Given the pending litigation case initiated by the franchisor, what are the specific claims and what is the expected timeline for resolution?
#1
The system has only 2 units currently. What is the franchisor's growth strategy and timeline to expand the system, and how will this affect territory protection for existing franchisees?
#2
Can you explain why the technology fee is $0 monthly when comparable QSR franchises charge $110-408? What technology systems are included in the royalty rate?
#3
The agreement lists 24 termination causes (above typical), which include 14 non-curable defaults. What are the most frequently invoked termination causes, and how many franchisees have been terminated to date?
#4
Several cure periods for defaults are as short as 24 hours. Can you provide examples of which defaults have 24-hour cure periods and explain the operational feasibility?
#5
The renewal conditions count is 6, below the typical range. Specifically, what are these 6 conditions and what percentage of franchisees have successfully renewed to date?
#6
Since there have been zero exits across 3 years, can you provide data on franchisee profitability and satisfaction? Are existing franchisees meeting their financial targets?
#7
The franchise requires personal guarantees from both the franchisee and spouse without limitation. How does this differ from your typical franchise offering, and why is this required?
#8
The non-compete clause is 2 years within 10 miles. How is this enforced, and are there any cases where former franchisees have violated this covenant?
#9
Why is territory not exclusive despite being protected? What specific protections exist beyond protection, and can the franchisor open competing units nearby?
#10
All disputes must be resolved through binding arbitration in Carson City, Nevada, with class actions waived. What is the average cost and timeline for arbitration claims based on your dispute history?
#11
Can you provide Item 19 (financial performance representations) for existing franchisees? Without this, what sales, revenue, and profit data can you share from your 2 current units?
#12
The investment score of 79 is above typical range. What is the total initial investment including real estate, equipment, working capital, and all fees?
#13
Why does the support and training score of 89 fall below the typical range of 90-100? What specific training gaps exist compared to similar franchises?
#14
The franchisor restricts supplier selection with no ability to submit alternatives for approval. How restrictive is the approved supplier list, and are there any cost premiums compared to market rates?
#15
What is the breakdown of the 24 termination causes, and how many are related to financial underperformance versus operational or compliance issues?
#16
Given the pending litigation, what is the nature of the case, who is the opposing party, and could an unfavorable outcome materially impact franchisee operations?
#17
Are there any franchisees who have attempted renewal, and if so, how many successfully completed renewal versus faced obstacles in meeting the 6 renewal conditions?
#18
The royalty rate is 6% with 2.5% ad fund. Can you detail what the ad fund covers and how marketing spend is allocated across system versus local marketing?
#19