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Business Description

To simplify the language in this disclosure document, “VIOCF” means Valvoline Instant Oil Change Franchising, Inc., the licensor. “You” means the person who is awarded the franchise. VIOCF was incorporated in Delaware on August 1, 1988. Its principal place of business is 100 Valvoline Way, Lexington, Kentucky 40509. VIOCF does not conduct business under any other name. VIOCF offers license and development agreements for the establishment and operation of a business that provides quickservice engine oil changes, chassis lubrication, preventive maintenance and other automotive services.

Prior Experience

VIOCF has not previously offered license or development agreements in any other type of business, nor does VIOCF engage in any other line of business.

Business Offered

In its license agreement (the “License Agreement”), VIOCF grants you the right to establish and operate a Valvoline Instant Oil Change service center (the “Center”) at a specific location approved by VIOCF (the “Approved Location”). The License Agreement you sign for any additional Center will be in the current form of the License Agreement offered to new licensees at that time. In its development agreement (the “Development Agreement”), VIOCF grants you the right to establish, whether by acquiring and converting existing oil change facilities that are not currently branded as part of the System (as defined below) and/or by new construction, a specific number of Centers in a defined area (the “Development Area”). An individual License Agreement must be signed for each new Center within the time frame specified in the Development Agreement. The License Agreement you sign for each new Center will be in the current form of the License Agreement offered to new licensees at that time. Each Center offers its customers a variety of motor vehicle maintenance services, including quick service engine oil change, chassis lubrication, oil filter and air filter change, and a maintenance check that includes top-off of differential, transmission, radiator and windshield washer fluid levels, power steering, battery and safety checks of tire pressure and windshield wipers. Other services include front and rear differential service, transfer case service, manual and automatic transmission services, coolant system flushes, serpentine belt replacement, cabin air filters and complete fuel system treatment service. Other services may include air conditioning recharge, windshield repair, battery replacement, bulb replacement, power steering flush, tire rotation and balancing, and fuel filter replacement. Any other products and services to be offered by a Center, including car washes, brakes and mobile quick lubes, must be preapproved by VIOCF. Centers are identified by means of, or use of, certain trade names, service marks, trademarks, logos, and emblems (the “Proprietary Marks”), including the marks “V VALVOLINE INSTANT OIL CHANGE? and design”, “VALVOLINE?”, “V?”, “INSTANT OIL®”, “VALVOLINE INSTANT OIL CHANGE®”, as well as any other Proprietary Marks as now or later may be designated by VIOCF in writing for use in the Center. Converting OCH Licensees (which are Valvoline franchisees that were originally franchisees under the OCHI franchise system) may have a limited right to use the Oil Can Henry’s Proprietary Mark, along with the other Proprietary Marks, in the manner determined by VIOCF. Centers provide services to the public using the methods, standards, specifications, procedures for operations, consistency of products, services offered, quality and inventory control, and promotional activities as VIOCF requires and may change from time to time (the “System”). VIOCF estimates that a Center’s primary market will be individuals and businesses that own or lease vehicles and do not wish to perform their own routine, ongoing maintenance on their vehicles. Centers are usually free-standing buildings and may be established in a variety of locations, for example, in suburban shopping center “pads” or strip shopping center locations. Centers compete with other quick-lube operations, service stations, automotive repair businesses, automotive service departments at national chain stores, brake and other “specialty” automotive repair stores, tire stores, automobile dealerships and other businesses that offer oil change and lubrication services and other routine automotive maintenance. Some of the above named competing businesses may use the Valvoline name for promoting the Valvoline? product and may be supplied with VALVOLINE® oil and other products by Valvoline. Valvoline offers two different types of programs to independent quick lube businesses and other automotive service and product sales operations. Valvoline’s Express Care® and “We Feature” programs both provide certain merchandising and promotional programs, including building specifications, demographics, image enhancement and related signage, and operational, marketing, merchandising and advertising assistance based on product purchases and a contract commitment. In addition, the American Oil Change Association (AOCA) Manager and Technician Training Manuals are provided at a discounted fee. Financial assistance is also available. The Express Care® program identifies its locations as Express Care® centers and have use of the marks “Valvoline?” and “V?” and are provided some limited operational and administrative consultation. Valvoline’s “We Feature” program also allows its customers the use of the marks “Valvoline?” and “V?”. Valvoline does not charge a franchise fee or royalty for the use of these trademarks. VIOCF also offers its License Agreement and Development Agreement to eligible employees of Valvoline (“Employee Program”). To be considered for the Employee Program, you must be listed as an “Active, Full-Time” employee with Valvoline or one of its affiliates for a minimum of five years. For each of those five years, you must have a performance rating of “effective” and, if you qualify, and if VIOCF agrees to grant you a franchise, you must resign your position with Valvoline or its affiliate when you sign the License Agreement.

