Signal 88

The franchise fee of $150,000 is significantly higher than the typical range of $31,125-$50,000. What specifically is included in this higher initial investment, and how does it compare to competitors in the business services security sector?

Ad fund rate of 5.0% is more than double the typical range. How is this fund used, and can you provide documentation of ad spend allocation and ROI metrics from the past 2 years?

Transfer rate of 20.0% is four times higher than the typical range. Are these transfers primarily driven by franchisee choice or franchisor-encouraged transitions? What is the typical reason franchisees request transfers?

Closures increased from 11 units in 2022 to 63 units in 2024. What percentage of these closures are attributed to franchisor terminations versus voluntary closures, and what are the primary reasons cited for each?

You have 2 pending litigation cases. Can you provide a summary of the nature and status of these cases, and what they involve (franchisee disputes, trademark issues, regulatory matters, etc.)?

You have been plaintiff in 2 cases and defendant in 2 cases over the past 3 years. What were the outcomes of the cases where Signal 88 was the plaintiff, and what is your success rate in recovering judgments?

The initial contract term is only 3 years versus the typical 5-10 years. What is the renewal process, and what are the typical outcomes when franchisees approach renewal—do most receive new contracts under similar terms?

Non-compete restriction of 75 miles is substantially broader than typical. Can you explain the rationale, and has this restriction been enforced through litigation? If so, what were the outcomes?

The 2-year non-compete extends 2 years post-termination. For franchisees who exit before the 3-year initial term ends, how are the non-compete obligations modified or pro-rated?

Your transfer fee is $30,000, significantly above typical levels. What does this fee cover, and are there circumstances where it is waived or reduced?

Transfer rate of 20.0% is very high. What is the average time between unit purchase and transfer request, and what percentage of franchisees request transfers before the end of their initial 3-year term?

You have no encroachment protection clause despite offering exclusive territory. What prevents the franchisor from opening new units nearby or adding franchisees that compete with existing territory holders?

Can you provide Item 19 financial performance data showing the number of units reporting, average unit volumes broken down by year of operation, and whether top performers are represented proportionally?

Minimum revenue performance requirements are specified in Exhibit D. What happens if a franchisee falls short of these minimums, and are there consequences beyond non-renewal?

Late payments accrue interest at 25% per annum. Have franchisees challenged this rate as potentially exceeding state usury laws, and has this been litigated?

You require purchases from only franchisor-approved suppliers across 6 categories. Can you disclose whether the franchisor or its affiliates profit from these supplier relationships, and what are the markup percentages?

Personal guarantees are required from all beneficial owners and the franchisee's spouse. Can you clarify whether spouses remain personally liable even if they are not actively involved in the business?

Dispute resolution requires non-binding mediation first at the franchisor's option. If mediation fails, can the franchisee immediately proceed to arbitration, or does the franchisor retain the ability to delay arbitration?

System grew 55.3% in one year from 1,059 to 1,645 units. What is the primary driver of this growth—new franchisees or acquisitions—and what is your target unit growth rate for the next 3 years?

Median unit sales of $1,533,692 are strong, but what percentage of franchisees fall below the median, and what is the profitability after accounting for all fees, royalties, and ad fund obligations?