The franchise fee of $75,000 is 25% above the typical range for this category. What specific services, training, or support justify this premium pricing compared to competitors?
#1
Closure rates have accelerated from 9 units in 2022 to 30 units in 2024. What factors drove this tripling of closures, and are there specific markets or unit types experiencing higher exit rates?
#2
With a one-year turnover rate of 15.8%, what percentage of departed franchisees would you characterize as involuntary terminations versus voluntary sales or closures due to profitability issues?
#3
The transfer rate of 12.1% is notably high. What is your policy regarding franchisee-to-franchisee transfers, and how does the franchisor evaluate potential new owners of transferred units?
#4
There is 1 pending litigation case. Can you provide details on the nature of this dispute, parties involved, and anticipated timeline for resolution?
#5
Your System Health score of 26/100 is significantly below the typical range of 50-70. How does the franchisor define or measure system health, and what specific initiatives are in place to improve this metric?
#6
Bottom quartile units generate median sales of $501,788 while top quartile units generate $3,093,559. What are the primary variables that cause this 6x performance gap, and how much of it is attributable to franchisee execution versus territory quality?
#7
The non-compete clause specifies 20 miles, which is below the typical 25-40 mile range. How does the franchisor enforce this geographically limited non-compete, and are there documented cases of former franchisees competing within this radius?
#8
Renewal conditions count 13 requirements, above the typical 6-9. Can you itemize all 13 renewal conditions and clarify which ones involve capital expenditures or system remodeling costs?
#9
Your termination causes list includes 25 items versus the typical 14-21. Of these 25 causes, how many are discretionary (franchisor judgment) versus objective (measurable thresholds), and what was the dispute rate on terminations initiated in the past 3 years?
#10
The Investment Costs score of 61 is below typical (74-75). Beyond the franchise fee, what are all initial and pre-opening costs franchisees should budget for (equipment, inventory, working capital, insurance, etc.)?
#11
Ongoing Fees score is 60 versus typical of 62. Beyond the 7% royalty and 2% ad fund, are there other mandatory fees (technology, data, reporting, marketing participation, insurance, etc.)?
#12
Can you provide a 3-year unit-by-unit breakdown showing which locations closed and why (voluntary exit, franchisor termination, performance-based closure, market conditions)?
#13
The franchise agreement includes 8 curable defaults with 30 days to cure and 17 non-curable defaults. Can you provide examples of each category and clarify the process for cure notices?
#14
Personal guarantees are required from all owners holding more than 10% ownership. Can you clarify what obligations are guaranteed, whether they survive contract termination, and typical litigation costs franchisees face related to guarantee enforcement?
#15
The 18% annual interest rate on late payments is mentioned. Under what circumstances is this applied, and are there graduated penalties or opportunity for fee waivers based on payment history or circumstances?
#16
Minimum annual royalty requirements exist with shortfalls triggering additional payments. What is the minimum annual royalty amount, how is it calculated, and what was the actual royalty range paid by franchisees last year?
#17
You retain the right to establish supplier pricing requirements and mandate use of approved vendors. What markup percentages or pricing controls does the franchisor impose, and do franchisees negotiate pricing collectively?
#18
The Financial Performance score of 88 exceeds typical (54-60). What percentage of franchisees are generating the reported average sales of $1.46M, and is this figure based on all operating units, a subset, or a representative sample?
#19
With net unit growth of -7.77% in the past year, what is your 2-year and 5-year growth projection, and what market expansion or franchisee recruitment initiatives are planned to reverse the contraction trend?
#20