The franchise fee of $18,000 is substantially lower than the typical range of $20,000-$40,000 for real estate service franchises. What additional costs or requirements should franchisees anticipate before opening a location?
#1
With zero reported unit exits since 2022, can you provide detailed unit history for the original 4 units in place at that time to confirm whether these are the same units currently operating?
#2
Why does the contract include 25 termination causes when the typical range for this category is 15-20? Can you explain which termination causes are most commonly cited and provide examples?
#3
The system has grown from 4 to 5 units in the past year. What is the franchisor's growth strategy and timeline for the next 3-5 years? What support exists for franchisees to scale their operations?
#4
Two litigation cases are currently pending. Can you provide details on the nature, status, and expected resolution timeline for these cases without disclosing confidential information?
#5
The royalty rate of 4.0% is below the typical 5.25-7.0% range. Are there performance-based increases, volume discounts, or circumstances under which the royalty rate changes?
#6
Territory is designated as non-exclusive with no encroachment protection. How does the franchisor prevent market saturation in areas where multiple franchisees operate? Can you provide an example of how encroachment is handled?
#7
The transfer fee of $3,500 is below the typical range of $5,000-$10,000. Does this fee cover all required services such as training, background checks, and legal review of the transfer?
#8
The non-compete clause restricts activity within 2 years and 25 miles. How is this enforced, and have there been any legal disputes over former franchisees violating these restrictions?
#9
The renewal fee is $3,000. What are the eight conditions for renewal mentioned in the legal clause, and what percentage of franchisees historically qualify for renewal at term's end?
#10
Item 19 (financial performance representations) is not included in the franchise disclosure document. Can you provide any performance data, sales benchmarks, or profitability information from existing franchisees?
#11
Of the 3 litigation cases filed, what were the outcomes of the 1 case where the franchisor was plaintiff? What does this reveal about contract enforcement or franchisee compliance?
#12
The dispute resolution clause requires binding arbitration at JAMS with a class action waiver. Has arbitration been used in any of the current or past litigation cases, and if so, what were the results?
#13
Personal guaranties are required from all owners and require spousal consent. If a franchisee defaults, how has the franchisor pursued personal guaranties against owners in practice?
#14
What ongoing support and training does the $64.99 monthly technology fee cover? Is this fee fixed or does it scale with business volume?
#15
The system currently has only 5 units. How long has the franchise been operating, and when was the first franchise agreement signed?
#16
The renewal conditions require 'substantial compliance' during the initial term. What specific metrics or criteria does the franchisor use to determine whether substantial compliance has been met?
#17
Can you clarify whether the zero turnover rate reflects strong franchisee satisfaction, market conditions specific to existing franchisees' territories, or limited data given the system's small size?
#18