The royalty rate of 6.5% exceeds the typical range of 5.0-6.0% for fast casual restaurants—what services or support justify this higher rate compared to competitors?
#1
Technology fees of $600/month are above the typical $200-$500 range—what specific technology systems and tools does this cover, and are there opportunities to reduce this cost?
#2
Transfer fee is $5,000, significantly below the typical $8,750-$20,000 range—does this lower fee reflect a franchisor strategy to encourage transfers, and are there other fees associated with transfers?
#3
The franchise has grown from 22 units 3 years ago to 95 units currently (62.8% CAGR)—what are the franchisor's unit growth targets for the next 3-5 years, and what support will be provided for this continued expansion?
#4
Seven units were transferred in the past year—what are the reasons franchisees are seeking transfers, and what support does the franchisor provide to facilitate smooth transitions?
#5
The non-compete restriction extends 25 miles, which exceeds the typical 5-20 mile range—can you explain the business justification for this broader geographic restriction?
#6
Why does the contract offer 99 renewal options of 10 years each (1,000 years total potential term) compared to the typical 20-26 year total potential term for similar franchises?
#7
Termination causes count of 11 is below the typical 15-23 range—what specific causes for termination are outlined in the franchise agreement, and how does this compare to your competitors?
#8
Renewal conditions count of 5 is below the typical 6-9 range—what conditions must be met to renew the franchise, and are there additional conditions that may be added during the renewal process?
#9
The binding arbitration clause requires residents of Illinois, Maryland, and Washington to resolve disputes through arbitration and waive class action rights—how does this impact your ability to seek legal remedies, and what is the cost of arbitration?
#10
The franchise agreement requires personal guarantees with joint and several liability—does this mean you are personally responsible for all franchise obligations even if the franchise entity fails?
#11
Indemnification requirements state franchisees must indemnify the franchisor for all losses and damages—what specific scenarios trigger indemnification obligations, and are there caps on your financial exposure?
#12
Only 1 unit closure and 1 termination have occurred in the past year despite rapid expansion—what early warning systems or performance metrics does the franchisor use to identify struggling franchisees before closure or termination?
#13
How does the franchisor support new franchisees during the critical first 2-3 years, given that transfer activity is elevated compared to the category?
#14
The renewal fee of $2,500 is significantly less than the initial franchise fee of $35,000—what changes or upgrades can occur during renewal that might trigger additional costs?
#15
Since no litigation cases have been filed, can you provide references from current and former franchisees to understand their experiences with dispute resolution and franchisor relations?
#16
What specific financial performance metrics or sales thresholds must franchisees achieve to avoid termination, and how is performance monitored?
#17
The franchise does not provide Item 19 financial performance data—can the franchisor provide average unit volumes (AUVs), profitability ranges, or case studies of typical unit performance by location type?
#18
Territory is exclusive, but what is the franchisor's policy on adding new units within existing territories or opening company-owned locations that might compete with franchisees?
#19
What happens to your renewal options if the franchisor terminates the franchise relationship—do you lose all remaining renewal options, and what recourse is available?
#20