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Business Description

The franchisor is One Hour Air Conditioning Franchising, L.L.C., and may be refenced to in this document as “One Hour®”, ‘•Franchisor, “us” or “our”. A person or business entity who' buys a franchise from us will be referred to a5 “you.” If you are a corporation, partnership, limited liability company or other business entity, “you” also includes your to owners (-‘Owners”). "While are a Florida limited liability company organized on February 20, 2003. Dur principal place of business is 12 Greenway Plaza, Suite 250, Houston, Texas 7704.6.; We conduct business under our name, One Hour Air Conditioning Franchising, L.L.C., or under the trademarks ONE HOUR AIR CONDITIONING & HEATING^ of ONE HOUR HEATING & Air CONDITIONING®. We do not conduct business under any other trademarks or trade names. Our agents for service of process, are disclosed in Exhibit B. Our Parent, Predecessors and Affiliates General We do not have any' predecessors. One of our affiliates and our parent company is Clock work, IP., a Delaware corporation, located at 12 Greenway Plaza, Suite 250, Houston, Texas 77046. (“Clockwork Services”). On July 1, 2010, our former parent. Clockwork Home Services, Inc. (“CHSI”), and Direct Energy (CW), Inc. (“DECW”), a Delaware corporation, completed a corporate reorganization transaction through which DECW acquired substantially all the assets of CHSI. As a result of that transaction. Franchisor became a wholly-owned subsidiary of DECW and, in connection with that transaction, DECW was renamed “Clockwork, Inc.” Clockwork Services operates Under the name “Clockwork Home, Services” (as did CHSI). Clockwork Services, through its affiliate Clockwork IP, EEC, a Delaware limited liability company, located at 12 Greenway Plaza, Suite ,250, Houston, Texas 77046. (“Clockwork IP”) owns the ONE: HOUR AIR CONDITIONING & HEATING mark, and other related marks, and licenses them to us., On April 30, 2019, RSG Holding Corp. (‘Seller”) sold to Hidden Gem. Holdco, EEC, a Delaware limited liability company (“Buyer”), all of the issued and outstanding equity interests of Clockwork Services pursuant to a Purchase and Sale Agreement dated February 15, 2019 (the “Acquisition”). Buyer is an affiliate of Apax Partners, E.P., a private equity firm based in London, United Kingdom. As a result, of the Acquisition, Clockwork Services became a direct wholly owned subsidiary of Buyer, and we became an indirect wholly-owned subsidiary of Biiyer (and we continue to be a direct wholly-owned subsidiary of Clock Work Services). Our business and affairs will be managed by Clockwork Services as the sole member of our limited liability company, the Franchisor. Clockwork Services will provide some back-office support to us by identifying and participating in. business, opportunities that serve niche markets, meeting, unfulfilled market demands and offering products, services and education. There is no commifment.by Clockwork Services to provide post-sale obligations On our behalf. You must look only to the Franchisor and not to Clockwork Services Or any Other affiliate to fulfill the franchisor obligations under your Franchise Agreement. There are no formal arrangements between Franchisor and Clockwork Services for your benefit or on which you can rely, and there are no formal arrangements directly between Clockwork Services and you related to your Franchise Agreement Or your business. Clockwork Services previously supported four contractor affinity groups under' the umbrella of its Success Group International® business division. These affinity groups operated under the trade names Air Time® 500, Plumbers' Success International®, Roofers' Success International®, and Electricians' Success International®. The affinity group businesses have not been affiliated with us since 2014., Members of these affinity groups continued to have full access to Buy Max (described below) until July 2017, when their full access was limited to only the sourcing of Buy Max's private, branded products. Buy Max is no longer a vendor partner to the affinity groups. However, Buy Max continues to sell private branded products to independent contractors, including affinity group members and other independent contractors iii its sole and absolute discretion. Other Buy Max members, including our franchisees, continue to have full access to Buy Max. Some of the tools Air Time 500 provides to members in the HVAC industry will be like the tools (such as training, marketing systems, and management expertise) provided