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Business Description

The franchisor is Worldwide Refinishing Systems, Inc. We were incorporated in the State of Texas on October 7, 1975, under the name Gnu Services Corporation. We changed our name to Worldwide Refinishing Systems, Inc. on December 15, 1988. We maintain our principal place of business at 510 N. Valley Mills Dr., Suite 304, Waco, Texas 76710. We do business under our corporate name and under the name DREAMMAKER BATH AND KITCHEN BY WORLDWIDE®. We have no predecessor or parent company. We do not engage in any other business activity. Our agents for service of process are listed on Exhibit A-2.

Prior Experience

From 1975 to 1995, we offered franchises which refinished, repaired and replaced porcelain, laminate, wood, ceramic tile, cultured marble, fiberglass and other surfaces. Since 1996, we have offered franchises of the type described in this disclosure document. We offer these franchises as “Start-Ups” or you have the option to convert an existing business into a franchise (a “Conversion”). We do not own or operate any franchises. We have not offered franchises in any other line of business.

Business Offered

You will perform residential and commercial bathroom and kitchen remodeling, cabinet refacing, safety and mobility modifications, and perform related services and sell related products. You will focus primarily on interior remodeling, but will also provide exterior remodeling and restoration projects as needed. You will operate the franchised business under our service mark DREAMMAKER BATH & KITCHEN BY WORLDWIDE® and the additional principal service marks, trademarks, trade names, logos, emblems, slogans or indicia of origin which are or may be designated by us in the future (the “Marks”) for use in accordance with the methods and processes developed by us in connection with the franchise (the “System”) within a specified geographical area (the “Territory”).

