The advertising fund rate of 5.0% exceeds the typical range for quick service restaurants. How is this fund allocated, and what specific marketing initiatives and return on investment can you document for franchisees?
#1
Can you provide detailed information about the single litigation case filed against the franchisor, including the nature of the claim, resolution, and current status?
#2
Unit closures increased from 7 in 2022 to 18 in 2024. Can you break down the reasons for these closures by year and identify whether any locations were in specific underperforming geographic areas?
#3
The franchise shows strong 1-year net growth of 10.4%, exceeding the category average. Is this growth primarily from new unit sales, transfers of existing units, or both?
#4
What support and resources does the franchisor provide to address the 5.2% annual transfer rate, and how does the $10,000 transfer fee compare to the cost of recruiting a new franchisee?
#5
Your renewal conditions count of 6 is below the typical range of 7-9 for quick service restaurants. What conditions must franchisees meet to qualify for renewal, and are any conditions discretionary or subjective?
#6
The agreement includes termination for 16 non-curable defaults with immediate termination rights. Can you provide a detailed list of these 16 non-curable defaults and examples of how they have been applied in actual franchisee situations?
#7
The operational control clause requires purchasing from approved suppliers in 6 categories. Which product and service categories are subject to supplier restrictions, and what is the estimated percentage of cost of goods sold affected by these requirements?
#8
All current and future owners must provide personal guarantees. Are spouses required to guarantee the agreement, and what are the implications if a franchisee wishes to transition ownership?
#9
The franchise fee is $35,000 with a total potential term of 25 years. How many franchisees have successfully renewed their franchises since the program began, and what percentage of original franchisees remain in the system?
#10
Item 19 financial performance data shows median gross sales of $954,743. What is the median net profit or EBITDA, and what percentage of franchisees meet or exceed the median gross sales figure?
#11
The non-compete clause is 2 years and 5 miles. How has this been enforced historically, and what is the franchisor's position on franchisees opening competing concepts within the restricted territory after exit?
#12
Territory is protected but not exclusive. What specific encroachment protections are provided, and can the franchisor open or license additional Tropical Smoothie Cafe units or competing brands within my territory?
#13
The franchise agreement allows the franchisor to control both maximum and minimum pricing. How frequently are pricing mandates issued, and can franchisees request pricing flexibility based on local market conditions?
#14
Cure periods range from 10 to 30 days depending on the default type. Can you provide specific examples of defaults that fall into each cure period category?
#15
The renewal fee is $0. Are there other fees or costs associated with renewal beyond the renewal conditions that franchisees should anticipate?
#16
System growth of 10.4% in year 1 is strong, but closures also increased to 18 units in 2024. What is the franchisor doing to ensure sustainable unit growth and address the closure trend?
#17
What percentage of franchisees are current on royalty and ad fund payments, and how does the franchisor communicate or enforce compliance with fee obligations?
#18
Can you provide references from franchisees who have exited the system in the past 2 years, including details about their experience, reasons for departure, and relationship with the franchisor post-exit?
#19