to you under the Franchise Agreement and you may compete with Air Time 500 members in your Territory. One or more affiliates: or subsidiaries of Clockwork Services operate businesses (“Company-Owned Outlets”) of the type that are offered in this Disclosure Document, under the trademark ONE HOUR AIR CONDITIONING & HEATING or ONE HOUR HEATING & AIR Conditioning in, or near Las Vegas, Nevada Naples, Florida; Delray Beach, Florida; Rocklin, California;, Denver, Colorado; Loveland, Colorado; Indian, Indiana; Cincinnati, Ohio; Houston, Texas; and Corpus Christi, Texas. Company-Owned Outlets include outlets owned by us, or our affiliate that use the Licensed Marks (defined below). Clockwork expand its Operations into new territories through additional Company-Owned Outlets or otherwiSe. Our Affiliates that offer Franchises in other Lines of Business In September 2001, Benjamin Franklin Franchising, LLC, a, Missouri limited liability company located at 12, Greenway Plaza, Suite 25,0„ Houston, Texas, 7704:6 (“Benjamin Franklin Plumbing”) began offering franchises to operate a plumbing repair and services business under the trademark BENJAMIN FRANKLIN PLUMBING®. Benjamin Franklin Plumbing is Owned by Clockwork Services. As of December 31, 2018, Benjamin Franklin Plumbing had 260 franchises sold to 95 persons or entities; Fifty-five of the 95 persons or entities purchased more; than one franchise from Benjamin Franklin Plumbing. Benjamin Franklin Plumbing has never offered an air conditioning and heating services business franchise like the type: described in this Disclosure Document. In June 2006, Mister Sparky Franchising, L-L-C-, a Florida limited liability company located at 12 Greenway Plaza, Suite 250, Houston, Texas, 77046 (“Mister Sparky”) began offering franchises to operate ah electric services business under the trademark, MISTER SPARKY®, Mister Sparky is owned by Clockwork Services. As of December 31, 2018, Mister Sparky had 106 franchises sold to 50 persons or entities. Nineteen of the 50 persons or entities purchased more than one franchise from Mister Sparky. Mister Sparky has never offered, an air conditioning and heating business franchise like the type described: in this Disclosure Document, Our affiliate; as; a result of the Acquisition, The Clearing Authority, LLC (“TCA”) is a limited liability company formed in Maryland oh February 4, 2010 and is a 1,00%-owned subsidiary of Authority Brands, LLC, a Delaware limited liability company (“Authority Brands”). Authority Brands is 100% owned by V]lla BidCO Ine. Authority Brands has not offered any franchises and has not provided any goods or services to our franchisees. Authority Brands' and TCA.S perihelial place of business is at 7230 Lee Deforest Drive, Suite 20B, Columbia, Maiyland 21,046. Since September 20l0, TCA has been offering franchises fpr a cleaning service ;(03/05/,l 9,)(05/03/,| 9)(Q5/16/!;9)(0,7705/1,9) Miiltistaie program that specializes in residential cleaning. As of December 31,201.8, there were: 211 TCA franchised businesses operating in the United States. TCA has not offered franchises in any other line of business and has never provided any goods or services to our franchisees. Our affiliate as a result of the Acquisition, The Cleaning Authority Inc. (“TCA CANADA”) Is a corporation formed in the Province of New Brunswick, Canada^ In August 2,014 as a 100% owned subsidiary of Authority Brands. TCA CANADA maintains its principal business address at 1 Gennaih Street Suite 1700, Saint John NB E2L 4V1. TCA CANADA offers franchises; in Canada under ‘THE CLEANING AUTHORITY” mark and logo, As of December .31, 2018f there were seven (7) TCA franchised businesses in Canada. TCA CANADA does not provide any goods, or services to our franchisees nor has it offered franchises in any other line of business. A subsidiary of Authority Brands since September 20l7, Home watch Caregivers, EEC, f/k/a Home watch International, EEC, a Colorado limited liability company (“Home watch”) maintains its principal business address at 7100 E.. Belleview Avenue, Suite lOl, Greenwood Village, Colorado 80111. Since January 1996, Home watch has been offering franchises for the operation of a business: vvhich offers companionship, personal care, complex personal care and nursing services provided by home health aides, personal care providers, certified nurse assistants, licensed practical nurses and registered nurses for seniors and clients of all ages, under the service mark “Home watch Care Givers”. From 1993: through 1996, Home watch also offered, franchises for housesitting, handyman and companionship service businesses that used the service mark Home watch. As of December, 3l., ,20i;8, there, were 174 Home watch Care Givers franchised businesses in the U.S. Home watch does not provide any goods or services to our franchisees nor has it offered franchises in any other line of business. On August 25, 2DT7, Authority Brands formed Home watch Canada, Inc. (“Home watch Canada”), a New Brunswick, Canadian corporation, as a 100%-owned subsidiary of Authority Brands. Home watch Canada has its principal place of business at Barker House, 570 Queen Street, Suite. 