TourScale

Can you provide details on the 2 litigation cases filed in the past 3 years, including the nature of disputes, outcomes, and whether they relate to system-wide issues or isolated incidents?

Why is the termination rate of 2.8% significantly higher than the typical 0.0-1.6% range for hospitality franchises, and what are the primary causes of these terminations?

Your sales performance (median $66,855, average $99,786) is substantially below category benchmarks ($187,523-$1,126,915). Can you explain the reasons for this significant gap and whether Item 19 data supports franchise profitability at these revenue levels?

What specific support and training resources are provided to franchisees, and why does the Support & Training score of 66 fall below the typical 73-86 range for this category?

The royalty rate of 6.0% exceeds the typical 5.0-5.5% range. What additional services, marketing support, or technology benefits justify this premium rate versus competitors?

Can you clarify the 9 renewal conditions referenced in the contract, as this exceeds the typical 4-7 conditions? Are there specific performance benchmarks or system changes required to qualify for renewal?

The non-compete clause (2 years / 5 miles) is restrictive for hospitality franchises where this is typically 0 years. How strictly is this enforced, and what practical limitations does this place on franchisees after exit?

Why did the transfer rate spike to 5.6% in the trailing year, and what are the franchisor's policies regarding transfer approvals and associated barriers?

The initial term is 10 years, which is below the typical 15-20 year range. Does this shorter initial term require a higher renewal fee, and what is the specific renewal fee as a percentage of the then-current franchise fee?

Can you provide a breakdown of the 5 units that exited in 2023 and the 6 units with activity in 2024 by type (closure vs. transfer vs. termination vs. other), including reasons where available?

What is driving the System Health score of 42, which falls significantly below the typical 50-68 range? Are there specific operational, training, or support gaps identified?

The technology fee is $200 annually. What systems and tools are included, and are there additional technology costs or software subscriptions required beyond this stated fee?

How are the ad fund proceeds allocated, and can franchisees request an accounting of how their 2.0% contribution was spent annually?

Given the protected but non-exclusive territory model, what encroachment protections exist if the franchisor opens competing TourScale locations nearby, and have any franchisees raised encroachment complaints?

Can you explain the distinction between the 2 litigation cases (one where the franchisor was plaintiff, one where defendant)? What were the outcomes and has either case resulted in policy changes?

The renewal fee is $24,975 (50% of current franchise fee). If the initial franchise fee increases, does the renewal fee automatically increase proportionally, and what is the historical trend of franchise fee increases?

What percentage of current franchisees are in their initial term versus renewal terms, and what is the actual renewal rate (percentage of eligible franchisees who renew versus exit)?

Does the requirement to purchase proprietary products exclusively from the franchisor or designated suppliers apply to all operational inputs, and what is the typical markup or margin impact on franchisee profitability?

The Ongoing Fees score of 60 is at the lower end of the typical 62-62 range. Are there hidden or variable fees beyond the royalty, ad fund, and technology fee that franchisees should budget for?