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Business Description

Wireless Zone is a wholly owned subsidiary of PYITE, LLC, an Indiana limited liability company created in 2016, with its principal address at 525 Congressional Boulevard, Carmel, Indiana 46032 (“PYITE”). PYITE is a wholly owned subsidiary of Round Room, LLC, an Indiana limited liability company created in 2016 with the same principal address as PYITE.

Prior Experience

We are a Connecticut limited liability company. We were founded on July 1, 1988 as Automotive Technologies, Inc., a Connecticut corporation. In October 2016 we converted from a Connecticut corporation to a Connecticut limited liability company and changed our name. Our principal address is 795 Brook Street, Building #5, Rocky Hill, Connecticut 06067. We have offered franchises for the same type of business you will be operating since 1989, when we offered franchises under our original mark “The Car Phone Store.” We adopted the trademark Wireless Zone® for the System starting in 1995. We have never offered franchises in any other line of business. Currently, we do not own or operate any Wireless Zone® store locations, although we have operated stores in the past and may do so again in the future. In April 2019, we began offering a “Multi-Store Development Agreement,” which grants franchisees the right to develop 2 or more Wireless Zone® retail stores. If you sign a Multi-Store Development Agreement (“MSDA”) with us, you will also sign a separate Franchise Agreement with us for each Wireless Zone retail store you develop.

Business Offered

We grant franchises for the operation of retail outlets (“Stores”) operating under the mark Wireless Zone® and any other trademarks, trade names, service marks and related logos we may develop and authorize for Stores (the “Trademarks”) and certain systems relating to the establishment, development and operation of a Store (the “System”). Our business includes the sale of goods and services to our franchisees. We may also license the trademark Wireless Zone® and other proprietary rights to others in connection with the production and sale of Wireless Zone® brand products. We also sell directly and may license others to sell goods and services in connection with the trademark Wireless Zone® or any other trademarks, other than from a retail outlet. These other means of selling, also referred to as other channels of distribution, include direct sales by us via the Internet and outbound telemarketing and may include sales of goods and services by catalog, mail order, toll free telephone numbers for delivery, or other electronic means. The franchise is for the operation of a retail store specializing in wireless and wireline communication devices, services and accessories, which include the sale, installation and repair of mobile phones, ‘smart’ phones, phone accessories, wireless headsets and Internet based communications devices and data service plans. In addition, you may sell satellite and/or cable television and radio systems, and other forms of wireless and wireline communication, and entertainment and security products and services. We also offer to qualified persons the right to develop 2 or more Wireless Zone® retail stores within a specific territory under the terms of a Multi-Store Development Agreement. If you sign an MSDA, you will sign a separate Franchise Agreement for each Wireless Zone® retail store you develop under your MSDA. You will sign the first Franchise Agreement at the time you sign the MSDA. The form of the remaining Franchise Agreements will be our then-current form of Franchise Agreement at the time you are ready to develop each additional store.

