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Business Description

A & E Auto Sound, Inc., a California corporation ("Franchisor"), was incorporated oh March 26,2015, and is the franchisor for A1 & Ed's Stores. Our principal business address is 3751 South Hill Street, Los Angeles, California 90007. To Simplify the language in this Disclosure Document, "Franchisor;" "we" and "us" means A & E Auto Sound, Inc. "You" or "Franchisee" means ttie business entity, person or persons who sign the Franchise Agreement.

Prior Experience

Our parent company iS HRAP, Inc, a California corporation incorporated on July 10, 2014 ("HRAF'). HRAFs principal business address is 3728 South Grand Avenue, Los Angles, Califomia 90007. HRAP has 3 predecessors, A1 & Ed's Corporation, A1 & Ed's Autbsound, LLC and Mobile Electrordcs Products System> Inc., all of whidi were prior franchisors of A1 & Ed's Stores. HRAP's predecessor, was A1 & Ed's Corporation, a California corporation that was incorporated on July 22, 2004. Al & Ed's Corporation was located at 6855 Hayvenhurst Avenue, Van Nuys, California 91406. A1 & Ed's Corporation was the franchisor-of A1 & Ed's business from 2004 until 2007. HRAP acquired the assets of Al & Ed's Corporation through an assignment for the benefit of creditors with Equitable Transitions,.Inc. on February 4, 2015. HRAP granted us a perpetual license to use the A1 & Ed's Marks for the franchising of A1 & Ed's Stores under a License Agreement dated May 1,2015 (the "Trademark License Agreement"). The Trademark License Agreement authOrizes us to sell franchises for Al & Ed's Stores. The predecessor of A1 & Ed's Corporation was Al & Ed's Autosound, LLC, a Califomia limited liability company that was organized on September 20, 2001 and was located at 5871 Rickenbaeker Road, City of Commerce, California 90040. Al & Ed's Corporation acquired the assets of A1 & Ed's Autosound, LLC by an assignment for benefit of auditors with CMA Business Credit Services on June 29,. 2004; Al & Ed's Autosound, LLC was the franchisor of Al & Ed's businesses from 2002 until 2004. The predecessors of Al & Ed's Autosound, LLC were General Mobile Electronics Co, Inc., a Califomia corporation that was incorporated on February 21, 1962, and Mobile. Electronics Products System, Inc., a California corporation that was incorporated on October 10,1985, Al & Ed's Autosound, LLC acquired the assets of General Mobile Electronics Co., Inc. and Mobile Electronics Products System, Inc, by an assignment for benefit of creditors with CMA Business Credit Services on September 26, 2001. In 1986, General Mobile Electronics Co., Inc., the Oymer of the Al & Ed's trademarks, granted Mobile Electronics Products System, Inc. the right to sell Al & Ed's franchses under the Al & Ed's Autosound trade name; At that time. General Mobile Electronics Go., Inc. operated company-owned Al & Ed's Autpsound stores and Mobile Electronics Products System, Inc; was the franchisor of Al & Ed's Autosound Stores. Al & Ed's Corporation, Al & Ed's Autosound, LLC, General Mobile Electronics Co, Inc. and Mobile Electronic Products System, Inc. are defunct. We assumed the obligations of Al & Ed's Autosound, LLC under 15 Franchise Agreements for Al & Ed's Stores that were executed by Al & Ed's Autosound, LLC and its franchise between May 2002 and April 2004. As of March 26, 2015, we; were the franchisor of these 15 Al & Ed's Stores (the "Al & Ed's Existing Franchised Stores"), all of which are located in California. HRAP is the sole supplier of "Al & Ed's Branded Products", which bear the Al & Ed's Marks, and ''Al & Ed's Proprietary Products", which are produced or manufactured strictly in accordance with our trade secrets or that we designate as proprietary, to the A1 Ed's Existing Franchised Stores and will be the sole supplier of these products to our future franchisees. Our affiliate, CV & DA Holdings, Inc ("CVDA") is a California corporation that was incorporated oii September 14, 2012. CVDA's principal buaness address is 675 South Central Avmue, Los Angeles,; California 90021, CVDA supplies pertain products to HRAP which are sold to our franchisees. CVDA does business under the names "Cerwin Vega Mobile" and 'T>iampiid Audio;-' Neither HRAP nor CVDA have ever offered franchises in this business or in aiiy other line pf business. We have never pffered franchises in any other line of business. We have offered our franchises for s^e since April 2015. wd do rnot conduct any other business activities. We do not do business under any other names,

Business Offered

We and our predecessors have developed the A1 & Ed's system ("Al & Ed's System") for the operation of Al & Ed's Stores that use the trade names "Al & Ed's" and "Al & Ed's Autosound" and other related trademarks, service marks, logos and commercial symbols (collectively, the "Al & Ed's Marks") and that offer and sell mobile and marine electronic audio and video entertainmerit:equipment, GPS navigation and alarm systems, satellite and HD radio receivers, Bluetooth systems and related accessories and merchandise. We offer 3 separate franchises in this Disclosure Document, thpugh we may not necessary allow you the opportunity to purchase under any of these programs.

