Given that the system has only 1 operating unit, how long has this unit been in operation and what are its specific unit-level financial performance metrics?
#1
What is the reason for such limited system growth with only 1 unit currently operating? Are there planned expansion targets?
#2
The advertising fund is 1.0%, which is below the 1.5-3.0% typical range—how is the franchisor allocating these funds and what specific marketing support will franchisees receive?
#3
Gross sales of $1,024,316 exceed typical benchmarks for this category—can you provide detailed Item 19 financials showing the expense breakdown, net profit, and any assumptions underlying this figure?
#4
Why is the total potential contract term limited to 10 years when the typical range is 15-20 years, and what renewal options exist beyond the initial 10-year term?
#5
The non-compete radius is 25 miles, which exceeds the typical 5-23.75 mile range—how was this distance determined and what restrictions does it impose after franchise termination?
#6
The agreement contains 22 termination causes, above the typical 15-20 range—can you provide a complete list of these termination triggers and explain which ones can be triggered at the franchisor's sole discretion?
#7
Personal guarantees are required from all 5%+ owners with unlimited scope—are spouses required to sign, and what specific obligations do guarantors assume?
#8
All disputes require binding arbitration with mandatory 60-day mediation and waived class action rights—what are the typical costs and timelines for arbitration disputes in your franchise system?
#9
The franchisor maintains extensive supplier restrictions requiring purchases from approved vendors—what percentage of inventory must be sourced from the franchisor or its affiliates, and how are pricing and terms negotiated?
#10
Can you provide the complete Item 20 list of all franchisees and former franchisees from the past 5 years, including their contact information and exit dates?
#11
Has the single operating unit ever filed a complaint with the franchisor, been subject to enforcement actions, or threatened termination during its operation?
#12
What were the circumstances of any franchisees who may have been terminated, closed, or exited during the system's operational history prior to the current unit?
#13
The transfer fee is $15,000—is this in addition to renewal fees, and what approval process does the franchisor use for transfers?
#14
What specific training, ongoing support, and operational guidance are provided to franchisees, and how is this typically measured or evaluated?
#15
Are there any territorial encroachment protections beyond the 25-mile non-compete, such as exclusive territory guarantees or buyout provisions if the franchisor opens nearby locations?
#16
What are the capital expenditure requirements for renewal after 10 years, and are there facility upgrade mandates or renovation obligations?
#17
Can you clarify the royalty structure—is the 5.0% royalty calculated on gross sales or net sales, and are there any adjustments or deductions allowed?
#18
Does the franchisor collect any rebates, overages, or profit-sharing from approved suppliers, and if so, how are these amounts disclosed to franchisees?
#19
What insurance requirements are mandated, what coverage limits apply, and does the franchisor require to be named as an additional insured?
#20