Floor Coverings International

The franchise has 8 litigation cases over 3 years with 2 pending—more than double the typical range. Can you provide details on the nature of these 6 cases where the franchisor was plaintiff, and what issues prompted legal action against franchisees?

Why are 2 cases currently pending, and what is the expected timeline for resolution? How might adverse outcomes in these cases affect the franchise agreement or franchisor-franchisee relationship?

Your 1-year exit rate of 10.1% results in 29 closed units in 2024. What percentage of these closures were franchisor-initiated terminations (3.8% termination rate) versus voluntary exits or transfers? Why did closures increase from 20 units in prior years to 29 in 2024?

The transfer rate of 6.9% is above the typical range, meaning 20 units changed hands in 2024. What is the franchisor's policy on unit transfers, and are there restrictions or approval requirements that might limit a franchisee's exit options?

The 3-year turnover rate of 28.0% significantly exceeds the typical range of 2.88-22.53%. What is driving this elevated churn, and how does it compare to your industry benchmarks or competitor systems?

Your advertising fund rate of 3.0% is higher than the typical range of 1.0-2.0%. How is this fund allocated, what specific marketing initiatives does it support, and can franchisees see itemized reports of how their contributions are spent?

Your royalty rate of 5.0% is lower than the typical range of 6.0-7.0%. Are there any circumstances under which the royalty rate could increase, or is this rate locked in for the full contract term?

The Item 19 financial data shows median gross sales of $895,993 but average sales of $1,109,721—a significant gap. How many units reported data for Item 19, and what percentage of franchisees fall above versus below the median?

Bottom quartile sales of $451,369 exceed typical ranges, suggesting stronger performance at lower volumes. However, what percentage of franchisees fall into the bottom quartile, and what is the revenue threshold below which units typically become unprofitable?

You require personal guarantees from all partners and shareholders with unlimited scope. If a franchisee defaults, can the franchisor pursue personal assets beyond the business itself, and are spouses held liable for business obligations under spousal liability clauses?

The non-compete restriction is 2 years and 25 miles. Does this apply only after termination or non-renewal, or does it also restrict current franchisees from opening competing businesses within their territory?

What specific training and ongoing support does the 95/100 support and training score reflect, and are there benchmarks or certifications franchisees must maintain throughout their term?

How does the franchisor calculate the $10,000 renewal fee for your 5-year renewal options? Are there any circumstances under which a renewal could be denied, and what happens if a franchisee cannot pay the renewal fee?

The $15,000 transfer fee applies when a unit changes hands. Does this fee cover franchisor approval costs, and are there conditions under which the franchisor could refuse to approve a proposed buyer?

Can you explain the 2 cases where the franchisor was defendant? What were the allegations, what was the outcome, and did they result in changes to the franchise agreement or franchisor practices?

With net unit growth of 14.29% year-over-year, how many of the 36 new units came from new franchisee recruitment versus territory expansion into existing franchisee areas (encroachment)?

Given the elevated termination rate of 3.8% and non-renewal rate of 1.0%, what are the primary reasons franchisees fail to renew or have their agreements terminated? Are there specific performance thresholds that trigger termination?

Your Risk Factors score of 49 is significantly below the typical range of 58.0-76.0. What specific factors lowered this score, and does this mean there are fewer protections for franchisees or different risk considerations in this system?