Why is the royalty rate of 40.0% substantially higher than the typical 6.0-8.0% range for sports and recreation franchises, and how is this justified relative to franchisor support and services provided?
#1
Can you provide a detailed breakdown of what the 40.0% royalty covers and whether any portion is rebated or credited based on performance metrics or revenue thresholds?
#2
The ongoing fees score is 4/100, well below the typical 62.0 for this category. What ongoing costs beyond the 40.0% royalty and 2.5% ad fund should franchisees anticipate, and are there any seasonal or volume-based fee adjustments?
#3
What specific reasons led to the 4 unit closures in 2024 (compared to 0 in 2022), and what percentage of those were voluntary versus franchisor-initiated?
#4
Given the non-compete clause of 2 years / 15 miles, what happens if a franchisee wants to relocate their facility within the protected territory during or immediately after the contract term?
#5
The franchise agreement requires mandatory renovation and upgrading of facilities to reflect current franchisor standards for renewal. What are the typical costs associated with these mandatory upgrades, and are there payment plans or financing options available?
#6
Can you clarify the supplier exclusivity requirement for the 5 designated supplier categories? Are there approved alternative suppliers, and what happens if a franchisee sources from an unapproved vendor?
#7
What is the franchisor's policy on encroachment within the exclusive territory, and are there documented cases where the franchisor has enforced territorial boundaries against competing D-BAT locations?
#8
Personal guarantees are required from all principals and their spouses. In the event of a dispute or default, how has the franchisor historically enforced personal guarantees, and what scenarios trigger enforcement?
#9
Item 19 financial performance data is available. Can you provide the median and average gross sales for units of similar size and location, along with the percentage of franchises that achieved profitability in their first 3 years?
#10
What is the average cost breakdown for initial buildout, equipment, and pre-opening expenses, and are there any financing partnerships or SBA loan programs the franchisor recommends?
#11
The renewal fee of $7,500 occurs every 5 years. Are there any other fees, certification costs, or mandatory training expenses required at renewal, and how are renewal terms negotiated?
#12
What specific training and ongoing support does the 40.0% royalty include, and are there additional fees for specialized coaching, staff training, or marketing support?
#13
Can you provide contact information for 5-10 recent franchisees who have operated for 3-5 years to discuss their profitability, actual operating costs, and experience with the high royalty rate?
#14
The system grew from 113 to 170 units in 3 years. What percentage of this growth came from new franchise sales versus conversions or acquisitions, and what is the franchisor's target for system expansion?
#15
Are there performance benchmarks or revenue minimums that, if not met, could trigger termination or non-renewal of the franchise agreement beyond the 12 listed termination causes?
#16
The termination causes count of 12 is below the typical range of 15.0-21.75. What are the franchisor's primary grounds for termination, and are there opportunities to cure defaults before termination is enforced?
#17
What is the franchisor's policy on master franchises or multi-unit operator agreements, and are there incentives or different fee structures for developers with multiple locations?
#18