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Business Description

FTG IS a Florida limited liability company that was organized on June 3, 2002 under the name Floors To Go Acquisition, LLC On June 24, 2002, Floors To Go Acquisition, LLC filed Articles of Amendment to its Articles of Organization changing its name to Floors To Go, LLC FTG began offering franchises m certain states in June 2002 FTG does business under the name Floors To Go FTG has its principal office at 3471 Bonita Bay Boulevard, Bonita Springs, Florida 34134 FTG was organized for the sole purpose of acquiring certain assets of Floors To Go, Inc , a California corporation ("FTGI"), and to operate as the franchisor of the FTG System, as defined below, on a going-forward basis In June 2002, FTG acquired certain assets of FTGI FTG has members located throughout the United States FTG does not currently own or operate any retail floor covering outlets FTG and its predecessor have not sold franchises in any other of business during the last 10 years FTG has never done business under another name FTG does not have a parent company

Prior Experience

In light of the acquisition described above, FTGI could be deemed a predecessor of FTG The former address of FTGI was 4295 Business Drive, Shingle Springs, California 95682. Abbey Carpet Co , Inc ("Abbey") is the owner and franchisor of Abbey Carpet® Showrooms, a floor covering and home fashion franchise catering to the upscale consumer market on a custom-ordered basis Abbey is owned by Philip Gutierrez, FTG's Chief Executive Officer Abbey has been offering its Abbey Carpet® franchises since 1963, and currently has 462 showrooms throughout the country Abbey is located at the same address as FTG Abbey is not engaged in any other fine of business and has never offered franchises in any other line of business For five years prior to becoming a franchisor. Abbey operated retail carpet stores in California Abbey is located at the same address as FTG There are no other companies that are controlled by, controlling, or under common control with FTG which are currently offering franchises in any line of business or will provide products or services to you

Business Offered

FTG offers you a marketing and merchandising system for selling floor covering and window treatment products to consumers from your store's location ("Showroom") The FTG marketing system is based upon owners/operators of these Showrooms selling to individual consumers from a wide variety and selection of samples and purchasing such merchandise from FTG approved floor covering and window treatment vendors (the "FTG Marketing System") FTG members also have the option of utilizing FTG's merchandising system which features showroom design, displays, product selection, and interior signage (the "FTG Merchandising System" and, together with the FTG Marketing System, the "FTG System") This concept is such that a member of the FTG System can offer a wide variety of quality floor covering and window treatment products to the consumer by selling from samples and then purchasing merchandise necessary to supply a particular consumer's needs at special prices negotiated by FTG from designated vendors The concept eliminates the need to maintain a substantial inventory of floor covering and window treatment products The special orders of merchandise sold are obtained from FTG-approved floor covering and window treatment vendors at prices that normally are less than those available to a store not participating in the FTG System The individual or business entity becoming a member will be incensed for five (5) years to utilize the FTG System and the Floor To Go trademarks, trade names and service marks, as the same currently exist (the "Marks") Memberships in the FTG System are offered on both a simple-Showroom and a multiple-Showroom basis, and members that choose to operate more than one Showroom will not be required to pay an Initial Membership Fee (defined in Item 5 below) or any Service Fees or Advertising Fees (defined respectively in Item 6 below) for their additional Showrooms Only the first Showroom will be required to pay the Initial Membership Fee, and only the first Showroom will be entitled to the $1,000 sign credit (described m Item 7, footnote 6 below) The minimum purchase requirements are set forth in Item 8 below (see Section 7 1 of the Membership Agreement) The FTG membership concept is intended for and directed towards the experienced owner/operator of an existing floor covering store, and accordingly FTG does not provide site selection, business financing, employee training, or management supervision before or after the execution of any FTG membership agreements The FTG System competes with other national floor covering marketing and merchandising systems FTG IS not aware of any regulations applicable specifically to the selling of floor coverings other than laws and regulations applicable to businesses in general, including, without limitation, the Americans with Disabilities Act, Federal Wage and Hour Laws, and the Occupational Safety and Health Act

