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Business Description

The Franchisor. Pool Scouts Franchising, LLC (“we”, “us”, “our”, “Pool Scouts”, or “Franchisor”) was organized as a Virginia Limited Liability Company on December 10, 2015. We maintain our principal place of business at 2829 Guardian Lane, Suite 100, Virginia Beach, VA 23452. We have not operated a business similar to the Franchised Business but our affiliate, Pool Scouts Local Operations, LLC, has operated a business similar to the Franchised Business since January 8, 2016. We conduct our business under our company name and the trademarks POOL SCOUTS® and the other trademarks listed in Item 13 (“Marks”). We were organized for the purpose of offering franchises and operating businesses that provide services and equipment to both residential and commercial customers to clean and maintain swimming pools (“Franchised Business”). In addition to offering franchises, we may supply to you certain products related to your Franchised Business. We do not conduct any other unrelated business activities. We began offering franchises for the Franchised Business on February 23, 2016.

Prior Experience

ur parent is Buzz Franchise Brands, LLC (“BFB”). BFB was organized on November 23, 2009. BFB's principal place of business is 2829 Guardian Lane, Suite 100, Virginia Beach, VA 23452. BFB does not offer franchises in this or any other line of business. We have had no predecessors during the ten (10) year period immediately before the close of our most recent fiscal year. Our affiliates are Pool Scouts Local Operations, LLC (“Local Operations”), Pool Scouts Services, LLC (“Pool Scouts Services”), BFB IP LLC (“BFB IP”), Home Clean Heroes Franchising, LLC (“Home Clean Heroes”), Home Clean Heroes Local Operations, LLC (“HCH Local Operations”) and Home Clean Heroes Services, LLC (“HCH Services”), each a wholly owned subsidiary of BFB. Local Operations, a wholly-owned subsidiary of BFB, was organized on October 1, 2015 and operates a business of the type being franchised. Local Operations acquired and began operating a business similar to the type being franchised on January 4, 2016. The acquired business served customers in southeastern Virginia since May 2013. Local Operations does not offer franchises of the type being franchised or in any other line of business. Pool Scouts Services, a wholly-owned subsidiary of BFB, was organized on September 5, 2017, and provides certain products and services to our franchisees, including the Mailer Program and the Digital Advertising Program in which all franchisees must participate. Pool Scouts Services does not operate a business of the type being franchised and does not offer franchises in any other line of business. BFB IP, a wholly-owned subsidiary of BFB, was organized on October 19, 2016, and owns certain intellectual property. BFB IP does not operate a business of the type being franchised and does not offer franchises in any other line of business.

