What specific defaults triggered the termination of 32 franchises in 2024? Were these related to financial performance, operational violations, or other factors?
#1
Can you provide details on the 2 pending litigation cases currently against the franchisor? What are the alleged violations and potential financial exposure?
#2
Given the 34% termination rate in 2024, what support and training improvements has the franchisor implemented to prevent similar mass terminations in 2025?
#3
What is the average unit economics for franchises that were terminated in 2024 compared to those that remain operational?
#4
Why does the technology fee of $792/month fall significantly above the industry typical range? What specific services and features does this include?
#5
You advertise a minimum monthly royalty of $500 regardless of revenue. How many franchisees are currently paying only this minimum, and what is the median revenue threshold where franchisees exceed the minimum?
#6
How does the franchisor define 'protected territory' given that exclusivity is not guaranteed? What specific encroachment protections exist beyond the non-compete clause?
#7
Of the 44 units added in 2024 to offset the 32 terminations, how many were sold to existing franchisees versus brand new franchisees, and what is the early-stage survival rate for cohorts less than 12 months old?
#8
Can you explain the disconnect between your strong financial performance metrics (median sales of $883,693) and the high 34% termination rate? What percentage of terminated franchises were performing above or below median sales?
#9
The advertising fund rate of 3.0% exceeds typical rates. How is this fund allocated, and what specific marketing support do franchisees receive? Can you provide historical ad spend allocation for the past 24 months?
#10
Given that 14 defaults are non-curable versus 1 curable default, what are the specific non-curable violations and how do they differ operationally or financially from typical franchises?
#11
What is the timeline and process for renewal? Do all 9 renewal conditions carry equal weight, and how many franchisees have successfully renewed since the franchise started?
#12
Can you provide the cohort analysis for unit survival rates by vintage year? Specifically, what percentage of the 50 franchises from 2023 remain operational today?
#13
How does the mandatory local advertising expenditure of the greater of $2,000 monthly or [percentage] compare to actual network advertising spend? Are franchisees able to offset this with corporate fund contributions?
#14
What recourse do franchisees have if the franchisor terminates their agreement? Has any terminated franchisee filed a claim against the franchisor related to the 2024 terminations?
#15
The royalty rate of 5.0% is below industry typical rates (6.0-7.0%). Is this intentionally low to attract franchisees, and is there any plan to increase royalties for new or renewing franchises?
#16
Can you explain the rationale for the 1.5% monthly late payment interest rate? Has this been applied frequently, and to what percentage of franchisees?
#17
How many of the current 94 units are company-operated versus franchisee-operated? What financial performance do company-operated units generate compared to franchisee units?
#18
Given the high turnover rate, what is your franchisee satisfaction score, and do you conduct regular franchisee surveys or hold advisory council meetings to identify operational challenges?
#19