The technology fee of $700 monthly significantly exceeds the typical range for health and beauty franchises. What specific technology services and platforms does this fee cover, and are there options to reduce or customize this cost?
#1
Your Item 19 shows median gross sales of $2,474,117, substantially higher than typical for your category. Can you provide context on whether these 3 reporting units represent the typical performance across your system, or are they high-performing outliers?
#2
The contract specifies 24 non-curable default categories compared to only 2 curable defaults. Can you provide a complete list of these 24 default categories and clarify which specific behaviors would result in immediate termination without cure period?
#3
The post-termination non-compete restricts franchisees from providing behavioral therapy services within 20 miles for 24 months. How is compliance monitored, and have there been any disputes regarding the breadth or enforceability of this restriction?
#4
Given that your system has only 3 units with zero growth over 3 years, what is your strategy for expanding the franchise network, and why has growth been flat during this period?
#5
The dispute resolution clause mandates binding arbitration in Virginia with no appeal rights and waives class action and jury trial rights. Why was Virginia selected as the arbitration venue, and are franchisees permitted to negotiate this term?
#6
Your agreement requires personal guarantees from all principals and their spouses. Are there any circumstances under which the franchisor would consider limited guarantees or corporate-only guarantees for franchisees?
#7
The renewal conditions require franchisees to meet 7 performance standards to renew. What happens to franchisees who substantially meet but do not fully satisfy all 7 renewal conditions—is there room for negotiation or renewal denial?
#8
Your operational control clause permits the franchisor to set maximum prices for products and services across 7 categories. Can you provide examples of how price caps have been applied historically and whether franchisees have input on pricing decisions?
#9
The franchise has zero litigation cases and zero terminations recorded. Have you ever initiated disputes against franchisees that were resolved outside formal litigation, or have franchisees ever voluntarily exited without formal termination?
#10
Can you provide detailed financial statements for each of the 3 franchisees, including information on how many achieved the median sales of $2,474,117 versus underperforming units?
#11
The transfer fee is $10,000 and renewal fee is also $10,000. Are these fees non-refundable, and what specific services or processes do these fees cover?
#12
With only 3 units in your system, what is the minimum capital requirement to launch a new unit, and are there economies of scale or volume pricing benefits available to future franchisees?
#13
The non-compete clause is 2 years and 20 miles. Is this restriction enforceable in all states where you operate, and have you considered geographic variations based on state law?
#14
Your ad fund rate is 1.0%. How is this fund managed, what advertising initiatives are funded, and do franchisees have visibility into spending and ROI metrics?
#15
Can you explain why the bottom quartile sales ($1,398,165) are significantly above the typical range for your franchise type? What factors contribute to strong performance even for lower-performing units?
#16
The agreement includes 7 categories for approved supplier mandates. Will you provide a complete list of approved suppliers, their pricing, and whether franchisees can request exceptions for alternative vendors?
#17
Given that all disputes require binding arbitration in Virginia, what are the estimated costs for arbitration, and will the franchisor cover arbitration expenses in cases where the franchisee prevails?
#18