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Business Description

Floorcoverings International, Ltd. is a Georgia corporation established in February 1998 with corporate offices located at 5390 Triangle Parkway, Suite 125, Norcross, Georgia 30092; the telephone number is (800) 955-4324. On October 1, 2003, our parent The Franchise Company (U.S.) Inc., a Delaware corporation with a principal business address of 126 Prospect Street, Cambridge, Massachusetts 02139, acquired FCI from Thomas K. Gandee and Cynthia L. Gandee (the “Gandee's”). As a result of a corporate reorganization, effective August 2, 2010, FCI became a subsidiary of TFC Brands, Inc., a Delaware corporation, which is a subsidiary of The Franchise Company (U.S.) Inc. Our parent TFC Brands, Inc. changed its name to FS Brands, Inc. and has its principal business address at 2621 Van Buren Avenue, Suite 550A, Audubon, PA 19403. Our President and Chief Executive Officer, Thomas Wood owns 24% of our stock. We do business as “Floor Coverings International” and “FCI.” Our agents for service of process are disclosed in Exhibit I of this disclosure document. Floorcoverings International, Ltd. is a Georgia corporation established in February 1998 with corporate offices located at 5390 Triangle Parkway, Suite 125, Norcross, Georgia 30092; the telephone number is (800) 955-4324. On October 1, 2003, our parent The Franchise Company (U.S.) Inc., a Delaware corporation with a principal business address of 126 Prospect Street, Cambridge, Massachusetts 02139, acquired FCI from Thomas K. Gandee and Cynthia L. Gandee (the “Gandee's”). As a result of a corporate reorganization, effective August 2, 2010, FCI became a subsidiary of TFC Brands, Inc., a Delaware corporation, which is a subsidiary of The Franchise Company (U.S.) Inc. Our parent TFC Brands, Inc. changed its name to FS Brands, Inc. and has its principal business address at 2621 Van Buren Avenue, Suite 550A, Audubon, PA 19403. Our President and Chief Executive Officer, Thomas Wood owns 24% of our stock. We do business as “Floor Coverings International” and “FCI.” Our agents for service of process are disclosed in Exhibit I of this disclosure document.

Prior Experience

We have offered franchises in the mobile retail floorcovering and window blind business since our incorporation in February 1998. We do not offer and have not offered franchises for any other business. Currently, neither FCI nor our affiliates operate Floor Coverings International® businesses of the kind being offered to you as described in this disclosure document. Predecessor On February 27, 1998, the Gandee's purchased substantially all the assets of the company formerly called Floorcoverings International, Ltd., a corporation organized under the laws of the state of Georgia (the “Predecessor”). The Predecessor has changed its name to LaPonsa, Inc. The Gandee's incorporated under the name Floorcoverings International, Ltd. in February 1998. The Predecessor was located at 5182 Old Dixie Highway, Forest Park, Georgia 30297. The Predecessor sold Floor Coverings International® franchises from its inception in 1988 to February 1998. The Predecessor never operated a Floor Coverings International® business similar to the one described in this disclosure document and never offered franchises for any other business. Any historical information contained in this disclosure document relating to events before October 1, 2003 represents information about our Predecessor.

Business Offered

We sell a mobile retail floor coverings franchise business for both soft and hard flooring products and window treatments (the “Franchised Business”) under the terms of a Franchise Agreement included in this disclosure document as Exhibit A (the “Franchise Agreement”). You are required to establish an studio (office/warehouse). Each Franchised Business includes the right to use our name, service marks and business methods (the “License”) in a protected territory (a “Designated Market Area” or “DMA”). A DIMA generally encompasses between 50,000 and 80,000 single family dwellings. Under the Franchise Agreement, you may only offer, sell and/or perform the following: carpeting, window treatments, hard and soft floor covering products in residential dwellings that have less than five units/apartments, as well as individual residential apartments, condominiums or townhomes, provided (i) such work is not subject to the National Account Program, and (ii) the total aggregate contract amount does not exceed $50,000 for any one particular job (collectively, “Residential Services”). FCI has a National Account Program in which FCI has the exclusive right to negotiate and enter into agreements to provide services to National Account customers. FCI may offer you the option to perform such work in the DMA but it may also provide such services itself or contract with a third-party including another FCI franchisee to perform such services in the DMA. Further, we may offer qualified franchisees the right to perform services for any particular residential job in which the aggregate contract amount exceeds $50,000 (“Commercial Services”), and any other flooring services not specifically identified as Residential Services above, including but not limited to any business or other commercial building, hotel or academic institution, upon the payment of a one time, non-refundable Commercial Services Licensing Fee, signing our Commercial Services Addendum, and the completion of our Commercial Training Program and such other conditions as we require. FCI franchisees operating a commercial services franchise are permitted to offer and sell their Commercial Services in the DMA. See Item 12 for more information about FCI's National Account Program and Commercial Services. \ From time to time, FCI may establish certain programs for the benefit of its franchisees and the FCI System whereby FCI franchisees will be permitted to offer, sell and perform certain flooring services in accordance with the specifications described in any particular program established by FCI (“Program Services”). Franchisee's participation in any particular program will be subject to the terms and conditions of such program. We will provide you with training and assistance in marketing, sales, advertising, staffing, product selection, operational procedures, and financial administration. As the owner of a mobile floor coverings and window treatments business, you will operate from a design- consultation studio from which you and your team will service your local market. No prior experience is required, although we reserve the right to award franchises at our sole discretion. As a franchisee, you and your team take samples of floor coverings and window treatments (the “Franchised Products and Services”) to your customer's home or business, where you help them select floorcovering and/or window treatment type, color, and style best suited to your customer's furniture and color scheme. When your customer places an order, you telephone the order to a designated mill or mill manufacturer representative or other supplier and schedule ' installation by a qualified installer. You will compete with fixed location retail facilities and department stores as well as other mobile floor covering businesses that offer similar floor covering and window treatment products and services.

