Can you provide detailed explanations for each of the 2 cases where the franchisor was named as defendant, including the nature of claims, outcomes, and any settlements or judgments?
#1
What specific factors are driving the high closure rate of 17.9% in the past year compared to the typical range of 1.3-8.55%? Are closures concentrated in particular regions or unit types?
#2
The system has declined from 34 to 24 units over 3 years (29% contraction). What is management's growth strategy to reverse this trend, and what support is being provided to prevent further closures?
#3
Why is the technology fee of $800/month significantly higher than typical retail franchises ($100-479/month)? What specific services and technology does this fee cover?
#4
Can you explain the transfer rate of 0.0% and why no franchisees have transferred their units in the past 3 years? Does this suggest difficulty in finding qualified buyers?
#5
The termination rate of 3.6% exceeds the typical range of 0.0-2.28%. What are the primary causes of franchisee terminations, and how many franchisees are currently in breach of their agreements?
#6
How do you calculate 'ceased other' in your unit history, which accounts for 25 of the 26 total closures? Are these voluntary closures, and what support or exit assistance is provided to franchisees?
#7
Given the requirement for a $5,000 renewal fee plus store remodeling to current standards, can you provide cost estimates for typical renewal remodeling projects?
#8
The non-compete clause is 1 year and 15 miles, which is half the typical duration. Will you consider extending this to protect franchisees' territorial investments?
#9
What are the 8 specific renewal conditions mentioned in the franchise agreement? Can franchisees realistically meet all conditions, or are there common barriers to renewal?
#10
Can you explain why System Health scored 0/100, which is significantly below the typical range of 32.3-70.0? What metrics or factors contributed to this score?
#11
Support & Training scored 79/100, below the typical range of 84.0-99.0. What training and ongoing support programs are available, and how frequently are they updated?
#12
The Risk Factors score of 49 falls below the typical range of 65.0-75.3. What specific risk factors are not being adequately mitigated?
#13
Are financial Item 19 disclosures available? If not, what is the average unit volume (AUV) and unit-level profitability data you can share?
#14
In the past year, 5 units closed while only 1 transferred and 1 was terminated. Did the 5 closure closures represent voluntary exits, and what were the primary reasons franchisees cited?
#15
How will the dispute resolution clause requiring mediation followed by binding arbitration (with waiver of class action and jury trial) affect a franchisee's ability to bring claims?
#16
The personal guarantee requirement on a joint and several basis means both spouses are liable for the entire obligation. Can this requirement be negotiated or limited?
#17
What specific store remodeling requirements and costs should a franchisee anticipate every 5 years to meet renewal conditions?
#18
Given the 2 litigation cases against the franchisor, will you provide copies of the court filings or settlement agreements to help prospective franchisees understand the nature of these disputes?
#19