600, Fredericton NB E3B 6Z6. In September 2017, Home watch Canada acquired from Horne watch all. of Home watch's right, title and interest in and to all of the franchise agreements, for Home watch Care Givers franchised businesses involving, or relating to any franchise territory located in Canada (and any associated accounts receivable) (the “HWCG Canadian Franchise Agreements”), and it assumed all of Home watch's liabilities related to such HWCG Canadian Franchise Agreements, other than liability for taxes arising from Home watch's operation of its Canadian business and the ownership of the HWCG Canadian Franchise Agreements prior to the date of such acquisition. As of December 31, 2018,, Home watch Canada was a party to HWCG Canadian Franchise Agreements fora total off our Home watch Care Givers franchised businesses, Home watch Canada does not provide any goods or services to our franchisees nor has it offered franchises in any other line of business, Qn August 25, 2017, Authority Brands formed Home watch Care Givers International, Inc. (“HWCG International”), a Delaware corporation, as a 100%-owned subsidiary of Authority Brands. HWCG International has the same principal place of business as Authority Brands. In September 2017, HWCG International acquired from Home all of Home watch's right, title and interest in and to all of the franchise agreements for Home watch Care Givers franchised businesses involving or relating.to any franchise territory located outside the U.S. and Canada (and (03/05/19)(05/03/.l 9.)(05/!:6/l 9)(0,7/0'5/i;9) Multistate any associated accounts recyclable) (the Internationalis HWCG Franchise Agreements”), and it assumed all of Home watch's liabilities related to such International HWCG Franchise Agreements, other than liability for taxes arising from Home watch's operation of its international business and the ownership of the International FIWCG Franchise Agreements prior to the, date of such acquisition. Immediately following the acquisition of Home watch by Authority Brands, Authority Brands contributed all the capital stock of HWCG International to Home watch, making HWCG International a 100%-owned subsidiary of Home watch. As of December 31, „2G,18, HWCG International was a party to International Franchise Agreements in Chile (with one HOMEWATCH CAREGIVERS business operating), Colombia (with one HQMEWATCH CAREGIVERS business operating), Costa Rica (with two HOMEWATCH CAREGIVERS businesses operating), Guatemala (with one HOMEWATCH CAREGIVERS business operating), and Mexico (with five HOMEWATCH CAREGIVERS, businesses operating). Except as described above, HWCG International does not provide any goods or services to our franchisees nor has it offered franchises in any line of business. Our affiliate as a result of the Acquisition, ASP Franchising, Inc. (“ASP Franchising”), a Georgia corporation formed on January 11, 20Q6, is a wholly-owned indirect subsidiary of Villa. Bid Co. Asp Franchising's principal business address is 3986, Lake Street, Macori, GA, 31204. Since January 2006, ASP Franchising has been offering franchises for businesses that provide swimming pool cleaning swimming pool maintenance and swimming pool renovation services, as well as related services and products in the swimming pool industry., such as swimming pool construction and retail operations, under the name ASP®., As of December 31, 2018, there were 2^1 ASP franchised businesses in the U.S. ASP Franchiser does not provide any goods or services to our franchisees nor has it offered franchises in any other line of business. Gur affiliate as a result of the Acquisition^ Mosquito Squad Franchising, LLC (“Mosquito Squad”) Is a wholly-owned indirect subsidiary of Villa Bid Co. Mosquito Squad was originally formed on January 19, 2009 as a Delaware corporation Mosquito Squad Franchising Corporation and was converted on December 7, 2018 to a Delaware limited liability company. Mosquito Squad's principal business address