Given that the franchise currently operates only 1 unit, what is the franchisor's growth strategy and timeline to expand beyond this single location?
#1
Why does the franchise agreement identify 27 non-curable termination causes when the typical range for Quick Service Restaurants is 15-20? Can you provide the complete list of these causes?
#2
The termination clause allows immediate termination for non-curable defaults with only 30 days to cure material defaults. What constitutes a material default, and how is this term defined in the agreement?
#3
Can you clarify the dispute resolution clause requiring individual arbitration with class action waivers? Have there been any internal disputes that were resolved under these terms, and what was the outcome?
#4
The operational control clause requires exclusive purchases from Arms Global Inc. affiliate for noodles, broth, seasonings, sauces, packaging, cups, menu boards, signs, and kitchen equipment. What are the typical markups or pricing premiums on these required purchases compared to open market alternatives?
#5
Can you provide the specific 8 renewal conditions franchisees must satisfy to qualify for the renewal option? Are all conditions within the franchisee's control?
#6
The renewal fee is 25% of the then-current initial franchise fee. If the franchise fee increases significantly, how much could a franchisee expect to pay for renewal after 10 years?
#7
What does the support and training program include, and why does it score 85/100 when the typical range for this category is 90-100? What specific training gaps exist?
#8
Given the personal guarantee requirement and potential spouse signature requirement for renewal, what are the implications if a spouse refuses to sign the guarantee?
#9
The general liability insurance requirement is mentioned but specific coverage amounts are not detailed. What minimum coverage limits does the franchisor require, and how frequently must policies be updated?
#10
How is the protected territory defined geographically, and what specific protections exist against franchisor-initiated encroachment within that territory?
#11
The franchise has zero unit growth (0 units net growth in 1 year). What is the reason this single location has not expanded, and are there plans to add additional units?
#12
With no litigation cases on record, has the franchisor engaged in any disputes with franchisees that were resolved outside of formal legal proceedings? If so, what were the issues and resolutions?
#13
The transfer fee is $5,000. Are there any conditions that could prevent a franchisee from transferring their unit to a buyer, even after paying this fee?
#14
Can you provide the Item 19 (financial performance) statement if available, even if not required? What are typical unit economics and average gross sales for the single operating unit?
#15
The non-compete clause is 2 years and 5 miles post-termination or non-renewal. Does this apply equally to all termination scenarios, including those initiated by the franchisor?
#16
What happens if a franchisee does not renew at the end of the 10-year initial term? Are there any holdover provisions, or does the relationship terminate immediately upon expiration?
#17
Since the system consists of only 1 operating unit, how will the franchisor support multi-unit franchisees if growth and expansion are expected? What is the management structure for supporting scaled operations?
#18