REF Global

Can you explain the current litigation case pending against the franchisor and what the specific claims are? When is resolution expected?

Why is the royalty rate of 20% significantly higher than the industry standard of 6-10% for business services franchises? What justifies this rate relative to support and services provided?

The technology fee is $30/month, substantially lower than the typical $100-$500/month for similar franchises. What technology services and support does this cover, and are there additional technology costs not disclosed?

The termination rate of 6.7% exceeds the typical range by nearly double. Can you provide details on why the 1 unit was terminated—what defaults or violations occurred?

What are the renewal terms and conditions if available? The agreement shows an initial 10-year term with no renewal options listed—is the franchise non-renewable, or are renewal terms to be negotiated?

How does the 150-mile non-compete radius compare to actual market territories you operate in? Does this restriction effectively prevent former franchisees from operating competing businesses within a reasonable operating distance?

The non-compete duration is 1 year, significantly shorter than the typical 2 years. Were there disputes over the enforceability of this provision, and does this reflect recent legal changes or negotiated amendments?

Gross sales data shows median revenues of $211,568 and average of $270,047, both below industry standards. Are these figures trending up, down, or stable over the past 3 years? What factors explain the lower-than-average performance?

With 15 units in a 3-year period and no net growth, what is the franchisor's growth strategy? Are new unit development targets in place, or is the system intentionally remaining small?

The transfer fee is $5,000, at the lower end of the typical range. Given the zero transfer rate, what are the barriers to unit transfers, and would reducing the fee encourage existing franchisees to sell rather than exit?

Regarding the mandatory arbitration clause in Miami, Florida—have any of the litigation cases involved disputes over this arbitration requirement? Do you have experience arbitrating franchise disputes in Florida?

The agreement includes 13 non-curable defaults allowing immediate termination. Can you provide examples of what constitutes non-curable defaults and whether these are consistent with industry standards?

Personal guarantees are required from all principal owners without limitation. In the event of franchise termination, what steps have been necessary to enforce personal guarantees against former owners?

The franchisor retains pricing control and can regulate product/service prices. How frequently have pricing controls been exercised, and have franchisees challenged these controls as limiting profitability?

Can you explain the specific circumstances of the 2022 and 2024 unit closures/terminations? Were these closures due to performance issues, default, or operational challenges? Did units remain operational under new ownership?

The system health score is significantly below typical range at 35/100. What specific factors contributed to this low score, and what improvements are underway?

How many of the current 15 franchisees are performing above the median sales figure of $211,568? What is the distribution of unit performance across the system?

The support and training score of 70 is below the typical range of 74-91. What support services are provided beyond what is typical, and what training is available to new franchisees?

Are there any pending or threatened litigation cases beyond the 1 currently listed? Has the franchisor disclosed any claims or disputes in preliminary legal proceedings?

What proportion of your franchisees have renewed or attempted to renew their agreements? Given the fixed 10-year term, how are renewal negotiations structured, and what are typical renewal terms?