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Business Description

ZRF is a Colorado limited liability company. We operate under the name Zoom Room Franchising, LLC, Zoom Room, and no other name. Our principal business address is 11836 Teale Street, Culver City, CA 90230. We were formed on July 8, 2017. We began offering franchises for Zoom Room Franchised Businesses in August 2017. We have not, and do not, operate any franchises like those described in this Franchise Disclosure Document, or in any other line of business. We do not conduct any other business other than franchising Zoom Room Franchised Businesses.

Prior Experience

We have one parent, which is also a predecessor. Zoom Room, Inc. (“ZRI”) was formed on December 1, 2008. ZRI offered franchises for Zoom Room Franchised Businesses from April 2009 through July 2017. We acquired substantially all of the franchise assets from ZRI on August 1, 2017. We also have two affiliates, Zoom Room IP, LLC (“ZRIP”) and Clyde Orange, LLC (“COL”). ZRIP and COL share our principal business address. ZRIP owns the Zoom Room intellectual property and licenses certain intellectual property to us and our affiliates. ZRIP does not conduct any other business except licensing intellectual property and does not and has not offered franchises in this or any other line of business. COL owns and/or operates two Zoom Room Franchised Businesses, located in Culver City, California and Austin, Texas, which are substantially similar to those franchised businesses being offered under this Franchise Disclosure Document. COL does not and has not offered franchises in this or any other line of business.

Business Offered

ZRF's and ZRIP's agent for service of process is Universal Registered Agents, Inc. 36 South 18th Avenue, Suite D, Brighton, CO 80601. ZRI's and COL's agent for service of process is Mark Van Wye, 11836 Teale Street, Culver City, CA 90230. Our agents for service of process for other states are identified by state in Exhibit A. If a state is not listed, we have not appointed an agent for service of process in that state in connection with the requirements of franchise laws. There may be states in addition to those listed above in which we have appointed an agent for service of process. There may also be additional agents appointed in some of the states listed. The Franchise We offer franchises for the operation of businesses that provide obedience and agility training, solution-oriented pet retail products, social events for dogs and their owners, and other related services (“Zoom Room Franchised Businesses”) for the use of our “ZOOM ROOM” trademarks, trade names, service marks, and logos (collectively, “Marks”) for the operation of Zoom Room Franchised Businesses. Zoom Room Franchised Businesses are operated under our proprietary Zoom Room system (“System”). The System may be changed or modified by us throughout your ownership of the Franchise. Zoom Room Franchised Businesses provide obedience and agility training, solution-oriented pet retail products, and social events for dogs and their owners. You will operate your Zoom Room Franchised Business from an approved retail location (“Dog Training Gym”). You must sign our standard franchise agreement (“Franchise Agreement”) attached to this Franchise Disclosure Documents as Exhibit B. You may operate no more than one Zoom Room Franchised Business for each Franchise Agreement you sign. If you meet the qualifications to operate multiple units, (a minimum of three and a maximum of five) you must sign our multi-unit agreement (“Multi-Unit Development Agreement”), attached to this Franchise 2 Zoom Room 2019 FDD v2 Disclosure Document as Exhibit I, and our then-current Franchise Agreement, which may be materially different than the agreement included as Exhibit B, for each unit listed in the Multi-Unit Development Agreement.

Initial Fees

Initial Franchise Fee If you purchase a single unit Zoom Room Franchised Business from us, you must pay us an initial franchise fee (“Initial Franchise Fee”) of $49,500 when you sign the Franchise Agreement. The Initial Franchise Fee is due in full at the time you sign the Franchise Agreement, is deemed fully earned by us once the Franchise Agreement is signed and is non-refundable for any reason. During the last fiscal year, we sold 1 franchise. We charged the then-current Initial Franchise Fee of $39,500. Multi-Unit Development Fee Certain well qualified prospective franchisees may be offered the opportunity become a Multi-Unit Operator (“Multi-Unit Operator”), earning the right to establish and operate a minimum of three and a maximum of five Zoom Room Franchised Businesses under a Multi-Unit Development Agreement (“Multi-Unit Development Agreement”) when they apply to acquire the right to operate a Zoom Room Franchised Business. If you sign a Multi-Unit Option Agreement with us for three Zoom Room Franchised Businesses, you must pay us a multi-unit development fee (“Multi-Unit Development Fee”) of $120,000 when you sign the Multi-Unit Development Agreement and the first Franchise Agreement. If you sign a Multi-Unit Option Agreement with us for five Zoom Room Franchised Businesses, you must pay us a MultiUnit Development Fee of $180,000 when you sign the Multi-Unit Development Agreement and the first Franchise Agreement. The Multi-Unit Development Fee is due in full at the time you sign the Multi-Unit Development Agreement and the first Franchise Agreement, is deemed fully earned by us once the MultiUnit Development Agreement is signed and is non-refundable for any reason. If you purchase sign a MultiUnit Development Agreement with us, you will not be required to pay a separate Initial Franchise Fee for any of the subsequent Franchise Agreements you sign pursuant to the requirements of the Multi-Unit Development Agreement. During the last fiscal year, we did not sell or sign any Multi-Unit Development Agreements and therefore did not collect any Multi-Unit Development Fees. Point of Sale System and Software You are also required to purchase the proprietary operations software for your Zoom Room Franchised Business (“Software”) from us. The initial setup fee for Software is $400 and is due and payable 60 days before you begin operation of your Zoom Room Franchised Business. The Software has been specially designed and suited for use in the operation of a Zoom Room Franchised Business and assisting with booking appointments and accepting payments. You are also required to pay us a weekly Software fee of $50.00, and is due weekly, as agreed upon, once you have opened for business. VetFran To honor those men and women who have served in the U.S. military, the Veterans Transition Franchise Initiative, known as “VetFran,” was developed to help those individuals transition to civilian life. This initiative is a voluntary effort of International Franchise Association (IFA) member-companies and is designed to encourage franchise ownership by offering financial incentives to honorably discharged veterans. We offer a ten percent (10%) discount of the Initial Franchise Fee for the first Franchised Business to individuals who qualify under VetFran.

