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Business Description

The Franchisor is Fast Undercar Franchise, LLC. We were organized as a California Limited Liability Company on April 17, 2018 originally under the name of FUFC Acquisition, LLC and filed a name change request on June 4, 2018 to Fast Undercar Franchise, LLC. Our principal business address is 3 Dakota Drive, Suite 110, New Hyde Park, New York 11042. We do business under the name FAST UNDERCAR®. We are a direct subsidiary of PAI Holdco, Inc., a Delaware corporation (“PAI Holdco”) with a principal business address of 3 Dakota Drive, Suite 110, New Hyde Park, New York 11042. We describe our parent companies in this Item 1. On May 15, 2018, FUFC Acquisition, LLC and its affiliate, Parts Authority Metro, LLC, a California limited liability company (“PAM”), together as “Purchasers,” entered into an Asset Purchase Agreement to acquire the assets of Fast Undercar, Inc., a California corporation (“FUI”) and Fast Undercar Franchise Corporation, a California corporation (“FUFC”). FUI at the time owned and operated 5 FAST UNDERCAR® Outlets in California and FUFC operated as a franchisor and provided franchise services under 28 franchise agreements with third party franchisees. On the transaction's closing date, June 1, 2018, PAM acquired FUI's assets and FUFC Acquisition, LLC acquired all of FUFC's right, title and interest in the Franchise Agreements then in effect. Consequently, we consider FUFC as our predecessor. Our predecessor, FUFC, was organized as a California corporation on July 6, 1998 to administer the FAST UNDERCAR® franchise program. FUFC was affiliated through common ownership with FUI, which incorporated on May 29, 1996. Both FUI and FUFC's principal place of business are the same as our principal business address. We do not now and have not in the past offered or sold franchises in any other line of business. We are not presently affiliated with any other company that presently offers franchises in any line of business. Our affiliate, PAM, operates FAST UNDERCAR® Outlets in California as we disclose in this Disclosure Document. We may directly or through an affiliate company engage in Internet sales of undercar and other automotive aftermarket parts, supplies and accessories to the public. We and our affiliates have common principals. We derive our operating experience from our affiliates' experience in developing and operating FAST UNDERCAR® outlets and in automotive aftermarket distribution in various market channels.

Prior Experience

Our predecessor, FUFC, was organized as a California corporation on July 6, 1998 to administer the FAST UNDERCAR® franchise program. FUFC was affiliated through common ownership with FUI, which incorporated on May 29, 1996. Both FUI and FUFC's principal place of business are the same as our principal business address. We do not now and have not in the past offered or sold franchises in any other line of business. We are not presently affiliated with any other company that presently offers franchises in any line of business. Our affiliate, PAM, operates FAST UNDERCAR® Outlets in California as we disclose in this Disclosure Document. We may directly or through an affiliate company engage in Internet sales of undercar and other automotive aftermarket parts, supplies and accessories to the public.

Business Offered

The FAST UNDERCAR® franchise grants you the right to own a distribution outlet specializing in the sale of undercar and other automotive aftermarket parts, supplies and accessories. FAST UNDERCAR® outlets sell primarily to professional installers ranging from independent garages with a single service bay to well-known national repair chains servicing high volumes of business. Your inventory will include popular-brand brake parts, steering, chassis and suspension components, power transmission parts and other automotive parts and supplies that we specify. These parts and supplies are for installation or use in automobiles and other light vehicles in accordance with manufacturers' specifications. Most undercar products are subject to constant wear and tear and most professional installers can install these products without special training. Our affiliate, PAM, maintains relationships with a variety of wholesale suppliers of high quality, national brand undercar and other automotive aftermarket parts who are capable of supplying our chains' inventory needs and promptly fill restocking inventory orders as needed. PAM endeavors to negotiate favorable group buying programs with certain recommended suppliers to obtain volume discounts and other favorable terms for our franchisees. Neither we nor PAM make any representation regarding our ability to obtain particular prices, payment or credit terms. You must purchase all of your undercar and other automotive aftermarket parts, supplies and accessories from our recommended suppliers unless you obtain our prior written consent to purchase inventory items from a supplier who you propose to us and we approve after considering the quality of the supplier's inventory and the supplier's overall reputation and ability in our opinion to make timely deliveries. We forbid our franchisees to negotiate different prices or other terms of sale directly with suppliers on our recommended supplier list. FAST UNDERCAR® outlets' primary customer base is the professional installation market rather than retailers who sell undercar and other automotive aftermarket parts to the general public. Professional repair facilities of all types are under increasing pressure to shorten repair and service times and increase returns from their service bays. By specializing in undercar parts and marketing to the professional installation market, FAST UNDERCAR® outlets occupy a distinctive segment of the automotive aftermarket. As component parts proliferate, professional installers are specializing in the kind of repair work they handle. FAST UNDERCAR® outlets serve this increasingly specialized market niche. We distinguish the FAST UNDERCAR® system by featuring a two-step supply delivery process. Our approach involves FAST UNDERCAR® outlets (i) purchasing inventory directly from manufacturers and wholesalers of undercar and other automotive aftermarket parts, and (ii) using delivery vehicles to “hot shot” inventory directly to the customer's repair shop. Our delivery systems represent a significant departure from traditional wholesale distribution methods which historically involve at least three-steps: a hard parts manufacturer selling to a jobber or full-line warehouse who, in turn, resells inventory to a local distributor or retailer where customers travel to pick up the products they need. Our approach eliminates the functions that, historically, local auto parts jobbers (who typically combine retail and wholesale operations in retail locations where customers must come and shop) and full-line warehouse distributors (who sell primarily to jobbers, but historically are weak on service functions), perform. Our two-step distribution approach emphasizes parts delivery and customer convenience. We speed up the process of getting parts to the ultimate end user (the installer) and minimize expenses attributable to carrying an extensive inventory line.

