What criteria define a 'Former Franchisee' of Mr. Sandless, as described in this document?

According to the 2025 Mr. Sandless Franchise Disclosure Document, a 'Former Franchisee' is defined as a franchisee that had their outlet terminated, canceled, or not renewed. This definition also includes franchisees who voluntarily or involuntarily ceased business operations under the Franchise Agreement during the most recently completed fiscal year. Additionally, Mr. Sandless considers franchisees who have not communicated with the franchisor within the 10 weeks preceding the Issuance Date of the Disclosure Document as 'Former Franchisees'.

For a prospective franchisee, this definition is important for understanding the scope and context of Item 20 in the FDD, which discloses the number of franchisees who have left the system. Knowing the criteria for being classified as a 'Former Franchisee' helps in evaluating the data presented in Item 20. A high number of 'Former Franchisees' due to terminations or non-renewals might indicate potential issues with the franchise system, while a high number due to voluntary cessation could suggest other factors, such as retirement or pursuing other business ventures.

It is essential to note that the definition includes not only those who actively ended their franchise agreement but also those who have become unresponsive to the franchisor for a certain period. This lack of communication could be a red flag for Mr. Sandless, potentially indicating disengagement or operational problems within the franchise. Therefore, the criteria for 'Former Franchisees' provide a comprehensive view of franchise turnover and potential challenges within the Mr. Sandless system.