The Franchise Fee of $60,000 exceeds the typical range for this category. What specific training, equipment, or initial setup costs does this higher fee cover compared to competitors?
#1
Your Royalty Rate of 4.0% is below the typical range of 5.0%-6.0%. Are there any conditions or unit performance thresholds that could trigger higher royalty rates?
#2
The Transfer Fee of $5,000 is significantly lower than the typical range of $8,750-$20,000. Are there any additional costs, administrative fees, or franchisor approval conditions associated with unit transfers?
#3
Your agreement includes 26 non-curable defaults allowing immediate termination. Can you provide a detailed list of these 26 defaults and explain which are most commonly cited as termination grounds?
#4
Only 3 defaults are curable with a 30-day cure period according to the termination clause. What are these 3 curable defaults, and are franchisees notified in writing before the cure period begins?
#5
The agreement requires mandatory remodeling and refurbishment for renewal at the franchisee's expense. What is the typical cost range for this renewal remodeling, and are there specific design or equipment requirements?
#6
Franchisees must purchase 5 categories of supplies exclusively from 334 Ellery Inc. (franchisor's affiliate). What is the markup on these exclusive products compared to market prices, and can franchisees request alternative suppliers?
#7
Your Territory Score is 100, above the typical range of 60-90. Does this reflect guaranteed exclusive territory protections, and what happens if the franchisor opens a company-owned unit within the franchisee's territory?
#8
The Investment Cost Score is 57, significantly below the typical 75. What is the total initial investment range including franchise fee, equipment, buildout, and working capital?
#9
One unit transfer occurred in 2024 with a transfer rate of 7.7%, above the typical range. Can you provide details on why this unit transferred and whether the buyer was approved by the franchisor?
#10
The Ongoing Fees Score is 67, slightly above the typical 62. Beyond the 4.0% royalty and 3.0% ad fund, are there any other mandatory fees (renewal, technology, compliance, training, etc.)?
#11
The $10,000 renewal fee is required upon meeting 8 specified conditions. Can you itemize all 8 renewal conditions and clarify what happens if a franchisee fails to meet any single condition?
#12
Your agreement includes class action and jury trial waivers with disputes resolved individually in federal or state court at your location. How many disputes have arisen in the past 3 years, and what were the outcomes?
#13
Personal guarantees are required from all owners, with spousal guarantees at your discretion. Under what circumstances does the franchisor exercise the option for spousal guarantees?
#14
The indemnification clause covers all costs related to franchisee operations. Can you provide specific examples of costs the franchisor has charged to franchisees under this indemnification provision?
#15
With 13 total units and zero closures or terminations, what is the average unit volume or revenue for a Prince Tea House location, and how does this compare to franchisee expectations?
#16
Can you provide the Franchise Disclosure Document (Item 19) with historical earnings or sales data for existing franchisees?
#17
The system has remained at 13 units for the past year. What is the franchisor's growth strategy, and how many new unit openings are projected over the next 3-5 years?
#18
Given the 2-year, 5-mile non-compete clause, what geographic restrictions apply if a franchisee chooses not to renew or if their franchise is terminated?
#19
Are there any affiliate relationships beyond 334 Ellery Inc. for required purchases, and what percentage of ongoing costs go to franchisor affiliates versus independent suppliers?
#20