The technology fee of $3,000 monthly is substantially higher than the typical range of $110-$408 for quick service restaurants. What specific technology systems and services does this fee cover, and how is it justified relative to competitors in the quick service category?
#1
The ad fund rate of 0.5% is significantly lower than the typical 2.0-4.0% range. How does this lower fund support national marketing initiatives, and are there any minimum monthly marketing commitments franchisees must meet independently?
#2
The franchise agreement contains no renewal rights, meaning at the end of the 10-year term the relationship terminates unless renegotiated. What is the franchisor's typical approach to renewal negotiations, and what are the actual renewal rates among existing franchisees approaching the end of their initial terms?
#3
Given the 10-year total potential term (below the typical 20-30 year range), what are the franchisor's expectations regarding franchisee investment recovery, and how does this shorter timeframe affect unit valuation and transferability?
#4
Personal guarantees are required from all 5%+ owners and their spouses covering all obligations unconditionally. Can you clarify which specific obligations are considered unlimited, and are there any circumstances under which personal guarantees can be limited or released?
#5
The franchise has experienced perfect unit retention (0% turnover) over 3 years. Can you provide details on the ages of existing units, whether any are approaching renewal or exit, and whether this pattern is due to selection criteria, support, or limited historical operating period?
#6
With only 6 current units, what are the franchisor's growth projections for the next 3-5 years, and what support systems exist to scale the system while maintaining quality?
#7
The territory is non-exclusive with no encroachment protection. Can the franchisor open competing Wok to Walk locations within 5 miles of your unit, and if so, what specific performance thresholds or conditions would trigger or prevent such encroachment?
#8
What specific termination causes are listed in the 14 enumerated grounds, and how do they compare in severity (e.g., health code violations vs. minor reporting failures)?
#9
The transfer fee is $7,500. Are there any franchisor approval conditions for transfers, non-compete restrictions on the incoming franchisee, or training requirements that would represent additional costs beyond this fee?
#10
Can you provide the FTC Item 19 financial performance statements showing average unit volumes, profitability, or success rates, or explain why this information is not available?
#11
The indemnification clause requires franchisees to indemnify the franchisor for all claims. Are there any carve-outs for franchisor negligence, willful misconduct, or breach of its own obligations under the franchise agreement?
#12
What is the historical experience of the 6 existing franchisees—specifically, how long have they been operating, what are their unit volumes, and would the franchisor provide contact information for reference checks?
#13
The non-compete restriction is 2 years within 5 miles. After the 10-year initial term expires, does the 2-year non-compete apply if the franchisee chooses not to renew?
#14
Are there any circumstances under which the franchisor will waive or reduce the $30,000 franchise fee based on multi-unit development, area development, or other negotiated arrangements?
#15
Given the very small system size, how does the franchisor ensure consistent quality, training, and support across units, and what is the minimum staffing and operational support available to franchisees?
#16
What happens to proprietary methods, recipes, or operational systems if the franchise agreement terminates or expires—can the franchisee continue using them under the 2-year non-compete, or must all be abandoned immediately?
#17
The royalty rate of 6.0% combined with a 0.5% ad fund and $3,000 monthly technology fee represents ongoing costs. Can you provide a breakdown of average unit volumes from existing franchisees to help calculate total ongoing fee burden as a percentage of revenue?
#18
Are there any undisclosed or contingent fees (e.g., mandatory participation in cooperative advertising, required vendor purchases, or renewal/renegotiation fees) not reflected in the disclosed fee structure?
#19
What specific performance metrics or sales thresholds does the franchisor use to evaluate franchisee compliance and termination risk, and how are these communicated in advance?
#20