The 9.5% exit rate in the past year is above the typical range for this franchise type. What were the specific reasons the 2 units that closed cited for their departure?
#1
Given the short initial 5-year term compared to typical franchise standards, what are the key factors that influence whether franchisees choose to renew for the second 5-year period?
#2
The non-compete radius of 50 miles significantly exceeds the typical range. How is this enforced in practice, and have there been any disputes regarding franchisees operating competing businesses within this radius after exit?
#3
Your franchise agreement lists 21 termination causes. Can you provide a breakdown of which causes have actually been invoked in your system's history?
#4
The agreement requires franchisees to purchase beverages, mugs, packaging, and branded products exclusively from franchisor-designated suppliers. What is the typical markup or margin the franchisor earns on these required purchases?
#5
Each mobile stand must participate in a minimum of 15 events per year. How is this requirement monitored, and what happens if a franchisee fails to meet this quota?
#6
Personal guarantees are required from all shareholders and their spouses. How many times has the franchisor enforced this guarantee against personal assets, and under what circumstances?
#7
The renewal fee is $6,000 with 8 renewal conditions. Can you provide specific examples of franchisees being denied renewal and the reasons cited?
#8
What support and training is provided during the initial term and upon renewal? The support score of 73 is below typical for this category—can you clarify the specific training hours and ongoing operational support available?
#9
The system lacked Item 19 financial performance data in the FDD. Will you provide actual revenue, profit, and expense data from comparable units for comparison purposes?
#10
Late payments accrue interest at the lesser of 18% annually or the highest lawful rate. How frequently do franchisees encounter late payment issues, and what is the average amount of accumulated interest?
#11
The franchise agreement requires 'completion of required maintenance and remodeling to franchisor's satisfaction' for renewal. What are the estimated costs for these remodeling requirements, and who bears this expense?
#12
Since the system has grown from 15 to 21 units in 3 years with no franchisor-initiated terminations, what is your criteria for terminating underperforming franchisees?
#13
Can you provide references from the 2 franchisees who closed in 2024 to understand their experience and reasons for closure?
#14
The Contract Terms score of 53 is below typical range. What contractual provisions do you consider most favorable to franchisees, and which provisions do you consider non-negotiable?
#15
The System Health score of 48 is below typical range. What specific metrics or KPIs indicate overall system health, and what initiatives are underway to improve this score?
#16
Are there any ongoing disputes or regulatory inquiries involving the franchisor, even if they haven't reached litigation stage?
#17
What is the average unit volume (AUV) and median unit volume across your current 21 locations, and how does this compare to your break-even analysis?
#18