What are the two scenarios that define a 'Converted Restaurant' for a Chop5 Salad Kitchen?

According to the 2024 Chop5 Salad Kitchen Franchise Disclosure Document, a 'Converted Restaurant' is defined by two specific scenarios. First, it includes any restaurant that was initially a Company-Owned Restaurant but was subsequently sold to a franchisee during the Measuring Period, which in this case was January 1, 2023 to December 31, 2023. Second, a 'Converted Restaurant' also encompasses any Franchised Restaurant that Chop5 Salad Kitchen or its affiliate reacquired from a franchisee during the same Measuring Period.

Understanding the definition of a 'Converted Restaurant' is important because Chop5 Salad Kitchen excludes data from Converted Restaurants when determining which restaurants qualify for inclusion in their financial performance representation. This means that the financial data presented to potential franchisees is based solely on restaurants that have maintained consistent ownership and operational characteristics throughout the specified period.

For a prospective Chop5 Salad Kitchen franchisee, this distinction is crucial for evaluating the financial performance data provided. Since 'Converted Restaurants' are excluded from the financial performance representation, it is important to understand why they were converted and what impact that conversion might have had on their financial results. This information can provide a more comprehensive understanding of the potential risks and opportunities associated with investing in a Chop5 Salad Kitchen franchise.