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Business Description

We are a Delaware Limited Liability Company formed on May 7, 2018. We are a wholly owned subsidiary of Buff City Soap Holdings, LLC, a Delaware limited liability company (“Parent'). Our principal business address and Parent's principal business address is 3080 Stage Post Drive, Suite Number 104, Bartlett, TN 38133. You will operate your Franchised Business under the name “Buff City Soap® Shop,” (a “BCS Shop”). Buff City Soap LLC, a Tennessee limited liability company (“BCS”) was formed in October 2013 to operate the initial Buff City Soap Shop retail location in Bartlett, Tennessee that opened on December 31, 2013. The owners of BCS created Buff City Soap Tennessee, LLC and Buff City Soap Colorado, LLC (collectively with BCS, the “Retail Affiliates”) to operate joint venture BCS Shops in Memphis, Tennessee and Castle Rock, Colorado in 2017. On May 7, 2018, the business was reorganized and both store ownership entities, in addition to BCS, became subsidiaries of Buff City Stores OpCo, LLC, a Delaware limited liability company (“OpCo”), which manages the Bartlett, Memphis and the Colorado BCS Shops. OpCo is a wholly owned subsidiary of Parent. Also on May 7, 2018, we formed our subsidiary Buff City Soap Supply, LLC, a Delaware limited liability company (“BCS Supply”), which may supply or distribute certain products to our franchisees and affiliate owned Shops. On October 4, 2018, OpCo sold its interests in the limited liability company owning the Covington, Tennessee Shop to its partner, who entered into an area development with us for certain areas of Termessee. The address of these Affiliates is 3080 Stage Post Drive, Suite Number 104, and Bartlett, TN 38133. We have no affiliates offering franchises in any other line of business.

Prior Experience

We do not operate any BCS Shop. We conduct no business activities other than franchising. We have never operated a BCS Shop. We have offered BCS Shop retail franchises in the United States since May 2018. BCS offered licenses of the Buff City Soap intellectual property to third parties who have licensed the property and operate BCS Shops in Covington, Tennessee, and Olive Branch, Tupelo, New Albany, Ocean Springs and Oxford, Mississippi, (the “Licensed Shops”). The license agreements with the Licensed Shops were assigned to us in the reorganization described above. We have not offered and do not offer franchises in any other line of business. OpCo is our affdiate that operates BCS Shops of the Retail Affiliates. None of Parent, OpCo, BCS Supply or the Retail Affiliates has ever offered franchises in any other line of business.

Business Offered

We offer the opportunity to establish and operate a BCS Shop retail franchise (the “Franchised Business”) at a single, defined location (the “Franchised Location”) within the Protected Area (defined below) using our trademarks, service marks, trade names, logos and commercial symbols (the “Marks”), certain printed materials (the “Materials”), proprietary products and methods of operation (the “System”) under a Franchise Agreement you sign with us and our Operations Manual that sets forth our System Standards (the “System Standards”). A Buff City Soap personal care product retail shop (a “BCS Shop” or a “Shop”) is a clean, upscale, rustic and minimalistic retail body products shop, providing high-quality, fresh, hand-made, plant-based soaps, bath bombs, body and face products. Our products are targeted to both men and women ages 10 to 65, as well as to parents as a unique children's party offering. Our body products are made with our proprietary formulas and include our signature base products, scents, and colorants, all of which must be purchased from us or BCS Supply and must be made and sold according to our System Standards. Our shops have a well-designed, modular footprint with a standard and recognizable layout and a signature, color scheme and decor. Included in the decor is a signature reclaimed wood counter/workspace and wood display bins and tables to showcase body products. Most of our body products are produced on the premises of the shop at the Buff City Market allowing customers the opportunity to witness the production of the products. A BCS Shop offers customers the opportunity to customize products to their own scent and color preferences. A BCS Shop also offers private parties (for both children and adults) and soap making classes at the Franchised Location to maximize the revenue opportunities at each location. The Buff City Soap franchise system includes System Standards, policies and procedures for trade dress, product preparation, equipment, signage, sales and marketing, pricing guidelines, staff and employee training, customer service and retention programs, information technology (IT) and our assistance with advertising, promotion, public relations, and social media programs, all of which we may change, improve and further develop over time. Specifications for build-out, equipment and decor will be included in the system's Operations Manual library. Locations will include 1,500 to 2,100 square feet in Class A anchored retail, downtown urban centers and lifestyle retail center locations in upscale, high traffic, high visibility areas. During the development of a franchisee's initial location, we, or our designee, will provide one on-site visit to review potential sites identified by you at no charge to you. We also offer to qualified candidates a Multi-Unit Operator Agreement. Multi-Unit Operators will be provided an agreed upon protected territory in which they will be required to open and operate an agreed number of BCS Shop locations during an agreed period of time based upon a precise performance schedule for opening Shops. We anticipate four month opening cycles for Multi-Unit Operators and will base the performance schedule on that cycle. The Development Term of the performance schedule will usually be two years for a commitment of four Shops. We may extend the Development Term for a longer period for a commitment to develop more Shops. The Multi-Unit Operator Agreement is not a franchise agreement. A separate Franchise Agreement will be signed for each BCS Shop franchise that the Developer opens. During the term of the development schedule, you will be required to sign the original form of Franchise Agreement attached to the Agreement or at our option, the form of franchise agreement we then offer, which may differ from the current form of Franchise Agreement included in the Disclosure Document. If a Multi-Unit Operator fails to open and operate the Shops required under the Multi-Unit Operator Agreement, we may terminate the Multi-Unit Operator Agreement. If we terminate the Multi-Unit Operator Agreement, the Multi-Unit Operator may continue to operate the BCS Shop then open subject to compliance with the respective Franchise Agreements for the Shops. We reserve the right to require prospective franchisees to sign and perform Multi-Unit Operator Agreements in any market that we believe that a single owner for multiple Shops is more appropriate than single Shops owned by different owners.

