The Spice & Tea Exchange

The royalty rate of 7.0% is above the typical range of 4.38-6.0% for retail franchises. How does this rate compare to your direct competitors, and what justifies the premium royalty structure?

Can you provide a detailed breakdown of the 4 unit closures in 2024 and the reasons behind them? Were these franchisee-initiated closures or related to specific operational issues?

The contract includes 21 termination causes, which is significantly above the typical range of 14-19.25. Which termination causes are most frequently cited, and how often has the franchisor actually exercised termination rights?

Your non-compete clause specifies 30 miles, double the typical range of 10-20 miles. What is the business rationale for this extended radius, and how is compliance monitored?

The total potential contract term is 30 years with 4 renewal options of 5 years each. Under what circumstances might renewal be denied, and what conditions must franchisees meet to qualify for renewal?

You require 9 renewal conditions, above the typical 6-8. Can you provide a complete list of all renewal conditions and explain how frequently franchisees fail to meet these requirements?

The franchise agreement requires personal guarantees from all principal owners and spouses. How does this personal guarantee obligation affect franchisee rights if the business entity faces financial distress?

The agreement grants you control over pricing policies including minimum and maximum prices. How prescriptive are these pricing directives, and can franchisees adjust prices for local market conditions or competition?

What is the structure and experience of your support and training program, given your exceptionally high support and training score of 100/100? How does this compare to what franchisees actually report?

Late payments incur a 15% late fee plus 18% annual interest. Can you provide data on how frequently franchisees incur late fees and whether payment issues correlate with eventual unit closures?

You require participation in mandatory marketing programs as part of financial obligations. What is the typical annual cost of these programs, and can franchisees opt out or modify their participation level?

The $1,750 monthly minimum royalty may represent a significant fixed cost for lower-volume locations. How many of your current franchisees are operating at or near this minimum royalty threshold?

Over the past 3 years, what was the average unit volume (AUV) for units that closed or were transferred, and how does this compare to your median and average gross sales figures?

Territory is marked as protected but not exclusive, and encroachment protection is noted as true. Can you clarify when and how the franchisor retains the right to add units or approve nearby franchisees?

What remedies are available to franchisees if the franchisor fails to perform its support and training obligations, given the personal liability obligations franchisees assume?

The transfer fee is $15,000 and renewal fee is $10,000. What is included in these fees, and are there any circumstances where these fees might be waived or negotiated?

Can you provide historical data on the percentage of franchisees renewing versus those choosing to exit at the end of their initial 10-year term?

How have the number of approved suppliers, distributors, and service providers evolved over the past 3 years, and how frequently are franchisees required to change vendors due to franchisor policy changes?

What specific circumstances triggered the 3 non-renewals implied by your 2.2% non-renewal rate, and were any related to the franchisor's operational control or financial demands?

Given your score of 69 for investment costs (below the typical range of 75) and 58 for ongoing fees (below the typical range of 62), what is the actual break-even timeline franchisees should expect, and what percentage of franchisees achieve profitability within years 1-3?