Financing

We do not offer direct or indirect financing. We do not guarantee your note, lease or obligation. We are listed on the Franchise Registry of the Small Business Administration.

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 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. Some gyms have earned this amount. Your individual results may differ. There is no assurance you will earn as much. Background The information in this ITEM 19 includes certain historical financial information provided by a total of 6 Zoom Room Franchised Businesses. Specifically, there were six franchisee-owned Dog Training Gyms (“Operating Franchisees”) that were (A) open for some or all of the period from January 1, 2015 to December 31, 2018 and (B) open for all 12 months of 2018 and (C) that were still in operation as of December 31, 2018. All six of the Operating Franchisees provided us with their relevant financial information for the entirety of 2018. The Operating Franchisees include the Dog Training Gyms operated by franchisees in Huntington Beach, California; Belmont, California; Sherman Oaks, California; Seattle, Washington; Trophy Club, Texas; and Virginia Beach, Virginia. The reporting period for Operating Franchisees in Table 2 and Table 4 is January 1, 2015 through December 31, 2018. Specifically, the information contained in Tables 2 and 4 are based upon Gross Revenues (as defined below) earned by the Operating Franchisees during the twelve-month period (“Annual Revenue Period”) for calendar years 2015, 2016, 2017, and 2018 (each a “Reporting Year”). The information contained in Table 3 is based upon Gross Revenues earned by the Operating Franchisees during each Operating Franchisee's first year of operation, beginning on each Operating Franchisee's grand opening day. hise owner; instead, location A is operated by a non-owning manager, whose salary and costs are included in the reported expenses. (2) The term “Gross Revenues” means the total of all revenues and income from the sale of all Zoom Room Franchised Business products and services to customers of each location. Gross Revenues does not include the sale of gift cards sold for use at the Zoom Room Franchised Business, nor does it include sales tax or any comps or discounts. The information regarding Gross Revenue has been provided to us by each of the six Operating Franchisees and has not been audited. (3) The term “Total Expenses” was calculated by adding all of the values for rows three through twenty-one for each Location listed. The term “Net Profit” was calculated by subtracting the value of the Total Expenses for each location from the Gross Revenues of each location. The “Net Profit Margin” was calculated by dividing the Gross Revenues by the Net Profit for each location. (4) To find the Average: we divided (A) the sum of the amounts (whether it was Gross Revenues, costs, or a calculated value) for each location by (B) 6. To find the Median: we put the amount (whether it was Gross Revenues, costs, or a calculated value) for each location in numerical order; then we identified the middle pair of numbers; then we calculated the value that was halfway between them by adding them together and dividing by 2. (5) Some Zoom Room Franchised Businesses have earned these amounts. Your individual results may differ from the results stated in this Item 19. There is no assurance that you will earn as much. (1) The term “Service Revenue” includes all revenues generated by offering various services at the Dog Training Gym, including group classes, private training, parties, special events, evaluations, private gym, playgroups, agility league, and various other services authorized to be offered from the Dog Training Gym. The term “Product Revenue” includes all revenues generated by selling various products at the Dog Training Gym, including dog toys, dog treats, and other dog-related accessories authorized to be sold from the Dog Training Gym. The Service Revenue and Product Revenue numbers referenced above are based on the aggregate Service Revenue and Product Revenue collected by all Operating Franchisees operating during each calendar year noted in the chart and has not been audited. The term “CAGR” means compound annual growth rate. CAGR is typically used to evaluate the annual rate of growth over multiple years. It determines the rate necessary to grow from a beginning balance to an ending balance assuming the balance compounds one time per year. In this case it is used to compare the compound annual growth rate of sales over a three year period. CAGR does not reflect investment risk. It is calculated by dividing the ending balance (here, the 2018 revenue) by the beginning balance (here, the 2015 revenue) and raising the 51 Zoom Room 2019 FDD v2 result to an exponent of one divided by the number of years (here, three years), and then subtracting one from the result and expressing it as a percentage. You can learn more about CAGR at https://en.wikipedia.org/wiki/Compound_annual_growth_rate. (2) The revenue data identified in the rows entitled “Service Revenue,” “Product Revenue,” and “Total Revenue” of the column entitled “Revenue Category” are based on the actual revenue earned from customers patronizing our Operating Franchisees. (3) We determined the Services Revenue growth and Product Revenue growth based upon information provided to us from the Operating Franchisee. The percentage increase or decrease reported during each Annual Revenue Period is determined by subtracting (A) the total revenue from the most recent Reporting Year from (B) the total revenue from the prior Reporting Year and then dividing that difference by (C) the total revenue from the prior Reporting Year. The information has not been audited. (5) Some Zoom Room Franchised Businesses have earned these amounts. Your individual results may differ from the results stated in this Item 19. There is no assurance that you will earn as much. (6) The data identified in the row entitled “Pet Industry Expenditures” is based on the yearover-year growth of the pet industry as a whole as reported by the American Pet Products Association (“APPA”), and located at http://americanpetproducts.org/press_industrytrends.asp. As noted by the APPA, the 2018 figure used for the comparisons with other years is an estimate, whereas figures for all other years reported by the APPA are actual.