Initial Fees

License Agreement You must pay to us a license fee of $30,000 for your first Center, with half of the fee to be paid upon execution of the License Agreement (a sample is attached as Exhibit A-1) and half of the fee to be paid on the date the first royalty payment is due after the Center is opened. The license fees for additional Centers are as follows: (i) $20,000 for the first newly constructed Center that is not the first License Agreement entered into by you with us, and (ii) $5,000 for each subsequent (a) newly constructed Center, and (b) existing oil change facility that is converted to a Center. If you purchase a Center from an existing VIOCF franchisee, the license fee you will pay to us is (i) $5,000 for the first Center that is purchased from the existing VIOCF franchisee, and (ii) $2,500 for each subsequent Center that is purchased from the same, existing VIOCF franchisee. If you are participating in the Employee program, your license fee is due upon signing of the first License Agreement. VIOCF considers the license fees fully earned when paid, and they are not refundable. During our last fiscal year, the actual initial license fees paid by individual franchisees were $0. Development Agreement If you are approved to develop multiple Centers within a given geographic market and you choose to sign a Development Agreement (a sample is attached as Exhibit A-11), you must pay VIOCF a development fee of $1,250 to $5,000 for each existing oil change facility that is not currently branded as part of the System that you intend to acquire and convert into a Center, and $1,250 to $15,000 for each newly constructed Center. In determining the range of fees you will pay for each Center, we consider the amount of resources that we will need to devote to the development of the Centers and the training of instore personnel employed by franchisee. If you are a new franchisee signing a Development Agreement, the license fee under the first License Agreement will be $30,000. As disclosed above, the license fee will be $20,000 for the first newly constructed Center that is not the first License Agreement entered into by you with us. Each license fee under subsequent License Agreements executed in connection with the Development Agreement will be $5,000 in the case of the conversion of an existing oil change facility (that is not currently branded as part of the System) to a Center and $5,000 in the case of a newly constructed Center. If you are an existing franchisee signing a Development Agreement, the license fee under each License Agreement executed in connection with the Development Agreement will be $5,000 in the case of the conversion of an existing oil change facility (that is not currently branded as part of the System) to a Center and $5,000 in the case of a newly constructed Center. VIOCF considers development fees fully earned when paid, and the fees are not refundable. During our last fiscal year, development fees paid to us were $1,250 to $3,750 per Center. Conversions If you own or will buy an existing oil change facility, including a Center, we may agree to sell you a franchise to convert to a Center or agree to your assignment of the existing franchise. VIOCF’s conversion fee is $30,000 if it is your first Center regardless of whether you are acquiring a service center from a third party or from one of VIOCF’s existing franchisees. If the conversion is for other than your first Center and is a qualifying, independent, existing and currently operating quick lube facility that provides similar services in a similar business format as required by VIOCF’s standards, then the conversion fee is $5,000. VIOCF has in the past reduced or waived this fee and may do so in the future. You will be required to sign VIOCF’s then-current form of License Agreement. Employee Program VIOCF’s current policy is to waive the license fees for the first Center granted to a person who qualifies under the Employee Program. The license fees will not be waived for any additional Centers and you will be required to sign VIOCF’s then current form of License Agreement. Incentive Programs VIOCF offers incentive programs to certain licensees and area developers. Repayment in full of the incentive payments is required if there is a default under the License Agreement or Development Agreement. See ITEM 10 for additional information on incentive programs that you may qualify.

