The royalty rate of 5.0% is notably lower than the typical range of 6.0-10.0% for business service franchises. Are there plans to adjust this rate, and under what circumstances could it increase during the franchise term?
#1
The system has declined from 137 units 3 years ago to 129 units currently, a loss of 8 units. What factors have driven this decline, and what strategies is the franchisor implementing to stabilize or grow the system?
#2
Closures accelerated from 1 unit in 2022 to 5 units in 2024. Can you provide details on why these units closed and whether any were in particular geographic markets or demographics?
#3
What is the average unit profitability for existing franchisees, and can you provide Item 19 financial performance data or refer me to franchisees willing to discuss revenue and expenses?
#4
The termination rate is 0.7% annually. Can you clarify the specific default triggers that would result in non-curable termination, and how often these have been enforced in practice?
#5
The dispute resolution clause requires binding arbitration within 30 miles of the franchisor's principal place of business and waives class action rights. Has this ever resulted in disputes with franchisees, and what was the outcome?
#6
Personal guarantees are required from all principals and spouses. Are there any circumstances where the franchisor has waived or modified this requirement, and what recourse exists if a franchisee cannot secure spousal agreement?
#7
All products must be purchased from franchisor-approved suppliers, and the franchisor may set maximum prices. How frequently have supplier restrictions or price controls been implemented, and what is the typical price markup on approved products?
#8
The transfer fee is $12,500 with no renewal fee. Are there any other costs or approval requirements when renewing the franchise agreement or transferring it to another party?
#9
How many of the 5 units that closed in 2024 were terminated by the franchisor versus voluntarily closed by franchisees, and what was the primary reason cited for each closure?
#10
The non-compete clause restricts activity within 2 years and 25 miles. Has the franchisor enforced this restriction, and are there any exceptions or modifications available for multi-unit franchisees?
#11
With zero litigation cases on record, does the franchisor have alternative dispute resolution mechanisms or mediation options outside of binding arbitration?
#12
The technology fee is $142. What specific technology services, platforms, or tools does this cover, and how often has this fee increased in the past 5 years?
#13
Can you provide a list of franchisees currently in operation and those who have exited in the past 3 years, along with their contact information for reference checks?
#14
The agreement contains 16 curable defaults and 5 non-curable defaults. Can you provide the full list of these defaults and clarify which operational decisions would trigger each category?
#15
What support and training are provided during the initial term and upon renewal, and are there additional costs beyond the stated fees for specialized training or retraining?
#16
The initial term is 5 years with 3 renewal options. What is the renewal process, and are renewal terms negotiable, or are they fixed as stated in the original agreement?
#17
Has the franchisor modified the franchise agreement significantly in recent years, and if so, are existing franchisees required to adopt the new terms or do they maintain grandfathered terms?
#18