What was the nature of the 1 litigation case initiated against the franchisor in the past 3 years, and has it been resolved?
#1
Can you provide details on the 2 unit exits in 2022 (1 closure and 1 other cessation)? What were the circumstances and reasons?
#2
The non-compete restriction is 1 year and 10 miles, below the typical 2-year restriction. Can you explain the rationale for this shorter restriction period?
#3
With 22 non-curable defaults in the termination clause, what are the most common reasons franchisees face termination, and do you track data on default notices issued?
#4
The transfer fee of $5,000 is significantly lower than the typical range of $8,937.50-$18,437.50. Are there any restrictions on who franchisees can transfer to, or additional vetting fees?
#5
You require mandatory minimum royalties of $1,000-$3,000 monthly regardless of sales performance. How many franchisees fall below these thresholds in their first few years of operation?
#6
Personal guarantees are required from all principals and spouses. Are there any circumstances where this requirement can be waived or modified?
#7
The agreement requires purchasing all equipment, fixtures, and inventory from designated suppliers. Can you provide a list of approved suppliers and typical markup rates or price ranges?
#8
What support and training is provided to justify the 100/100 support & training score, and how does this compare to competitor franchise offerings in the escape room category?
#9
The median gross sales of $682,427 assumes the location is profitable. What is the break-even point, and how long does it typically take franchisees to reach profitability?
#10
Can you clarify the $250 late payment fee policy? Are there other penalties or interest charges applied to late royalty payments?
#11
Investment costs score 57/100, below the typical 75/100 for this category. What is the typical total initial investment including real estate, buildout, and working capital?
#12
How many of the 75 current units are profitable, and what percentage of units fail to reach the median gross sales figure of $682,427?
#13
The system grew from 53 to 75 units in 3 years. How many of these new units are new locations versus transfers from other franchisees?
#14
Are there any geographic markets where unit density has created encroachment issues despite the exclusive territory protection?
#15
The renewal fee is $5,000. Are there any rate increases for renewal, or does the royalty structure remain the same?
#16
What is included in the $499 monthly technology fee, and has this fee increased since the franchise system's inception?
#17
Can you provide references from at least 10 current franchisees, including those who have been operating for 1 year, 5 years, and 10 years?
#18
The Item 19 financial performance disclosure is available. Do you have any performance data segmented by location type (mall, downtown, suburban), age of unit, or geographic region?
#19
What happens to a franchisee's territory if they choose not to renew after the initial 10-year term? Is there a right of first refusal or non-compete for the territory?
#20