In 2023, 3 units were closed and 3 units were terminated from the 24-unit system. Can you provide the specific reasons for each termination and closure?
#1
The termination rate of 12.5% is significantly above the typical range of 0.0% for this franchise category. What specific operational or financial triggers led to these terminations?
#2
What is the average unit volume (AUV) or gross sales data for operating units? While Item 19 is included, specific sales figures were not disclosed.
#3
The franchise fee of $65,000 is approximately 18% higher than the typical range of $39,500-$55,000. How does this premium justify the value proposition compared to competitor franchises?
#4
The monthly technology fee of $950 exceeds typical ranges. What specific technology services and platforms are included in this fee, and are these mandatory or optional?
#5
You mention 22 non-curable defaults in the termination clause. Can you provide a complete list of all 25 termination causes and clarify which 22 are non-curable?
#6
Given the 300% net unit growth in one year, what was your acquisition strategy, and how did you onboard and support this rapid expansion?
#7
The 10-day cure period for non-payment defaults is relatively short. Are there circumstances where this period is extended or waived?
#8
Can you provide an itemized breakdown of what the 8 mandatory supplier categories include and what percentage of typical monthly expenses these represent?
#9
The agreement requires a minimum royalty of $750/month or 8% of gross revenue, whichever is greater. How many franchisees are currently subject to the minimum, and what does this imply about their sales volume?
#10
Late payment fees include $100 plus 18% annual interest. Has this policy been enforced, and what percentage of franchisees have incurred these charges?
#11
The non-compete clause restricts activity for 2 years within 10 miles post-termination. How is this enforced, and are there any exceptions for franchisees who exit voluntarily?
#12
What support systems were in place for the 3 units that closed in 2023 before they ceased operations?
#13
Are there any pending or recently settled litigation matters not reflected in the formal litigation history?
#14
The transfer fee is $10,000 and renewal fee is $3,000. Are these fees negotiable, and do they apply to all transfer scenarios?
#15
With 25 termination causes, what percentage of units have been subject to at least one notice of default or cure demand?
#16
How do you define 'gross revenue' for royalty calculation purposes, and are there any categories of revenue excluded from this calculation?
#17
Can you provide quarterly or annual unit data for 2022 and 2023 to understand when the 3 exits occurred relative to new unit openings?
#18
The territory is protected but not exclusive—what specific protections exist against franchisor-opened or franchisee-encroachment situations?
#19
Given the 30-year potential term, what renewal terms have been offered to franchisees, and have any franchisees declined renewal?
#20