Legacy Claims Services

Given the high royalty rate of 15.0% (above industry typical range of 6.0-10.0%) and ad fund rate of 3.0% (above industry typical range of 1.0-2.75%), what is the total ongoing fee obligation as a percentage of gross revenue, and how does this compare to competitors in the claims services industry?

The franchise agreement includes 9 renewal conditions—above the typical range of 5-8 for this type of franchise. What specific conditions must franchisees satisfy to renew, and which conditions might be most challenging to achieve?

The system expanded from zero units 3 years ago to 41 units today, representing 41.4% growth in the past year. What are the franchisor's expansion plans for the next 3 years, and how will rapid growth affect territory encroachment and franchisee profitability?

The territory is protected but not exclusive. Can the franchisor place competitor units or non-competing claims service units in your territory, and under what circumstances might encroachment occur?

The non-compete clause restricts franchisees from competing within 25 miles for 2 years post-term. How is the 25-mile radius measured (from the franchisee's office, territory boundary, etc.), and has the franchisor enforced this clause against former franchisees?

The franchise agreement requires unlimited personal guarantees from all owners with 5% or greater interest. What assets are at risk if the franchisee entity cannot meet obligations, and have any franchisees been required to personally satisfy franchise debts?

Beginning in year two, franchisees must pay minimum monthly royalty fees regardless of revenue performance. What is the minimum monthly royalty amount, and how is this calculated relative to expected earnings in the first year?

With zero litigation cases in the franchisor's history, are there any pending disputes, regulatory inquiries, or complaints filed with state franchise regulators that are not yet captured in official litigation data?

The franchise agreement mandates binding arbitration and waives jury trial rights. In what jurisdiction is arbitration required, and who bears the costs of arbitration proceedings?

All disputes must be resolved through mandatory mediation before binding arbitration. What is the expected timeline and cost for mediation, and are there any documented cases where mediation failed to resolve franchisor-franchisee disputes?

The agreement requires franchisees to purchase products and services only from franchisor-designated or approved suppliers. Can you provide a complete list of mandatory suppliers, their pricing, and whether the franchisor or its affiliates earn revenue from these supplier relationships?

What operational updates or refurbishment investments must franchisees make to renew their agreement, and what is the estimated cost to comply with these renewal conditions?

The transfer fee of $10,000 applies when franchisees sell their unit. Are there any franchisor approval requirements for transfers, and has the franchisor ever rejected a proposed transfer or required additional fees beyond the stated $10,000?

Late payment interest accrues at 1% per month (12% annually). How many franchisees have incurred late payment charges in the past 3 years, and what is the average amount collected?

Can you provide references from at least 10 current franchisees who have been operating for at least 2 years, including their gross revenue, profitability, and experience with the required $5,000 renewal fee?

Item 19 (Financial Performance Representations) is not included in the franchise disclosure. Can the franchisor provide any documented financial performance data, earnings claims, or typical unit economics for similar franchisees?

The franchisor reserves the right to modify operational standards and requirements. What is the process for communicating changes to franchisees, and are franchisees required to invest additional capital to comply with modified standards?

With the system growing 41.4% in one year, how many of the 12 new units are franchised units versus company-owned units, and what is the breakdown between new franchises and multi-unit operator expansions?

The initial franchise fee is $49,900. What does this fee cover (training, software, territory setup, marketing materials), and are there additional startup costs required before opening?

Zero terminations and zero non-renewals have been recorded. Does this indicate that all franchisees who completed their initial 5-year term chose to renew, or are there other reasons for the absence of non-renewal data?