Why is the monthly technology fee of $1,000 approximately double to ten times the typical range for coffee franchises, and what specific services or systems does this cover?
#1
Can you provide detailed explanations for the 4 unit transfers in 2021 and 4 transfers in 2023? Were these voluntary sales, franchisor-assisted transitions, or related to financial difficulties?
#2
The transfer rate of 13.3% is more than double the typical range for your category. Is this reflective of a business model that encourages franchisee exit through transfer, or are there specific operational challenges driving transfers?
#3
How have you achieved 50.0% net unit growth in 1 year while maintaining zero closure and zero termination rates? What percentage of new units are company-owned versus franchised?
#4
The non-compete clause prohibits any business featuring roasting or coffee products within 2 years and 25 miles. Can you provide examples of how this has been enforced and any disputes that have arisen?
#5
You offer three 10-year renewal terms for a total potential 40-year relationship, which is significantly longer than typical for your category. What conditions must franchisees meet to qualify for each renewal, and how frequently do franchisees actually renew?
#6
The franchisor has the right to establish maximum and minimum retail prices. What is the typical retail price range for your core products, and how much pricing flexibility do franchisees have?
#7
Transfer requires approval and franchisor compliance with 10 specified conditions. Can you provide the complete list of these 10 conditions and clarify how frequently franchisor approval is granted or denied?
#8
The franchisor retains a 60-day right of first refusal on any ownership transfer. How many times has the franchisor exercised this right, and under what circumstances?
#9
Coffee beans must be purchased exclusively from the franchisor or affiliates. What is the typical cost of beans as a percentage of revenue, and how do your prices compare to open-market alternatives?
#10
All disputes require mandatory binding arbitration in Davidson County with class action and jury trial waivers. What is the typical cost and duration of arbitration cases within this franchise system?
#11
Personal guarantees are required from all owners. Does this apply to corporate franchisees, and are there any circumstances where personal guarantees can be waived or limited?
#12
Franchisees must indemnify the franchisor for all costs of defense and resolution of claims arising from ownership operation. Can you provide examples of claims that have triggered indemnification and typical cost amounts?
#13
What is the median and average net profit (not just gross sales) reported by franchisees on Item 19, and how many franchisees are currently profitable?
#14
With 13 unit transfers in 3 years, can you identify any geographic patterns, unit size categories, or operational metrics associated with franchisees who choose to transfer?
#15
The Investment score falls below the typical range despite a $39,000 franchise fee. What additional capital requirements are not reflected in the franchise fee, and what is the typical total investment needed to open and operate a unit?
#16
Have any franchisees filed disputes, grievances, or complaints with state franchise regulatory authorities, even if no formal litigation resulted?
#17
What is the average unit volume for transferred units compared to current operating units, and are transferred units performing better or worse than average?
#18