Given average gross sales of $1.74M are above the category typical range, what percentage of franchisees in your network achieve sales within this upper range versus below the median of $1.34M?
#1
The non-compete restriction is 1 year and 10 miles—significantly narrower than the category typical range of 2 years and 20-46 miles. What is the rationale for these narrower restrictions, and how does this affect your ability to prevent former franchisees from competing?
#2
With 10 renewal conditions (above the typical 6-8), can you provide a detailed list of all 10 conditions and explain which conditions are most frequently cited as reasons for non-renewal or failed renewals?
#3
Your total potential contract term is 25 years (exceeding the typical 20 years)—can you clarify the specific conditions required for each of the 3 renewal options and whether franchisees have any right to renew versus franchisor discretion?
#4
The renewal fee of $4,950 is calculated as 10% of the 'then-current initial franchise fee'—has the initial franchise fee changed historically, and can you provide examples of renewal fees paid by franchisees in previous renewal cycles?
#5
Despite zero litigation cases on record, can you provide details on any disputes, complaints, or regulatory inquiries involving franchisees that may not have resulted in formal litigation?
#6
With 9-11 closures annually, what are the primary reasons franchisees are closing or transferring their units? Are there specific geographic or demographic factors driving these exits?
#7
The personal guarantee clause requires owners and spouses to guarantee all franchise obligations—are there any circumstances under which personal guarantees can be waived or limited?
#8
You require franchisees to purchase only from a Required Suppliers List with maximum price restrictions—can you provide the current list of approved suppliers and examples of the price controls applied?
#9
What specific training and support services does your 95/100 Support & Training score reflect, and how frequently are franchisees provided with ongoing operational guidance after launch?
#10
Among the 551 current units, how many were originally opened in the past 5 years, and what is the average unit tenure across your entire franchise system?
#11
Can you clarify the indemnification clause requiring franchisees to indemnify the franchisor 'against all losses, costs, claims, and damages'—are there any exclusions for franchisor negligence or breach of contract?
#12
With transfer fee of $24,500, does this fee apply whenever ownership changes hands, and are there circumstances where the fee can be waived or negotiated?
#13
What percentage of your 551 units are company-operated versus franchisee-operated, and how do their financial performance metrics compare?
#14
The financial performance data (Item 19) shows median and average gross sales—can you break down net profit margins and operating expenses so prospective franchisees understand actual profitability?
#15
Given the 4.5% annual transfer rate, can you provide data on how long franchisees typically hold their units before transferring, and what percentage of transfers are approved versus denied?
#16
With encroachment protection in exclusive territories, what is your process for evaluating whether a new unit would encroach on an existing franchisee's territory, and are there any circumstances where you would allow encroachment?
#17
The operational control clause mentions 5 categories of supplier restrictions—can you list these 5 categories and explain whether franchisees have any input in supplier selection or pricing negotiations?
#18
How many of the 551 current units have been through at least one renewal cycle, and what percentage successfully renewed versus were not renewed or terminated?
#19