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Business Description

The franchisor, Spice Merchants Entities Corp., has a principal business address of3150 Blue Star Highway, Saugatuck, Michigan 49453. We were incorporated in the state of Michigan on April 20, 2010. We conduct business under the names Spice Merchants and Spice & Tea Merchants and do not use any other names in our business. Our agent for service of process is Lisa Freeman, 3150 Blue Star Highway, Saugatuck, Michigan 49453. Exhibit E provides other information about state administrators and agents to receive service of process.

Prior Experience

We began franchising in May of 2010. We do not operate any outlets and does not offer franchises in any other lines of business. We have an affiliated company. Spice Merchants, EEC, a Michigan limited liability company, operating at 3150 Blue Star Highway, Saugatuck, Michigan 49453. As of December 31, 2018, this affiliated company operated 3 retail outlets in the state of Michigan with the original location having been in operation for 16 years. As of the date of this Franchise Disclosure Document the affiliated entity also operates 1 retail location each in the states of Massachusetts, Colorado and Arizona. This affiliated entity will sell to you the various spice, spice blends and teas you will offer in your franchised business. The affiliated company has previously licensed two Spice Merchants locations, one in Colorado and one in California that remain in operation as of the date of this disclosure document. In 2017 the affiliated company purchased the Colorado location.

Business Offered

We offer franchises for retail businesses that sell spices, spice blends, teas and related items. You will use the trade name, "Spice Merchants" or “Spice & Tea Merchants.” You can expect to compete with other independent and franchised businesses offering similar products and services to your potential customers including businesses that specialize in the sale of spices and teas. In addition, health food stores, discount chain retailers and grocery stores also might sell spices and teas in varying types and quantities. You should be aware that you may have to obtain a license from your county health department or Department of Agriculture in your state prior to opening for business. We are not aware of any other industry specific factors or legal requirements that you have to know about as part of running your business such as particular licenses or governmental regulations pertinent only to the sale of spices, spice blends and teas.

Initial Fees

You must pay to us an initial franchise fee of $25,000. You must pay a non-refundable deposit of $1,000 to us when you submit a franchise application to us. You must pay the remaining $24,000 when you sign the Franchise and License Agreement. We will refund all of the initial franchise fee except the initial ONE THOUSAND DOLLAR ($1,000.00) deposit if a suitable site does not exist in the proposed trade are as determined by us in our sole discretion. Such refund will be made to you after expiration of the ninety (90) day period for finding a suitable site as provided in Section 5.1 of the Franchise and License Agreement. You may, elect to reduce your monthly royalty percentage by paying us an additional $2,500 for each percentage point reduction you elect to take up to a maximum of 2 percentage points. This election must occur no later than the date you sign the Franchise and License Agreement. If you make this election, your initial franchisee fee will increase either $2,500 to $27,500 or $5,000 to $30,000. Apart from the royalty reduction election, the initial franchise fee is uniform for all franchisees.

Financing

We do not offer direct or indirect financing. We will not guarantee your note or other debt obligation.

Franchisee Revenue and Profit

The information presented here represents historical information for the 12 month period ending December 31, 2018, for the 16 retail locations that have been open for at least one full calendar year. Six of these retail locations are operated by our affiliated entity, Spice Merchants, LLC. While the affiliated locations are similar in format to the franchised business you are considering, they represent different types of possible locations. Three outlets are located in resort communities that rely on seasonal business for a significant share of annual gross sales. Another location included in the average gross sales figures is in upscale college community near a large metropolitan area. The fifth location is in an urban food market in a large metropolitan area. The remaining location is in a suburb of a large metropolitan area. These locations have been open for a period of time ranging from 1 to 16 years. The 10 franchised locations included in the 2018 gross sales figures exhibit diverse market characteristics ranging from resort locations with limited full time population to suburban locations in large metropolitan areas. These franchised locations have been open for a period ranging from 1 full calendar year ending December 31, 2018, to 7 years as of that date. The average gross sales for calendar year 2018 for the 6 affiliated outlets was $225,468 with 3 of the 6 outlets exceeding the average. Such gross sales ranged from $75,483 to $328,208. The average gross sales for calendar year 2018 for the 10 franchised outlets was $173,523 with 4 outlets exceeding that average amount. Such gross sales ranged from $50,144 to $415,765. We will provide written substantiation of such gross sales figures upon request.