The system has declined from 44 units to 37 units over 3 years with a -5.6% annual growth rate. What factors contributed to this contraction, and what is the franchisor's strategic plan to stabilize or grow unit count?
#1
Two litigation cases were filed against the franchisor in the past 3 years. What were the nature of these cases, what were the outcomes, and have they resulted in changes to franchise agreement terms or operations?
#2
In 2024, the system experienced 4 closures and 3 franchisor-initiated terminations in a single year. What specific circumstances led to these terminations, and what early warning signs preceded them?
#3
The transfer rate of 5.0% is above the typical range for retail franchises. What is driving the higher-than-average number of transfers, and how does the franchisor support incoming franchisees when units transfer?
#4
The initial franchise agreement term is 20 years with 3 renewal options of 10 years each, totaling 50 years potential. How were these extended terms justified, and what conditions must be met to qualify for renewal?
#5
The agreement specifies 13 types of curable defaults with only 10 days to cure. Can you provide specific examples of what constitutes a curable default, and how consistently is this 10-day cure period applied?
#6
The non-compete clause restricts activity for 2 years within 10 miles. How is this enforced, and have there been disputes over its scope or reasonableness?
#7
The franchisor does not provide an Item 19 financial performance representation. What average unit volumes (AUV) and profitability metrics can you share from existing franchisees, and will you provide verified financial statements from a sample of units?
#8
Territory is listed as protected but non-exclusive. How does the franchisor prevent encroachment, and have there been disputes between franchisees regarding territory overlap?
#9
Personal guarantees are required, and spouses must sign liability documents. What specific circumstances would trigger enforcement of personal guarantees, and can these requirements be negotiated?
#10
The renewal fee is $0, but you charge a $10,000 transfer fee. Why is there no renewal fee, and under what conditions might you decline to renew a franchise agreement?
#11
System Health scored 16/100, significantly below the typical range. What specific operational or support metrics contribute to this low score, and what improvements are planned?
#12
Support & Training scored 100/100, above the typical range. What specific training programs and ongoing support are included with the franchise, and are there additional fees for advanced training?
#13
Three closures in 2025 and an additional 3 'ceased other' units raise questions about exit reasons. Can you clarify what 'ceased other' means and provide detailed exit interviews or exit data from departed franchisees?
#14
The franchisor has won zero litigation cases as plaintiff while defending 2 cases. Does the franchisor pursue legal action against non-compliant franchisees, and if not, why?
#15
Termination rate is 0.0% despite 3 terminations in 2024. How is the termination rate calculated, and are there pending terminations or notices currently issued?
#16
Post-term restrictions include binding arbitration in the Jericho, New York metropolitan area. If a dispute arises and you are located elsewhere, what are the practical costs and logistics of arbitration, and can venue be negotiated?
#17
Contract Terms scored 85/100, above typical range. Can you explain which contract provisions are considered stronger than average, and which provisions favor the franchisee?
#18
What financial investment beyond the $35,000 franchise fee should a prospective franchisee expect for buildout, inventory, and working capital, and what is the typical time to profitability based on existing units?
#19
Can you provide contact information for at least 10 current and 5 departed franchisees, and are you willing to have unmediated conversations with prospective franchisees about the franchise opportunity?
#20