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Financial Disclosure Footnotes

Item 7 Footnotes

1. For all items in the table above other than those that you pay to us at signing of the Franchise Agreement you must arrange up front the required amounts in a bank account or have a dedicated line of credit. We will require evidence to our satisfaction that these arrangements have been made.

2. The minimum initial franchise fee to be paid to us is $37,000 for a Territory containing a population of 200,000, which is the minimum Territory you may purchase for more rural and less densely populated areas; or an initial franchise fee of $44,000 (which includes the Population discount) for a Territory containing a population of 300,000, which is the minimum Territory you may purchase for more densely populated and urban areas. You may purchase a Territory of up to a 1,000,000 in population where the Initial Franchise Fee is calculated as $185 per 1,000 population. You must pay to us an initial franchise fee of $37,000. However, there are certain situations in which you might qualify for a discount on the initial franchise fee as described in Item 5. You must pay the initial franchise fee in full when you sign the Franchise Agreement. We may agree to finance a portion of the initial franchise fee, depending upon your credit-worthiness, the collateral which you have available to secure the loan and our then-current lending policies, as explained in Item 10. Monthly loan payments depend upon the amount financed. The initial franchise fee is not refundable except as described in Item 5. A territory will generally contain a population ranging from 200,000 to 1,000,000. A larger territory may be allowed under certain exceptional circumstances to be determined at our discretion. See Item 5 for more information about the initial franchise fee, see Item 10 for more information about financing, and see Item 12 for more information about territory.

The numbers in the chart do not reflect the $5,000 veteran’s discount. If you qualify for our veteran’s discount, as described in Item 5, your estimated initial investment ranges from $128,350 to $316,225.

3. Upon signing the Franchise Agreement, you must pay us a software license fee of $3,995. We may increase these fees, and/or modify the services that are provided by us or our designee for these fees, but we will notify you of any changes applicable to you. We may remit a portion of this fee to a service provider and retain a portion of the fee to cover our costs and development. See Items 5 and 11.

4. At least one full-size cargo van, truck-enclosed trailer combination or truck-camper-top combination (vehicle) is required. Minimum acceptable enclosed trailer size is 6’ x 10’ with a minimum height of 6’6”. Trailers must have a flat front or rounded front, no wedge fronts, and must meet quality standards comparable to Wells Cargo® brand. A camper top cannot have windows, must be professional in appearance and satisfactory in appearance to us.

Each vehicle must not be more than four years old at the time of acquisition, in excellent condition, white in color (including truck-enclosed trailer combination) and have the required graphics decal/wrap package, including Marks professionally applied before the vehicle is put into service. We do not sell or lease vehicles. An existing vehicle can be converted for use in the franchised business or you may choose to acquire a vehicle; either must meet our specifications. One graphics wrap set featuring our Marks for a standard van is included in your franchise development package. You must purchase a graphics wrap set for each additional vehicle from our preferred vendor. Currently, a trademark graphics wrap set for a standard van costs $3,200. The low figure assumes you currently own a full-size cargo van or truck that meets our qualifications. The high figure assumes that you are purchasing or leasing a cargo van or truck that is four years old or newer, and financing a $20,000 total purchase price over three years. The high figure represents a 20% down payment, plus taxes, title and registration, and nine months’ finance payments of $550 each. The estimated cost range reflects the cost of acquiring a vehicle only that meets our standards, not including the graphics wrap package. You may customize your vehicle wrap to include additional approved information for an additional charge.

5. If you already own an existing business similar to the franchise, you will own much of the necessary equipment, supplies and inventory, including computer hardware and software, to begin the operation of your franchise. The low estimate shown here assumes that you already own an existing business similar to the franchise with many of these necessary items. However, you must get approval for items such as computer hardware and software because all of these items must meet our specifications. The high estimate shown here assumes you do not own an existing business, and includes office and field equipment, software and printer, etc., including inventory and supplies needed to equip your franchise in accordance with our standards. Both estimates include printed material (i.e., business cards, stationery, brochures, marketing materials, etc.), certain software packages, the franchise development package that must be purchased from us for $18,995, and initial sales training.

6. You must purchase the insurance coverage described in Item 8. If you do not, we can purchase it for you and bill you for our costs. Insurance costs will vary depending on such factors as the number of vehicles to be insured, your driving record (or your employees’ driving records), the insurer you choose, your location and other factors bearing on risk expense practices which apply to your locality.