Financing

Except as described below, neither VIOCF nor any affiliate of VIOCF will offer, directly or indirectly, any arrangements for financing your initial investment or the operation of the Center. VIOCF is unable to estimate whether you will be able to obtain financing for all or any part of your investment and, if you are able to obtain financing, VIOCF cannot predict the terms of this financing. Valvoline Branded Finance, Inc. VBF is a wholly-owned subsidiary of Valvoline, and affiliate of VIOCF. VBF has offered financing to franchisees in the past but does not currently offer any new financing to licensees or area developers. VIOCF and/or its affiliates have offered indirect financing on a case-by-case basis in the past in the form of guarantees and may do so in the future. Direct Financing VIOCF may offer to lease to you signs and equipment required to be displayed at the Center under a “Licensee Sign and Equipment Lease,” attached as Exhibit A-2. The lease term will be 15 years concurrent with the term of the License Agreement. The lease will terminate if the License Agreement terminates or expires. Lease payments will be based on the total value of the signs and equipment being leased and are negotiated by the parties based on a maximum 120-month term. No interest is charged. A default under the Licensee Sign and Equipment Lease constitutes a default of your License Agreement and all ancillary agreements with us and our affiliates. The licensee’s business owners must personally guarantee the obligations under the Licensee Sign and Equipment Lease. If you default, we may remove the signs and equipment from your premises. You must pay our expenses if we have to enforce the terms of the Licensee Sign and Equipment Lease. Small Business Administration Franchisees of the VIOCF system are eligible for expedited and streamlined SBA loan processing through the SBA’s Franchise Registry Program, www.franchiseregistry.com. SunTrust VIOCF has offered financing to franchisees in the past through a program with SunTrust Bank (“SunTrust”). This program was discontinued in March 2018, but the program will remain in place to service loans from SunTrust existing as of that date. Bank of America VIOCF has a financing program with Bank of America (“Bank of America”). Under this arrangement, you may be able to enter into a loan agreement with Bank of America for the financing of your Center. This program may be extended or expanded at the sole discretion of Bank of America and VIOCF. Bank of America makes loans to qualified borrowers (the “Borrower”) to finance new and existing Centers, including equipment, business value, real estate, and real estate construction. In exchange for the loan, the Borrower gives Bank of America a first priority lien and security interest in the real property, Center assets, and fixtures by signing a mortgage or deed of trust, assignment of leases and rents, security agreement, small business loan agreement, and a personal guaranty of each of the principal owners, establishing the Borrower’s obligation to repay the loan. Examples of these documents are included in this disclosure document as Exhibit I. The Borrower may not allow any other security interests or liens to encumber the property while the loan is outstanding except as permitted under the License Agreement and the loan documents. Bank of America financing is available to qualified Borrowers who meet certain financial tests in order to qualify. A Borrower, if qualified, may borrow a total principal amount of between $162,000 to $2,273,500. Bank of America has agreed to make loans to certain borrowers that do not meet its standard credit underwriting requirements (“Growth Loans”). Growth Loans under this program may be limited by Bank of America to an aggregate amount of $25,000,000 to all licensees. We have agreed to guarantee the Growth Loans to Bank of America. The aggregate amount of loans to franchisees that meet Bank of America’s standard credit underwriting requirements are not currently capped by Bank of America. We receive a fee from Bank of America of up to 1% of the loans funded to borrowers under this program, which is payable to us quarterly by Bank of America. The term for all loans in the Bank of America program, regardless of type, will be for a period not to exceed five (5) years. Business term loans will be amortized for a period of up to ten (10) years with a five (5) year balloon payment. Term loans for real estate will be amortized for a period of up to fifteen (15) years with a five (5) year balloon payment. The interest rate on a variable-rate term loan will be a floating rate which may change over time equal to the sum of Prime plus 0.50% for a total rate of 5.25% (as of the date of this disclosure document, Prime is equal to 4.75%). If the Borrower opens a Bank of America bank account, the Borrower receives