What specific circumstances led to the 4 unit terminations in 2024, and were there commonalities among the terminated franchisees?
#1
The termination rate of 9.1% significantly exceeds the typical range for this category. What are the 5 curable defaults and 26 non-curable defaults listed in the agreement, and which have been the primary causes of terminations?
#2
Can you provide details on the single litigation case filed against Steamatic? What was the claim, outcome, and settlement amount if applicable?
#3
Given the 31 termination causes in the agreement versus a typical range of 14-22, can you explain why your franchise agreement includes substantially more termination provisions than competitors?
#4
What specific 'minimum performance requirements' trigger the mandatory annual gross revenue growth requirement beginning in year two, and what happens if a franchisee misses this target?
#5
How is the cost-of-living percentage increase determined for the minimum revenue growth requirement, and which index is used?
#6
The total potential term of 25 years exceeds typical range. Can franchisees negotiate renewal terms, or are they automatically renewable at franchisor discretion?
#7
What is the $100 late payment fee structure, and are there additional penalties beyond this for overdue royalties or ad fund payments?
#8
The agreement requires purchasing from designated or approved suppliers only. Can you provide a list of mandatory suppliers and their typical pricing compared to open-market alternatives?
#9
You retain rights to establish minimum purchase requirements. What are the current minimum purchase commitments, and how often do these increase?
#10
Personal guarantees are required from all direct/indirect owners and spouses on a joint and several basis. Can these be negotiated for larger multi-unit franchisees?
#11
The indemnification clause requires franchisees to indemnify the franchisor. What specific scenarios have triggered indemnification claims historically?
#12
Disputes must be resolved through individual arbitration with a class action waiver. Has any franchisee challenged this provision, or has arbitration been used to resolve disputes?
#13
What is the venue for arbitration proceedings, and what are typical costs for arbitration under your clause?
#14
Only 2 units transferred in the past year while 8 units exited through closure or termination. What obstacles prevent franchisees from selling their businesses, and what approval process exists?
#15
The 2-year/25-mile non-compete is enforceable post-exit. How strictly has this been enforced, and have there been legal disputes over this provision?
#16
Despite the system maintaining 44 units, turnover of 9.1% suggests replacement recruitment is occurring. What is your current recruitment pipeline, and are new franchisees primarily converting from your terminated/closed units?
#17
System Health score of 35 falls significantly below the typical range. Can you explain what factors contribute to this low score and what improvements are planned?
#18
Financial Performance score of 40 is below typical range, and Item 19 is not provided. Can you share anonymized financial performance data, average unit volumes, and profit margins for franchisees?
#19
What training and ongoing support are provided to address the system health concerns, particularly given Support & Training scored 90/100 while System Health scored 35/100?
#20