The transfer fee of $24,500 is substantially higher than industry norms ($7,500-$15,000). What services and support does this fee cover, and is any portion refundable if the transfer is denied?
#1
Your median unit gross sales of $1.4M significantly exceed typical home services franchise ranges. Can you provide the breakdown of sales by revenue type (products vs. services) and explain what drives this above-average performance?
#2
The 5-year initial term is notably shorter than the typical 10-year term in your category. What was the reasoning behind this shorter timeframe, and how does it impact long-term investment viability for franchisees?
#3
Can you provide details on the 2 litigation cases filed in the past 3 years—specifically the nature of the disputes, parties involved, outcomes, and whether they resulted in any policy changes?
#4
The agreement requires mandatory arbitration in Delaware with a waiver of jury trial rights. How many franchisees have pursued dispute resolution through this process, and what were the average costs and timeframes?
#5
Your renewal conditions require completing mandatory repairs, renovations, and equipment upgrades. What is the typical cost range for these upgrades, and are they required before renewal approval or spread over the renewal term?
#6
The non-compete clause restricts activity for 24 months within 25 miles of any system location. Given that the system has 52 units, can you map the geographic distribution to clarify what areas would be restricted for a specific territory?
#7
The agreement states unpaid amounts bear 15% annual interest. In the past 3 years, how many franchisees have incurred interest charges, and what were the primary reasons (late royalties, unpaid upgrades, other)?
#8
You mention minimum performance standards requiring specified average gross revenue amounts. What is the specific threshold, what happens if a unit falls below it, and has any franchisee been terminated or non-renewed due to failing this standard?
#9
The system grew from 42 to 52 units over 3 years with zero closures. Were all new units organic franchises, acquisitions from other systems, or reactivations? What is your current recruitment pipeline?
#10
Entity franchisees must provide unlimited personal guarantees. What percentage of your franchisees are entity-based vs. individual operators, and how is this guarantee enforced in practice?
#11
All products and services must be purchased from the franchisor or franchisor-approved suppliers. Can you provide the markup ranges on required products and identify the top 3-5 required suppliers?
#12
The franchise fee of $60,000 is at the higher end of the range. Does this fee include initial inventory, training duration, opening support, and other specifics, or are these additional costs?
#13
Post-term restrictions apply within 25 miles of any system location. If a franchisee's territory is non-renewed, can they operate a competing service outside this radius immediately, or are there other restrictions?
#14
The agreement requires joining the advertising cooperative. What is the annual cost of the cooperative, how are funds allocated, and who governs spending decisions?
#15
In the past 3 years, how many franchisees have exercised their renewal options vs. choosing not to renew, and what were the stated reasons for non-renewals?
#16
The system has a 0% termination rate according to your data. Does this mean no franchisees have ever been terminated, or does it reflect the past 1-3 years only? If ever terminated, on what grounds?
#17
Your Support & Training score of 100/100 is above category norms. Can you detail the specific training program (length, location, ongoing support), and do ongoing support costs come from the royalty rate or additional fees?
#18