10 times higher than the typical range for fast casual restaurants. What justifies this premium transfer fee, and are there circumstances where it may be reduced or waived?
#1
Can you provide specific examples of the support and training provided to franchisees? The Support & Training score of 72 falls below the typical range of 90-100 for this category, suggesting potential gaps.
#2
What is the royalty structure and total ongoing fees not disclosed in the FDD? These are critical operational costs that should be clearly outlined before investment.
#3
Given the rapid growth rate of 108% over 3 years, how are you managing quality control and brand consistency across such accelerated expansion?
#4
The franchise has grown from 1 unit 3 years ago to 9 currently. How many of the original franchisees remain in the system, and what was their financial performance?
#5
Can you explain the lower-than-typical Contract Terms score of 70? What specific contract provisions may be considered franchisor-favorable?
#6
Personal guarantees and spousal signatures are required per the liability clause. How does this obligation extend to indirect owners, and what are the full liability implications?
#7
The non-compete clause restricts operation within 20 miles and 2 years post-termination. How has this been enforced in practice, and are there documented cases?
#8
All disputes must be mediated first, then arbitrated in Detroit, Michigan with class action waivers. What is the typical cost and timeline for arbitration, and why was Detroit selected as the venue?
#9
The 1-year non-renewal rate is shown as 0%, but with only 9 current units and 3-year existence, can you confirm the historical renewal rate of the original franchisees?
#10
Are there any disputes or conflicts currently pending with existing franchisees that are not reflected in litigation metrics?
#11
What Item 19 financial data can you provide? The FDD does not include this section, which typically contains sales performance and profitability information.
#12
With a $200,000 transfer fee, what is the typical total investment required for a new franchisee, and what ROI timeline can be reasonably expected?
#13
The Ad Fund Rate is 1.5%. How is this fund managed, allocated, and reported to franchisees? Can you provide examples of marketing initiatives funded?
#14
Given the rapid unit growth, what is the current recruitment pipeline, and how are you ensuring franchisee quality rather than expansion velocity?
#15
The renewal term provides 2 renewal options of 5 years each for a potential 20-year total relationship. Are there any conditions or fee increases associated with each renewal?
#16
Can you clarify whether the territory exclusivity and 20-mile non-compete radius are absolute, or if circumstances exist where the franchisor might grant exceptions?
#17
The franchise system has zero terminations to date. What specific performance metrics or benchmarks would trigger franchisor action against an underperforming franchisee?
#18
Are there any material changes to the franchise model, unit economics, or support structure anticipated in the next 12-24 months?
#19