Initial Fees

The Initial Franchise Fee is based on the number of single family dwellings in your DMA. You must pay a lump sum Initial Franchise Fee of $57,900 for a DMA of between 50,000 and 80,000 single family dwellings. If you wish to purchase a DMA with over 80,000 single family dwellings at the time you sign a Franchise Agreement, you must pay us a fee of either (a) $0.25 per each additional single family dwelling in your DMA or (b) $900 per $1,000,000 Flooring Opportunity (as defined in Note 2 to Item 7 below). We shall determine, in our sole discretion, which method to employ when pricing the additional dwelling or territory in your DMA, and this fee must be paid in addition to the Initial Franchise Fee. FCI delineates DMAs by one (or more) contiguous postal code(s), and determines the number of single family dwellings in a DMA from current sources and estimates which we believe to be accurate and reliable. If you are a veteran that qualifies for the VetFran Program, we will proudly offer you a ten percent (10%) discount on the Initial Franchise Fee. Besides paying the Initial Franchise Fee, you must buy an Opening Package from us. The standard Opening Package includes carpet and various hard surface flooring samples, laser measuring device, training materials, a license to use our proprietary software program, advertising brochures and materials, public relations start-up campaign, a van graphics package, FCI stationery, yard si gnsf showroom displays and display racks. The cost of the Opening Package ranges from $30,000 to $40,000. In addition, you must purchase two licenses from us for our proprietary software, InspireNet and InspireNet Mobile, at a cost of $7,500, and pay the ongoing Software Access Fee for use of this and other software and technology services (a pre-opening expense of approximately $300). See Items 6 and 7 for more details as to eosts of the InspireNet, InspireNet Mobile and the Software Access,Fee. We reserve the right to change the standard Opening Package from time to time. , The Initial Franchise Fee is payable upon signing the Franchise Agreement, and the Opening Package fee i s payable at least thirty (30) days prior to attending training. Such fees are in consideration of the territorial rights granted to you under the Franchise Agreement. The Initial Franchise Fee and Opening Package Fee are not refundable under any circumstances and are deemed fully earned upon execution of the Franchise Agreement, regardless of whether the Franchise Agreement is subsequently terminated, and are not contingent or conditioned on our performance of any pre-opening obligations. The Initial Franchise Fee includes the initial training program for you and one other person, for a total of two, at our headquarters. We may charge an additional fee for training additional persons. You must pay all fees due us in full when you sign the Franchise Agreement. We may, but are not obligated to, offer financing for the Initial Franchise Fee. (See Item 10 for details). All initial fees are deemed fully earned and non-refundable upon payment. We also reserve the right to implement promotional programs that may result in certain franchisees receiving a discounted Initial Franchise Fee or other benefits.

Financing

We may, at our option, but under no circumstances are we obligated to, finance a portion of your Initial Franchise Fee, up to a maximum of $20,000. You must sign a promissory note, and if the franchisee is a corporation, you must personally guarantee the obligations of the corporation, including any notes. The Personal Guarantee of Corporate Obligations is included in this disclosure document as Exhibit A-2. The detailed terms of financing are listed in the Promissory Note (Exhibit B in this disclosure document). We have no policy or intent to sell, assign or discount to a third party any note, contract or any other franchisee obligation in whole or in part. We do not receive any payments from lenders under these arrangements. Except as described above, we do not offer direct or indirect financing. We do ,not guarantee your note or any other 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 any reasonable basis for the information, and if the information is included in the disclosure document. Financial information that differs from that included in Item 19 may only be given 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. Background This Item sets forth certain historical data subrhitted by our franchisees. Written substantiation of the data used in preparing this information will be made available upon reasonable request. We have not audited this information, nor independently verified this information. The information is for the period of January 1, 2018 through December 31, 2018 (the “Measurement Period”). Importantly, the success of your franchise will depend largely upon your individual abilities and your market. Gross Revenue Produced. Gross Revenue Landed and Average Job Information i This Table presents the Gross Revenue Produced, Gross Revenue Landed and certain Job Information as reported to us by our 62 U.S. franchisees that were open and operating for more than 24 months as of December 31, 2018 and for whom we have complete sales data (the “Reporting Franchisees”). This table excludes franchises (a) who had not been open and operating for a full 24 months as of December 31, 2018, (b) for whom we do not have complete sales data, and (c) that do not operate tbe franchise as a full time venture. Data for startup Franchisees who were not open and operating: for a full 24 months as of December 31, 2018 was exluded from this Table to more accurately Gross Revenue Produced, Gross Revenue Landed and certain Job Information from the periodlof operations most representative of, and applicable to, a majority of System franchisees. The following table presents the average Gross Revenue Produced, Gross Revenue Landed and certain Job Infonnation for the 62 Reporting Franchisees during the Measurement Period. We have broken down the data into five groups (each, a “Group”) based on the Reporting Franchisees' Gross Revenue Produced.