Port of Subs

The ad fund rate of 1.0% is significantly lower than the typical 2.0-4.0% for quick service restaurants. What specific marketing initiatives does this fund support, and has the franchisor considered increasing contributions to match category norms?

Your technology fee is $0 compared to the typical $110-$408 monthly for this category. How does the franchisor provide essential point-of-sale systems, online ordering platforms, and inventory management technology without a dedicated technology fee?

Gross sales figures are substantially below category averages ($551,542 vs. typical $852,190-$1,615,336). Can you provide insights into whether this is due to unit size, location strategy, market conditions, or operational performance factors?

The non-compete radius of 2 miles is below the typical 5-10 miles. What is the rationale for this narrower restriction, and how does it protect franchisees from nearby encroachment?

The contract contains 25 termination causes compared to the typical 15-20. Can you provide a detailed list of these causes and clarify which are non-curable defaults requiring immediate termination versus curable defaults with grace periods?

Your 3-year compound annual growth rate is -1.5%, indicating unit decline from 132 to 126 units. What factors drove this contraction, and what strategies are in place to return the system to growth?

Transfer rates are at 7.1%, the upper boundary of the typical range. Are high transfers voluntary (franchisees seeking new ownership) or are they franchisor-managed transitions? What is the approval process for franchise transfers?

Median gross sales of $512,334 are approximately 37% below the category typical range. Are franchisees meeting profitability targets despite lower gross sales, and what is the average net profit margin for reporting units?

The franchise agreement contains a personal guarantee with potential spousal/family member signature requirements. Under what circumstances would the franchisor require multiple family members to sign, and are there alternatives to full personal guarantees?

With 25 termination causes, which are the most frequently cited reasons for franchisor termination, and can you provide 3-year termination data broken down by cause?

The territory is protected but not exclusive. Can the franchisor open additional Port of Subs locations within your territory, and if so, under what conditions or performance metrics?

Renewal requires payment of 25% of the then-current franchise fee plus mandatory facility upgrades. Can you provide examples of typical upgrade costs franchisees have incurred at renewal?

The binding arbitration clause requires resolution in federal or state court in California. For franchisees located outside California, what are the cost implications of this dispute resolution requirement?

What specific products and supplies does the franchisor require franchisees to purchase from approved suppliers, and does the franchisor receive rebates or revenue sharing from these suppliers?

Can you clarify the 25 non-curable default events mentioned in the termination clause? Which operational or financial metrics trigger immediate termination without a cure period?

Given the 6 closures and 14 transfers in 2022, followed by stabilization in 2023-2024, what operational or market changes did the franchisor implement to achieve stabilization?

The renewal conditions mention 9 specified requirements. Beyond facility upgrades and franchise fee payment, what other conditions might prevent renewal, and how frequently are renewals denied?

Are there any pending or threatened litigation cases not yet reported in the 3-year data, and has the franchisor faced regulatory actions or complaints from franchisees or health departments in the past 5 years?

What is the average unit volume (AUV) for each unit quartile, and what is the primary driver of the wide disparity between top quartile ($856,601) and bottom quartile ($325,117) sales?

Does the franchisor offer any financing programs or SBA loan assistance, and what is the typical franchisee investment breakdown between franchise fee, equipment, buildout, and working capital?