Initial Fees

Initial Franchise Fee. You will pay us an initial franchise fee which varies from $25,000 to $1,000 based on your level of experience in the wireless and wireline sales industry and/or the location of your Store according to the following chart. We are a subscriber to the Vet*Fran program of the International Franchise Association. Under that program, in addition to our criteria for new franchisees, if you are an honorably discharged veteran you are entitled to a discount of 50% on the standard initial franchise fee. If you are a business entity, the veteran must be a 51% Owner of the entity. This Vet*Fran discount may not be combined with any other discount or incentive offer and is limited to 1 discount per individual or franchisee entity. Payment of the initial franchise fee is due in full when you sign the Franchise Agreement, but we may offer to finance up to 50% or 100% (if the fee is less than $12,500), if you meet our credit standards. See Item 10. All franchise fees are fully earned by us and are non-refundable. If you are unable to identify a site for your Store that is approved by us and by the Provider within 180 days of the effective date of your Franchise Agreement, we have the right to either: (i) terminate the Franchise Agreement or (ii) allow you an additional 180 days to find an approved site. If we terminate, you will be offered a refund of any franchise fees paid prior to the termination, less our actual out-of-pocket expenses, in exchange for a general release. If we allow you an additional 180 days to find a site, and you are unable to do so within the additional time, you will not be offered a refund of any fees paid to us. The initial franchise fee is the same for all franchisees under this Disclosure Document except as described above, and except we may negotiate the initial franchise fee: (i) with franchisees who purchase franchises for multiple existing locations at the same time; (ii) with franchisees who have prior wireless retail management or ownership experience, either with Wireless Zone, or another agent of our Provider, or a competitor of our Provider; or (iii) if the franchisee evidences comparable circumstances or considerations as those in clauses (i) or (ii). We also offer Multi-Store Development Agreements to develop multiple (2 or more) Wireless Zone® retail stores. The Development Fee you pay us under the MSDA is $2,500, multiplied by the number of Wireless Zone® retail stores you are permitted to develop under the MSDA up to 10 franchises, and $1,000 per franchise above 10 that you are permitted to develop. You pay this fee to us at the time you sign the MSDA. The Development Fee is not refundable, but we will credit $2,500 of the Development Fee against the initial franchise fee you pay when you sign each of the first 10 individual Franchise Agreements and $1,000 of the Development Fee against the initial franchise fee due under each additional Franchise Agreement you sign. New Franchisee Training Fee You must complete our mandatory new franchisee training program to our satisfaction, according to the schedule we provide. We do not charge any new franchisee training fee for the first person to attend our initial training program. We may charge our New Franchisee Training Fee for each additional person that attends a portion of the program. The fee for an additional person attending this training program is currently discounted to $1,000. This fee is not refundable. You must pay the costs of travel, lodging, meals and additional expenses for all training attendees. Initial Product Inventory Before you initially open your Store, we require that you purchase inventory that meets our requirements. We may require you to purchase this inventory from us. If you are acquiring an existing Store, we may require you to update or increase the inventory at the Store prior to assuming operational control. We typically require between $50,000 and $75,000 of initial inventory, and between $35,000 and $75,000 of inventory when an existing store is transferred. We will also require you to pay for shipping and handling, costs of which will vary. The actual amount of inventory we require to open your Store will vary based in on the size of your store, anticipated customer buying patterns, the current market price for equipment and accessories and technological innovations beyond our control. We may offer financing for your initial inventory, on credit terms as described in Item 10, or we may require payment in full before shipment, with payment delivered electronically via ACH or wire transfer (EFT). Payment for all inventory is non-refundable, except we may repurchase usable inventory if we terminate your Franchise Agreement. Signs, Fixtures, Computers, Displays, Kiosk and Traffic Monitoring System Before you open or assume operation of your Store, you must order from us or from our approved vendor the signs, fixtures, displays, traffic counter monitoring and reporting system, and computer Point of Sale (POS) workstation setup and mobile POS hardware you will need for the build out of a new Store, and if applicable, the cost of your kiosk if you will operate a kiosk location in a shopping mall or similar location. The cost of each item varies as follows: the signs and displays, between $14,000 and $39,000; fixtures, including installation, carpets, paint and related hardware, between $35,000 and $88,000; and POS and network hardware, including related equipment and set up, between $2,000 and $5,000. You may elect either to coordinate your own purchases and installations or you may elect to have Wireless Zone® coordinate and oversee this process. If you are acquiring an existing Store, we may require you to remodel the Store or upgrade the existing fixtures, displays, signs and POS equipment to meet our thencurrent system standards, before you assume operational control of the Store. For items ordered from us, or if You authorize us to order on your behalf, You must pay us within 30 days of receiving an invoice from us with payment to be made via check, ACH or wire transfer (EFT) or by business (not personal) credit card. If you pay by credit card we may charge a credit card fee. Payment is non-refundable. We have established a referral relationship with a third-party lender, Ascentium Capital LLC (“Ascentium”), which may offer financing to you in the form of equipment finance agreements (“EFA”) with terms of 12, 24, 36, 48 and 60 months for the signs, fixtures, displays, and computer point of sale workstation setup and related services (“Equipment”) you need to open your Store. See Item 10. You may also seek your own financing. Sales Tax, Use Tax, Gross Receipts Tax, Excise Tax You must pay any sales tax, use tax, gross receipts tax, excise tax, or other similar tax on your payments to us. We may collect these taxes from you for transmittal to the taxing authority. You will reimburse us for any taxes we must pay directly to any taxing authority. These payments are not refundable.

