Taco John's

The closure rate of 8.8% is well above the typical 0-5.6% range for QSR franchises. Can you provide a detailed breakdown of the 30 units closed in 2024 by closure type and reason?

System Health scores 33 out of 100, significantly below the typical 50-75 range. What specific operational or performance issues are driving this low score?

Your franchise fee of $40,000 exceeds the typical range of $25,000-$37,500. How does this premium reflect additional support, training, or resources compared to competitors?

Net unit growth is -4.8% over the past year. Can you share the franchisor's strategic plan to stabilize and grow the system, including any new unit development targets?

What factors led to the acceleration in closures in 2024 (30 closures vs. 17-20 in prior years)? Are these closures concentrated in specific geographic regions or unit types?

Can you provide details on the 1 pending litigation case against the franchisor and the expected timeline for resolution?

The contract allows for 21 termination causes, above the typical 15-20. Can you clarify which of these 21 causes are most commonly invoked and how frequently each occurs?

Your contract includes 11 curable defaults with 30-day cure periods and 10 non-curable defaults allowing immediate termination. Can you provide specific examples of each category and how disputes are typically resolved?

The binding arbitration clause requires claims to be filed in Minneapolis, Minnesota. How many disputes have gone to arbitration in the past 3 years, and what were the outcomes?

Franchisees must purchase from franchisor-approved suppliers across 5 product categories. Can you disclose the rebate or profit margins the franchisor receives from these approved suppliers?

Median unit volumes are $1.19 million. What percentage of current franchisees fall below this volume, and what is the typical payback period on the $40,000 franchise fee?

Territory is protected but not exclusive. How many locations currently exist within your defined territories, and what is the minimum distance between franchised units?

Initial term is 20 years, above typical 10-15 years. What is the rationale for this extended initial commitment, and what renewal fee ($10,000) is required for each 10-year renewal?

Can you provide the actual transfer rate data for the past 3 years? The 2.7% transfer rate suggests many franchisees are exiting rather than selling their units.

Termination rate is 1.2%, above the typical 0.0-1.03% range. Can you break down the specific causes of the 4 terminations in 2024?

What operational support or financial assistance (if any) does the franchisor provide to underperforming units to prevent closures?

Has the franchisor made any changes to the franchise agreement, fee structure, or operational requirements in the past 24 months to address system contraction?

Can you explain why Ongoing Fees score 64, above the typical 60-62% range? What additional fees beyond royalty and ad fund should franchisees expect?

What percentage of closed units in 2024 cited insufficient profitability as the reason for closure, and what are the typical profit margins for a break-even unit?

Non-compete terms are 2 years within 5 miles. Are former franchisees actively challenging this restriction, and has this been a factor in any of the pending or recent litigation?