The transfer fee of $20,000 is above market range for this category—what does this fee cover, and is it negotiable based on unit performance or length of system tenure?
#1
Three litigation cases against the franchisor in 3 years exceeds the typical range. Can you provide details on the nature of these cases, their outcomes, and whether they relate to operational, financial, or contractual disputes?
#2
The termination rate of 3.8% is more than double the typical range of 0.0-1.68%. What are the primary reasons franchisees are being terminated, and what percentage involve voluntary shutdowns versus franchisor-initiated terminations?
#3
The transfer rate of 12.1% is more than twice the typical range. Are franchisees primarily transferring ownership to maintain operations, or do transfers often precede closures?
#4
The system has contracted by 6 units over 3 years with a -0.82% CAGR. What is the franchisor's growth strategy, and what percentage of closures are attributed to market conditions versus operational issues?
#5
Your non-compete restriction is only 3 miles, which is significantly below the typical 10.0-25.0 mile range. How is this limited geographic radius enforced, and what prevents former franchisees from opening competing massage studios nearby?
#6
The franchise agreement lists 23 non-curable defaults (above the typical 15-21 range). Can you provide the complete list and explain which defaults have been the primary cause of franchise terminations?
#7
Item 19 financial performance data is available—what were the median and average gross sales for units in the most recent reporting period, and how many units reported?
#8
The agreement requires binding arbitration in Denver, Colorado. How many current franchisees are located more than 50 miles from Denver, and what are the estimated travel costs for dispute resolution?
#9
Personal guarantees are required from all owners and may include spouses with joint and several liability. Can you clarify when spouse guarantees are mandatory versus optional?
#10
You mandate designated supplier purchases across 5 supplier categories. What percentage of unit operating costs are tied to mandatory franchisor-approved suppliers, and are prices competitive with open-market alternatives?
#11
The renewal conditions include signing a current franchise agreement form. How frequently do franchise agreement terms change, and can franchisees renegotiate terms during renewal or must they accept current terms as written?
#12
In 2024, 29 units transferred (highest of the 3-year period) while only 9 closed. Are these transfers occurring to new franchisees or existing franchisees expanding, and what is the success rate of transferred units?
#13
Your cure period for most breaches is 30 days. How many terminations in the past 3 years occurred because franchisees failed to cure within this timeframe versus being issued non-curable default notices?
#14
The franchisor may set maximum or minimum advertising spending. What is the typical annual advertising budget for franchisees, and does the franchisor provide marketing guidance or required campaigns?
#15
The non-compete applies to any business offering therapeutic massage or bodywork services within 3 miles. How have courts interpreted this language, and have there been disputes over non-compete enforcement?
#16
Zero non-renewals were recorded in the past year. Is this because franchisees are automatically renewing, or are franchisees being terminated before renewal discussions occur?
#17
What support and training are provided post-launch, and how frequently does the franchisor conduct on-site inspections or audits to assess compliance with operational standards?
#18