Initial Fees

Single Store Program You must pay us an initial franchise fee (the "Ihitid' Franchise Fee") of $30,000 when you sign the Franchise Agreement (Exhibit A) for a new A1 & Ed's Store. If you are, signing the Franchise Agreement with the renewal of an existing Franchise, you will pay us a renewal fee in lieu of art Initial Franchise Fee when you sign the renewal franchise Agreement as provided in your existing Franchise Agreement. You must pay us an Initial Franchise Fee $20,000 when you sign the Franchise Agreement (Exhibit A) and Conversion Franchise Addendum when you agree to convert your' existihg retail electronics business to an A1 & Ed's Store. If you are signing the Franchise Agreement with the renewal of ain existing Franchise, you will pay us a renewal fee in lieu of ;an Initial Franchise Fee when you sign the renewal Franchise Agreement: as provided in your existing, Franchise Agreement. Area Development Program You must pay us a development fee (the "Development Fee") of $10,000 per A1 & Ed's Store to be developed under the Area Development Agreement when ybu the Area Development Agreement (Exhibit BV for a minimum of 2 A1 & Ed's Stores. You must also sign a separate Franchise Agreement (Exhibit A) for eadi.Al & Ed's Store to be opened under the Area Development Agreement; When you sign the Franchise Agreement, you must pay us an Initid Franchise Fee of $30,000 fbr each hew A1 & Ed's Store and $20/000 for each conversion.Al, & Ed's Store; however, we will credit $5,000 of ybur Development Fee against the Inidal Franchise Fee for eadi Al & Ed's Store (not to exceed a credit of $5,000 for any smgleiAl & Ed's Store), so you will only have to pay us $25,000 when you sign your Franchise Agreements for hew Al & Ed's Stores and $15,000 when you sign your Franchise Agreements for conversion Al & Ed's Stores. After we accept the proposed Franchised Location for each A1 & Ed's Store you will operate and after we d^ver our then ciirreaitiDisGlosufe Dbcumerit to you> you must sign a Franchise Agreementifor the Franchi^d Location. Opening Inventory You must purchase: your opening inventory from HRAP or other approved suppliers. The cost of the opening inventory will range from $30,000 to $60,000. Refunds, Different Fees and Financing The Initial Franchise Fee and Development Fee are fully earned by us when paid and are not refundable under any circumstances. We use the proceeds from Initial Franchise Fees to defray a portion of our expenses in connection with the sale and establishment: of franchises, stich as: (i) costs related to developing and mnproving our services; (ii) expenses of prepariirg and registering titis Disclosure Document; (iii) legal fees; (iv) aciroUnting fees; (v) costs of obtaining and screening franchises; and (vi) general administrative expenses. We inay reduce, finance, defer or waive the Initial. Franchise Fee or Development Fee if and wheri we determine, it is wOTanted by a vmique-of compelling situation. We generally do not provide finaiidhg for the Initial Franchise Fee or Development Fee. We inay do so if and when we determine, it is warranted by a unique or coinpelling situation.

Financing

We do not offer direct or indirect financing. We will not guarantee your note, lease, Or 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 a reasonable basis for, the information, and if the mfonriatibn is included in the Disclosure Document. Financial performance information that different 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; br (2) a franchisor supplements the information provided in this Item 19,.for example, by providing information about possible performance of a particular location or under particular circumstances; We do not make any representations about a franchisee's future financial performance or the past, financial performance of company-owned br franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in, writing. If you are purchasing an existing Outlet, however, we may provide you with the actual recprds bf that butlet If you receive any other financial performance informaticm or prpjectipns pf your future iricome, you shPiild report it to the franchisor's management by contacting John Haynes, A & E Auto Sound, Inc, 3751 S; Hill Street Los Angeles, California 90007; Telephone: 818-908-5700; the Federal Trader Commission, and the appropriate state regisatory agencies.