Initial Fees

Initial Franchise Fee: The minimum initial franchisee fee is $37,000, plus $185 per 1,000 population for additional territory, less applicable discounts, as described below. You must pay to us an initial franchise fee of $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. Additional territory, if available, costs $185 per additional 1,000 population and generally consist of no more than 1,000,000 individuals. A larger population may be allowed under certain exceptional circumstances to be determined at our discretion. The initial franchise fee is used to cover our costs in obtaining the Marks, recruiting, training, and supporting you in the initial phase of your operation. You must pay the initial franchise fee in full when you sign the Franchise Agreement and it is fully earned and nonrefundable. Financing for the initial franchise fee may be available as noted in Item 10. We do not finance the franchise development package. Franchise Development Package: Before you begin the operation of the franchise, you must pay us $18,995 for our franchise development package, which includes initial sales training and contains many of the items you will need to equip your franchise in accordance with our standards and specifications. See Items 7 and 8 for more information about the franchise development package. This fee is not refundable for any reason and this fee will not be discounted for any reason. All orders of the package must be placed within 90 days of completing Waco Training or those funds will be forfeited. Initial Advertising and Promotional Deposit : When executing the Franchise Agreement, you will pay us an amount between $12,000 and $42,000, to be determined in our discretion, which we will hold as a deposit. At least $12,000 of the deposit amount, or such other greater amount we determine (the “Franchisor's Draw”), will be spent by us on advertising and promotional activities connected with your franchised business. The remainder of the deposit will be returned to you as you incur expenditures related to approved advertising and promotional activities. The lower range of the deposit amount applies to Conversions, while the higher range applies to Start-Ups. We will provide you with a list of approved advertising and promotional activities on which this amount can be spent and, once you submit to us proof that you have incurred such related expenses, we will return to you the related expenditure amount, up to the deposit amount, less the Franchisor's Draw. You may submit for our approval additional types of advertising and promotional activities; however, you must receive our written approval in order to request that the amount be drawn from your deposit. If you do not submit proof of approved advertising and promotional expenditures at least up to the amount of the remainder of your deposit within 12 months of the first Monday after completion of Waco Training the balance will be forfeited. The deposit is refundable before the completion of Waco Training if the Franchise Agreement terminates for any reason, less any expenditure already incurred in connection with your franchised business. Beginning as of the first Monday after completion of Waco Training, however, the deposit is only refundable as described above. Continuing Education Fee: Beginning the first full week after you complete the Waco Training, you must pay us a Continuing Education Fee of $100 per month via automatic bank draft. If you meet certain requirements, it is our current policy to reimburse you for expenses you incur in attending certain specified training meetings, up to a defined limit. For the first meeting, we will reimburse you for expenses up to the sum of your Continuing Education Fee payments or $600, whichever is less; for each additional meeting, we will reimburse you $600. Total reimbursement, for any year, will not exceed the sum of your Continuing Education Fee payments or $1,200. To qualify for reimbursement, you must be current in all payments due under the Franchise Agreement, including the Continuing Education Fee, and you must attend the training meeting in its entirety. We may modify or discontinue this policy at any time. Software License Fee: Upon signing the Franchise Agreement, you must pay us a software license fee of $3,995 for your use of software that we own or otherwise have a right to license to you (“Franchisor's Software”). The software license fee is fully earned at that time and is nonrefundable. Franchisor's Software includes financial related software such as a QuickBooks template that allows formatting of financial information to coordinate with our systems and industry-specific job costing capability (the “Financial System”) and software which provides and combines contact management, sales and lead tracking management, job estimating, and proposal generation, and which produces take-off lists for production and interfaces with our required accounting software (“Customized Management Software”). This fee is subject to change and may increase in the future. In addition, it is anticipated that you will need to engage the services of other professional consultants from time to time to assist with the training, deployment or enhancement of the Franchisor's Software. Discount Programs: Our discount programs are described below: Cash Discount : If you pay us the entire initial franchise fee in cash before the expiration of 60 days from the effective date of your Franchise Agreement, we will discount the initial franchise fee by 5%. Population Discount : If you purchase a territory containing a population of 300,000 or more we will discount the initial franchise fee by 20% to 50%, depending on the population of the territory.The Population Discount is based on the population of the territory you purchase at the time you sign the Franchise Agreement and not on the combined population of the territory you purchase and any territory included in an option. Roll-In Discount for Existing Business If you have an existing business with annual gross sales of $100,000, which is similar to the franchise and you agree to merge the business with the franchised business, we will discount the initial franchise fee by 1% for every $20,000 in annual Gross Sales you agree to "roll-in" to the franchise, up to a maximum discount of 50%. Additional Territory Discount: For qualified franchisees that have been our franchisee for at least two years and who purchase additional territory, the initial franchise fee will be discounted based on the number of years the franchisee has been our franchisee. HIRE Discount for Employees of Franchisees : We have a discount program to reward qualified employees of our franchisees who have been recommended by their employer, have been employed by our franchisee for at least two years, and who otherwise qualify to be our franchisee. Franchises granted by us under the HIRE Program will generally contain a population of 200,000. The HIRE Discount applies only to the first 200,000 of population and does not apply to any additional initial franchise fee. If you wish to acquire a territory containing a population of more than 200,000, you must pay the additional initial franchise fee at our usual rates except for territories of more than 300,000 of population in which you may qualify for the population discount. VetFran Discount We are a member of the International Franchise Association and we participate in the International Franchise Association's VetFran Program. If you are an honorably discharged veteran who meets our qualifications for purchasing a franchise, we will discount the initial franchise fee by $5,000. Combination and Application of Discounts : The VetFran discount will be applied first and any other discounts will be applied to the net amount after the VetFran discount. The VetFran discount cannot be used on additional territory. You may use the Cash Discount and either the Territory Discount or the Roll-In Discount. You cannot use both the Roll-In Discount and the Territory Discount. If you qualify for both the Roll-In Discount, and the Cash Discount, these discounts will be calculated as shown in the following example: You agree to “roll-in” $1,500,000 in annual Gross Sales from an existing business you own, and you also agree to pay the initial franchise fee in cash. On an initial franchise fee of $100,000, you first receive a 50% Roll-In Discount on the initial franchise fee, reducing the initial franchise fee to $50,000. You will then receive a 5% Cash Discount on the discounted initial franchise fee of $50,000, reducing the initial franchise fee to $47,500. The Additional Territory Discount (for our qualified existing franchisees only) may be used with the Cash Discount but not with any other type of discount. If you qualify for both the Additional Territory Discount and the Cash Discount, these discounts will be calculated as shown in the following example: if you have owned your franchise for 10 years, you receive a 40% Additional Territory Discount on an initial franchise fee of $100,000, reducing the initial franchise fee to $60,000. You will then receive a 5% Cash Discount on the discounted initial franchise fee of $60,000, reducing the initial franchise fee to $57,000. You cannot use the HIRE with any other discount except the Cash Discount. If you qualify for the VetFran or HIRE discounts, you must have and maintain during the term of the Franchise Agreement a 51% majority interest in the beneficial ownership and voting interest of the franchisee if the franchisee is a corporation, partnership or other entity (not a natural person). The above examples are for illustration only. Any questions about application or combination of discounts, including questions about the order in which discounts may be applied, will be resolved by us in our sole discretion. Option for Additional Territory : You may, if qualified, purchase a one-year (18 months in the case of a Start-Up) option on additional territory by paying us a fee of 10% of the initial franchise fee for the territory you wish to buy when you purchase a franchise. The Additional Territory Discount above will apply to the option territory we mutually select; however, the number population of your option territory cannot be combined with the territory under the Franchise Agreement you execute to obtain a larger Additional Territory Discount. You must sign an Option to Purchase Agreement (Franchise Agreement, Exhibit “9”). At any time within the one-year (or 18 months for Start-Ups) period beginning from the effective date of your Franchise Agreement you may purchase the additional territory by paying us the balance of the initial franchise fee. The 10% deposit will be applied to the purchase price. We do not refund your deposit if you decide to not purchase the additional territory. You may also acquire an additional territory during the term of the Franchise Agreement by entering into another Franchise Agreement for the additional territory or, at our option, an amendment to your existing Franchise Agreement, for that particular territory if available. When you purchase additional territory, whether or not through the Option to Purchase Agreement we may require that you sign a general release releasing us from all claims you may have except claims which, under state law, may not be released. Resale Training Fee: You may acquire an existing franchised business on terms negotiated between you and our franchisee, subject to the transfer provisions of our franchisee's agreement with us. You must pay us a Resale Training Fee of $3,500 if you purchase an existing franchised business. See Item 6. If you acquire an existing franchised business you must also pay the Initial Sales Education Fee of $3,500 and require your Operating Principal to participate in this sales-related training program. Additional Training Costs: You must complete our Foundations Training, attend Waco Training, and complete our Simulation Training before you begin operating the franchise. See Items 7 and 11 for more information. You may send three people (including you) to Waco Training at no additional cost. If you wish to send additional employees to Waco Training, before training begins, for each employee, you must pay us $1,500.