is 2924 Emery wood Parkway, Suite TOl, Richmond, VA. Mosquito Squad's predecessor was Mosquito Squad Franchise Corp. (“Mosquito. Squad Predecessor”), Mosquito Squad Predecessor offered franchises; for outdoor' pest control businesses from January 2005 to January 2009. Since January 2009. Mosquito Squad has been offering franchises for Outdoor pest control businesses, which offer residential and commercial customers-a variety of goods and services in the pest elimination/control industry including the sale, design, instigation; servicing of outdoor misting systems, barrier treatment Services, and other pest elimination: and control systems, under the name Mosquito Squad®. As of December ,31„ 2018, there were 229 Mosquito Squad franchised businesses in the U.S. Mosquito Squad does not provide any goods or services to our franchisees has it offered franchises' in any other line of business.

Prior Experience

We began offering franchises of the type described in this Disclosure Document: in April 2003. We began offering Area Development Agreements of the type described in this Disclosure Document in April 20.18.

Business Offered

We award franchise's for air conditioning and heating maintenance, repair and equipment replacement services, including duct Cleaning and Other indoor air quality services, (“HVAC Services”) businesses to be operated under trademarks ONE HOUR AIR CONDITIONING & HEATING or ONE HOUR HEATING & AIR CONDITIONING. You will select which of these (03/05/19)(05/03/| 9)(p5/,l 6/19)(07/05/V9.) Miiltistave trademarks you prefer to use. "We do not engage in other business activities and do not and have never offered franchises in any other line, of business. If you sign a franchise agreement, the business you operate will use the trademarks, service marks, trade names^ logos, and symbols we designate (which trademarks,, service marks,, trade names, logos, and symbols we will call the “Licensed Marks”) to provide HVAC Services (the “Franchised Business”). The approved HYAG Services currently include only residential and commercial services, including maintenance, repair and replacement services, and do not include industrial, re modeling or new construction services. The Franchised Business: will use the methods and procedures we have developed (the “System”), which includes standards and methods of operation^ accounting, marketing, advertising and public relations, and the standards for conducting a. Franchised Business. The standards include responsibility for warranties and guarantees of customer service, levels, including customer satisfaction and timeliness guarantees^ The System for conduiting a Franchised Business is described, in our operations manual, which we call OpX Operational Excellence or OpX (the “Operations .Manual”), or otherwise in other writings designated by us as part, of the standards for the System (collectively with the Operations Manual,. “System Standards”). Our concept is to have a franchisee operate the Franchised Business from one approved location within the franchisee's territory. However, some of our franchisees may be awarded multiple mechanism contiguous or adjoining territories. In those circumstances, those franchisees may operate the if multiple franchises from an approved location in only one of their franchised territories. Franchisees will be, either converting, their existing HVAC. business info a Franchised Business (a “Conversion Franchise”) or will develop and open a new HVAC Services business (a “Start-Up Franchise”). We may pursue opportunities; to convert similar businesses operating under different trade names to a One Hour Franchised Business. We may provide conversion incentives to those: businesses (an “Incentive Program”). The terms of the Incentive Program vary depending on factors such as the existing sales: volume of the business, the size and location of the geographic area serviced, perceived competitive advantage Of the business, the skills and experience: of the: business leaders, physical cOndjti.pn and age of the business and its assets,, operating history, our then current conversion policy, the negotiations of the parties, and other factors determined by us in our sole and absolute discretion ,We may negotiate these incentives: when, and as business circumstances warrant. Pursuant; to a current Incentive Program, we offer financial incentives for certain qualified large-scale prospective conversion franchises pursuant to certain terms and conditions. We will notify you in advance and in writing if we believe you may qualify for an Incentive