The system declined from 29 to 20 units over 3 years with a 30% closure rate in the past year. Can you provide the specific reasons cited for each closed unit and whether closures were primarily driven by underperformance, franchisor terminations, or external market factors?
#1
Franchisor-initiated terminations jumped from 0 to 4 units in 2025, representing a 21.1% termination rate. What specific defaults or performance issues triggered these terminations, and were cure periods offered under the 15-30 day curable default provisions?
#2
Median unit sales of $354,878 are roughly 56% below the typical quick service restaurant average. Can you explain the sales decline trajectory and whether units are trending toward profitability or further closures?
#3
The monthly technology fee of $605 significantly exceeds the typical $110-$408 range for quick service restaurants. What specific technology services and platforms are included, and is this fee non-negotiable or can it be reduced based on unit performance?
#4
The franchise agreement lists 25 termination causes, exceeding the typical 15-20. Can you clarify which of these 25 causes have been invoked most frequently and whether the franchisor has terminated units for technical defaults versus material performance failures?
#5
Your contract limits the total potential term to 10 years, compared to the typical 20-30 year range. Does this mean franchisees can only renew once, and what happens if they wish to continue operating beyond the initial 10-year term?
#6
The renewal fee is $5,000 with a 10-year initial term. What are the specific conditions for renewal, and has the franchisor denied any renewal applications to existing franchisees?
#7
Non-compete obligations are 2 years and 10 miles post-termination. How is this enforced in the states where you operate, and have previous franchisees challenged or negotiated these restrictions?
#8
Territory is marked as 'protected' but 'not exclusive.' What does 'protected' mean operationally, and under what circumstances can the franchisor open competing units within my territory?
#9
The dispute resolution clause mandates binding individual arbitration and waives class action and jury trial rights. Can you provide examples of recent disputes and how arbitration outcomes affected franchisees?
#10
Personal guarantees are required from all principals and spouses. Are there any franchisees who have successfully negotiated partial or conditional guarantees, or is this requirement absolute?
#11
Franchisees must indemnify the franchisor against all claims, including those arising from the franchisor's own negligence. Have any franchisees sought to modify this indemnification clause, and what was the franchisor's response?
#12
Item 19 financial performance data shows median sales of $354,878. How many units reported this data, and was the data voluntary or mandatory reporting? Are underperforming units excluded from these figures?
#13
The system experienced negative net unit growth of -23.08% in the past year. Does the franchisor have any turnaround plan, new marketing initiatives, or product innovations designed to stabilize or grow the system?
#14
Two historical litigation cases exist on record. Can you describe the nature of these cases, whether they involved franchisee disputes or regulatory matters, and what resolutions were reached?
#15
With a 0% transfer rate in the past year, are franchisees prohibited from transferring their units, or do existing owners simply lack buyer interest due to the system's performance decline?
#16
The System Health score is 0/100, and Risk Factors score is 35/100, both significantly below typical ranges. What specific factors contributed to these low scores, and what remediation steps is the franchisor taking?
#17
Non-renewal rate is 15.8%, meaning franchisees are choosing not to renew. Why are franchisees declining to renew, and does the franchisor offer incentives to encourage renewals?
#18
The ad fund rate is 3%, but how is this fund utilized? Can you provide an itemized breakdown of ad spending by channel and explain how this supports individual unit marketing needs?
#19
Initial training and ongoing support scored 92/100, which is the strongest category score. Can you detail the specific training curriculum, frequency of support visits, and whether support quality has changed as the system contracted?
#20