What specific operational or compliance issues led to the 4 terminations in 2022, and were these isolated to particular franchisees or systemic issues?
#1
The 30.8% termination rate is significantly above typical for this category (0.0-6.83%). Can you provide details on the termination clause triggers and how many franchisees have been terminated under each condition?
#2
Why did the system contract from 13 units (3 years ago) to 11 units currently? What happened to the 2 units that closed in 2022?
#3
The monthly technology fee of $645 exceeds the typical range ($156.5-$599.0). What specific technology and services does this fee cover, and how is it justified compared to competitors?
#4
Your royalty rate of 8.0% is above the typical range (6.0-7.0%). What additional support or services justify this higher rate?
#5
The transfer fee of $22,500 significantly exceeds the typical range ($7,500-$15,000). Why is this fee so high, and is it negotiable?
#6
Item 19 financial performance data is not disclosed. Can you provide median or average unit volumes, revenue, and profitability data for current franchisees?
#7
With only 11 current units in the system, how are you supporting franchisees' growth and business development? What is the long-term growth strategy?
#8
The renewal conditions are fewer (5) than typical (6.0-9.0). What conditions must franchisees meet to qualify for renewal, and what happens if they don't meet all conditions?
#9
Post-termination non-compete restrictions are 2 years and 25 miles. How is compliance with this restriction monitored and enforced?
#10
The binding arbitration clause requires proceedings in Suffolk County. Why was this specific location chosen, and what are the cost implications for a franchisee in another state?
#11
Personal guarantees and spouse guarantees are required. Are there circumstances where this requirement can be waived, and what specifically does the spouse guarantee cover?
#12
The termination clause allows 10 or 30 days to remedy curable defaults. Can you provide examples of curable versus non-curable defaults and clarify which default category allows 10 days versus 30 days?
#13
How many of the 11 current franchisees have been in the system for less than 3 years, and what is the retention rate for franchisees who complete their first 2 years?
#14
Are there any franchisees who have renewed their initial 10-year term, and if so, how many and what were their outcomes?
#15
What support and training are provided, and is there a difference in support quality or frequency for newer versus established franchisees?
#16
The system has zero litigation history. Is this because disputes are resolved through arbitration without disclosure, or is the system genuinely litigation-free?
#17
What is the minimum territory size, and what geographic areas are currently available for new franchisees?
#18
Can transfer fees be negotiated or reduced if the franchisee is transferring to a family member or existing employee?
#19