Given the 3-year initial term and 3-year total potential term, significantly below the typical 10-20 year range for Health & Beauty franchises, what is the franchisor's renewal track record and renewal conditions for franchisees completing their initial term?
#1
Why does the franchise offer no automatic renewal right and instead require renegotiation of terms at expiration? Under what circumstances would renewal be denied?
#2
The Royalty Rate of 3.0% is below the typical 6.0-7.0% range. Does this lower rate reflect reduced franchisor support, and what is included in ongoing support over the 3-year term?
#3
The Technology Fee of $100/month is substantially below the typical $165-$427.50 range. What technology services and systems are included, and are there mandatory technology upgrades or additional fees that could increase this cost?
#4
The Franchise Fee is $15,000, significantly lower than the typical $39,500-$54,625 range. Does this lower initial investment reflect reduced training, site selection, or pre-opening support?
#5
The Ad Fund Rate of 3.0% is above the typical 1.0-2.5% range. How is this fund used, and can franchisees see a breakdown of spending and ROI on advertising campaigns?
#6
Why is territory non-exclusive with no encroachment protection? Does the franchisor reserve the right to open additional Jung Kwan Jang units within a franchisee's operating area?
#7
What specific circumstances led to the 1 closure and 1 termination in 2022? Were these voluntary closures or franchisor-initiated terminations, and what were the underlying causes?
#8
The Financial Performance Score is 40/100, below the typical 53-60 range. Does the franchisor provide Item 19 earnings claims or unit-level financial data to demonstrate profitability?
#9
The Territory Score is 50/100, below the typical 75-85 range. Can you explain what specific territory protections or lack thereof contribute to this lower score?
#10
The contract requires binding arbitration with class action waiver and jury trial waiver. Have there been any disputes resolved through arbitration, and what were the outcomes?
#11
Operational control requires purchases from approved suppliers only. Which suppliers are pre-approved, what products are mandatory purchases, and how are pricing and terms for supplier relationships determined?
#12
The 2-year, 20-mile non-compete clause applies after franchise termination or expiration. Has this clause been enforced, and are there documented cases of franchisees operating competing businesses after exiting?
#13
What is the average unit volume (AUV) or typical revenue range for Jung Kwan Jang franchisees, and how many units are currently profitable?
#14
The Net Unit Growth is modest (1 unit increase over 1 year, 2 units over 3 years). What is the franchisor's growth strategy, and why is expansion slow relative to other Health & Beauty franchises?
#15
Are there any pending or threatened litigation cases not reflected in the 3-year data, or any regulatory investigations by state attorneys general or the FTC?
#16
How many of the current 36 units are company-owned versus franchisee-owned, and what is the franchisor's investment level in direct operations?
#17
The renewal fee is $0. Are there any other fees assessed at renewal, such as system upgrades, re-training, or facility improvement requirements?
#18
What support and training does the 3-year term include, and what additional services or training become available only through paid add-ons after the initial term?
#19
Given the short 3-year term, how are multi-year marketing campaigns, build-out investments, or large equipment purchases justified by franchisees?
#20