Can you provide detailed explanations for the 7 unit closures in 2022 and 6 closures in both 2023 and 2024? What were the primary reasons for these terminations?
#1
The advertising fund rate of 4.0% is significantly higher than the typical 1.0-2.75% range for business services franchises. How is this fund specifically allocated and what marketing activities does it support?
#2
Your Support & Training score of 64 falls below the typical range of 74-91 for this category. What specific training and ongoing support programs are provided to franchisees, and how do they compare to competitors?
#3
The non-compete clause of 1 year / 50 miles is shorter than the typical 2-year non-compete for this industry. How does this protect franchisees from competitive activity by departed franchisees in their market?
#4
Can you explain why there are only 10 documented termination causes in your franchise agreement when the typical range is 12-21? Are there additional termination scenarios not explicitly documented?
#5
The franchise agreement requires binding arbitration in the franchisor's headquarters city. How many disputes have been arbitrated under this clause, and what were the outcomes?
#6
Personal guarantees and spousal liability are required. Can you clarify what specific obligations spouses are personally liable for under the indemnification clause?
#7
Why does the franchise agreement have a below-typical non-compete term? Does this reflect industry standards or competitive positioning?
#8
Item 19 financial performance data is not provided. Can you share income statements or sales data from a representative sample of franchisees, broken down by territory size and business mix?
#9
Six units were terminated in 2024. Were these terminations due to performance failures, non-compliance with standards, or other reasons? What is the franchisee's right to cure before termination?
#10
The system has grown from 121 units to 130 units in 3 years despite consistent closures. What is your franchisee recruitment strategy and what percentage of new franchisees have prior business brokerage experience?
#11
The Transfer Fee of $10,000 applies when a franchisee wants to transfer their business. Are there any franchisor approval requirements, and can the franchisor block transfers to certain buyers?
#12
Can you provide the franchise agreement language regarding the indemnification clause? Specifically, what liabilities can the franchisor shift to franchisees?
#13
How many of the 8 unit transfers in the past year were franchisor-approved? Were there any transfer requests that were denied?
#14
Given the 1-year non-compete and 50-mile radius, can a former franchisee open a competing business brokerage immediately after departure? Are there any other restrictive covenants?
#15
The Risk Factors score of 79 is above the typical range. What specific risk factors does this score reflect, and how do they compare to competitors in the category?
#16
Are there documented disputes between the franchisor and franchisees regarding the interpretation of non-compete obligations or territory encroachment?
#17
What percentage of franchisees choose not to renew at the end of their 10-year term? Are renewal terms negotiable, or are fees and obligations fixed?
#18
The Support & Training score is notably below industry standards. Have any franchisees filed complaints about inadequate training or support? What improvements are planned?
#19
Can you provide references from at least 10 current franchisees representing different geographic markets and different tenure lengths within the system?
#20