Financing

We are not obligated to offer directly or indirectly any arrangements for financing of your initial investment, your equipment or the continued operation of your franchise. You must make your own financing arrangements. However, if you meet our credit standards, we may offer financing for all or a portion of your initial franchise fee or renewal fee (depending on the circumstances), and we have made arrangements with a third party who may offer financing to you for equipment. Initial Franchise Fee / Renewal Fee If you meet our credit standards, we may offer to finance up to 50% of the initial franchise fee or renewal fee (or up to 100% if the fee is less than $12,500) for up to 12 months. We will charge you interest at a fixed rate of 12% per year, but if you default, we can increase the rate to 1.5% per month (or the highest rate allowed by law if lower) until the default is cured. Payments will be due in 12 equal monthly installments of principal and interest over the term of the loan. The monthly payments will depend on the amount financed. For example, if we finance $12,500 of the initial franchise fee, your payments will be $1,110.61 per month. If you fail to make any payment when due, we have the right to accelerate the balance, and we have a right to recover all our costs of collection, including court costs and attorneys’ fees. We also have the right to deduct these payments from Commissions or other payments due to you. If we offer you financing, you will sign a Promissory Note (“Promissory Note”) in the form attached as Exhibit 5 to the Franchise Agreement. Under the terms of the Promissory Note, we have the right to enforce your obligations in Connecticut, you waive certain notices of default or enforcement, and you waive your rights under Connecticut law, which will govern the Promissory Note, to notice or hearing before we attempt to obtain a prejudgment remedy, including an attachment or garnishment against you or your property. You do not waive your rights to assert your defenses or confess judgment to a collection action we may bring. You also waive your right to a jury trial. We have the right to sell, assign, or discount your Promissory Note or other financing arrangements to a third party. A default under the Promissory Note is also a default under the Franchise Agreement. You may prepay the Promissory Note without penalty, at any time. If the franchisee is an entity, any Owner with at least a 5% equity interest, and under certain circumstances their spouses, must personally guarantee the promissory note and your other obligations to us. The form of Guaranty of Performance is attached as Exhibit 3 to the Franchise Agreement. Under the Franchise Agreement, you also grant us a security interest in all of your assets, including your equipment, inventory and franchise business to secure all of your obligations to us. Your failure to make payment on financing obligations with us could result in the loss of your franchise rights. You cannot use the assets of the Store, including accounts receivable, or your ownership interest in a franchisee entity, as collateral for a loan without our consent. We will require that your other lender sign an intercreditor agreement with us. We do not intend to grant consent for you to use the Store as collateral for a loan to finance an unrelated business or a loan otherwise not related to the Store or your Franchise Agreement. Inventory and Demo Lines Following a credit review by us, we may provide extended payment terms for purchases of inventory, use of demo lines and other services from us. The amount of credit we offer will be adjusted periodically based on sales and payment performance. If you are given extended purchasing credit terms, you may have up to 65 days to pay for your purchases, depending on the invoice date. We do not charge interest, as long as you pay on time. For transfers and new locations, we may require that you pay for your initial opening inventory order in advance, electronically via ACH or wire transfer (EFT) or business (not personal) credit card. We, in the exercise of our sole judgment, will determine the amount of inventory purchases that we will finance. We may also put you on adjusted credit terms for a period of time, which may extend for 6 months or longer. The adjusted credit terms will require you to pay an up-front fixed prepayment amount, established by us, for each wireless device that you order. This amount will be debited from your bank account via Electronic Funds Transfer. The remaining balance due for your order will be given credit terms due in full on the 1st day of the second month following the order date. After reviewing your sales and payment performance, we may, in our sole discretion, determine to replace the adjusted credit terms with extended credit terms. If you do not comply with the extended purchasing credit terms, we may reduce the value of the credit we offer to you. Additionally, we may require you to pay an up-front fixed prepayment amount, that we establish, for each wireless device that you order. We also may impose an interest rate on all purchases that are not paid for on time. Currently, that rate is 1.5% per month, or the highest rate allowed by law if lower, from the date on which the purchases were made until the date on which the outstanding balances are paid. We retain the right to deduct from Commissions due to you all amounts owed for purchases and other amounts you