7. You will need to advertise locally in the start-up phase of your franchise to help establish name recognition in your locality, as well as generate customer leads. This deposit amount will be paid to us and returned to you as described in Item 5 and Item 11.

8. See Items 6 and 11 for more information. You should allow at least the minimum amount stated above for travel, lodging, food and other miscellaneous living expenses incurred during Waco Training. Your actual costs will vary, depending on the distance traveled, method of travel, and your personal preferences. The low estimate shown above assumes we will train no additional people. The high estimate includes an additional amount of training fees and costs in the event you wish us to train additional employees. Both estimates include the required visit to a franchise during the Simulation Training and a required visit to our preferred cabinet vendor.

9. We do not require any prepaid deposits, permits or licenses before you begin the operation of your franchised business but your particular locality may require a permit or license to perform remodeling services or have other business licensing requirements. You are responsible for obtaining any permits or contractor’s licenses as well as any other business licenses required in your locality. You should consult your attorney or your local city, county and state authorities about the specific legal requirements for payment of sales tax and business licenses and related types of expenses.

10. We do not require that you operate from either a leased or purchased commercial office location until three months after you complete Waco Training, after which you must operate your franchised business from a commercial office location that meets our minimum requirements as set forth in the manual. The low estimate amount we have allocated is for a period of nine months and is based on our estimate of what you may have to pay for a mortgage or lease, utilities, and furnishings for our minimum requirements. The high estimate is for costs of acquiring additional space and subsequent mortgage or lease, utilities, buildout, displays and furnishing for a design center. No other related costs are included. Your costs will vary and you must make your own individual estimate of expenses for real estate based on costs in your local market. See Item 11 for more information.

11. This estimate is for fees that will be charged by your attorney to review the Franchise Agreement and other documents, to advise you and to incorporate a business entity on your behalf, as well as those charged by your accountant and/or financial advisor. These amounts are only estimates and your actual fees may vary significantly depending on the specific work you request, the advisors you select and the rates for professional fees in your area.

12. We charge you a per-person registration fee to attend the Reunion. We determine the registration fee in the fall of each year for the following year’s Reunion. The registration fee is usually $225 to $350 per person, with discounts for early registration and for subsequent attendees. For non-participants, there is a separate charge for the Banquet, usually $45 for children under 12 and $75 for those over 12. These fees may increase in the future. We will automatically draft the Reunion registration fee. Currently, we draft the registration fee on the April 1st before Reunion. This fee is nonrefundable because your attendance is required.

13. We recommend that you have additional funds available during the start-up phase of your franchise. These amounts are our estimates of the amount needed to cover your expenses before opening and for a six to 12-month period from the date you open for business, and include funds needed to pay the Software Maintenance and Support and Continuing Education Fees. These figures are only estimates and we cannot assure you that you will not have additional expenses starting your franchise. Your actual costs will vary according to your approach to the franchise; your management skills, experience and business acumen; local economic conditions; the local market for the franchise’s services; the prevailing wage rate in your market; competition; the rate of growth of your franchise and type/size of office space and/or design center you choose to open above the minimum requirements for the first nine to 12 months you are in business. We recommend that you obtain independent estimates from third-party vendors of the costs which would apply to your establishment and operation of a franchise or discuss the economic experience of opening and operating a franchise with our current and past franchisees. Included in additional funds is an estimate of personal living expenses estimated at $3,000 to $6,000 per month and the estimated salary of a part-time office manager (minimum 20 hours a week) and up to a full-time office manager dedicated solely to your franchise operation. This is based on our experience and information from franchisees who have estimated this for themselves. This is only an estimate. Your personal living and salary expenses may vary significantly and you must adjust this amount to take into account any variances. The estimated initial investment and other estimates in this disclosure document do not take into account your debt, all ongoing working capital requirements, accounts receivable financing or other costs. We have not provided for capital or other reserve funds necessary for you to reach “break-even,” “positive cash flow” or any other financial position. We do not furnish nor do we authorize our salespersons or anyone else to furnish estimates as to those amounts. We recommend that you review these figures carefully with your business advisors.

14. All of the fees listed as payable to us are non-refundable, except as described in Item 5. We relied on our experience to compile these estimates. The actual amount of additional funds you will need depends on a variety of factors, such as whether you extend credit terms to customers or the time of year you start your business. Except as specifically stated above, the amounts given may be subject to increases based on changes in market conditions, our cost of providing services and future policy changes. We have no current plans to increase any payments over which we have control. Financing for all or some of the above costs may be available.

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