Given the 51.8% 3-year CAGR, what specific market conditions or operational changes drove the acceleration from 6 units in 2022 to 21 units in 2024, and is this growth rate sustainable?
#1
The median gross sales of $1,720,000 significantly exceeds typical for QSR franchises. Can you provide the Item 19 breakdown showing what percentage of units achieved this sales level and the sales range across all operating units?
#2
With a 90.9% unit growth rate in the past year and zero turnover, what due diligence have you conducted on franchisee satisfaction, and are there any pending franchise terminations or non-renewals beyond the 2 transfers reported?
#3
The non-compete radius of 15 miles is wider than typical. How is this enforced, and can you provide examples of disputes or conflicts that have arisen from this restriction?
#4
Your total potential contract term of 35 years (15 initial + 4 × 5 renewals) exceeds typical ranges. What conditions must franchisees meet to qualify for each of the 4 renewal options, and are there financial performance thresholds tied to renewal eligibility?
#5
The renewal conditions number 10, which is above typical. Can you clarify each condition and explain how frequently franchisees fail to meet renewal requirements?
#6
Technology fees of $100 monthly are below the typical range. Does this fee cover all required POS systems, delivery platforms, and digital marketing tools, or are there additional technology costs not included?
#7
With zero litigation cases in 3 years, has the franchisor initiated or settled any disputes with franchisees outside of formal litigation, and are there any regulatory investigations or complaints filed with state franchise regulators?
#8
The transfer fee of $7,000 equals the renewal fee. Can you explain the circumstances of the 2 unit transfers in 2024 and whether franchisees encountered any obstacles or franchisor approval delays in transferring their units?
#9
Item 19 shows gross sales but not net profitability. Can you provide average unit volumes (AUV) data, typical food costs, labor percentages, and net profit margins for a representative unit at median sales levels?
#10
What is the average time to profitability for a new Smalls Sliders location, and do franchisees achieve positive cash flow within the first year given the $35,000 initial franchise fee?
#11
The operational control clause requires franchisor-approved suppliers for all products and packaging. Can franchisees source products competitively, or does the franchisor designate exclusive suppliers and capture margins on product sales?
#12
The termination clause permits immediate termination for 18 non-curable defaults. Can you provide the specific list of non-curable defaults and clarify how disputes over what constitutes a non-curable default are resolved?
#13
Personal guarantees are required from all owners and spouses with unlimited scope. In the event of franchise termination, have franchisees been pursued for personal guarantees covering franchisor damages, and what is the average liability exposure?
#14
With protection but not exclusive territory, what is your policy on multi-unit development or franchisor-owned units within an existing franchisee's territory, and have encroachment disputes occurred?
#15
The renewal condition requires completion of brand standards training. What does this training entail, what is the cost, and has non-compliance with this requirement ever prevented a franchisee from renewing?
#16
Given the exceptional growth from 6 to 21 units in 3 years, what is your franchisor support infrastructure capacity, and how do you prevent service degradation as you expand rapidly?
#17
The franchise fee of $35,000 is relatively low. Does this fee structure change if a franchisee opens multiple units, and are there multi-unit discounts or master franchise agreements available?
#18
Can you provide contact information for at least 10 franchisees across different opening cohorts (including the original 6 from 2022, franchisees from 2023, and recent 2024 franchisees) so I can conduct independent reference checks on profitability and franchisor support?
#19