Initial Fees

Initial Fees are all fees and payments, or commitments to pay, for services or goods that you receive from us or any of our affiliates before your FAST UNDERCAR® outlet opens for business to the public. We determine Initial Fees in a uniform matter. Except as we describe in this Item 5, Initial Fees are not refundable. A. Initial Franchise Fee. The Initial Franchise Fee (“Initial Franchise Fee”) for the right to own and operate one FAST UNDERCAR® outlet is $12,500 for both start-up and conversion franchisees. We charge the same Initial Franchise Fee regardless of the size of your Territory. We establish the boundaries of the Territory before you sign the Franchise Agreement. B. Territorial Rights Fee. While most franchise sales will grant the right to open and operate one FAST UNDERCAR® outlet, we do grant area development rights to qualified applicants who can demonstrate sufficient net worth, automotive aftermarket parts and related industry experience, management skills, and business acumen to operate multiple outlets. When we grant area development rights, you receive the exclusive right to open a mutually-agreed number of FAST UNDERCAR® outlets within an agreed-upon geographic area. Your area development rights are subject to your meeting agreed-upon development obligations. The Area Development Agreement (see Exhibit F) identifies these development obligations (i.e., the specific number of outlets you must open and the dates when you must open them by) as well as the development territory within which you must open your outlets. We establish the boundaries of the development territory and the development commitment with you before you execute the Area Development Agreement. The Area Development Agreement does not confer any right to sell FAST UNDERCAR® franchises to third parties. The minimum development commitment is 5 outlets. You must pay a territorial rights fee (“Territorial Rights Fee”) when you sign the Area Development Agreement. The Territorial Rights Fee compensates us for agreeing to forego other opportunities to develop the territory during the Area Development Agreement's term. We fully earn the Territorial Rights Fee when you pay it. We will not refund any portion of the Territorial Rights Fee under any circumstance, irrespective of whether you satisfy the opening commitments or not. We compute the Territorial Rights Fee as a multiple of the number of outlets that you commit to open times the Initial Franchise Fee per outlet. Therefore, if you commit to open 5 outlets, the total Territorial Rights Fee is $62,500. You pay the entire Territorial Rights Fee when you sign the Area Development Agreement, and we credit $12,500 of the Territorial Rights Fee to the Initial Franchise Fee each time you sign a new Franchise Agreement. You sign the Franchise Agreement for the first FAST UNDERCAR® outlet in your development commitment when you sign the Area Development Agreement, and sign each additional Franchise Agreement for the other FAST UNDERCAR® outlets in your development commitment when you obtain site approval. For purposes of computing a developer's Territorial Rights Fee and Initial Franchise Fee, we treat all area developers as start-up franchisees, even if the area developer has previously bought a franchise through our conversion program. We calculate the Territorial Rights Fee uniformly for all persons purchasing an area development franchise, but the specific amount that you will pay depends upon the number of outlets you commit to open. If you buy an area development franchise, you will sign the same form of Franchise Agreement for each FAST UNDERCAR® outlet that you open within your development territory, which is the form of Franchise Agreement that we use to sell unit franchises at the time when we enter into the Area Development Agreement. Therefore, you will enter into a separate Franchise Agreement for each FAST UNDERCAR® outlet that you open in your development territory, although the terms of each of these Franchise Agreements are identical. C. Franchise Application. To apply for a franchise or to acquire area development rights, you must submit preliminary financial and biographical information to us. We will evaluate this information and decide if more discussion about the FAST UNDERCAR® franchise opportunity would be productive. If there is mutual interest in continuing discussions, you will at that time execute the Application and Franchise Deposit Agreement (see Exhibit C), pay us a deposit of $2,000, and complete a comprehensive application, including providing bank and personal references and the additional information that we request. We charge the same deposit to start-up and conversion applicants. If we accept your application, we fully credit your deposit to the Initial Franchise Fee for the first (or only) franchise that you apply to buy (depending on whether you apply to buy a single unit franchise or area development rights). Neither our expression of interest in continuing discussions, nor your payment of the deposit, obligates us to sell you a franchise or area development rights. We have 30 days after receiving your complete application in which to accept or reject it, and reserve complete discretion