Can you provide detailed information about the 2 units that closed in 2024? What were the primary reasons for closure, and how long had those units been operating?
#1
The advertising fund rate of 5.0% is more than double the typical rate for business services franchises (1.0-2.75%). How is this fund utilized, and can you provide documentation of advertising expenditures and ROI from the past 2 years?
#2
The closure rate of 22.2% in the past year significantly exceeds typical rates. What support or performance metrics are in place to help struggling franchisees before they exit?
#3
With no non-compete clause (0 years / 0 miles), what prevents former franchisees or terminated units from competing directly in their former territories?
#4
The renewal conditions list includes 9 requirements, which is above the typical range of 5-8. Can you detail each renewal condition and explain how often franchisees fail to meet these requirements?
#5
The transfer fee of $3,500 is substantially lower than the typical $5,250-$19,500 range. Are there any additional hidden costs or conditions associated with unit transfers that are not reflected in this fee?
#6
The system grew from 0 units 3 years ago to 9 units currently (from 6 units 1 year ago). What is the growth strategy, and what percentage of new recruits are coming from existing franchise networks versus new markets?
#7
Item 19 financial performance data is not provided. Will you make financial performance information available during due diligence, and if so, what is the range of unit profitability?
#8
The franchise agreement requires arbitration in Tempe, Arizona. Given the franchisor's home state location, what is the estimated cost for a franchisee in another state to pursue arbitration, and are there any restrictions on legal representation?
#9
The agreement specifies 17 non-curable defaults allowing immediate termination without cure period. Can you provide the complete list of these 17 defaults and explain the rationale for each?
#10
The personal guarantee clause requires owners and spouses to guarantee all franchise obligations unconditionally. Has this personal guarantee been enforced in past disputes, and what is the typical liability exposure?
#11
The franchisor designates or approves suppliers across 8 specified categories. What is the franchisor's financial interest in these suppliers (markup, commission, referral fees), and are there opportunities for franchisees to negotiate alternative suppliers?
#12
Territory is listed as 'protected' but 'non-exclusive.' Can you clarify what protections actually exist, and have other franchises been opened within existing franchisees' territories?
#13
The $10,000 renewal fee is non-refundable. What happens if a franchisee applies for renewal but is denied? Are there any conditions that would cause the franchisor to deny renewal?
#14
With 50.0% year-over-year net unit growth and a 22.2% closure rate occurring simultaneously, what is the breakdown between new unit openings and unit closures in 2024?
#15
The litigation history shows 0 cases. Has the franchisor or any franchisees been involved in regulatory complaints, arbitrations, or mediations that would not appear in litigation records?
#16
Can you provide contact information for at least 5 franchisees who closed their units in the past 2 years, as well as 5 current franchisees operating for at least 2 years, so I can conduct independent due diligence?
#17
The initial franchise fee is $35,000. What does this cover in terms of training, setup, and initial support, and are there additional startup costs not included in this fee?
#18