Financing

We may agree to finance a portion of the initial franchise fee for qualified prospective franchisees under specified terms and conditions. The amount we agree to finance will depend on your qualifications. The maximum amount we will finance is 70% of your initial franchise fee. We also limit the amount we will finance to a specified amount (currently, an amount that is less than 50% of the total equity, debt and other financial support of your business); and you must represent to us, in writing and in a form we specify, confirming the dollar amount of your total equity, debt and other financial support. (See Exhibit “8” to the Franchise Agreement, Legal Entity Sheet and Financial Information Sheet) The representation must remain true through the life of your franchise. We may elect not to approve a transfer, including a transfer to a corporation or other entity wholly owned by you, if you do not either maintain the same investment in your business or pay any loans payable to us and/or our Affiliates in full. Our decision to finance may be based, in part, on your credit-worthiness, the collateral that you have available to secure the financing and our then-current financing policies. If we agree to finance a portion of the initial franchise fee, you must sign a promissory note when you sign the Franchise Agreement. You must pay us the down payment when you sign the Franchise Agreement and pay the balance in monthly installments. To qualify for the interest rates noted above you must meet our credit standards and be otherwise eligible for financing. An example of our form of promissory note is attached as Exhibit “5” to the Franchise Agreement. You must make note payments to us by automatic bank draft. Some banks and other financial institutions charge a fee for electronic transfers that can range from $3 to $20 per transfer but these electronic transfer fees are often negotiable. Monthly payments will begin approximately two months after you complete Waco Training. The length of the repayment term is negotiable but typically does not exceed five years, and cannot exceed seven years, after you complete Waco Training. We require a security interest in the franchise, including its assets, against which we may file any liens permissible by law. You may prepay the note at any time without penalty. If you default, we may declare the entire remaining amount due. If you do not pay us the entire balance, and any accrued, unpaid interest, you may be responsible for the court costs and attorneys' fees we incur in collecting the debt from you, and we may terminate your Franchise Agreement. You must waive your rights to certain notices of a collection action in our form of promissory note, security agreement and guaranty but there are no waivers of defense in our form of promissory note, security agreement or guaranty. If you are a legal entity, your shareholders, members, partners and/or owners must personally guarantee the debt and agree to pay the entire debt and all collection costs. We may sell, assign or discount any promissory note or other obligation arising out of the Franchise Agreement to a third party. If we sell or assign your promissory note, it will not affect our obligation to provide the services to you that are described in the Franchise Agreement but the third party may be immune under the law to any defenses to payment you may have against us. We may periodically agree with third party lenders to make financing available to our qualified franchisees and we may, in our sole discretion, refer you to a third party lender for financing. We have no control over whether financing will be offered to you by any third party lender. The lender is not obligated to provide financing to you or to any other franchisee that the lender finds does not meet its credit requirements and loan criteria. If we refer you to a third party lender for financing, we may agree to take a short-term promissory note until your financing is arranged. An example of our form of short-term promissory note is attached as Exhibit “5” to the Franchise Agreement. You must use the proceeds from the lender to pay any promissory note to us. We do not currently derive income from referrals or placement of financing with any third party lender. However, we may require payment from you or other persons for the placement of financing in the future. If we charge for placing financing in the future, we expect to use the payments to offset our expenses in doing so. Currently, we have no arrangements with third party lenders. We do not guarantee your obligations to third parties.

Franchisee Revenue and Profit

The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances. The following graph reflects average Gross Sales achieved by our franchisees in calendar years 2011, 2012, 2013, 2014, 2015, 2016, 2017, and 2018. In calculating these averages, we included Gross Sales information only for the franchisees that had been in operation for the full calendar year, and excluded information about franchisees that began operating after January 1st or ceased operating before December 31st of the respective year. As reflected in the chart below, average Gross Sales for our franchisees increased from $495,524 in 2011, to $1,076,928 in 2018, representing 117.33% growth and median Gross Sales for our franchisees increased from $455,310 in 2011, to $830,929 in 2018, representing 82.5% growth.