Ding Tea

Of the 8 litigation cases filed against the franchisor over 3 years, what are the specific claims and outcomes? Has any case resulted in monetary damages or operational changes to the franchise system?

The 1 pending litigation case—what is the nature of this case, which party filed it, and what are the potential implications for franchise operations?

Why did the closure rate spike to 21 units in 2024 after declining to 16 in 2023? Were these voluntary closures or franchisor-initiated terminations?

What accounts for the 16 units that 'ceased other' in 2024—what does this category include and why did it increase significantly from prior years?

The termination rate is 4.2%, far exceeding the typical 0.0-0.6% range. What are the primary reasons the franchisor is terminating franchisees, and are there systemic issues driving this?

With only a 3-year initial term and no apparent renewal options beyond that, what is the long-term stability of a franchisee's business investment? How many franchisees have failed to renew at the end of their initial 3-year term?

The non-compete clause is only 1 year/25 miles. Given typical 2-year restrictions in this category, what is the rationale for this shorter period, and does it protect franchisee investments adequately?

Territory is marked as 'protected' but 'non-exclusive'—can the franchisor add competing locations within my territory during my 3-year term, and if so, under what conditions?

The ad fund is 3.0%—how is this fund calculated and spent? Can you provide a detailed accounting of ad fund contributions and expenditures for the past 3 years?

Why does the Item 19 not include financial performance data? Can you provide actual gross sales, average unit volumes, or profitability data for comparable units in my proposed market?

The renewal fee is $15,000 for a 3-year renewal—is this mandatory, and are there any conditions I must meet to qualify for renewal? What happens if I'm terminated before the 3-year term ends?

Personal guarantees are required from all direct and indirect owners with joint and several liability. Can you explain the specific scenarios where I would be held personally liable beyond the franchise agreement itself?

How many of the 17 units that closed in the past year were located in the same geographic markets you're proposing for my franchise? Are there market-specific performance issues?

The transfer rate is 8.3%—why are franchisees transferring their units at a higher-than-typical rate? Are these transfers to new franchisees within the system or exits?

Can you provide the average unit economics (AUE) or Item 19 equivalent showing typical revenues, expenses, and profitability for a franchisee at break-even, 1-year, and 3-year marks?

Given the 53.3% turnover rate over 3 years, what percentage of the original 116 units from 3 years ago are still operating today?

What specific support and training do you provide? The support and training score is 75, below the typical 83.75-99.0 range for this category—what gaps exist?

The system health score is 14/100 and risk factors score is 38/100, both significantly below typical ranges. What is the franchisor's plan to address system stability and reduce risk factors for prospective franchisees?