Turning Point
Turning Point offers specialty breakfast, brunch, and lunch items cooked to order in multiple restaurant locations. Known for its high initial investment, it caters to those interested in owning a food service franchise.
Turning Point franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to begin operating under an Area Development Agreement (ADA) ranges from $911,000 to $1,448,000 for two to three restaurants, respectively. This includes the development fee and other costs associated with opening multiple restaurants as outlined in the FDD excerpts [p.1] and [p.23].
What is the initial franchise fee?
The initial franchise fee is $45,000, which is deemed fully earned and nonrefundable upon payment [p.89]. For subsequent restaurants under an Area Development Agreement or as specified in the agreement, a reduced initial franchise fee of $15,000 per restaurant applies [p.216, p.180].
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is 5% of Gross Sales [p.89], payable on Wednesday of each week [p.41]. Additionally, there is an ongoing Brand Fund Contribution of up to 3% of Gross Sales for advertising and marketing, with the current requirement being 1% [p.41].
How long is the initial franchise agreement, and can I renew it?
The term of the franchise agreement is not specified in the provided excerpts. However, it typically allows for renewal upon expiration subject to the Company's approval and payment of a renewal fee [p.214].
Can I sell or transfer my franchise, and what does that require?
According to the FDD, you cannot sell or transfer your franchise without the prior written consent of Turning Point [p.51, p.115]. However, there are some exceptions; for instance, a transfer of less than a five percent interest in a publicly-held corporation does not require this consent [p.115]. Additionally, if you wish to transfer your franchise to a corporation or limited liability company owned by you after six months from the Effective Date, you must pay a fee which can range from $500 to 50% of the current initial franchise fee depending on circumstances [p.117].
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement on various grounds, including failure by the franchisee to comply with lawful provisions of the franchise agreement and failing to cure such failures within a reasonable time frame, which cannot exceed 30 days [p.6]. Additionally, termination may occur if certain conditions are not met upon the death of the franchisee or if there is no transfer or disposal of the franchise interest before the expiration of specified periods [p.119]. Furthermore, termination without 'reasonable cause' as defined by the Virginia Retail Franchising Act or Virginia law may be unlawful [p.229].
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts. The FDD does not provide specific details on net worth or liquid capital requirements for franchisees. However, it does mention that potential franchisees must demonstrate adequate financial resources and capital to operate the business [p.116], and are encouraged to consult with advisors [p.70].
Do I get an exclusive or protected territory?
No, you do not receive an exclusive territory. However, you are granted a Protected Territory which covers an area around your restaurant, and the size of this territory is determined by factors such as geographic area, population density, and competition in the surrounding area [p.50]. This protected territory continues to apply even if you sell or transfer your franchise [p.51].
What training and ongoing support does the franchisor provide?
The franchisor provides initial training to the Training Team, including operational materials, planning, and functional training courses [p.216]. This initial training is typically conducted on an as-needed basis before operations begin [p.47], and there may be a fee for additional or retraining after Initial Training is completed [p.47]. Ongoing support includes general assistance and instruction during employment/term of contracting with the franchisee [p.165]. The franchisor also provides preopening services such as operational materials, planning, and functional training courses, which are recognized as a separate performance obligation [p.216].
How many franchised outlets are there, and how many have closed or been terminated?
As of December 31, 2023, there was one (1) franchised outlet among the twenty-five (25) restaurants in operation. This information does not specify the number of closed or terminated franchises [p.67].
Does the franchisor share any financial performance or earnings information?
Yes, the franchisor may provide financial performance information, but it is limited. According to [p.67], the franchisor can provide actual or potential financial performance of its outlets if there is a reasonable basis for the information and it is included in the Disclosure Document. However, as stated on [p.142], no guarantees are made regarding specific earnings or profits, and any such information must be read with the understanding that it does not represent what you can expect to achieve.
What am I restricted to selling, and where must I buy supplies?
You are required to sell only those items, products, and services that the franchisor expressly approves in writing [p.28]. You must purchase most items, products, goods, services, and equipment from designated or approved suppliers as specified by the franchisor [p.28]. As of the FDD's issuance date, you must purchase branded items, coffee beans, promotional materials, and certain equipment directly from the franchisor or their affiliates [p.28].