The franchise fee of $19,995 is substantially lower than the typical range of $45,000-$59,900 for this category. What explains this significant difference, and are there any additional upfront costs not reflected in this fee?
#1
Your royalty rate of 10.0% exceeds the typical 6.0-7.0% range. How does this rate structure compare to competitors, and is there flexibility in negotiating this rate?
#2
The system has declined from 31 units to 19 units over 3 years (a -15.06% annual decline). What are the primary reasons for this contraction, and what specific steps is the franchisor taking to stabilize and grow the system?
#3
The 1-year turnover rate of 22.7% is nearly double the typical range. Can you break down the reasons for unit exits in the past 12 months—how many were franchisor-initiated terminations versus franchisee closures?
#4
Nine terminations have occurred over the past 3 years. What are the most common reasons the franchisor has terminated agreements, and what specific performance standards or benchmarks trigger termination?
#5
The non-renewal rate is 9.1%, and renewal requires payment of a $5,000 fee plus remodeling to current standards. How many existing franchisees have opted not to renew, and what are their stated reasons?
#6
Territory is non-exclusive with no encroachment protection. Can the franchisor open additional units or approve new franchisees in your territory, and has this occurred with existing franchisees?
#7
The 2-year/25-mile non-compete applies to 'all other system locations.' How many system locations currently exist within the 25-mile radius of a typical franchise territory, and could this radius expand if the system grows?
#8
Item 19 financial data shows median gross sales of $416,288 and average gross sales of $560,899. How many units contributed to these figures, and what is the range of performance (top 25% vs. bottom 25% of units)?
#9
The franchisor charges a $295 monthly technology fee plus a 2.0% ad fund. What technology services and marketing support are included, and are these costs mandatory or optional?
#10
Personal guarantees from principals and their spouses are required with joint and several liability. Are there any circumstances under which the franchisor would release spouses from personal liability?
#11
Termination events include 18 non-curable defaults that result in immediate termination. Can you provide a complete list of these triggers, and how would a franchisee be notified of potential non-compliance before termination?
#12
The late fee is the greater of $250 or 10% of overdue amounts, with 18% annual interest. Have these penalties been enforced against franchisees, and are there any hardship provisions?
#13
Minimum performance requirements exist as either minimum royalty payments or per-transaction fees. What are these minimums, and what percentage of current franchisees are meeting them?
#14
The franchise agreement requires use of franchisor-specified brands and approved suppliers. Are these suppliers exclusively designated by the franchisor, and what percentage of costs do approved supplier products represent?
#15
Support & Training scores 78, below the typical 79.0-90.0 range. What initial training is provided, how long does it last, and what ongoing support or continued education is available?
#16
System Health scores only 1/100. What specific metrics does this reflect, and what operational or contractual issues is the franchisor aware of?
#17
Risk Factors scores 46/100, below the typical 58.0-76.0 range. What are the primary risks identified in this system, and how does the franchisor plan to mitigate them?
#18
Has the franchisor conducted any audits or inspections of franchisee operations, and what remediation steps are required if deficiencies are found?
#19
Are there any pending disputes or complaints filed with state franchise regulators, even if not reflected in formal litigation data?
#20