Kung Fu Tea

The royalty rate of 4.0% is below the typical 5.0-6.0% range for this category. Are there any circumstances under which the royalty rate could increase, or is this rate guaranteed for the contract term?

Transfer fees are $5,000, significantly below the typical $8,750-$20,000 range. What is the rationale for the lower transfer fee, and does the franchisor view this as a strategic incentive or cost recovery method?

The franchisor initiated 1 litigation case in the past 3 years, which is atypical for this category. What was the nature of this case, and has it been resolved or is it still pending settlement?

Unit closures increased from 9 in 2022 to 28 in 2024, more than tripling in 2 years. What factors does the franchisor attribute to this increase, and what support is being provided to existing franchisees to reverse this trend?

The contract includes 27 non-curable termination causes, significantly above the typical 14-23 range. Can you provide a complete list of these 27 causes and clarify which are within franchisee control versus external factors?

The contract offers a 30-year total potential term (initial 10 years + 2 renewals of 10 years), above the typical 20-year range. Why is the contract term extended beyond industry norms, and what are the renewal conditions that must be met?

The territory is marked as protected but not exclusive. What specific protections exist against franchisor-owned or other franchisee locations in my protected territory, and what distance minimum is maintained?

Renewal requires meeting 8 specific conditions. Can you provide the complete list of these renewal conditions and clarify what benchmarks (sales, customer satisfaction, compliance scores) must be achieved?

The agreement requires purchasing 5 categories of products from approved suppliers, specifically franchisor affiliates. What are the markup percentages on these required purchases, and are there price caps or competitive bid requirements?

Personal guarantees are required from all equity owners, with discretion to require spouse guarantees. Under what circumstances would the franchisor require spouse guarantees, and are there alternatives to personal guarantees for investors?

The agreement waives jury trial and class action rights, requiring individual litigation. Has this dispute resolution structure affected any prior disputes, and what are the typical legal costs franchisees have incurred in conflicts with the franchisor?

In 2023, there were 18 units marked as 'ceased other'—significantly higher than 2022 and 2024. What does 'ceased other' mean, and why did this category spike in 2023?

The technology fee is $108 monthly. What specific technology services and platforms does this cover, and are there opportunities to negotiate or remove this fee based on volume or performance?

With a termination rate of 0.0% in the past year, does this mean the franchisor has not terminated any franchisees, or that franchisees chose to exit voluntarily? Please clarify the distinction in your records.

The non-compete is 2 years / 5 miles. Does this apply only to the franchisee or also to employees, and are there geographic or product line exceptions to this non-compete?

The Territory Score is 50, below the typical range of 60-90. What specific factors contributed to this lower score, and what territory protections are lacking compared to other franchises in the category?

The Litigation Data shows the franchisor as plaintiff in 1 case. Was this case against a franchisee, supplier, or other party, and what was the outcome?

The Investment Costs Score is 82, above the typical 75.0. Does this reflect the $37,000 franchise fee, or are there additional investment costs not captured in the fee structure?

With a 5-day cure period for payment defaults versus 30 days for material defaults, how much time does the franchisor typically allow before legal action begins, and are there circumstances where cure periods are waived?

The franchisor has discretion to require suppliers or other third parties be indemnified by franchisees. Beyond the franchisor, who else can be named in indemnification claims, and what costs have franchisees typically borne under these provisions?