The termination rate of 18.2% is substantially higher than the typical range for this category. Can you provide details on the 2 units terminated in 2023 and the specific reasons for termination?
#1
What were the circumstances of the 2 units that closed in 2023? Were these initiated by the franchisor or franchisee-initiated exits?
#2
The average gross sales per unit ($147,321) is significantly below the typical range ($259,529-$1,130,314). What factors contribute to this lower revenue performance, and how do you support unit profitability?
#3
Your franchise fee of $59,950 exceeds the typical range by approximately $4,000-$19,950. What specific inclusions or services justify this premium pricing?
#4
The royalty rate of 8.25% is above the typical range of 7.0-8.0%. Is this rate negotiable, and does it apply uniformly to all franchisees or vary by location or performance?
#5
The technology fee of $483/month is at the high end of the typical range. What services, software, or systems are included in this fee, and are there less expensive alternatives?
#6
With a total potential term of 30 years (initial 10 + two 10-year renewals), this is substantially longer than typical. Why is the contract structured with such an extended potential duration?
#7
What are the 8 conditions required for renewal after the initial 10-year term, beyond the $5,000 renewal fee and required renovations mentioned in the legal summary?
#8
Can you clarify the discrepancy between the 0.0% one-year exit rate reported and the 18.2% termination rate for the three-year period? How is termination rate calculated differently?
#9
The transfer fee of $5,000 is significantly lower than the typical range of $7,400-$20,000. Are there additional costs or conditions associated with unit transfers that aren't reflected in this fee?
#10
Given the binding arbitration clause requiring disputes to be resolved at your headquarters location and including a class action waiver, how have franchisees responded to these dispute resolution terms?
#11
The 30-day cure period for non-payment breaches and 10-day cure period for other breaches is relatively short. How often do franchisees trigger termination due to inability to cure within these timeframes?
#12
Post-termination non-compete restrictions cover a 25-mile radius for 2 years. Have any former franchisees challenged this restriction, and how strictly do you enforce it?
#13
What specific training and ongoing support justify your Support & Training score of 99/100, which significantly exceeds the typical category range?
#14
The franchise requires personal guarantees from all owners and their spouses. Are there circumstances under which this requirement can be waived or modified?
#15
Can you provide references from the 2 units that were terminated in 2023 or franchisees who have renewed to understand their perspectives on the termination conditions and renewal requirements?
#16
What is your strategy for improving unit-level financial performance given the current average gross sales are less than 57% of the category typical range?
#17
With 14 total units in the system, how many of these are company-owned versus franchisee-owned, and what is the performance comparison between the two?
#18
The agreement lists 14 categories of non-curable defaults subject to termination. Can you provide specific examples of non-curable breaches that have resulted in terminations?
#19