What specific operational or performance issues led to the 6 unit closures in 2024 and the 3 closures in 2025? Were these franchisee-initiated or franchisor-initiated?
#1
Can you provide details on the 4 terminations executed by the franchisor (2 in 2024, 2 in 2025)? What were the primary reasons, and were cure periods offered?
#2
Gross sales average $969,040, significantly below the category norm of $1.2-$2.7 million. What is your explanation for this performance gap, and what support does the franchisor provide to help units reach higher sales levels?
#3
The system has declined from 38 to 32 units (-5.57% CAGR) with zero net growth in the past year. What is the franchisor's growth strategy to stabilize and expand the franchise network?
#4
How does the franchisor define and enforce the 14 termination causes in the franchise agreement? What percentage of terminations in the past 3 years were for non-payment versus other causes?
#5
The 1-year turnover rate of 9.4% and termination rate of 6.3% both exceed typical ranges. How do you support existing franchisees to reduce voluntary departures and franchisor-initiated terminations?
#6
Why is the technology fee of $66 monthly substantially lower than the typical range of $90-$500? What does this fee cover, and are additional technology costs expected?
#7
The transfer rate of 12.5% is 3x the typical range. Why are a disproportionate number of units being transferred rather than closed, and what approval process do you use for transfers?
#8
The non-compete period is 1 year / 10 miles versus the typical 2 years. Why was this shortened, and does the franchisor enforce this actively?
#9
The initial term is 20 years with a potential 30-year total term, both above the typical range. What is the rationale for these longer terms, and are there early exit provisions if performance targets are not met?
#10
Item 19 financial performance data is provided. How many units are included in the median sales figure of $947,948, and what is the range of sales among reporting units?
#11
Have you received any complaints or disputes from franchisees regarding the personal guarantee requirement that binds all owners individually for all franchise undertakings?
#12
The franchise agreement includes cure periods of 10 business days for payment defaults and 30 days for non-compliance. Have terminations been executed without offering these cure periods, and what documentation supports your compliance?
#13
Why was the transfer fee set at $12,000, and how often does the franchisor deny transfer requests?
#14
The renewal fee is $0. Does this mean franchisees can renew without additional costs, or are there unstated fees or mandatory upgrades required at renewal?
#15
Protected territory is offered but not exclusive, with encroachment protection. Has the franchisor opened units within existing franchisees' protected territories, and if so, what conflicts resulted?
#16
What support and training does the franchisor provide to help new franchisees achieve sales performance above the current system average of $947,948?
#17