Can you provide documentation explaining why the system experienced zero turnover, closures, terminations, and transfers over the past 3 years? This appears inconsistent with typical restaurant franchise patterns.
#1
What is the basis for the 65.1% three-year compound annual growth rate? How many of the 9 current units are franchisee-operated versus company-owned?
#2
The technology fee of $500/month is significantly higher than the typical range ($110-$408/month) for quick service restaurants. What specific systems, services, and software are included in this fee, and are there any additional technology costs not listed?
#3
You mention Item 19 (Financial Performance) is not included in the Franchise Disclosure Document. Will the franchisor provide audited financial statements, average unit volumes, or profitability data from existing franchisees before I commit?
#4
The non-compete radius of 25 miles exceeds the typical range (5-10 miles). How is this geographic restriction enforced, and what would prevent me from operating a competing business outside this radius after my franchise ends?
#5
Renewal requires satisfaction of 10 conditions. Beyond the mentioned compliance and 18-month improvement items, what are all 10 renewal conditions, and how subjectively are they assessed by the franchisor?
#6
The franchise agreement includes franchisor right of first refusal on any transfer. If I wish to sell my unit, what timeline must the franchisor follow to exercise this right, and what happens if they decline?
#7
All disputes must be resolved through arbitration in Los Angeles County, California. If a dispute arises, who bears the costs of arbitration, and can I appeal an arbitrator's decision?
#8
Personal guarantees are required from all owners and their spouses. If the franchise underperforms, could my spouse's personal assets be at risk for franchise obligations they did not personally incur?
#9
You require purchase of approximately 10 categories of source-restricted goods and services from approved suppliers. Can you provide a detailed list of these approved suppliers, the markup percentages, and whether franchisees can request supplier alternatives?
#10
Given the system is only 3 years old with just 9 units, what is your timeline for national expansion, and how will this affect territory protection and encroachment in my protected area?
#11
What support and training are provided post-opening? Given your Support & Training score of 86 is below the category average (90-100), what specific gaps exist in ongoing support compared to competitors?
#12
Can you provide references from all 9 existing franchisees, including their unit sales, profitability, and candid assessments of franchisor support and any contractual disputes?
#13
What is your average unit economics assumption for break-even and profitability? How long do franchisees typically take to recover their initial investment?
#14
The franchise agreement has an Investment Cost score of 79, above typical range. Besides the $30,000 franchise fee and startup costs, what hidden or unanticipated costs should I expect?
#15
How is the 4.0% advertising fund calculated and spent? Can franchisees see an itemized annual accounting of ad fund expenditures, and do they have any voice in marketing strategy?
#16
Transfer restrictions require prior written consent. Under what circumstances would the franchisor deny a transfer request, and is there a cap on transfer fees or conditions?
#17
The franchise agreement scores 4/5 on operational control regarding source-restricted suppliers. What percentage of my revenue is typically directed to franchisor-approved suppliers versus independent vendors?
#18