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Business Description

PACCAR Leasing is part of a Washington corporation incorporated March 31, 1961, doing business as PACCAR Leasing, PacLease and PACCAR Financial, which maintains its principal business address at 777 – 106 th Avenue Northeast, Bellevue, Washington 98004.

Prior Experience

PACCAR Leasing’s predecessor was PACCAR Leasing Corporation which was a wholly owned subsidiary of PACCAR Inc. The parent company, PACCAR Inc, manufactures and sells, through independent truck dealers, medium and heavy duty trucks under the Kenworth and Peterbilt trade names. On May 1, 2000, PACCAR Leasing’s predecessor, PACCAR Leasing Corporation, was merged into PACCAR Financial Corp., which is also owned and controlled by the same parent company, PACCAR Inc. PACCAR Leasing’s predecessor was merged into PACCAR Financial Corp. to achieve savings in administrative costs and taxes. All of the personnel, assets and operations of PACCAR Leasing’s predecessor are now a separate division of PACCAR Financial Corp. PACCAR Inc, PACCAR Leasing and PACCAR Financial Corp. all have the same principal address which also is the former principal address of PACCAR Leasing’s predecessor. Franchisor’s parent company, PACCAR Inc, has not offered franchises for this business, conducted a business of this type, or offered franchises in other lines of business. PACCAR Inc sells commercial trucks through dealers under state motor vehicle dealer laws in all fifty states. These dealers are not franchises under either general state franchise laws or the Federal Trade Commission franchise trade regulation rule.

Business Offered

Each PacLease business rents and leases commercial trucks and related equipment such as trailers and provides maintenance and other services for those vehicles. Most PacLease franchises will be owned by, or affiliated with, a Kenworth or Peterbilt truck dealership and your franchise business may be operated together with your Kenworth or Peterbilt retail truck dealership. However, PACCAR Leasing also may offer franchises to parties not affiliated with Kenworth or Peterbilt truck dealerships. These parties may own and operate their own truck leasing and rental businesses at the time they are offered a PacLease franchise. PACCAR Leasing intends to offer a PacLease franchise to these parties in locations not served by PacLease franchises affiliated with Kenworth or Peterbilt truck dealerships or in locations where a PacLease franchise affiliated with a Kenworth or Peterbilt truck dealership is not adequately serving the rental and leasing market. PacLease may also own and operate truck rental and leasing establishments in locations where the market is not served by an existing PacLease franchise or where the existing PacLease franchise is not adequately serving the market. The service and products are used primarily by the trucking industry for the transportation of goods. The general market for full service truck rental and leasing is a mature but growing market that principally offers trucks, tractors, trailers, maintenance and related services to a wide variety of manufacturing and service industries needing to transport their goods and services. Local, state and federal regulations generally govern servicing, maintaining, operating and titling motor vehicles and related equipment. These include general regulations of the U.S. Department of Transportation and the Federal Highway Administration, federal and state highway use and mileage taxes, state and local use taxes, state vehicle titling and registration laws, federal and state environmental regulations affecting motor vehicles and state and local laws governing safe operation and maintenance of motor vehicles.

Initial Fees

You must pay an initial fee in the amount of $4,000.00 for your base location in a lump sum 30 days from the date you sign the Franchise Agreement. The initial franchise fee for a base location may not be uniform in all cases and may be waived under certain circumstances. PACCAR Leasing may change the initial franchise fee upon notice to you. In 2017, PACCAR Leasing appointed Rihm PacLease as a new franchise in the U.S. PACCAR Leasing does not refund the initial franchise fee in whole or in part under any circumstances. You must also pay to PACCAR Leasing a $250 deposit which may be used by Franchisor to reimburse other PacLease franchises for unpaid service work provided to your customers under Franchisor’s procedures for reciprocal service as described in the Standard Operating Procedures (Exhibit B-1 to this disclosure document). This deposit is not refundable in whole or in part.

Financing

PACCAR Leasing offers you lease financing alternatives for the purchase of trucks and trailers if you meet PACCAR Leasing’s credit standards. PACCAR Leasing offers this financing most often under an agreement called the Lease for Re-Lease Agreement which will be called the “Lease” in this Item. (Exhibit C is a copy of this agreement.) PACCAR Leasing publishes in advance the terms of the lease financing offered and bases financing rates on market conditions. If you choose this option, you will typically pay $1,465 to $1,810 a month for 60 months for a vehicle with an acquisition cost of $118,000 and no down payment (acquisition costs typically vary from $80,000 to $138,000). Prices may vary. As disclosed in Note 5 to Item 7, the monthly payment varies depending on the residual value you choose (the residual value is the estimated fair market value at the end of the lease term). See Exhibit C to the disclosure document. The Annual Percentage Rate (“APR”) varies depending on PACCAR Leasing’s cost of funds. As of January 2017, the average APR on a 60 month term is 4.97%. PACCAR Leasing retains legal title to the vehicle during the lease term (Section 13 of the Lease). During the lease term, you may terminate the lease for any vehicle early although that may involve an early termination payment to PACCAR Leasing under Section 12 of the Lease. If you do not make a payment on time, PACCAR Leasing can demand payment of all past due rental or lease payments, remove the vehicles without legal process or notice to you and terminate the Lease. PACCAR Leasing may then hold, lease or sell any vehicle as it chooses and you shall be liable if sales proceeds or rental payments are insufficient under the terms of the Lease (Section 13 of Lease). You do not waive your rights to assert other defenses. PACCAR Leasing can also recover all cost and expenses of collection, including reasonable attorneys’ fees (Section 13 of Lease). PACCAR Leasing may require a personal guarantee and retain a security interest in all rental or lease or other proceeds you derive from the vehicle and in the vehicle itself if the Lease is not treated as a true lease by your court. Finally, PACCAR Leasing may sell, assign or discount your lease obligations under the Lease to a third party who may be immune to any defenses or claims you may have against PACCAR Leasing. PACCAR Leasing does not guarantee any notes, leases, contracts or obligations.

Franchisee Revenue and Profit

We do not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or 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 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 Jake Civitts, Director of Franchise Operations, 777 106 th Ave NE, Bellevue, WA 98004, 425-468-7877, [email protected], the Federal Trade Commission, and the appropriate state regulatory agencies.