Subject: Pre-signing questions on GoldLeaf Smoothie Bar FDD
Hello,
Thank you for providing the FDD. I am reviewing it carefully and would appreciate clarification on several points before making any decision. I am also planning to discuss these items with a franchise attorney and my financial advisors so I can evaluate the opportunity responsibly.
1. Fees and unit economics
- Can you walk me through the full ongoing fee burden in practice, including the 6.5% royalty, 2.0% brand fund, 1.5% local advertising minimum, and $650 monthly technology fee?
- How is “Gross Sales” calculated operationally in the POS and reporting system?
- Are sales taxes, refunds, discounts, chargebacks, and third-party delivery commissions excluded anywhere in the actual agreement or reporting setup?
- For delivery-app orders where the platform keeps 20–30%, what percentage of the cash actually received by the store typically goes to royalty and advertising?
- Is any opening-period royalty relief, fee deferral, or technology-fee waiver available for new franchisees?
2. Initial investment and working capital
- Item 7 states that the estimate includes three months of additional funds and that three months may not be sufficient to reach break-even. What have recent openings typically needed in total working capital before break-even?
- What percentage of recent stores reached break-even within 3, 6, and 12 months?
- What startup costs most often exceed the Item 7 estimate?
3. Item 19 financial performance representation
- Item 19 reports Gross Sales only. Do you have any additional information on typical cost of goods, labor, occupancy, delivery mix, or store-level margin ranges for mature stores?
- How many total franchised units existed during the measurement period, and how many were excluded from the 39-unit sample?
- Can you provide quartile breakdowns or sales by years open so I can better understand how newer stores compare with mature stores?
- Since only 36% of the 39 units met or exceeded the average, is the median a better planning benchmark for a new operator?
4. Territory and channel conflict
- Item 12 says the 1.5-mile Designated Radius is not exclusive. In practical terms, what protection does that radius provide?
- How are online orders and third-party delivery orders handled for customers located within my area?
- Does the local store receive any priority, credit, or revenue share for online or delivery sales into its trade area?
- Are there any current or planned grocery, kiosk, wholesale, or affiliated-brand initiatives near the market I am considering?
5. Renewal, termination, and exit
- For renewal, can you share the current form of agreement that renewing franchisees would be asked to sign, or summarize how it differs from the initial agreement?
- What have renewal remodel costs typically been?
- Does the required general release at renewal exclude claims already raised in writing or unresolved payment disputes?
- Item 17 mentions termination for under-reporting, repeat defaults, minimum performance quotas, and acts that the franchisor determines harm the brand. Can you provide more detail on what specific conduct has triggered these provisions in practice?
- What are the current minimum performance quotas, and how are they adjusted for market conditions?
- If a franchisee needs to exit for business reasons, is there any voluntary surrender or negotiated de-identification process?
6. Transfer process
- What objective criteria are used to approve a transfer?
- Over the last 24 months, how many transfer requests were approved, denied, or withdrawn?
- How does the right of first refusal work in practice, and what is the typical timeline for a transfer review?
- Is the $10,000 transfer fee ever reduced for family, affiliate, or estate-planning transfers?
7. Supplier restrictions and purchasing
- Can you explain how approved suppliers are selected and monitored for price competitiveness?
- What categories of rebates, allowances, or other consideration does the franchisor or its affiliates receive from suppliers?
- Are any of those amounts used to offset system costs or benefit franchisees?
- What additional required purchases have been added over the last 24 months, and what were the approximate costs?
8. Litigation and franchisee validation
- Item 3 references litigation involving under-reporting, non-compete enforcement, and a former franchisee’s allegation about unit economics. Were any changes made to the sales process, compliance procedures, or franchisee support model as a result?
- I plan to contact current and former franchisees from the attached lists. Are there particular operators you recommend I speak with, including both newer and more established franchisees?
9. Outlet turnover
- Item 20 shows 14 terminations, 9 non-renewals, 4 reacquisitions, and 7 other closures in the prior year. Can you break down the main reasons for those outcomes?
- Were those closures concentrated in certain markets, store formats, or operator profiles?
- What steps has the franchisor taken to reduce turnover and improve franchisee performance?
10. Franchisor financial condition
- Item 21 notes reliance on continued initial franchise fee revenue to fund operations. Can you help me understand management’s view of that note and the company’s current financial position?
- What percentage of current revenue comes from royalties versus franchise sales and product sales?
- If franchise sales slowed materially, how would the franchisor continue funding field support, training, and system development?
- Are more recent interim financial statements available?
11. Dispute resolution
- If a franchisee is located outside Florida, are remote mediations or remote arbitrations permitted?
- Is there any pre-arbitration mediation process?
- Are there any circumstances where disputes can be handled locally rather than in Orange County, Florida?
I appreciate any clarification you can provide. My goal is simply to understand the economics, operating expectations, and long-term relationship clearly before moving forward.
Thank you,
Prospective Franchisee
Territory AI Analysis
