The ad fund rate of 1.0% is significantly below the typical 2.0-4.0% range for quick service restaurants. How is the marketing fund allocated, and what specific programs and media channels does this funding support for franchisees?
#1
Your franchise agreement includes 25 termination causes, above the typical 15-20 for this category. Can you provide a detailed breakdown of these causes and examples of the specific operational failures that would trigger termination?
#2
Why is the initial contract term only 5 years compared to the typical 10-15 years for quick service restaurant franchises, and does the shorter term reflect expectations about unit performance or business model maturity?
#3
One unit closed in 2024 out of the 7 units operating at the start of the year. What circumstances led to this closure, and what support or remediation steps were attempted before the closure occurred?
#4
The system grew from 2 units three years ago to 11 currently (76.52% CAGR). What is the franchisor's expansion strategy going forward, and what unit count is targeted for the next 3-5 years?
#5
The turnover rate of 9.1% is notably higher than the typical 0.05-6.55% range. Beyond the one documented closure, are there units that have underperformed financially or faced operational challenges, and what happens to franchisees who struggle?
#6
The franchise agreement requires exclusive purchasing from designated suppliers for 5 categories of items including Trade Secret Food Products. Can you provide transparency on supplier pricing, markup structures, and whether franchisees can request alternative approved suppliers?
#7
Post-termination restrictions include a 2-year, 10-mile non-compete. How is this enforced, and have any former franchisees challenged or violated these restrictions since the franchise system began?
#8
The agreement states all disputes must be resolved through binding arbitration at the franchisor's principal place of business. What is the typical cost and timeline for arbitration disputes, and how many disputes has the franchisor pursued through arbitration to date?
#9
Item 19 financial performance data is not provided. Can you share audited or verified financial statements showing average unit volumes, profitability ranges, and the timeframe for break-even for typical franchisees?
#10
The renewal clause requires mandatory refurbishment, remodeling, and upgrading as conditions for the one renewal option available. What is the estimated cost of these mandatory upgrades, and what flexibility exists if a franchisee cannot meet these requirements?
#11
With only one renewal option available after the initial 5-year term, what happens to a franchisee's business after year 10? Are there pathways to extend beyond 10 years, or must the business be transferred or closed?
#12
The franchise agreement requires personal guarantees from both the franchisee and spouse. Under what circumstances would both spouses' personal assets be at risk, and does the franchisor pursue personal guarantees in legal actions?
#13
Support and training scored 85/100, below the typical 90.0-100.0 range. What ongoing operational support, training, and field assistance does the franchisor provide beyond initial training?
#14
Contract terms scored 53/100, below the typical 60.0-65.0 range. What are the most franchisee-unfavorable terms in your agreement compared to industry standards, and is the franchisor open to negotiating specific contract language?
#15
The franchise fee is $30,000 with a $15,000 transfer fee. What is included in the franchise fee, what are the total startup costs including equipment and inventory, and are there financing options available?
#16
Given the aggressive growth from 2 to 11 units in 3 years, what vetting process is in place for franchise applicants, and what criteria must a prospective franchisee meet to be approved?
#17
Are there any pending development agreements, master franchise arrangements, or area representatives in negotiations that could impact the market territory of individual franchisees?
#18
The termination clause includes 24-hour cure periods for health violations. What specific health and safety violations trigger this expedited termination right, and how is compliance monitored?
#19
Can you provide contact information for at least 5-10 current franchisees and 3-5 former franchisees so that I can independently verify performance claims, support quality, and reasons for any closures or exits?
#20