a 0.25% reduction in the interest rate. Bank of America offers options to fix the interest rate for a term loan at no additional expense. There is a loan processing fee payable by the Borrower for a term loan equal to 0.50% multiplied by the aggregate principal amount of the loan. Loan payments consisting of principal and interest will be due and payable monthly on a scheduled date. The monthly principal payments will be established once the loan is fully funded. Bank of America may offer you up to three months of payments of interest only. Payments are made by electronic funds transfer through the Automated Clearing House (ACH) System. All Bank of America loans may be prepaid in full or in part at any time without prepayment penalties. The prepayments will be applied to the loan installments due in the inverse order of maturity. Bank of America may sell or transfer your loan without your consent. If you fail to make your loan payments, your entity fails to continue to exist, a guarantor dies and is not replaced within 60 days, or you fail to meet your obligations under the loan documents, License Agreement, or other documents material to the transaction, you will be in default under the loan documents with Bank of America. (Loan Agreement, Section 19.) If you are in default for failure to make your loan payments or for any other reason, Bank of America may terminate any commitment to make any further advances or additional loans to you, require you to pay the entire balance of the loan (principal and interest) immediately, charge default interest equal to the current interest on the loan plus 6%, and/ enforce its rights to any collateral under applicable law. These rights include the right to demand payment from any guarantor, to take possession of the collateral, or to sell the collateral. (Loan Agreement, Section 20.) If Bank of America must take action against you, you must pay all costs and expenses of the action incurred by Bank of America. (Loan Agreement, Section 18.) A default under the loan documents constitutes a default of your License Agreement and all ancillary agreements with VIOCF and its affiliates. Incentive Programs VIOCF offers incentive programs to certain licensees and area developers on an individual Center basis. All incentive payments are evidenced by an incentive promissory note with a term of 15 years that does not require re-payment unless there is a default under the incentive promissory note or the License Agreement (and related documents) for the Center associated with the incentive payment (See Exhibit A10). If licensee or area developer is in default of any of these agreements, VIOCF may accelerate all amounts due under the promissory note. The incentive promissory note does not require the payment of interest, however, in the event of a default, interest will begin accruing on the balance due at the time of default. A default under the loan documents would constitute a default of your License Agreement and all ancillary agreements with VIOCF and its affiliates. Upon a default, we may collect reasonable attorneys’ fees and our expenses of collection, including court costs. You waive a jury trial and presentment of the promissory note. The current incentive programs for licensees and area developers are described in more detail below. We have the right at any time to change or discontinue the incentive programs by providing notice to you. New/Renewal Store Incentive Program VIOCF is currently offering incentives to new or existing franchisees that meet certain conditions and construct new Centers, acquire existing oil change facilities and convert them to Centers or renew existing Centers. If you are eligible to receive an incentive payment, you will be required to sign a side letter, an example of which is attached as Exhibit A-12. If you construct a new Center (ground up), the Center may qualify for an incentive payment from VIOCF based on VIOCF’s projection of the number of oil changes that will be performed by that Center on an annualized basis as of the 2-year anniversary of the store opening (the “VIOCF Oil Change Projection”). The amount of the incentive payment will be equal to (i) $10.00 multiplied by (ii) the number of oil changes forecasted by the VIOCF Oil Change Projection. If you acquire an existing oil change facility, that facility may qualify for an incentive payment from VIOCF based on (i) documentation of the historical number of oil changes performed in the 12 months preceding purchase (the “Historical Number of Oil Changes”) or, if no such documentation is available, (ii) VIOCF’s projection of the number of oil changes that will be performed by that Center on an annualized basis as of the 18-month anniversary of the store conversion (the “VIOCF Conversion Oil Change Projection”). The amount of the incentive payment will be equal to (i) $10.00 multiplied