The franchise fee of $5,000 is significantly lower than typical Food & Beverage franchises ($30,000-$40,000). What is included in this fee, and are there additional startup costs not reflected in the disclosed fee?
#1
The royalty rate of 8.0% exceeds the typical range of 5.0-6.0%. How does this compare to competing Food & Beverage franchises, and is there flexibility in negotiating this rate?
#2
The termination rate of 1.6% is nearly triple the typical range of 0.0-0.6%. What are the primary reasons franchisors have terminated units in the past 3 years, and what performance metrics trigger termination?
#3
Can you provide details on the 3 unit closures in 2023 and the 3 in 2024? Were these due to performance issues, franchisee decisions, or franchisor termination?
#4
The transfer rate of 9.4% is elevated compared to the typical 0.0-6.1%. Are franchisees transferring units due to profitability concerns, or are transfers occurring for other reasons?
#5
The initial contract term is only 3 years with one 3-year renewal option (6-year maximum), compared to typical 15-20 year terms. How does this short term affect long-term business planning and justifying initial investment?
#6
The renewal fee equals the then-current initial franchise fee. Given the initial fee is $5,000, what is the projected renewal fee in 3 years, and on what basis does the franchisor adjust this?
#7
What specific conditions must be met to qualify for the one renewal option, and what happens if a franchisee does not meet these conditions?
#8
The 2-year non-compete within a 5-mile radius covers 'Asian style foods, sushi, fresh fish products, steamed [items].' How broadly is this interpreted, and could it prevent you from operating other food concepts in your location after contract expiration?
#9
The franchise agreement requires personal guarantees from all individual owners and spouses. What are the specific financial obligations covered by these guarantees, and can they be limited?
#10
What mandatory purchasing arrangements exist beyond proprietary items? Can franchisees source from approved vendors other than the franchisor, and are there price caps on franchisor-supplied items?
#11
The agreement lists 20 non-curable defaults resulting in immediate termination. Can you provide the complete list, and are any of these standards subjective or difficult to comply with?
#12
What is the 30-day cure period for non-monetary defaults in practice? Have franchisees successfully cured defaults within this timeframe, or do curable defaults typically result in termination?
#13
The system experienced 68.1% 3-year CAGR growth, but with 6 units transferred and 5 units closed in 2023-2024, what is the actual franchisee retention rate among franchisees who have been in the system for 2+ years?
#14
No Item 19 financial performance disclosure is provided. Will the franchisor provide comparable unit economics or financial performance data from existing franchisees before you sign the agreement?
#15
The transfer fee of $1,000 is significantly below market ($7,500-$17,500). What restrictions, if any, apply to who can purchase a transferred unit, and can the franchisor approve or reject a proposed transferee?
#16
What specific training and ongoing support does the $100 monthly technology fee cover, and are there additional technology or software requirements beyond this fee?
#17
How many of the current 76 units are company-operated versus franchisee-operated, and what is the financial performance gap between these two segments?
#18
Since zero litigation cases are reported, what is your dispute resolution process (arbitration, mediation, litigation) if conflicts arise with the franchisor?
#19
Can you provide a list of all current franchisee contact information so I can conduct independent interviews about their profitability, support quality, and experience with the franchisor?
#20