Program. Unless you qualify for an Incentive ‘Program and are notified by us in writing that you qualify, you will not be entitled to receive the benefits of any Incentive Program. Any Incentive Program we offer or may offer in the future may be modified', limited, expanded, initiated, extended of terminated, at any time in our sole and absolute discretion and without advance; notice or amendment of this Disclosure: Document. We also offer qualified applicants the ability to enter into an area development agreement (an “Area Development Agreement”) to develop multiple Franchised Businesses; within a specifically described geographic area (the “Development Area”). Each Franchised Business developed pursuant to the Area Development Agreement will operate within a defined territory in (03/05/191(Q'5/03/19X05/16;/1,9X0'7/0571?) Multistate the Development Area., Our Current form of Area, Development Agreement is attached to this Disclosure Document as Exhibit 1. The size, of the, Development Area will vary depending on the local market conditions and the number of Franchised Businesses to be developed, but each territory within the Development Area wifi, be based on, total population blocks of approximately. J00,,0Q0. The Development Area, and the territories within the Development Area, will be determined before you sign, the Area Development Agreement and will be described iii the Area Development Agreement or an attachment to it (“Development Schedule”). You must develop the number of Franchised Businesses specified by the Area Development Agreement in the Development Area according to, and in a sequence described in, the Development Schedule though you mayj in bur sole and absolute discretion, develop more than One Franchised Business at a timCi We reserve the right to refuse to enter into an Area Development Agreement with any franchisee or-prospective franchisee as determined in our sole and absolute discretion., In addition, we are not required to offer or enter into an Area Development Agreement with franchisees that develop more than one Franchised Business., For each Franchised Business developed Under the Area Development Agreement, you must sign our then-current Franchise Agreement and any required amendments and related agreements, including a general release. The forms of Franchise Agreement you sign pursuant to the Area Development Agreement may be different from the fdim included with this Disclosure Document and may contain different terms and conditions (including but not limited to different or increased fees and other financial terms). You must also meet certain eligibility requirements in order to develop Franchised Businesses pursuant to the Area Development Agreement, including that each of your Franchised Businesses maintain a minimum revenue of$500,000 per year.; These eligibility requirements are discussed in greater detail in Item 12. You (and your Owners if you are a business entity) must agree to be individually bound by certain obligations and' covenants in the Area Development Agreement and, unless we agree otherwise, must personally guarantee your performance Under the Area. Development Agreement.

Initial Fees

Standard Initial Fees The minimum initial fees (“Initial Fees”) for both Conversion Franchises and Start-Up Franchises-are $43,000, for a territory that has a minimum population of 100^000, plus $430 for each 1000 of population above 100,000. The population in a territory is generally approximately 100,000. We currently determine population by utilizing an ‘electronic database called MapPbint®but reserve the right to use such other software or database to determine population as we. deem fit in our sole and absolute discretion. In the third quarter of 20,19, Or other time as we may determine in our sole and absolute discretion, we intend to start using another database Called GbBIS, offered by Intelligent Direct, Inc., to determine population. GbBIS is expected to have the same or similar internationally as MapPoint. If we change our database from MapPoint to GbBIS (or another electronic database), it will not change how your Initial Fees are calculated. The electronic database we use shows population information by zip code. The Initial Fees must be paid in a lump sum, or for qualifying franchisees, may be financed ln installment payments. The (03/05/19){05/03/l 9.)