in selecting FAST UNDERCAR® franchisees. If we reject your application, we refund your entire deposit, less a $500 application fee. If we accept your application, a single unit franchisee will execute a Franchise Agreement (Exhibit D) and pay the balance of the Initial Franchise Fee within 14 days after notice of acceptance, and an area developer will execute the Area Development Agreement (see Exhibit F) and pay the entire Territorial Rights Fee within 14 days after notice of acceptance. If you fail to do so, we are under no obligation to sell you a FAST UNDERCAR® franchise or area rights. We may withdraw our approval at any time after the 14 days expire and refund your $2,000 deposit, less the $500 application fee. D. Conditions Regarding Refund. Territorial Rights Fee. We do not refund the Territorial Rights Fee under any circumstance regardless of whether you open all of the outlets in your development commitment or not. Initial Franchise Fee. If you are a start-up franchisee who purchases a single franchise, we will refund the Initial Franchise Fee in two situations only, as we describe below. These refund conditions do not apply if you sign a Franchise Agreement after purchasing area development rights: 1. We may terminate the Franchise Agreement if you and the Company cannot agree upon a site for your FAST UNDERCAR® outlet within 30 days after we receive your site proposal. If either one of us terminates the Franchise Agreement before we approve your proposed location, we retain $1,000 of the Initial Franchise Fee and refund the balance to you. To obtain a refund, you must execute our current form of general release (see Exhibit J) and agree to waive any claims that you might have against us or our officers and directors. 2. It is your responsibility, not ours, to negotiate the lease for the site we approve. You will have 30 days after we approve the outlet to deliver to us a copy of the lease and an Addendum to Lease (see Exhibit G) that you and the landlord sign, together with an executed UCC-1 (see Exhibit G) covering the personal property assets of the franchise. If you fail to satisfy this condition, we may terminate the Franchise Agreement. If we do, we retain $1,500 of the Initial Franchise Fee paid, and refund the balance to you. To obtain a refund, you must execute our current form of general release (see Exhibit J) and agree to waive any claims that you might have against us or our officers and directors. E. Sale of Operating Fast UNDERCAR® Outlet by Us or Our Affiliates. In individual cases, we (to the extent we operate FAST UNDERCAR® outlets) or one of our affiliates which may own a FAST UNDERCAR® outlet may agree to sell all of the assets of its operating outlet to a buyer who will continue to operate the FAST UNDERCAR® outlet as a franchise under the FAST UNDERCAR® system. The buyer must meet our current qualifications for new FAST UNDERCAR® franchisees and must purchase franchise rights from us. In other words, our sale of franchise rights and the sale of the assets are 2 separate events that must occur simultaneously, so that on the same date the buyer acquires title both to the assets of the operating outlet and to the franchise rights for the outlet. We (if we own the operating outlet), or our affiliate which owns the operating outlet for sale, and the prospective franchisee/buyer will negotiate the price and terms of purchase for the assets and the other conditions for the purchase and sale agreement before the franchisee/buyer executes the Franchise Agreement. The terms of purchase will vary in individual cases according to the performance history and market potential of the FAST UNDERCAR® outlet being sold. Depending upon the payment terms we negotiate, you may pay all or part of the purchase price for the physical assets before your business opens. You will sign the current Franchise Agreement and pay us the Initial Franchise Fee simultaneously upon the closing of the asset acquisition.

Financing

We do not offer direct or indirect financing, nor do we guaranty any note you make or 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. We set forth below the total actual gross profit and cost of goods and labor for a reporting group consisting of 20 franchisee-owned FAST UNDERCAR® outlets. The reporting group represents franchisee-owned FAST UNDERCAR® Outlets that (i) were owned and operated by the same owner during the entire 12 months of FY 2018 (1/1/18 – 12/31/18); (ii) had been operating for at least 12 months before the start of FY 2018; and (iii) voluntarily reported this information to us. We exclude 6 franchisee-owned FAST UNDERCAR® Outlets that met the (i) and (ii) reporting criteria, but did not report data to us. Except for the information in this Item 19, we do not furnish, or authorize any person who sells FAST UNDERCAR® franchises to furnish, any oral or written information concerning the actual or potential sales, costs, income or profits of a FAST UNDERCAR® outlet. Actual results may vary from outlet to outlet for a variety of reasons, and we make no representation regarding the results you may achieve. Substantiation of the data we use to prepare this Item 19 will be made available to you on reasonable request.