Initial Fees

When you sign a Franchise Agreement for a Franchised Business, you must pay a non-refundable Initial Franchise Fee of $50,000 to us. The Initial Franchise Fee is not refundable unless you or your designee fails to complete initial training to Buff City Soap's satisfaction. If you or your designee fail to complete our training program successfully, we will refund 50% of the Initial Franchise Fee paid less our costs to provide training, site inspection, sales commissions and other costs. You and your guarantors will be required to sign a General Release upon termination of the Franchise Agreement in exchange for the refund. We provide no financing for the Initial Franchise Fee. In 2018, we waived the Initial Fee for one franchisee but have otherwise uniformly imposed it. We will offer to qualified individuals honorably discharged from any branch of the U.S. Military with an undeleted certified copy of your DD214 or individuals who currently serve or are retired as first responders (police, fire, EMT etc.) a $5,000.00 discount (the “Public Service Discount') of the Initial Franchise Fee you would otherwise pay. Such request must be made when you apply for a franchise. You must pay us $28,000 for initial inventory and supplies for the Franchised Business before you open each BCS Shop. When you sign a Multi-Unit Operator Agreement, you must commit to develop at least four BCS Shops. You must pay us a non-refundable Development Fee of at least $125,000 when you sign the Multi-Unit Operator Agreement, all of which is credited toward your Initial Franchise Fee of $50,000 for the first Franchised Business, plus a reservation fee of $25,000 for each additional Franchised Business you commit to develop. The Initial Franchise Fee for the second through fifth Franchised Business is $45,000, and the Initial Franchise Fee for the sixth and each additional Franchised Business you commit to develop is $40,000. Subject to our approval, the Initial Franchise Fee for a Franchised Business developed in excess of the number of Franchised Businesses you commit to develop under the Multi-Unit Operator Agreement during its term is $20,000. The minimum reservation fee payable to us when you sign a Multi-Unit Operator Agreement is $25,000 per Franchised Business you commit to develop. You must sign the Franchise Agreement, pay the balance of the Initial Franchise Fee and obtain our approval for your proposed BCS Shop locations by the dates specified in the Multi-Unit Operator Agreement to obtain the reduced Initial Franchise Fee for each BCS Shop. The Public Service Discount described above will be applied to the final payment of the Initial Franchise Fee for each BCS Shop. The Development Fee is a non-refundable fee and not a deposit. We credit the identified portion of the Development Fee against each location's Initial Franchise Fee. The Multi-Unit Operator will execute the Franchise Agreement for the initial Franchise Business to be opened and the Multi-Unit Operator Agreement at the same time.

Financing

We do not offer direct or indirect financing. We do 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. Table 1: Gross Sales & Cost of Goods Sold The information below is based on historical data from our System outlets, including outlets operated by our Retail Affiliates and by licensees. The BCS Shops in Bartlett, TN, Castle Rock, CO, Downtown Memphis, TN, Midtown Memphis, TN, and Olive Branch, MS were operated by Retail Affiliates. The Shops in Birmingham, AL, Olive Branch, MS and New Albany, MS are operated by licensees. During 2016, there were two outlets open operated by our Retail Affiliates and no open outlets operated by licensees. During 2017, there were a total of five open outlets operated by Retail Affiliates and five open outlets operated by licensees. Information for this financial performance representation was obtained from the financial accounting systems of the Retail Affiliates and the Olive Branch licensee. The information is unaudited. Table 1 below presents the following unaudited information concerning each of the four Reporting BCS Shops that were continuously open from January 1, 2018 through December 31, 2018: (1) the Gross Sales for 2018; (2) the Cost of Goods Sold for 2018; (3) the Cost of Goods Sold percentage for 2018. In addition. Table 1 also presents the following unaudited information concerning each of the three Reporting BCS Shops that were continuously open from January 1, 2016 through December 31, 2017 (Bartlett, TN, and Olive Branch, MS): (1) the Gross Sales for the periods of 2016 and 2017; (2) the Cost of Goods Sold for the periods of 2016 and 2017; (3) the Cost of Goods Sold percentage for the periods of 2016 and 2017.