Business Offered

If you receive our approval, you (we will refer to individuals, partnerships, corporations, and the owners of partnerships and corporations as “you” and “your”) may sign a Pool Scouts franchise agreement (“Franchise Agreement”, see Exhibit D) to establish and operate the Franchised Business according to our established system (“System”). With our approval, you may also convert an existing business offering similar services to a franchised business under the terms stated in the franchise agreement and related agreements. We offer to qualified persons the right to develop up to 3 Franchised Businesses within the Development Area determined by us, under an area development agreement (“Area Development Agreement”). The Area Development Agreement requires you to open an agreed upon number of Franchised Businesses under a development schedule. You may be required to open 2 Franchised Businesses within the first year. You must sign our then-current form of Franchise Agreement for each Franchised Business that you open. This means that for each future franchise, the area developer may be required to sign a form of Franchise Agreement that is different from the form of Franchise Agreement attached in this offering. The distinguishing characteristics of the System include, without limitation, distinctive Marks, uniform standards, specifications, and procedures for operations; quality and uniformity of the pool and spa cleaning and maintenance products, equipment and services provided by licensed and Franchisor-approved professionals; special confidential techniques for selling products, services, and service agreements; route scheduling; back-office operations; field marketing techniques; emblems; uniforms; instructional materials and training courses; advertising and promotional programs for use in the Franchised Business. (Any and all aspects of the System may be changed, improved, and further developed by us from time to time.) The Franchise Agreement allows you to use our Marks in the operation of the Franchised Business. You must conduct the Franchised Business according to our Confidential Operations Manual, Sales Manual, and other manuals and instructional materials that we create in the future for use in the System (“Manuals”). You must offer only those services, equipment and products, which we specify, and in the manner we specify. You must use only the integrated business management system and credit card processing service approved by us, and you must obtain certain equipment, supplies, products, services and printed materials only from us or third party suppliers who meet our specifications and whom we have approved in advance. The Franchised Business offered by this Franchise Disclosure Document will operate a business providing swimming pool and spa service, including pool openings, pool service to maintain a clean pool with proper water chemistry, and pool closings. Pool service does not include pool repair services beyond minor repairs requiring low technical expertise. In time, with the appropriate technical training, expertise and applicable certification, we anticipate that our franchisees may provide pool repair services. The repair services could also be offered by a franchisee hiring a qualified professional. The Franchised Business may provide only authorized products and services, including cleaning and maintaining swimming pools within a geographic area of responsibility (“Territory”). Your Territory will contain a number of “Targeted Households,” typically 6,000 to 7,500 estimated Targeted Households. A “Targeted Household” is a single family detached home with a pool or spa as well as an estimated annual gross income of at least $75,000. The number of Targeted Households is estimated because we rely on a third party source to supply us with this data. While we believe this data to be accurate within an acceptable margin of error, there is no way to guarantee or know the actual number of households with swimming pools or spas and that meet gross income criteria. The actual number of swimming pools with the gross income criteria may be more or less than 6,000 to 7,500. Schedule A of the Franchise Agreement will set forth the number of Targeted Households in your Territory. We or an affiliate will identify the Targeted Households in the Territory with reference to information provided by a third party data compilation and demographic information service provider that we select. We may, in our sole discretion, permit you to add unoccupied zip codes, which are immediately adjacent to your Territory, from an unoccupied territory at a cost of $1.00 per Targeted Household located within that unoccupied zip code (the “Purchased Zip Codes”). All Purchased Zip Codes will be included in your defined Territory, and all references to “Territory” include the Purchased Zip Codes. Since the Purchased Zip Code will become part of your Territory, you must include all Targeted Households within the Purchased Zip Code in the Mailer Program in which you are required to participate. You must participate in the Mailer Program and pay the associated fees described in Items 5, 6, 7 and 8 of this disclosure document. As of the issuance date of this disclosure document, we or our affiliate are the only approved supplier of the Mailer Program services. It is essential to the ongoing operation of the Franchised Business that you develop new customers, as well as service those existing or potential customers you develop.

Initial Fees

you sign a single Franchise Agreement offered by this disclosure document, you must pay us an Initial Franchise Fee of $20,000. We have established a Community Heroes Program and may offer to qualifying franchises a $1,000 discount on the Initial Franchise Fee for the first Pool Scouts franchise, but no discount will be given for franchises under an Area Development Agreement. We include firefighters, law enforcement personnel, emergency medical technicians and personnel, teachers and educational administrative staff in our Community Heroes Program. We participate in the VetFran program sponsored by the International Franchise Association. If you qualify to participate in this program, you may be eligible for a discount of $4,000 off of the Initial Franchise Fee for the first Pool Scouts franchise. This discount may not be combined with any other discount. A franchisee that otherwise meets the criteria to qualify for both the Community Heroes Program discount and the VetFran program discount may only receive a single discount. The Initial Franchise Fee is paid when you sign the Franchise Agreement. The Initial Franchise Fee is fully earned upon execution of the Franchise Agreement by us. The Initial Franchise Fee is refundable, only if you do not pass our Operations Training (“Operations Training”) in accordance with our current passing standards for Operations Training, provided that you return to us all materials which we distributed to you during Operations Training. We may, in our sole discretion, finance a portion of your Initial Franchise Fee. See Item 10. Financing not offered in California

