Chem-Dry

The franchise has lost 593 units over 3 years (35% decline). Can you explain the primary causes of closures and what franchisor actions are being taken to stabilize or reverse this trend?

Termination rates average 9.2% annually, double the typical range for cleaning franchises. What are the primary reasons franchisees are being terminated, and how do you identify franchisees at risk of termination before contract failure?

Average gross sales of $218,400 are less than half the typical range for cleaning franchises. What factors contribute to this lower-than-average revenue, and how does the franchisor support underperforming units?

There is 1 pending litigation case. What is the nature of this pending case, and could an adverse outcome impact franchisor operations or franchisee obligations?

You initiated 1 litigation case against a franchisee or other party. What was the nature of this case, the outcome, and what does it indicate about enforcement practices?

The advertising fund rate of 3.0% is significantly higher than industry typical rates of 1.0-2.0%. How is this fund allocated, and can franchisees audit or contest fund usage?

The contract specifies 26 termination causes, well above typical ranges. Are all 26 causes enforced equally, and can you provide examples of recent terminations to clarify enforcement practices?

What specific conditions trigger the 9 renewal requirements, and how often do franchisees fail to meet renewal conditions, resulting in non-renewal?

The non-compete clause is only 1 year versus the typical 2 years. Is this shorter restriction a disadvantage to franchisees, and can you exit and operate competing services after 1 year?

With exclusive territory, what happens if the franchisor fails to protect your territory from encroachment by other Chem-Dry franchisees or unauthorized operators?

What support, training, or operational changes has the franchisor implemented in response to the 14.4% annual unit decline over the past year?

Transfer fees are $3,600, significantly lower than the typical $5,500-$15,000 range. Are there additional hidden costs to transfer a unit, or does this low fee indicate limited franchise transferability or value?

Item 19 sales data shows average gross sales of $218,400, but does this data include all franchisees or exclude struggling units? How many franchisees fall below and above this average?

The contract includes 9 renewal conditions including mandatory remodeling and upgrades. What are estimated costs for these mandatory upgrades at renewal, and can franchisees negotiate or dispute these requirements?

Dispute resolution requires binding arbitration in Nashville, Tennessee. What is the estimated cost of arbitration, and has the franchisor initiated arbitration against franchisees in the past 3 years?

Personal guarantees are required from all shareholders and spouses. Does this guarantee apply to spouse assets separately, and can spouses obtain independent legal counsel to review this obligation?

Given the 35% system contraction over 3 years, how is the franchisor positioned financially, and are there any risks to franchisor solvency affecting franchisee support or viability?

The system has experienced significant closures and terminations. What resources, benchmarks, or performance targets does the franchisor provide to help franchisees remain profitable and avoid closure or termination?

Non-compete restrictions cover carpet cleaning, upholstery cleaning, spot removal, and hard surface cleaning for 18 months post-term. Can you operate a different cleaning service (e.g., window cleaning, pressure washing) within the 50-mile radius?

What percentage of franchisees achieve or exceed the $218,400 average gross sales, and what is the typical timeline to profitability for new franchisees?