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Business Description

The franchisor is CK Franchising, Inc. (“CKFI,” “we,” “us” or “our”). “You” means the person(s) or entity (corporation, partnership, limited liability company, or other entity) to whom we grant a franchise. If you are an entity, “you” does not include your owners, who are described as “Related Parties.” (See Item 15 of this disclosure document) We were incorporated under Ohio law on February 8, 1999. On February 7, 2003, we restated our charter to effect a recapitalization that resulted in a substantial increase in our authorized capital and our outstanding capital stock. As a result of the recapitalization, February 7, 2003 is considered the date of our inception for accounting purposes. Our principal business office is located at 1 Park Plaza, Suite 300, Irvine, CA 92614.

Prior Experience

We conduct business under our corporate name and under the name “Comfort Keepers.” We do not do business under any other name, although we offer a line of personal technology services and equipment branded with the SafetyChoice® mark but associated with the COMFORT KEEPERS® mark. We also offer Comfort Keepers® services in shared housing we operate for groups of up to four seniors under the name “LifeSelect by Comfort Keepers.” If we have an agent in your state for service of process, that agent’s name and address are listed in Exhibit B-2. We have been in the business of granting Comfort Keepers® franchises and assisting franchisees since March 1999. In addition, since June 2008, we have been offering personal technology services and equipment branded with the SafetyChoice® mark and supplying those same services and equipment to our franchisees for resale by them. Since April 2016, we also have been the designated supplier of the grandPad tablet, a senior-friendly computer tablet customized with the Comfort Keepers application, and related software and applications, which we offer for sale to our franchisees for use in connection with their businesses. In October 2013, we began providing Comfort Keepers services in shared housing we operate for groups of up to four seniors under the LifeSelect™ mark. In July 2017, we began offering the Marketplace, an internet portal/website that provides access to non-core value added services for Clients via affiliates and third party partners. We operated a business similar to the Comfort Keepers franchise in Toledo, Ohio between March 1999 and December 2003, when we franchised the business to a manager. Since March 2012, we have operated franchised Comfort Keepers businesses on behalf of SDX Home Care Operations, L.L.C. (“SDX”), an affiliate and franchisee. See Item 20 of this disclosure document. We have never sold franchises for any other line of business.

Business Offered

The business that you will operate under a Franchise Agreement with us (“Franchised Business”) provides homemaker/companionship and personal care services for the elderly and other adults who need assistance in daily living, as well as personal technology services and equipment. Care typically is provided in the Client’s home but may also be provided in other facilities, such as assisted living facilities. Homemaker/companionship services include companionship, meal preparation, light housekeeping, grocery and clothing shopping, grooming and dressing guidance, and assistance with recreational activities. Personal care services relate to core activities of daily living, such as eating, bathing and dressing. You will design a customized care plan for each Client, whose care needs may range from periodic care to 24/7 live-in care. The majority of your Clients will be private pay Clients. You may also choose to seek authorization from state agencies to provide Medicaid-waiver services, although we recommend that you focus your efforts on private pay Clients. You will perform background checks on and hire employees to provide care services after you have given them training in accordance with our and/or applicable law requirements. You may also offer personal technology services and equipment such as personal emergency response systems, medication management systems, and related monitoring and other services that are branded with the SafetyChoice® mark but are associated with the Comfort Keepers® mark (together, “Personal Technology Services”). You may also sell or lease personal technology equipment, without related services, that is branded with the SafetyChoice® mark and associated with the Comfort Keepers® mark (“Equipment”) and grandPads. You may also offer services that we make available through the Marketplace, including Simply to Go meals (if available in your geographic area) or any later established or rebranded meal program. You may also offer other ancillary services that we approve. We may also authorize you to offer minimally-invasive private duty nursing services (“PDN Services”) if you meet the following criteria: you complete the required PDN training offered by CKFI, you satisfy applicable state licensure requirements, you maintain specified insurance for PDN Services, and you are then and have been in good standing. You will operate the Franchised Business under the Comfort Keepers® trade name, service marks and trademarks and other marks that we own (collectively, "Marks"). (See Item 13 of this disclosure document)

