The termination rate of 3.8% is more than double the typical range for this franchise type. What are the primary reasons franchisees are being terminated, and what specific performance metrics trigger termination?
#1
Unit closures have increased 178% over 3 years (9 units in 2022 to 25 units in 2024). What is driving this increase, and are closures concentrated in specific regions or unit types?
#2
The franchise fee transfer is $25,000, at the upper boundary of the typical range. Are there situations where this fee is waived or reduced, such as for family transfers or strategic acquisitions?
#3
Your renewal conditions count of 12 exceeds the typical range of 6-8. What are these 12 renewal conditions, and how many franchisees fail to meet them?
#4
The 5-year initial term is shorter than the typical 10-year term for this category. Why was a shorter initial term chosen, and what happens if a franchisee wishes to extend early?
#5
Despite strong financial performance (median sales of $1,694,795), why is the termination rate elevated? Are underperforming units being terminated, or are there other contractual or operational issues?
#6
The technology fee of $95/month is significantly lower than the typical $141-$440 range. What technology and support does this cover, and are there additional technology costs not included in the basic fee?
#7
Can you provide a breakdown of the 21 terminated units in 2024 by reason (e.g., sales quota failure, operational non-compliance, legal violations)?
#8
Personal guarantees and spouse guarantees are required. If a franchise is terminated, are spouses also liable for outstanding financial obligations, and has this been enforced?
#9
The non-compete is 2 years within 35 miles. How is this enforced, and have there been disputes over the scope of restricted activities or geography?
#10
Minimum monthly average gross sales are required. What is the specific minimum sales threshold, how frequently is it measured, and what happens if a unit falls below threshold for one month versus multiple months?
#11
The franchise agreement grants the franchisor the right to set maximum and minimum prices for franchisee services. How often is this exercised, and what recourse do franchisees have if price controls limit profitability?
#12
Franchisor approval is required for certain suppliers and services. What percentage of suppliers require approval, and are there approved vendor lists with negotiated rates?
#13
The agreement specifies 4 curable defaults and 18 non-curable defaults. What are examples of the 18 non-curable defaults that allow immediate termination without cure periods?
#14
Item 19 financial data shows strong sales performance, but what does the franchisor's Item 19 data reveal about franchisee profitability, operating expenses, and net income?
#15
28 units were transferred in 2024. Can you provide information on approval rates for transfer requests, typical selling prices, and buyer profiles (individuals versus investors)?
#16
No litigation appears in public records, but have there been disputes resolved through mediation or arbitration that are not publicly disclosed? How many disputes has the franchisor been involved in over the past 3 years?
#17
The franchise agreement requires participation in cooperative advertising. How is this managed, what is the typical cost, and can franchisees opt out or propose alternative advertising?
#18