Given the franchise fee is $5,000 compared to the typical range of $35,000-$40,000 for fast casual restaurants, what is the total initial investment required to open a unit, and how does this compare to the disclosed initial investment range?
#1
The Ad Fund Rate is 1.0% versus the typical 1.5-3.0% for this category. How is this 1.0% fund allocated, and what specific marketing and advertising support do franchisees receive?
#2
Why is the initial contract term only 5 years when the typical range for this category is 10 years? Does the franchisor have any plans to extend initial terms in future franchise agreements?
#3
The transfer rate of 6.5% is above the typical range of 0.0-5.73%. Can you provide details on why unit transfers are occurring at this higher rate and whether there are specific challenges with unit viability?
#4
Can you explain the 11 renewal conditions required for the one renewal option? What are the specific conditions, and how frequently do franchisees fail to meet them?
#5
The franchise agreement lists 25 termination causes, which is above the typical 15.0-23.0 range. Can you provide a breakdown of the most commonly invoked termination causes and their frequency?
#6
With 23 total closures over 3 years (average 7.7 per year), what were the primary reasons units ceased operations? Were these primarily due to economic factors, franchisee underperformance, or other causes?
#7
The termination rate of 1.2% slightly exceeds the typical range, meaning 6 terminations over 3 years. How many of these terminations were for cause versus convenience, and are there patterns in the types of defaults?
#8
Given the total potential term is only 10 years (below typical 20.0-26.25 years), how does the franchisor support long-term franchisee viability and what happens to established units after the 10-year period expires?
#9
The non-compete clause is 2 years / 10 miles. How is this enforced, and are there any exceptions for franchisees whose renewals are not approved?
#10
Why does the franchise agreement include personal guarantees from all shareholders, partners, members and their spouses? What liabilities are franchisees personally responsible for beyond their franchise obligations?
#11
The renewal fee ranges from $2,500 for 3-year terms to $4,000 for 5-year terms. How is this fee structured, and what does it cover in terms of legal review, system updates, or other services?
#12
Can you provide the actual Item 19 financial performance disclosure or sales data? The absence of Item 19 limits visibility into unit profitability and average unit volumes for this system.
#13
The Territory score is 50 (below typical 75.0-88.75), and territory is explicitly non-exclusive with no encroachment protection. How is the franchisor managing market saturation, and can multiple franchisees operate in the same geographic area?
#14
The Support & Training score is 66 (below typical 90.0-100.0). Can you detail the specific initial training program duration, ongoing support provided, and any associated costs beyond the disclosed fees?
#15
With 13 units net growth in the past year but 29 total exits (closures + terminations + transfers + ceased other), how is the franchisor recruiting and signing new franchisees to offset the exit rate?
#16
The Contract Terms score is 53 (below typical 60.0-65.0). Can you clarify which contract terms are weighted heavily against franchisees, and are there any recent updates or amendments to improve balance?
#17
The personal guarantee clause covers spouses as well. What is the rationale for including spouses' personal liability, and is this requirement negotiable?
#18
Can you provide references from franchisees who have recently transferred their units or chosen not to renew? What were their experiences and reasons for departure?
#19