Perkins Restaurant & Bakery

Of the 4 litigation cases initiated against Perkins in the past 3 years, what were the specific claims and outcomes? What is the nature of the 1 currently pending case?

The system contracted by 15 units over 3 years (2.3% annual decline). Can you provide details on the primary reasons for closures—were they franchisor-initiated terminations, franchisee non-renewals, or voluntary closures due to profitability issues?

Your technology fee of $850 monthly significantly exceeds the typical range of $75-$300 for full-service restaurants. What specific systems and services does this fee cover, and is it subject to increases?

Financial performance data shows median unit volume of $1.93 million, well above category norms. How many units are actively reporting sales figures in your Item 19, and what percentage of your 257 units fall below the median?

The initial franchise term of 20 years is nearly double the typical 7.75-10 year range. What happens at renewal if a franchisee wishes to continue but Perkins declines renewal—is there a buyout or exit obligation?

Renewal requires payment of $10,000 (25% of initial fee) plus compliance with 6 renewal conditions. What are these specific conditions, and how frequently are renewals denied based on franchisee non-compliance?

Your royalty rate of 4.0% is below the typical 5.0-6.0% range. Has this rate been consistent throughout the franchise's history, or has it changed? Are there any circumstances under which it could increase?

The transfer rate spiked from 2 units in 2022 to 9 units in 2024. What is driving this increase in unit transfers? Are these transfers to new franchisees or back to Perkins?

Your non-compete clause is 2 years and 5 miles. How is the 5-mile radius determined—from the franchisee's location, the franchisor's headquarters, or each unit? Are there any exceptions for seasonal closures or temporary relocations?

Personal guarantees are required from both franchisee and spouse regardless of spouse ownership interest. What happens to the spouse's guarantee if the franchisee transfers the unit to a new owner?

The franchisor can terminate for defaults with cure periods ranging from 3 to 10 days depending on the default type. What constitutes each category of default, and can you provide examples of defaults with only 3-day cure periods?

Can you detail the cross-default provisions mentioned in the termination clause—specifically, which other agreements with Perkins or its affiliates could trigger termination of the franchise agreement?

All fixtures, equipment, and approved suppliers must be sourced through franchisor-approved channels. What is the process for requesting supplier approval, and can franchisees appeal denials? What percentage of operating costs typically go to approved suppliers?

The bottom quartile of units still generates $1.05 million in annual sales. What are the operating margins for units in this quartile, and are they profitable after accounting for the cost structure?

Item 19 provides sales data, but what other financial metrics are disclosed—specifically, operating expenses, labor costs, and net profit margins for reporting units?

Has Perkins implemented any initiatives to reverse the 3-year unit decline, such as modernization programs, menu updates, or operational support improvements? What is the franchisor's growth strategy going forward?

Given the 4 pending and recent litigation cases, what categories of claims are driving the disputes—breaches of franchise agreement, royalty disputes, non-renewal denials, or other issues?

For franchisees looking to exit before the end of the initial 20-year term, what are the financial and legal obligations? Is there a buyback program or accelerated exit mechanism?

The termination rate is only 0.6%, but the overall exit rate is 4.4%. This suggests most exits are voluntary (closures, transfers, non-renewals). Are voluntary exits increasing, and what are the primary stated reasons franchisees cite when leaving?

How many franchisees have renewed their agreements to date, and what percentage of renewals have been denied due to non-compliance with renewal conditions?