The royalty rate of 3.7% is notably lower than the typical 5.25-7.0% for real estate franchises. What services and support does this lower rate fund, and are there plans to adjust it?
#1
You have 1 pending litigation case against the franchisor. Can you provide details on the nature of this case and the expected timeline for resolution?
#2
The termination rate is 6.0%, above the typical range of 0.0-4.4%. In 2023, 3 units were terminated. What were the primary reasons for these terminations, and were they for cause or convenience?
#3
The franchise agreement allows for 99 renewal options of 5 years each, creating a 500-year total potential term. Is this standard language, or can you explain the reasoning behind this structure?
#4
There are 11 renewal conditions in your agreement, above the typical range of 5.0-8.0. What are these conditions, and how frequently do franchisees fail to meet them?
#5
Your franchise offers exclusive territory but provides no encroachment protection. How does the franchisor define and protect exclusive territorial rights in practice?
#6
The non-compete clause specifies 1 year with no radius limitation. Does this apply only within the franchisee's assigned territory, or is it broader?
#7
There are 12 non-curable defaults that allow immediate termination. Can you provide a full list of these defaults and confirm that franchisees understand them before signing?
#8
Your Investment Cost score is 8/100, the lowest category score. What is the typical total investment cost for a new franchisee, and what does the $40,000 franchise fee cover?
#9
Unit growth has been minimal over 3 years (50 to 48 units). What is the franchisor's growth strategy for the next 5 years?
#10
The franchise provides no Item 19 financial performance data. Are franchisees able to receive references from current franchise owners to verify earnings claims?
#11
The transfer fee is $5,000. Are there other conditions or franchisor approval requirements for transferring a franchise to a new owner?
#12
Risk Factors score 78/100, above the typical range of 38.0-69.0. What specific risk factors are reflected in this score?
#13
Non-renewal rate is 0%, but termination rate is 6.0%. Are franchisees choosing not to renew, or are they being terminated by the franchisor?
#14
The 1-year turnover rate is 0% but the 3-year turnover rate is 8.0%. What changed between these periods, and is the 0% rate sustainable?
#15
What support and training does the franchisor provide to help franchisees succeed, given that the category has an N/A score for Support & Training?
#16
The $220 monthly technology fee represents what specific technology services and software platforms?
#17
Can you explain the discrepancy between having exclusive territory and no encroachment protection language in the agreement?
#18