The royalty rate of 14.0% is significantly higher than the typical range of 6.0-10.0% for business services franchises. What is the justification for this higher rate, and is it negotiable for multi-unit agreements?
#1
The advertising fund rate of 3.0% exceeds the typical range of 1.0-2.75%. How is this fund allocated, and can you provide documentation of advertising expenditures and ROI metrics from the past 2 years?
#2
Your transfer rate of 7.7% is above the typical range of 0.0-5.18%. What are the primary reasons franchisees are transferring ownership, and what support does the franchisor provide during ownership transitions?
#3
The franchise agreement lists 25 termination causes, above the typical range of 12-21. Can you provide a detailed breakdown of these 25 causes and clarify which are curable versus non-curable defaults?
#4
The agreement specifies 10-30 day cure periods for defaults. For which specific termination causes do cure periods apply, and for which causes is immediate termination possible without cure opportunity?
#5
Given the 15 non-curable default categories mentioned, what practical examples would constitute non-curable breaches, and how frequently have these been invoked in the past 3 years?
#6
The non-compete clause restricts competitive staffing and recruitment services within 25 miles for 24 months post-termination. How is 'competitive' defined, and have any franchisees challenged this restriction?
#7
Personal guarantees are required from each owner and their spouse for all financial obligations. Can you clarify whether spouses remain liable after divorce or if guarantees can be released through spousal consent agreements?
#8
The agreement requires minimum monthly royalty fees regardless of sales performance, plus $150 non-compliance fees and 18% annual interest on late payments. What is the average monthly royalty amount franchisees typically pay, and how many franchisees have incurred non-compliance fees in the past year?
#9
Renewal requires payment of 15% of the then-current initial franchise fee. If the initial franchise fee increases to $75,000 by your renewal in 8 years, would the renewal fee be based on that amount?
#10
All disputes require binding arbitration in Butler County, Ohio, with class action and jury trial waivers. Has the franchisor ever initiated arbitration against franchisees, and what were the outcomes?
#11
The territory is protected but not exclusive. How is encroachment defined, and what specific actions would the franchisor take if another franchisee or the franchisor's own operations entered your territory?
#12
The system grew from 24 units 3 years ago to 39 units today. Can you break down this growth by: new unit openings, transfers, and company-owned locations versus franchisee-owned locations?
#13
Four units closed in 2023, the highest number in the 3-year period. What were the primary reasons for these closures, and were any related to franchisor support issues or market conditions?
#14
Zero terminations have been recorded in the past 2 years despite the broad termination clause. Has the franchisor opted not to enforce terminations, or have disputes been resolved through other means?
#15
The technology fee of $234 monthly ($2,808 annually) is a significant recurring cost. What specific technology services and tools does this cover, and can franchisees opt out or use alternative systems?
#16
The franchise agreement allows for up to 18 years of total potential terms. What conditions would prevent renewal after the initial 8-year term, and how many franchisees have renewed at the end of their initial terms?
#17
Item 19 financial performance data is not available. Will the franchisor provide unit-level financial performance data, customer acquisition costs, or average revenue figures upon request during your evaluation period?
#18
With a 25.8% net unit growth rate year-over-year, far above the typical range, what is driving this expansion? Are these primarily new franchisees, multi-unit franchisees adding locations, or company-owned growth?
#19
The franchisor must indemnify the franchisor from all losses and claims unless the franchisor is grossly negligent. Has this indemnification clause been tested in litigation, and are there caps on franchisee liability exposure?
#20