(05/l 6/19)(P7/g5/l 9) Multistate Initial Fees will be fully earned by us upon your signing of the Franchise Agreement and are not refundable under any circumstances. Other Initial Fees Details Initial Fees paid may not be uniform. We may vary, reduce, negotiate or make exception to our standard Initial Fees structure and/or payment terms in order to facilitate mergers, conversions Or Other large transactions, as well as to accommodate certain existing franchisees that acquire additional locations. For example, at the present time, we may, in our sole and absolute discretion, offer opportunities, to purchase; a franchise at a reduced fee to (i) qualified existing franchisees in good standing, (ii) qualified prospective franchisees that are converting existing, companies: to a Franchised Business or (iii) qualified veterans purchasing on the. basis of the International Franchise Association's® VetFran® Program. We make no representations that these or any other opportunities or variations to the standard Initial Fees will continue to be made available and they may be discontinued without notice at any time in our sole and absolute discretion. We are a member of the International Franchise Association (“IFA®'') and participate in. the. IFA's VetFran; Program which provides special financial incentives to qualified veterans. Pursuant to this program, we offer a 10% discount on the initial franchise fee for all honorably discharged veterans of American and Canadian armed forces for your first franchise only. We shall determine, in our sole and absolute discretion, whether a prospective franchisee qualifies for this discount. In making this determination, we may be guided by the definitions used by applicable; United States or Canadian government offices, but the decision remains ours. The software package-that we currently require for our franchises is the cloud hosted model of Success Ware Tl (“SuccessWare2:l”). The initial activation fee is waived by Success Ware for our franchisees, bUtiSuecessWare21 will cost you a monthly fee, which currently ranges from $32.5 to $525 per month. The first month's payment is usually paid before opening for business and the; payment is non-refundable. You must: also pay for a required SuccessWare21 training class. The cost of the SuccessWare21 training class is $1,795 for up to two attendees., You may send up to two additional attendees for an additional $1,79;5. We estimate you will have to pay $1,795 to $3,590 for ShccessWare2I training classes, depending on the number of people that attend. This amount is paid to Success Ware usually before opening for business and the payment is nonrefundable. If you are converting an HVAC Services business to a Franchised Business and you do not currently use SuecessWare2J, Success Ware may have to provide technical support to convert your HVAC Sei-vices business data .soft can be imported into Success Ware Tl (SuecessWare2I may be referred to as “Success Ware Tl (ASP .Option)” in Other documents). If you qualify for and choose to to-participate in the Incentive Program, the technical support provided by Success are to convert your data will be at no cost to you. If you do not qualify for the Incentive Program or choose not to participate in the Incentive Program, the technical support provided by Success Ware to convert your data Will be paid by you at rates that will be established and updated, at Success Ware's sole and absolute discretion. Last year new Conversion Franchisees that required technical support from Success Ware to convert data paid Success Ware $2,000 to $3,400 for this service; The amount you will have to pay will depend on the type, quality, and amount of data., that needs to be (03/05/19)(05y03719,)(05/16/1 ?)(07/b5/l9) Muliistate converted. This amount is paid to Success Ware usually before opening for business, and the payment is non-refundable,^ Development Fee When you sign an Area Development Agreement, you must pay us a lump-sum, nonrefundable development fee equal to $10,000 multiplied by the number Of Franchised Businesses to be developed pursuant to the Development Schedule (“Development Fee”). The Initial Fees for each Franchised Business developed pursuant to the Development Schedule will be reduced to $23,000, arid the $2,000 Initial Fee will be owed at the time you sign each Franchise Agreement pursuant to the Development Schedule. The Development Fee may riot be urtifornt for all area developers entering into an Area Development Agreement under this offering depending on the geographic area and other factors. Unless otherwise provided by state law in your jurisdiction, the Development Fee will be fully earned by us upon your signing of the Area Development Agreement and is not refundable under any circumstances.

