The franchise fee of $70,000 exceeds typical industry ranges. What specific services, training, or support justify this above-market fee structure?
#1
The transfer fee of $25,000 is significantly higher than typical ranges ($5,250-$19,500). Is this fee refundable or non-refundable, and what does it cover in the transfer process?
#2
Your royalty rate of 5.0% is below the typical 6.0-10.0% range. Are there any circumstances under which this rate could increase, or is it locked for the entire term?
#3
The data shows 5 transfers in the past year but no terminations. What are the primary reasons franchisees are transferring their units, and are they reporting satisfaction before transfer?
#4
Sales performance data shows extreme variance, with top quartile units at $22.7M versus bottom quartile at $1.5M. What factors explain this 15x difference, and what support is provided to lower-performing units?
#5
One litigation case has been initiated against the franchisor. Can you provide details about the nature of this case, its current status, and the outcome or settlement terms?
#6
The contract specifies 13 renewal conditions that must be satisfied. Can you provide a detailed list of these conditions and clarify what 'maintenance, refurbishing, renovating, and remodeling' requirements entail?
#7
The termination causes list contains 25 items, which is substantially above the typical 12-21. How many of these are performance-based versus discretionary, and have any been invoked in the past 3 years?
#8
The non-compete radius of 150 miles is 3-15 times broader than typical ranges. How was this radius determined, and what geographic flexibility exists in negotiating this clause?
#9
Binding arbitration in Johnson County, Kansas is required for all disputes. If I operate outside Kansas, what are the practical implications and costs of arbitration in that location?
#10
The minimum performance standard is $0.20 per person per year in gross revenues. How is territory population defined and verified, and what happens if a unit falls short of this threshold?
#11
Personal guarantees are required from all principals. Does this mean my personal assets are at risk for franchise obligations, and are there any limitations or caps on personal liability?
#12
Late fees are assessed at the greater of $30 or 10% APR. In what situations do these fees apply, and are there any grace periods before fees are triggered?
#13
The median sales figure is $4.8M, but how many of the 98 units reported financials for Item 19? What percentage of the system is this based on?
#14
What is included in the monthly $120 technology fee, and can you provide a breakdown of technology services and their costs?
#15
The franchise shows zero terminations in 3 years. What is the actual termination rate compared to similar franchisors, and what performance issues typically lead to termination?
#16
With 2 years and 150 miles of non-compete protection, what activities or businesses would be prohibited for me after the franchise ends?
#17
Can you explain the encroachment protection policy? If the franchisor opens a corporate location or sells a neighboring territory, what recourse do I have?
#18
Historical unit growth shows 13 net new units over 3 years. What is the projected growth rate, and what percentage comes from new franchisees versus existing franchisees opening additional locations?
#19
The renewal fee is listed as N/A. Are there any fees, retraining requirements, or refurbishment costs associated with renewing for additional 5-year terms?
#20