Why did the franchise system decline from 34 units to 29 units in 2023, and what specific actions did the franchisor take to reverse this trend in 2024?
#1
The franchise fee of $49,000 is above the typical range for this category. What additional benefits or services does this higher fee provide compared to competitors?
#2
Your royalty rate of 7.0% is above the typical range of 5.0%-6.0%. How does this rate compare to other bakery/food franchises, and is it negotiable for multi-unit operators?
#3
With a 3-year CAGR of -2.0%, what is the franchisor's growth strategy going forward, and are there specific markets or regions targeted for expansion?
#4
The transfer rate of 10.3% is notably high compared to the typical range of 0.0%-6.05%. What are the primary reasons franchisees are transferring units, and what is the approval/rejection rate for transfer requests?
#5
Can you provide details on the 4 units that closed in 2022 and the 3 that closed in 2023? Were these due to franchisee financial struggles, operational issues, or market conditions?
#6
What does the $350/month technology fee cover, and are there any opportunities to reduce or negotiate this fee?
#7
With an initial term of 15 years and a renewal term of 15 years (30 years total), how many franchisees have completed an initial term and renewed, and what is the renewal acceptance rate?
#8
What is included in the $5,000 renewal fee, and does the franchisor assist with location transition or relocation during renewal negotiations?
#9
Given the average gross sales of $1,212,634 reported in Item 19, what are the typical operating costs and net profit margins for an average unit, and how do top and bottom quartiles compare?
#10
Can you clarify the difference between the 4 units that 'ceased other' in 2022 and the 1 unit that 'ceased other' in 2023? What circumstances led to these exits?
#11
The franchise agreement requires personal guarantees from all shareholders or members and spouses. Are there any circumstances under which the franchisor would waive spouse guarantees or allow corporate guarantees only?
#12
With 15 non-curable defaults listed in the termination clause, what are the most common defaults franchisees have triggered, and how are these enforced in practice?
#13
Has the franchisor ever enforced the 10-day cure period for monetary defaults or 30-day cure period for non-monetary defaults, and what percentage of franchisees successfully cure violations?
#14
The non-compete clause is 2 years/5 miles. Are there any circumstances where this is reduced for franchisees who exit voluntarily vs. those who are terminated?
#15
How is the exclusive territory defined (e.g., zip code, radius, trade area), and what happens if demographics or customer density change significantly during the 15-year term?
#16
Can you provide references from franchisees who transferred units and those who went through renewal negotiations to discuss their experiences with the franchisor?
#17
What support and training services justify the 100/100 Support & Training score, and how do these compare to direct competitors in the artisan bakery space?
#18