Your royalty rate of 4.0% is below the typical 4.5% to 6.0% range for casual dining—what is the rationale, and are there any circumstances under which this rate could increase?
#1
Can you provide details on the 1 closure and 1 termination that occurred in 2022 when you had only 15 units, including the reasons and lessons learned?
#2
Your non-compete radius of 3 miles is significantly narrower than the typical 7.5 to 15 miles for casual dining franchises—how do you protect existing franchisees from encroachment?
#3
The non-compete term of 1 year is half the typical 2-year standard—what happens to franchisees operationally after their franchise ends or is not renewed?
#4
You specify 6 renewal conditions, which is fewer than the typical 7-8 conditions for casual dining—what are these 6 conditions, and how strictly are they enforced?
#5
Your system has grown 40% in the past year and 23.1% over 3 years, which significantly exceeds typical casual dining growth—is this growth sustainable, and what is driving it?
#6
The franchise agreement requires products be purchased only from you or franchisor-approved suppliers—provide a complete list of approved suppliers and explain the approval process.
#7
What is the renewal fee of $17,500 (50% of original fee) based on, and are there any circumstances where this could be negotiated?
#8
How many units have been transferred in each of the past 3 years, and what are the typical reasons franchisees request transfers?
#9
The Support & Training score (83) falls below the typical range (90-100) for casual dining—what specific training and ongoing support are provided, and how frequently?
#10
Can you clarify what 'substantial compliance' means in the 6 renewal conditions, and provide examples of compliance failures that have resulted in non-renewal?
#11
The agreement requires binding arbitration at your headquarters with class action and jury trial rights waived—how many disputes have gone to arbitration, and what were the outcomes?
#12
What are the 8 categories of supplier restrictions referenced in the operational control clause, and how do they impact franchisee costs?
#13
Can you provide the financial performance data (Item 19) showing average unit volumes or gross sales for established franchisees?
#14
How many of the 28 current units are located in company-owned territories versus franchisee territories?
#15
The agreement specifies 8 curable defaults with cure periods of 24 hours to 30 days—provide the full list and explain which have been enforced most frequently.
#16
What are the 7 non-curable defaults that allow immediate termination, and have any terminations occurred under these clauses?
#17
How do cross-default provisions (tied to other franchisor agreements or obligations) affect franchisee operations, and what instances have triggered these?
#18
Given the strong growth trend, what is your unit growth projection for the next 3-5 years, and what geographic markets are you targeting?
#19
Can you explain the discrepancy between your System Health score (75) and Risk Factors score (80)—both outliers—and what specific areas of concern do these reflect?
#20