Initial Fees

As a new member, you will be charged an Initial Membership Fee of $22,000 This fee IS payable as follows (a) $1,000 is paid at the time your Membership Agreement is signed, and (b) the remaining $21,000 is paid through the FTG CashBack Program (described below) whereby you will grant FTG the right to retain all proceeds allocable to you from the FTG CashBack Program up to the $21,000 amount or for a five-year time period, whichever occurs first (referred to hereafter as the "CashBack Participation") If the CashBack Participation does not generate proceeds to FTG of $21,000, whatever lesser amount of proceeds is collected by FTG over the five-year participation period on your behalf will be deemed payment in full for your Initial Membership Fee If your Membership Agreement is terminated prior to completion of the initial five-year term, the remaining balance of the Initial Membership Fee shall be due and payable by you to us in cash immediately upon the date of any such termination The FTG CashBack Program consists of various floor covering and window treatment manufacturers offering CashBack incentives for the purchase of selected floor covering and window treatment products When you purchase such selected carpets and/or floor coverings you will be credited with a cash rebate based upon a percentage of the selected carpets and/or floor coverings purchased These percentages range up to 8% of the purchase price of selected items Such cash rebates will be paid to FTG on your behalf when you earn such CashBack incentives FTG will hold such funds, without liability for interest, and after verification of amounts received, and after setting off any amounts that you owe to FTG, will distribute such funds to you annually or semiannually You are eligible to participate in the FTG CashBack Program and will be notified on a regular basis of qualifying CashBack items received on your behalf The Initial Membership Fee entitles you to participate in the FTG System and to receive various marketing materials currently available through the FTG System Proceeds from the Initial Membership Fee are, in part, profit to us and are, in part, used to pay some of the following costs and expenses incurred by us for (1) obtaining and screening Members, (2) administering the territories, (3) providing assistance to Members, (4) accounting fees and legal fees, (5) protection of our commercial symbols, names, proprietary trademarks, service marks and copyrights, (6) developing new product lines, marketing programs and advertising materials, (7) paying salaries and benefits to our management and employees, and (8) marketing and selling memberships In addition to the Initial Membership Fee, you will be obligated to make certain other expenditures, which are described in Items 6 and 7 below Some of these expenditures must be made before you can open your Showroom for business However, other than the Initial Membership Fee, you will not be required to pay FTG or its affiliates any fees or amounts for services or goods received from them prior to the time you open your FTG Showroom for business The Initial Membership Fee is not refundable except that if you reach $1,000,000 of first quality, running thee purchases, exclusive of promotional products, special purchases and SP's, through the FTG System within the twelve-month period beginning on the OO^** day after the date your membership begins, your Initial Membership Fee will be waived, and au payments you have made for such fee will be refunded to you by FTG on or after the fifteenth month after the date your membership begins B Multiple Showroom Memberships If you open or convert more than one Showroom on or after the execution of your initial Membership Agreement, you will pay the $22,000 Initial Membership Fee for your first Showroom (see Item 5(A) above), but you will not be required to pay an additional Initial Membership Fee or any Service Fees or Advertising Fees (see Item 7 below) for any additional Showrooms that you own and operate If you add an additional Showroom(s) simultaneously with the execution of your first (initial) Membership Agreement then an additional Schedule "A" will be attached to such Membership Agreement for each additional Showroom If you would like to operate additional Showrooms subsequent to the execution of your initial Membership Agreement, we must approve the opening of such additional Showroom(s), and you must execute the then-current membership agreement (see Section 3 3 of the Membership Agreement) The Early Termination Fee described below applies to each of your Showrooms C Membership Promotions We may offer promotions for limited periods of time in the form of credits against Initial Membership Fees as part of a program designed to promote the execution of membership agreements, and to encourage the opening of FTG Showrooms We may, in the future, change the Initial Membership Fee then being charged to new members

Financing

Neither FTG nor any of its agents or affiliates offers any financing arrangements, directly or indirectly, to you except that FTG permits deferred payment of the Initial Membership Fee which is paid over a period of time in conjunction with the CashBack Participation program (see Section 7 2 of the Membership Agreement) The CashBack Participation program is described in greater detail under Item 5(A) above No interest will be charged to you and no separate promissory note will be executed by you The amount of the Initial Membership Fee which is deferred is $21,000 FTG does not offer direct or indirect financing FTG does not intend in the future to sell, assign or discount to a third party any note, contract or other obligation of yours which IS owed to FTG does not arrange financing from other sources, and accordingly, does not receive payments for placing financing FTG does not guarantee your note, lease or obligation

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 do not make any representations about a member's future financial performance or the past financial performance of company-owned or franchised outlets We also do not authorize our employees or representatives to make such representations either orally or in writing If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet If you receive any other financial performance information or projections of your future income, you should report it to our management by contacting Ted Dlugokienski, Floors To Go, LLC, 3471 Bonita Bay Boulevard, Bonita Springs, Florida 34134, (866) 357-7246, the Federal Trade Commission and any appropriate state regulatory agencies