by (ii) the Historical Number of Oil Changes or the number of oil changes forecasted by the VIOCF Conversion Oil Change Projection. If you acquire an existing oil change facility that has been closed prior to acquisition, that facility may qualify for an incentive payment from VIOCF based on VIOCF’s projection of the number of oil changes that will be performed by that Center on an annualized basis as of the 36-month anniversary of the store conversion (the “VIOCF Closed Store Projection”). If such facility is eligible, the amount of the incentive payment will be equal to (i) $10.00 multiplied by (ii) the number of oil changes forecasted by the VIOCF Closed Store Projection. Incentive payments are generally made within thirty (30) days of the store opening (ground-up) or store conversion (acquisition). VIOCF also currently offers incentives for franchisees that renew an existing Center for a term of no less than 15 years. If you renew and sign a new License Agreement for an existing Center for a term of not less than 15 years, the Center may qualify for an incentive payment from VIOCF in an amount equal to $10.00 for every oil change that the Center has performed in the 12 months preceding renewal. We will measure the actual number of oil changes to true-up the incentive payment made to you at the end of (i) at least eighteen (18) months after the opening of a converted Center, (ii) at least twenty-four (24) months after the opening of the ground-up Center, and (iii) at least 36-months after the opening of a closed Center. The number of actual oil changes performed by the Center in the six (6) months preceding the applicable measurement date will be annualized and compared against the projected number of oil changes for the Center used to determine the incentive payment we made to you. If we overpaid you, you will be required to repay to us the overpayment within thirty (30) days. If we underpaid you based on the actual number of oil changes, we will pay you the additional incentive payment within thirty (30) days. Development Agreement Incentive Program VIOCF may offer incentives to those franchisees that sign a Development Agreement and construct a new Center or acquire an existing oil change facility in a given geographic market. If you construct a new Center (ground up) under a Development Agreement, the Center may qualify for an incentive payment from VIOCF based on VIOCF’s projection of the number of oil changes that will be performed by that Center on an annualized basis as of the 2-year anniversary of the store opening (the “VIOCF Oil Change Projection”). The amount of the incentive payment will be equal to (i) $10.00 multiplied by (ii) the number of oil changes forecasted by the VIOCF Oil Change Projection. If you acquire an existing oil change facility under a Development Agreement, that facility may qualify for an incentive payment from VIOCF based on (i) documentation of the historical number of oil changes performed in the 12 months preceding purchase (the “Historical Number of Oil Changes”) or, if no such documentation is available, (ii) VIOCF’s projection of the number of oil changes that will be performed by that Center on an annualized basis as of the 18-month anniversary of the store conversion (the “VIOCF Conversion Oil Change Projection”). The amount of the incentive payment will be equal to (i) $10.00 multiplied by (ii) the Historical Number of Oil Changes or the number of oil changes forecasted by the VIOCF Conversion Oil Change Projection. If you acquire an existing oil change facility that has been closed prior to acquisition under a Development Agreement, that facility may qualify for an incentive payment from VIOCF based on the VIOCF Closed Store Projection. If such facility is eligible, the amount of the incentive payment will be equal to $10.00 multiplied by the number of oil changes forecasted by the VIOCF Closed Store Projection. Incentive payments are generally made within thirty (30) days of the store opening (ground-up) or store conversion (acquisition). We will measure the actual number of oil changes to true-up the incentive payment made to you at the end of (i) at least eighteen (18) months after the opening of a converted Center, (ii) at least twenty-four (24) months after the opening of the ground-up Center, and (iii) 36- months after the opening of a previously closed Center. The number of actual oil changes performed by the Center in the six (6) months preceding the applicable measurement date will be annualized and compared against the projected number of oil changes for the Center used to determine the incentive payment we made to you. If we overpaid you, you will be required to repay to us the overpayment within thirty (30) days. If we underpaid you based on the actual number of oil changes, we will pay you the additional incentive payment within thirty (30) days.

