Can you explain the increase in unit closures from 7 in 2022 to 15 in both 2023 and 2024? What factors contributed to this acceleration?
#1
Of the 15 closures in 2024, how many were due to franchisee financial failure versus strategic decisions to exit the business?
#2
The system lost 4 net units in the past year despite having 165 current franchises. What is your growth strategy to reverse this negative trend?
#3
Why is the transfer fee $20,000, which exceeds the typical range of $5,750-$15,000 for pet service franchises? What justifies this premium?
#4
Your royalty rate of 5.0% is below the typical 6.0-7.0% range. Does this lower rate reflect competitive positioning, or are there other mandatory fees franchisees should expect?
#5
The franchise agreement allows termination with only 5 days cure for payment defaults. Can you provide specific examples of when this provision has been exercised?
#6
Your non-compete clause covers 30 miles for 2 years post-termination. How is this enforced, and have there been any disputes over this restriction?
#7
The renewal conditions require mandatory refurbishment and eight specific conditions to be met. What is the typical cost of meeting these renewal requirements?
#8
Item 19 shows average gross sales of $545,417, but the median is $482,007—a $63,000 gap. Can you explain this variance and provide the range of unit profitability?
#9
How many of the 15 units closed in 2024 were franchises that had recently renewed or transferred? Does contract history correlate with closure risk?
#10
The minimum performance requirement mandates $1,000 per quarter spending on private label products. How many franchisees fail to meet this requirement annually, and what are the consequences?
#11
Late fees are the greater of $50 or 5% of amounts due, plus 1.5% monthly interest. Can you provide data on how frequently late fees are assessed and collected?
#12
Your Support & Training score is 100 (the highest possible), yet the system shows a 8.9% annual turnover rate. What specific training or support gaps have you identified from exiting franchisees?
#13
The total potential contract term is 10 years, which is below the typical 12.5-20.0 year range for pet franchises. Why is the renewal term also limited to 10 years rather than offering longer-term security?
#14
Encroachment protection is listed as true, but territory is not exclusive. Can you clarify how franchisees are protected from internal competition within their protected territory?
#15
Has the franchisor exercised its right of first refusal on any unit transfers? If so, what was the franchisor's plan for those units?
#16
What percentage of the 2022-2024 closures involved franchisees who had complained about support or system issues prior to exit?
#17
With a System Health score of 39 (below the typical 50-75 range), what specific operational or financial metrics are concerning, and what corrective actions are underway?
#18
Can you provide a breakdown of the 'Ceased Other' category that accounts for 30 units over 3 years—what circumstances classify units in this category?
#19
Are there any pending or anticipated litigation cases not yet filed that franchisees or former franchisees have threatened that we should be aware of?
#20