The franchise fee of $60,000 is approximately 50% higher than the typical range for food & beverage franchises ($30,000-$40,000). What specific services, training, or support justify this above-market fee?
#1
The technology fee of $325/month exceeds the typical range ($75-$300/month) for this category. What specific technology systems and services are included, and what is the justification for the premium pricing?
#2
The system has grown 40% in the past year (4 new units from 10), which is significantly above the typical 0-25% growth for comparable franchises. Are projections for continued growth at this rate built into your business plan, and what risks exist if growth moderates?
#3
The total potential contract term of 30 years (10-year initial + 2 x 10-year renewals) is at the high end compared to typical 15-20 year terms. What are the renewal fee amounts after the initial term, and are there required capital investments or remodeling obligations upon renewal?
#4
Item 19 financial disclosures are available—do these reflect the performance of the 14 units currently in the system, and how many franchisees reported in the most recent disclosure?
#5
Zero terminations and zero transfers have been reported. Are there any disputes, performance issues, or franchisees considering exit that are not reflected in formal terminations or transfers?
#6
The franchisor requires mandatory remodeling and renovation upon renewal. What are the estimated capital requirements for these renovations, and do franchisees have flexibility in design or vendors?
#7
Nine categories of items require approved supplier purchases. Can you provide a detailed list of these categories, the approved suppliers, and examples of markup or pricing differences compared to non-approved alternatives?
#8
The non-compete clause restricts competing businesses for 2 years within 10 miles and prohibits franchising competing businesses anywhere in the United States. How is 'competing business' defined, and has this clause been enforced against former franchisees?
#9
Personal guarantees from all franchisee principals are unlimited in scope, and spouse guarantees are mandatory. What specific debts or obligations can these guarantees cover, and can they extend beyond the term of the franchise agreement?
#10
The cure period for general breaches is 30 days but only 3 business days for POS system access failures. What other defaults have short cure periods, and have any franchisees been terminated without cure opportunity?
#11
The franchisor maintains operational control over pricing. Are there published pricing guidelines, and how much flexibility do franchisees have in setting prices for menu items and promotions?
#12
Net unit growth was 4 units in the past year with zero closures and zero transfers. Have any franchisees expressed interest in selling or has the franchisor received any inquiries about acquisition or buyout?
#13
Median gross sales are $655,034. What is the typical operating profit margin after accounting for royalties, ad fund, technology fees, and cost of goods sold?
#14
The Financial Performance score of 62 is above the typical range (40-60) for this category. What specific factors contribute to this higher-than-typical score, and are there any reported losses or underperforming units?
#15
What is the average unit volume (AUV) for current franchisees, broken down by unit age cohort, and what percentage of units meet or exceed the median gross sales figure of $655,034?
#16
Are there any pending disputes, arbitrations, or negotiations with current franchisees regarding operational standards, supplier disputes, or territory encroachment?
#17
The Investment Cost score of 51 is below the typical range (75) for this category. What is the total initial investment range, including real estate, equipment, inventory, working capital, and contingency, and why does this score fall below expectations?
#18
Has the franchisor modified any terms, fees, or operational requirements within the past 3 years? If so, were existing franchisees required to comply with new terms, or were changes applied only to new franchisees?
#19
The exclusive territory grant includes encroachment protection. What specific triggers or breaches would cause the franchisor to modify or eliminate territorial exclusivity, and has this occurred with any franchisee?
#20