Can you explain the specific reasons for the 17 terminations that have occurred over the past 3 years? Were these primarily for breach of operating standards, financial non-performance, or other factors?
#1
The system has declined from 23 to 19 units in 3 years. What strategic changes has the franchisor implemented to address unit closures and terminations?
#2
Your closure rate of 21.7% is more than double the typical range for fast casual restaurants. What support do you provide to underperforming franchisees before termination?
#3
Why is your ad fund contribution (1.1%) significantly lower than the typical range of 1.5-3.0%? How is this fund utilized, and can it effectively support system-wide marketing?
#4
Your franchise fee of $45,000 exceeds the typical range. What additional value or support justifies this premium pricing versus competitors?
#5
The transfer fee of $5,000 is substantially below the typical $8,750-$20,000 range. Does this intentionally facilitate easier unit transfers, and are there any other fees associated with transfers?
#6
You charge no monthly technology fee while the category average is $200-$500. What technology systems and support are franchisees responsible for funding separately?
#7
Your Item 19 shows median unit volumes of $2.2M+, significantly above category average. How many units are included in this disclosure, and are these mature or new units?
#8
What specific operational controls does the franchisor enforce regarding pricing, hours, and supplier selection, and how have these impacted franchisee flexibility and profitability?
#9
With 22 non-curable defaults allowing immediate termination, can you provide the complete list of these defaults and explain their enforcement history?
#10
The agreement requires personal guarantees from all owners and spouses. Are there any circumstances under which these guarantees can be released or modified?
#11
How many of the 6 units that closed or ceased operations in 2022-2023 were due to franchisor termination versus voluntary closure by franchisees?
#12
What is the actual net income or profit range reported by franchisees in your Item 19? Are there specific cost breakdowns provided?
#13
Given the high termination rate, what specific training and ongoing support do you provide to help franchisees succeed during the critical first 3 years?
#14
Can you provide references from 5-10 current franchisees and 3-5 former franchisees who have closed or transferred their units in the past 2 years?
#15
The non-compete is 2 years/5 miles. Has this been enforced, and what is the franchisor's track record with enforcement actions?
#16
What is your renewal rate, and have franchisees chosen not to renew their agreements at the end of their initial 10-year term?
#17
Are there circumstances under which the renewal fee structure changes, and what conditions must be met for renewal approval?
#18
How does the franchisor define 'approved suppliers,' and are there exclusive supplier relationships that generate revenue for the franchisor beyond royalties?
#19
What are the average capital expenditure requirements for equipment replacement, renovations, or remodeling during the franchise term?
#20