Franchisee Revenue and Profit

Some stores have sold this amount. Your individual results may differ. There is no assurance you will sell or earn as much. All fiscal years referenced below are from October 1 through September 30 of the respective year. Assumptions of the conversion model The conversion model makes assumptions on the impact to the converting business of our fleet program, search engine marketing, and direct mail program. We assume that you use a simple reminder mail program. The model assumes that the service penetration rates of the existing stores are influenced by the stores’ utilization of the fleet and direct mail programs as well as our proprietary sales presentation and point of sale system. We will use data you provide on your entity’s fleet business. An assumption of improved performance is only made if your fleet business percentage is lower than our average. The conversion model uses standard pricing assumptions. Except for the premium oil change incentive program, the pricing model does not include the positive impact of the other incentives because participation in those programs is voluntary. Franchisees receive a scaled discount on conventional motor oil purchases depending on the percentage of premium oil changes. The conversion model uses the applicable discount that would apply if you achieved the franchisee average premium oil change percentage. Your incentive discount may be higher or lower depending on the premium oil change percentage that you actually achieve. We also offer a 1% discount for early payment for all product purchases (within 14 days of the date of the invoice and payment must be made by ACH draft). We also offer a discount on MaxLife ATF for franchisees that purchase and use MaxLife ATF as their exclusive ATF fluid (except where other fluids are necessary – i.e., CVT applications). Other than as outlined above, VIOCF does not furnish, or authorize our salespersons (or anyone else) to furnish, and you should not rely on, any oral or written information concerning the actual or potential sales, income or profits of a Center. We have not suggested that you will succeed in the operation of your Center, because the most important factors in the success of any Center, including the one to be operated by you, are your personal business, marketing, management, judgment and other skills and your willingness to work hard and follow the System. Actual results vary from store to store, area to area, and market to market. Except for projections made with the conversion model for prospective franchisees with existing quick lube stores, we cannot estimate or project the results for any particular Center. Many factors, including location, management capabilities, local market conditions, and other factors, are unique to each store and may significantly impact the financial performance of your Center. Newly opened business often do not achieve sales volumes or maintain expenses similar to those of an established business. Neither VIOCF nor any of its affiliates, make any promises or representations of any kind that you will achieve any particular results or level of sales or profitability or even achieve break-even results in any particular year of operation. You are responsible for developing your own business plan for your Center, including capital budgets, financial statements, projections and other elements appropriate to your particular circumstances. The expenses identified in this statement are not the only expenses that you will incur in connection with the operation of your Center. Additional expenses that you may incur include royalty and marketing fees (see ITEM 6 of this disclosure document), interest on debt service (see ITEM 10 of this disclosure document), insurance, legal and accounting charges, and depreciation/amortization. We encourage you to consult with your own accounting, business, and legal advisors to assist you to identify the expenses you likely will incur in connection with your Center, to prepare your budgets, and to assess the likely or potential financial performance of your Center. We also encourage you to contact existing Center operators to discuss the quick oil change business. In developing the business plan for your Center, you are cautioned to make necessary allowance for change in financial results to income, expenses, or both, that may result from operation of your Center during periods of, or in geographic areas suffering from, economic downturns, inflation, unemployment, or other negative economic influences. Historical costs and revenues do not necessarily correspond to future costs and revenues because of factors such as inflation, deflation, changes in competition, minimum wage laws, location, financing, construction costs, lease-related costs and other variables. For example, costs such as rent, CAM charges, taxes, interest, insurance and utilities vary from store to store. All information should be evaluated in light of current market conditions, including such costs and price information as may then be available.