The transfer rate of 16.1% in the past year is more than double the typical range for QSR franchises. Can you explain the reasons behind these 5 transfers and whether they represent growth-driven relocations or other factors?
#1
With zero turnover and zero terminations recorded, how do you define and track franchise exits? Are there unit closures that are categorized differently than the reported metrics?
#2
The transfer fee of $17,500 exceeds the typical range by $2,500-$12,500. How does this fee compare to your internal cost of processing transfers, and is it negotiable under any circumstances?
#3
Your Technology Fee of $108/month is below the typical range for your category. What specific technology services and tools are included in this fee, and does this cover all POS systems, delivery integrations, and customer data platforms?
#4
Financial performance data shows top quartile units grossing over $2.0M annually. What is the typical timeline for a new franchisee to reach top quartile performance, and what percentage of units currently operate above versus below the median?
#5
The franchise agreement includes 13 termination causes, which is below the typical 15-20 range. Can you provide a detailed list of these 13 causes and clarify which are curable versus non-curable?
#6
Renewal requires execution of the current franchise agreement and remodeling to current standards. What is the typical capital investment required for a unit remodel, and are there financing options available?
#7
Your dispute resolution clause requires binding arbitration in Boone County, Missouri, and waives jury trial and class action rights. How often have disputes required arbitration, and what were the typical costs and timeframes?
#8
The franchise agreement requires personal guarantees from franchisees and spouses covering all obligations. Are there any scenarios where personal guarantees can be released or modified after a certain operational period?
#9
You require purchasing products and services only from approved suppliers across 5 categories. Can you provide the full list of approved suppliers and clarify whether competitive pricing is available or if your approved suppliers are exclusive?
#10
With a 10-year initial term and 2 five-year renewals for a potential 20-year relationship, what happens to a franchisee's business at the end of the contract if renewal is denied?
#11
The non-compete clause restricts competition for 2 years within 10 miles post-termination or non-renewal. Are there any geographic or business exceptions to this non-compete, and has it been enforced?
#12
Item 19 shows an average gross sales of $1,368,244 with a median of $1,272,595. What is the average net profit margin after royalties, technology fees, and other ongoing costs for a typical unit?
#13
The system has grown from 28 units (3 years ago) to 32 units today. What is your target system size, and what is your unit growth strategy for the next 3-5 years?
#14
Zero litigation cases reported over 3 years is unusually low for a QSR franchise. Does this include all legal proceedings, arbitrations, and regulatory actions, or are certain categories excluded from this count?
#15
The renewal fee of $8,750 was not clearly addressed in the disclosure. Is this a one-time fee paid at renewal, and does it cover legal/agreement review costs or other services?
#16
Can you provide references for at least 5-10 franchisees who have transferred their units or renewed their agreements, and clarify whether any have departed the system in the past 3 years?
#17
The operational control section mentions franchisor can 'set prices to the extent permitted by law' for approved suppliers. Can you clarify what 'to the extent permitted by law' means and provide examples of price markups applied to franchisee purchases?
#18