Initial Fees

Deposit With respect to your first Expansion Agreement only, you may elect to sign a Franchise Deposit Agreement. Under the Franchise Deposit Agreement, you will pay us a $5,000 deposit and, for 180 days, we will reserve certain specified zip codes that will become your territory if you sign a Franchise Agreement for those zip codes within that time period. If you sign a Franchise Agreement for those zip codes within 180 days after you sign the Franchise Deposit Agreement, we will credit the entire deposit paid by you under the Franchise Deposit Agreement against the initial franchise fee (described below) payable under that Franchise Agreement. You must pay the deposit by certified check or wire transfer. The deposit is not refundable under any circumstances. During the last fiscal year, we charged the initial deposit uniformly as described. Initial Franchise Fee When you sign a Franchise Agreement (other than in connection with a transfer or a territory swap), you must pay us an initial franchise fee in the amount of $50,000 per Franchised Business, less, if applicable, any deposit paid by you under the Franchise Deposit Agreement. You must pay the initial franchise fee by cashier’s check or wire transfer. The initial franchise fee is not refundable under any circumstances. We offer financing for a portion of the initial franchise fee for franchisees signing a Startup Agreement or an Expansion Agreement and financing in connection with the purchase of unassigned zip codes and for franchisees signing an Expansion Agreement. See Item 10 of this disclosure document. We offer three types of discounts on the initial franchise fee, as follows: 1. We currently offer a discount on the initial franchise fee due under Expansion Agreements or if you purchase multiple Franchised Businesses in a single transaction. To qualify, 51% or more of the voting power must be held by the same individuals and/or entities under each Franchise Agreement. We discount the initial franchise fee by 15% for the second valid and in effect Franchise Agreement, 20% for the third valid and in effect Franchise Agreement, and 25% for the fourth valid and in effect Franchise Agreement and each additional Franchise Agreement under which the franchisee will operate at the same time. 2. We also currently offer a discount of 25% on the initial franchise fee to a current employee of ours or of a franchisee if the employee has worked for a Franchised Business or for us for at least 24 months before he or she submits an application to us to become a franchisee. The employee must own at least 51% of the voting power in the new franchise. 3. We participate in the International Franchise Association’s VetFran Program. If you qualify under this program and are signing a Start-up Agreement, we will give you a 10% discount on the initial franchise fee. If you qualify for more than one of the discounts described above, you will receive only the larger of the discounts. We may modify or discontinue any or all of these discount programs at any time and without notice. Some franchisees may be “grandfathered” under earlier agreements that establish franchise fees in amounts less than described in this disclosure document. During the previous fiscal year, those franchisees that were grandfathered paid an initial franchise fee of $45,000 less any discount for Expansion Agreements or the VetFran Program. Except as provided above, during the last fiscal year, we uniformly charged the initial franchise fee and applied the discounts described.