Financing

We and/or one of our affiliates may, in our or their sole discretion, finance a portion of your initial investment or operating capital. Whether we will extend financing and the amount of financing will vary depending on, among other factors, the availability of funds, your creditworthiness, the market conditions in your area, and your compliance with existing franchise agreements but may be up to half of your initial fee. The annual interest rate is typically 12%, but can vary depending on your creditworthiness. Financing must typically be repaid over 1-3 years through monthly payments that would vary depending on the amount financed (Example: $14,750 financed for 3 years at 12% the monthly payment would be $484.06), but we may require other repayment terms such as the submission of daily credit card receipts. The repayment terms that we offer will vary based on your creditworthiness and the amount financed. You or, in the case of an entity, your principals, must personally guarantee the debt. We may require your spouse to guarantee the debt. We may require a security interest in the assets of the Franchised Business. You may prepay the financed amount at any time during the term of the loan without penalty. You waive the homestead and other available exemptions, presentment, demand, protest, notice of dishonor and all other notices. If you default on amounts owed, we can accelerate the obligation to pay the entire amount due, and seek our collection costs including attorney's fees from you, and terminate your franchise agreement. See Exhibits F-1, F-2, F-3 and F-4. To accommodate franchisees who seek to obtain loans through the U.S. Small Business Administration (“SBA”) or other SBA loan programs, we may defer principal (but not interest) payments on loan amounts we have financed until SBA loans have been repaid. Under those circumstances, all principal amounts must be repaid within 24 months after the SBA loan is repaid. We are not required to offer you financing of any kind. We and/or our affiliates reserve the right to sell, assign or discount any note or other obligation arising out of the Franchise Agreement to a third party. If we or our affiliates assign your note, it will not affect our obligation to provide the services described in the Franchise Agreement, but the third party may be immune under the law to any defenses to payment you may have against us. Currently, we do not offer any lease arrangements. However, in the future we and/or our affiliates or a third party leasing company may offer lease financing for vehicles, equipment, signs and furniture. Such leasing will be subject to the availability of leasing capacity and your creditworthiness. We are not obligated to provide such leasing programs. If leasing is available pursuant to third party agreements, you may lease only those items which we indicate as eligible for leasing. We do not currently receive any payment from such arrangements with third party leasing companies, though we may receive revenue from your purchase of the leased items. The terms of such leasing programs vary and are yet to be determined for the coming year. Of course, if we do offer a leasing program and you elect to participate, you are obligated to make payments as required by the lessor. In the event you fail to make such payments, whether or not you sign the leasing paperwork, the entire lease amount will become due and payable immediately. We will charge interest on the amounts outstanding and delinquent amounts will subject you to the termination provisions of the Franchise Agreement. We do not receive payments from any person for the placement of financing, although in the future, we may accept referral fees. We may but are not required to assist you in your efforts to seek financing from third parties. We do not provide any financing in the State of California.

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. This Financial Performance Representation consists of the following: 1. Pool Service/Maintenance Industry Overview. A short summary of the Pool Service/Maintenance Industry is provided below for context regarding the financial performance representation of Pool Scouts Local Operations, LLC and Pool Scouts Franchising, LLC. 2. Pool Scouts Local Operations, LLC. Detailed information for our affiliate, Pool Scouts Local Operations, LLC (“Local Operations”), which operates 3 territories, consisting of the following information: a. Important Historical Information b. Key Performance Metrics c. Supporting Performance Metrics d. Territory Penetration Analysis by Zip Code 3. Pool Scouts Franchising, LLC. We began offering franchises on February 23, 2016. As of December 31, 2018, we had 16 Franchised Business owners operating 18 franchised locations. 16 of the 18 open locations had been in operation more than six (6) months as of December 31, 2018. Detailed information for these 16 locations is provided below.