Can you provide details on the single litigation case initiated by the franchisor? What was the nature of the dispute, outcome, and has this issue been resolved?
#1
Your 1-year turnover rate of 8.7% exceeds the typical range of 1.0-6.8%. Can you explain the reasons behind these 5 unit closures in 2023-2024 and whether any indicate systemic issues?
#2
The system grew from 13 to 23 units in 3 years (20.95% CAGR). How many of these new units are from organic growth versus acquisitions or conversions, and what is your pipeline for unit expansion?
#3
Average gross sales of $662,722 fall below the typical range of $816,490-$1,752,656. What factors contribute to below-average financial performance, and how does this compare to your system's expectations for new franchisees?
#4
Why is your renewal term 15 years, significantly longer than the typical 5-10 year range for automotive franchises? What is your rationale for this extended commitment?
#5
Your non-renewal rate is 5.9% annually. Can you explain why franchisees choose not to renew their agreements despite the 15-year initial term?
#6
With a transfer rate of 0.0%, do you have policies that restrict or discourage franchisee-to-franchisee transfers? If so, what are the restrictions and why?
#7
Item 19 financial data shows significant variation (bottom quartile at $119,067 vs. median at $915,503). What factors most significantly impact franchisee profitability, and can you provide guidance on which franchisees fall into each quartile?
#8
The personal guarantee requirement includes spousal consent and acknowledgment. Can you clarify the scope of personal liability and whether there are any circumstances under which this guarantee could be released?
#9
Your termination clause lists 13 non-curable defaults. Can you provide the complete list of these non-curable defaults and clarify what actions would trigger immediate termination without cure period?
#10
Beyond the $45,000 franchise fee and $7,500 transfer fee, what are the typical startup costs and working capital requirements franchisees should budget for initial launch?
#11
Can you provide a breakdown of how the $350 monthly technology fee is allocated and what specific services and software are included?
#12
For the 2 units that closed in 2023 and 3 in 2024, were these closures initiated by franchisees voluntarily, or did the franchisor terminate any agreements? What were the primary causes?
#13
You mention exclusive territory protection. How is the exclusive territory defined (radius, geographic boundary, etc.), and what is the typical territory size for a new franchisee?
#14
Can you provide examples of cases where you have enforced the non-compete clause and protected franchisees' exclusive territories? How actively do you monitor for encroachment?
#15
What is included in the $2,500 renewal fee, and are there any additional costs or franchisor-initiated modifications that typically occur during the renewal process?
#16
The indemnification clause requires franchisees to indemnify the franchisor. Can you clarify the scope of this indemnification and provide examples of claims you have pursued against franchisees?
#17
What support and training do franchisees receive in year 1 versus ongoing after that, and how does this support differ across the 30-year potential term?
#18
For the top quartile franchisees generating $1,483,453 in gross sales, what differentiates their operations from those in lower quartiles, and is their success replicable?
#19
Do you have any pending litigation, regulatory investigations, or complaints from franchisees with state regulators that are not reflected in your litigation disclosures?
#20