Why is the transfer fee of $26,250 more than double the typical range for this franchise category, and what circumstances justify this premium fee?
#1
Can you provide detailed financial performance data for the 2 operating units, including specific breakdown of sales, profitability, and capital recovery timelines?
#2
The average gross sales of $501,065 are significantly below typical QSR franchise performance. What explains this gap, and how do you expect new units to perform relative to current units?
#3
With only 2 units in the system and 100% unit growth in one year, what are the near-term expansion plans, and what is the minimum unit count you consider necessary for long-term system viability?
#4
Why is the initial contract term only 5 years compared to the typical 10-15 year term for this category, and does this shorter term affect franchisor support commitment?
#5
The non-compete radius of 50 miles significantly exceeds the typical 5-10 mile range. Can you explain the rationale and provide examples of how this geographic restriction has been applied in practice?
#6
The agreement lists 25 termination causes versus the typical 15-20. Can you provide a complete list of all termination triggers and examples of how minor defaults have historically been handled?
#7
How is the renewal fee of $1,500 applied, and what system upgrades, décor renovations, and equipment changes are required during renewal at the franchisee's expense?
#8
What is the status and timeline for the potential third unit you mentioned when discussing system growth, and what factors must be in place before expanding beyond 2 locations?
#9
Given the 85/100 Support & Training score is below the typical range for this category, what specific training is provided and who bears the cost—both initially and for ongoing staff training?
#10
The advertising fund rate of 1.0% is below the typical 2.0-4.0% range. How is this fund deployed, what results can be demonstrated, and is there transparency in accounting for these funds?
#11
Can you provide the full arbitration clause details, including which party bears arbitration costs and whether there are caps on damages that protect franchisees?
#12
What happens if a franchisee fails to secure the required computer system and décor upgrades before renewal, and how strictly are renewal conditions enforced?
#13
Has any franchisee or franchisor initiated legal action or arbitration in the past 5 years, even if not yet formal litigation, and are there any pending or threatened disputes?
#14
Why does the franchise agreement require spouse liability in personal guarantees, and how have spouse guarantees been enforced in past termination or default scenarios?
#15
Can you provide 3-year financial statements, tax returns, and Item 19 performance disclosure for each of the 2 current franchisees (or an aggregate if confidentiality required)?
#16
What territory protection mechanisms exist beyond non-exclusive territory designation, and are there documented cases where encroachment disputes were resolved?
#17
Given the franchise is only 3 years old, what happens to franchisees' investments, lease obligations, and equipment if the franchisor terminates the franchise relationship or the system fails?
#18
How many prospective franchisees have applied in the past 12 months, how many were approved, and what reasons led to any rejections or candidates declining the opportunity?
#19