1. What are the franchise fees?
Within the Gas & Convenience category, franchise fees can range from $0 to $750,000.
We go into more details about franchise fees, annualized costs, working capital requirements, leasehold improvement costs and cash required in our Investment Structure Grade.
2. What are the royalty fees?
Within the Gas & Convenience category, royalty rates can range from 2% to 51%.
We dig deeper into royalties, advertising and coop rates, technology and extra fees in our Ongoing Fee Grade.
3. Are there any lawsuits?
Within the Gas & Convenience category, there are a number of franchises that do have some form of litigation. These systems can range from a high of 25 to a low of 2.
We look deeper into the types of lawsuits, franchisee representation and legal rights of franchisees in our Franchise Relations Grade.
4. What is the initial term of the agreement?
Within the Gas & Convenience category, each franchise can offer a different term length. As an example the shortest initial term is 7 months, and the longest initial term is 10 months.
We dig deeper into the initial term, annualized cost, renewal terms, territory rights, training and financing options within our Franchisee Rights Grade.
5. What is the franchisee turnover rate?
Franchisee turnover is a key variable to the success of a franchise investment. Franchisee turnover ranges significantly in Gas & Convenience. The highest turnover of a franchise system in this sector is 23% and the lowest is 0%.
We dig deeper into turnover and look at the number of transfers, terminations, non-renewals, reacquired and ceased operations of each franchise system within our System Turnover Grade.
6. How much growth and success has a franchise system had?
A growing system is a sign of a healthy investment opportunity. Growth rates can be very high if a smaller system grows from 5 to 20 outlets compared to another system that has grown from 250 to 300. Also a number of franchise systems in Gas & Convenience have negative growth, or have shrunk in size. The largest growth rate is 200% and the worst growth rate is -29%.
We dig deeper into growth and look at net growth, if it’s consistent, how many has the franchise system sold but no opened and their projections for next year in our System Growth Grade.
7. Do they provide any financial information about their franchisees?
Franchise systems are not required to disclose financial performance information of their franchisees to you. In the Gas & Convenience category, only 80% disclose any type of financial information. Some franchise systems only provide a small amount of revenue data (not expenses) and only a few healthy franchise systems will provide expense data. Within the Gas & Convenience category, only 40% disclose expense data for you to study the costs of running the business.
We dig deeper into financial transparency, compare the value of the information and highlight the benefits and qualities of each value in our Item 19 Disclosure Grade.