owe to us. If at any time your financial situation changes, you have a poor payment record, or otherwise not in good standing, we may no longer extend to you any purchasing credit terms and require that you purchase on a payment in advance or special term basis. The form of Security Agreement and Demo Line Payment you will sign to obtain this financing is attached as Exhibit 6 to the Franchise Agreement. That Agreement provides that all amounts you owe for use of demo lines will be paid within 45 days of receipt of an invoice. If you fail to pay those amounts when due, or any other amounts you owe us, we may deduct such amounts from any monies due to you. The Agreement grants us a security interest in all of your assets, including your equipment, inventory, and franchise business, to secure repayment of your obligations to us, both for inventory and under any other agreement you have with us. If you default, we can require that you assemble your assets and make them available to us so that we can take possession of the assets and sell them to recoup all costs, including any attorneys’ fees we may incur in enforcing our rights and obtaining payment of amounts you owe us. The Agreement provides that you waive all rights to notice and defenses other than payment in full. If we have to bring an action against you, we can do so in Connecticut, under Connecticut law, and you waive any right to a trial by jury or to object to the venue of the action. You will sign an agreement allowing us to initiate electronic transfer of funds from your account for payment of any obligations you owe us. The transfer authorization is attached as Exhibit 7 to the Franchise Agreement. We may also adopt a program in the future to offer third-party financing for your inventory purchases. We have established a referral relationship with a third party lender, Ascentium Capital LLC (“Ascentium”), which may offer financing to you in the form of equipment finance agreements (“EFA”) with terms of 12, 24, 36, 48 and 60 months for the signs, fixtures, displays, and computer point of sale workstation setup and related services (“Equipment”) you need to open your Store. Typically, franchisees choose terms of 36, 48 or 60 months. Since you will be financing the Equipment over a term that is intended to target a monthly payment meeting the cash flow needs you project for your business, and which may be different than a traditional bank loan, there is no conventional interest rate indicated on the EFA, however, based on Ascentium’s cost of funds as of the date of this Disclosure Document, the financing would have an effective interest rate in the range of 7.9% to 9.9% per annum. Your monthly payments will vary based on the amount you finance, market conditions, the strength of your credit, collateral quality and term of the EFA. Generally, Ascentium will not require a down payment, but they will require 1 payment in advance. If you are offered this financing, you will sign an EFA. If you are offered financing for 3 or more Stores, you may instead sign a Master EFA. Whether you sign an EFA or a Master EFA, you will have to pledge the Equipment as collateral for the EFA. You and any other owner of the franchise will also be required to personally guarantee repayment of the EFA. You may not prepay the EFA without Ascentium’s prior written consent. If you fail to pay any amount owing when due, or if you stop doing business or breach any other obligation in the EFA, Ascentium may terminate the EFA, and declare all remaining payments to be immediately due and payable, discounted at 3% per annum. After you default, the interest rate can increase to 16% per annum. Ascentium can take possession of the Equipment and sell it, and you will be liable for any deficiency. If they bring an action against you, they can bring that action in New Jersey, and you waive your right to a trial by jury and the right to object to them bringing the action in New Jersey. The EFA documents are governed by the laws of New Jersey. You may also be required to reimburse Ascentium for all costs they incur in enforcing their rights, including attorney’s fees and costs of repossession, repair, storage and remarketing of the Equipment. We receive a 1% commission on the total financed on each EFA entered into with a franchisee. A sample of the Ascentium EFA documents is attached as Exhibit E. Except as noted above, we do not offer or arrange direct or indirect financing. We do not guarantee any of your financing, lease or any other obligations. Except as disclosed above, we do not receive direct or indirect payments from placing financing.

Franchisee Revenue and Profit

Some Stores have earned these amounts. Your individual results may differ. There is no assurance that you’ll earn as much. Written substantiation for the financial performance representation will be made available to the prospective franchisee upon reasonable request. Other than the preceding financial performance representation, Wireless Zone LLC does not make any financial performance representations of company-owned or franchise 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 records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor's management by contacting Robert G. Huelin, Vice President, Legal and Compliance, 795 Brook Street, Building #5, Rocky Hill, Connecticut 06067, telephone number 860/632-9494 extension 1730, the Federal Trade Commission, and the appropriate state regulatory agencies.