Can the franchisor provide detailed information about the 1 unit that closed in 2022? Was this a franchisor-initiated termination or voluntary closure, and what were the specific circumstances?
#1
The technology fee of $500/month exceeds the typical range for childcare and education franchises. What specific technology services and systems are included in this fee, and how is it justified relative to competitor systems?
#2
Given the system has only 2 units, what is the franchisor's growth strategy and timeline for unit expansion? Are there specific geographic markets being targeted?
#3
The contract includes 14 non-curable default events allowing immediate termination. Can you provide a complete list of these events and clarify what constitutes 'immediate' termination procedures?
#4
The post-term non-compete restriction is 2 years within 25 miles and specifically prohibits any business featuring schools or instructional sessions for pregnant mothers and mothers of newborn children. How is this restriction enforced, and what related businesses would be prohibited?
#5
The renewal fee is $11,250 (25% of the current $45,000 franchise fee). Can you confirm whether this renewal fee will increase proportionally if the franchise fee increases during the initial 10-year term?
#6
The binding arbitration clause requires resolution in the franchisor's headquarters location. What are the franchisor's headquarters location and state, and what are the typical arbitration costs franchisees should anticipate?
#7
The contract requires franchisees to purchase or lease supplies and equipment from franchisor-approved suppliers across 6 different categories. Can you provide the complete list of approved suppliers and whether franchisees can negotiate alternative suppliers?
#8
Minimum performance standards require payment of the greater of 7% of gross sales or specified minimum amounts. What are these specified minimum amounts by time period, and how are they structured?
#9
Late payments incur a $100 late fee plus 18% annual interest. Are there specific payment terms (e.g., due within 15 days), and is there any grace period before late fees apply?
#10
Item 19 financial performance data shows average gross sales of $507,214. How many units reported this data, what was the time period covered, and what was the range (minimum and maximum) of reported sales?
#11
Since the system only has 2 current units, can the franchisor provide guidance on realistic sales expectations and profitability for new franchisees, and what percentage of existing units meet or exceed the average?
#12
The personal guarantee requirement includes both owner and spouse. Can this be modified or limited under any circumstances, and what specific obligations does the personal guarantee cover?
#13
Can the franchisor clarify the indemnification language requiring franchisees to defend the franchisor 'unless the franchisor's own gross negligence or willful misconduct is the sole cause'? What would constitute such gross negligence or willful misconduct?
#14
What operational support and training is provided during the initial term and during renewal periods, and are there additional costs associated with renewal support?
#15
The exclusive territory is guaranteed, but what are the specific boundaries and how are they defined (zip codes, radius, street boundaries, etc.)?
#16
Are there any encroachment issues or disputes with existing franchisees regarding territory boundaries, and how has the franchisor handled any encroachment complaints?
#17
What are the specific 6 conditions that must be met to enter into successor franchise agreements for the 2 renewal options?
#18
The system shows 100% unit growth in the past year. Can you explain what factors drove this growth and whether similar growth is expected in the coming years?
#19