Can you explain the unusually low turnover rate of 0.0% compared to the casual dining industry average of 4.0-16.35%? Is this reflective of the franchise's maturity or recent establishment?
#1
Given the $4,850 minimum monthly royalty regardless of sales performance, how many of your current 34 units operate below break-even profitability, and what is the average unit volume for units in the bottom quartile?
#2
What is the actual closure or failure rate of units that have exited the system, and are there any units currently struggling that may be candidates for closure or renegotiation?
#3
The agreement requires all owners and spouses to execute personal guarantees. Can you clarify what specific circumstances would trigger enforcement of these personal guarantees beyond the franchisee entity's obligations?
#4
Can you provide a list of all franchisor-designated approved suppliers for the 8 required purchase categories (furniture, equipment, inventory, POS systems, signage, etc.) and the markup or pricing policies applied?
#5
Your dispute resolution clause allows optional non-binding mediation but does not mandate binding arbitration. What percentage of disputes between franchisor and franchisees have reached litigation in the past 5 years, and what was the outcome?
#6
The technology fee of $100 monthly has not changed based on your data. What systems and services does this cover, and how often are these services updated or expanded?
#7
Can you detail the mandatory advertising requirements and how the 2.0% ad fund is allocated between national campaigns, local support, and administrative costs?
#8
Given zero terminations reported, under what specific circumstances would the franchisor initiate termination, and what is the typical cure period provided for breaches?
#9
The renewal fee is listed at $3,500. Are there any contingencies on renewal eligibility, such as required renovations or system upgrades, and what is the typical cost of these requirements?
#10
Can you provide performance data showing the breakdown of your 34 current units by location, operational tenure, and average unit volume to assess consistency across the system?
#11
The 2-year/10-mile non-compete is post-termination. Does this apply equally to voluntary transfers and non-renewals, or only to franchisor-initiated terminations?
#12
Late payment interest is set at 1.5% monthly (18% annually). Are there grace periods provided before interest accrues, and what is your policy on partial payments?
#13
Your Financial Performance score of 62 is above the typical range for casual dining (40.0-60.0). Can you explain what factors contribute to this outlier performance score?
#14
Since your Risk Factors score of 80 also exceeds the typical range (61.0-78.5), what specific operational or financial risks does this reflect in your system?
#15
The franchise has shown zero unit growth in the past year (34 units both current and 1-year ago). What is your growth strategy, and why has the system remained flat despite adding 2 units over 3 years?
#16
Can you provide references from franchisees who have renewed their agreements, particularly those from 2019 or earlier, to assess long-term satisfaction and renewal rates?
#17
Are there any pending or threatened litigation cases not yet reflected in your disclosure documents, and do you have any knowledge of disputes currently in informal resolution?
#18
The agreement requires franchisor control over general operations and menu offerings. How much flexibility do franchisees have to adapt the menu or operations based on local market conditions?
#19
Can you clarify the process and associated costs for transferring a franchise, given the $7,000 transfer fee and franchisor approval requirements?
#20