Financing

We offer financing to qualifying franchisees for a portion of the initial franchise fee to be paid under a Start-up Agreement or an Expansion Agreement and for a portion of the price for unassigned zip codes purchased in a single transaction of at least $15,000. Under our financing arrangement, you must pay us: (1) with respect to a Start-Up Agreement, 25% of the initial franchise fee at the time of execution of the agreement; (2) with respect to an Expansion Agreement, $5,000 of the initial franchise fee at the time of execution of the agreement; or (3) with respect to the purchase of unassigned zip codes, 25% of the purchase price at the time of execution of a zip code amendment to your Franchise Agreement. We will finance the balance of the initial franchise fee at 6% simple interest per year, payable over 30 months and the zip code purchase price at 6% simple interest per year, payable over 12 months. The balance of the initial franchise fee due, and therefore your principal balance and your loan repayments, will depend on the amount of the initial franchise fee, whether you qualify for any discounts or how many Expansion Agreements you have signed before. (See Item 5 of this disclosure document.) The purchase price for assigned zip codes and, therefore, your principal balance and your loan repayments, will depend on the population residing in the unassigned zip codes or, in the case of a zip code auction, the winning bid. If you qualify for and take advantage of this financing, you will sign a promissory note (“Note”), the two forms of which are attached as Exhibit F to this disclosure document, when you sign the Franchise Agreement. We do not require a security interest in any of your or your Related Parties’ assets, but the Guaranty we require of your Related Parties will apply to your obligations under the Note. You may prepay the Note in any amount, at any time, without penalty. (Note § 2) You must make all payments under the Note by electronic funds transfer (“EFT”) from your designated bank account. You must pay any related EFT transfer fee. (Note § 4) We will apply any payment first to EFT transfer, service, late, and other fees due; next, to accrued interest, and last, to principal. (Note § 2) You must pay a late charge of $225 for any payment that is late by 5 days or more. (Note §3) In addition, you must pay any service fee or other fee your bank imposes if your bank does not honor an EFT for any reason. (Note § 4) We may accelerate the full principal amount of the Note, together with unpaid interest, if any of the following Events of Default occurs (Note §§ 5 and 6): a. A default in payment under the Note. b. A default in payment under the Franchise Agreement. c. A default in payment of trade amounts due us. d. Our giving notice of default under any Franchise Agreement between you and/or your Related Parties and us. e. Your and/or any owner’s sale, transfer, or other assignment, voluntary or involuntary, of its interests in the Franchised Business, in you, and/or in or under the Franchise Agreement. f. Termination, whether voluntary or involuntary, of the Franchise Agreement. g. Your ceasing to operate the Franchised Business. In addition, because default under any other agreement between you and us is a default under the Franchise Agreement, we may terminate the Franchise Agreement for your default under the Note. (Franchise Agreement § 11.1.2(f)) You must pay our costs of suit and reasonable attorney fees in collecting the amount due under the Note. (Note § 6) Under the Note, you waive demand, presentment, notice of nonpayment or dishonor, notice of protest and any and all delays or lack of diligence by us in the enforcement of the Note. You also consent to any extension or postponement of the time of payment and waive any and all notice of any extension or postponement. (Note § 7) We have no intent to sell, assign, or discount to a third party all or any part of the financing described above. Other than the financing described above, we do not offer direct or indirect financing. We will not guarantee your note, lease or obligation.

Franchisee Revenue and Profit

The table below is a historical financial performance representation, based on revenue reported by franchisees; we have not included in the table the revenues or expense information for the Franchised Businesses we operate on behalf of our affiliate, SDX. For purposes of the table below, “net revenue” means that revenue on which a franchisee pays royalty fees (but which is, in the Franchise Agreement, called “Gross Revenue”), that is, the total amount of money the franchisee and its owners receive for all goods sold and services rendered in connection with the Marks, and all other income of any kind derived directly or indirectly in connection with the operation of a Franchised Business, including Client deposits and payments for mileage charges but excluding sales tax and Client refunds. The table shows information relating to all Franchised Businesses operating on September 30, 2019 that had been operating for at least one year and reported revenue for every month during the period October 1, 2018 through September 30, 2019 (“Reporting Period”). The table shows net revenue achieved during the Reporting Period by Franchised Businesses that had been operating the specified number of months. The last line in the table shows information relating to net revenue for the Reporting Period for all of the Franchised Businesses included in the table. We used the Start Date for a Franchised Business as the date its operations began. Under a Startup Agreement, the Start Date is the last day of the month following the month in which all of those persons designated in the Franchise Agreement: (1) successfully complete, as determined by us in our sole discretion, the initial training program; or (2) are required to complete the initial training program (60 days after the effective date of the Franchise Agreement), whichever is earlier. Under an Expansion Agreement executed before January 1, 2007, the Start Date is the date of execution of the Expansion Agreement. Under an Expansion Agreement executed January 1, 2007 or after, the Start Date is 60 days after the date of execution of the Expansion Agreement. SOME FRANCHISED BUSINESSES HAVE EARNED THIS AMOUNT. YOUR INDIVIDUAL RESULTS MAY DIFFER. THERE IS NO ASSURANCE THAT YOU’LL EARN AS MUCH. THE SUCCESS OF YOUR FRANCHISED BUSINESS WILL DEPEND IN LARGE PART UPON YOUR SKILLS AND ABILITIES, COMPETITION FROM OTHER BUSINESSES, AND OTHER ECONOMIC AND BUSINESS FACTORS. Other than the preceding financial performance representations, CKFI does not make any financial performance representations. 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 Carl McManus, President and Chief Executive Officer, 1 Park Plaza, Suite 300, Irvine, California, 949-988-6655, the Federal Trade Commission, and the appropriate state regulatory agencies.