The royalty rate of 5.0% is significantly below the industry typical range of 6.0-10.0%. What accounts for this lower rate, and are there plans to adjust it as the system grows?
#1
How does the franchisor define and enforce the 'protected territory' if exclusivity is not guaranteed, and what recourse do franchisees have if encroachment occurs despite protections?
#2
The franchise currently has only 1 unit as of 2024. What is the franchisor's growth plan and recruitment strategy for the next 2-3 years?
#3
Can you provide details on why the franchise system is so early-stage with only 1 operating unit, and how long the franchisor has been operating before franchising?
#4
The non-compete clause restricts franchisees for 2 years within 25 miles. How is the 25-mile radius calculated and measured, and can this be negotiated based on the franchisee's specific territory?
#5
What is the renewal fee amount, and the data shows it equals 25% of the then-current initial franchise fee—can you provide historical examples of how this fee has changed?
#6
The franchise agreement requires personal guarantees from owners and their spouses. Under what circumstances would the franchisor enforce these personal guarantees against individual spouses?
#7
Can you clarify the operational control restrictions on 8 categories of suppliers? Which specific suppliers are mandated, and are there alternative approved vendors or opportunities to negotiate pricing?
#8
The dispute resolution clause requires binding arbitration in Harris County, Texas. If the franchisee is located outside Texas, how will this affect accessibility and cost of dispute resolution?
#9
With zero litigation cases on record, can you provide references from the single existing franchisee regarding their experience with the franchisor and any disputes encountered?
#10
What support and training does the franchisor provide given the very early stage of the system, and are there documented operational standards or training materials available for review?
#11
The technology fee of $100 is listed separately from royalties. What specific technology services, systems, or software are included, and are there any additional technology-related costs not listed?
#12
Can you provide the Item 19 financial performance disclosure document even though it's marked as not available, or explain why financial performance data cannot be provided?
#13
What happens to franchisees' territories if the franchisor terminates the agreement? Are there specific conditions under which termination can occur besides non-compliance?
#14
Given the franchisor maintains control over POS systems and furniture purchasing, what is the total cost of required initial purchases from mandated suppliers?
#15
The non-renewal rate is 0.0% with only 1 unit. What are the specific conditions that would prevent a franchisee from renewing after the initial 10-year term?
#16
How does the franchisor handle disputes related to supplier pricing or mandatory purchases if the franchisee believes pricing is excessive or non-competitive?
#17