Financing

For qualified buyers that meet our credit standards, we may offer the option to pay Initial Fees with a promissory note and for qualified buyers that meet our credit standards that are eligible to sign an Area Development Agreement, we may Offer the option to pay the Development Pee with a promissory note. This option is available at our sole and absolute discretion. We do not guarantee your note, lease or other obligations. The Initial Fees, if not paid in a lump sum when the Franchise Agreement is signed, may be financed to the extent that you qualify for such financing and to the extent permitted by law. If financed, the balance scan be paid in up to 36 monthly installments at ah interest rate that is typically between 12% .and 18% per annum or the highest permissible rate allowed by law. Franchisees obtaining financing from us must pay a minimum of $5,000 or 20% of the Initial Fees, whichever is greater, when the Franchise Agreement is signed. The interest rate is based, in part. On prevailing conditions your individual credit history, your personal financial condition, and Other underwriting factors. The Development Fee, if not paid in a lump sum when the Area Development Agreement is signed, may be financed to the extent that you qualify for such financing, and to the extent permitted by law. Affianced, the balance can be paid in up to 36 monthly installments at an interest rate that is expected to be between 12% and 18% per annum or the highest permissible rate allowed by law. Area developers obtaining financing from us: must pay a minimum of 20% of the Development Fee when the Development Agreement is signed. The interest rate is based, in part, on prevailing conditions, your individual credit history your personal financial condition, and Other underwriting factors. A franchisee that finances the Initial Fees, and/or area developers that finance the Development Fee, must sign a promissory note and guaranty in the form of Exhibit C (‘Troinissory Mote and GuaiTanty”) and, as security, its Owners must sign the Owner's: Guaranty. If an Owner's spouse is also an Owner, then the Owner's spouse must also sign the Owner's Guaranty., We currently do hot take; a security interest in the assets of your Franchised Business or your Owner's; assets, but We reserve, the fight to do so. You must make all payments to us: by electronic funds transfer to an account designated by us or by such other method that we may designate from time to time. You Will be required to complete an Automated Clearing House (ACH) agreement authorizing automatic Withdrawals. You can prepay the Promissory Note and Guaranty at any time Without penalty. If you are in default Of the Promissory Note and Guaranty or the Franchise Agreement, we can declare the outstanding principal balance and all unpaid accrued interest immediately due and payable; You will have to pay our reasonable attorney's fees and other legal costs we incur in enforcing payment and collection of the balance due. The Promissory Note and Guaranty provide-that you and your guarantor wifi waive demand for payment, presentment for payment protest, notice of non-payment or dishonor, and all other notices and demands. (03/05/19,) (0;5/03/19) {b5/l.6/l 9X07/05/19) Muliis'tatc We may assign the Promissory Note and Guaranty to a third-party hut we remain obligated to provide services according to the terms of the Franchise Agreement and/or the Development Agreement, as applicable. Any third party to whom the Promissory Note and Guaranty may be assigned does not assume any of our obligations under the Franchise Agreement and/or the, Development Agreement, as applicable, and under the Uniform Comercial Code you may not assert against the. third party any defenses you may have against us. We do not receive any consideration for referring you to any prospective lenders.

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 franchisors 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 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 Intern 19 for example by providing, information about possible performance at a particular location or under particular circumstances., We are providing you with historical financial performance representations for Franchised Businesses that had Net Sales (as defined below) during the entire two-year period Indicated, If a Franchised Business did. not have Net Sales for the entire two-year period indicated, we did not include Its results in the financial performance representations! Summary of Same Store Sales for Franchised Business Territories Same store sales for Franchised Business Territories are based on Net Sales. Although the definition of Net Sales” may change slightly from year to year, it is generally defined as all revenue received by a Franchisee for the performance of all services and the sale of all products from or related to the Franchised Business (including revenues received for performing commercial services) less sales taxes,, refunds to customers, discounts and payments to subcontractors and permit costs related to the Franchised Business. A Franchised Business' Net Sales are obtained from individual financial packages submitted to Franchisor on a monthly basis., These financial packages include profit and loss, statements with sales data for Franchisor to ealciilate applicable franchisee fees. Franchisee fees are calculated on Net Sales, as defined in each individual franchisee's Franchise Agreement of Net Sales are captured, in electronic work papers and. are the basis for this historical financial performance representation. Occasionally, franchisees: fail to report. In such circumstances, estimates based on other financial records provided by non-reporting franchises such as required daily sales reports are employed. None of these estimates have, a material impact on the total amounts reported below. Franchisor reasonably relies on this data and believes it to be true and, correct However, Franchisor has not audited this data and cannot therefore provide any further assurances, as to its accuracy or completeness. We highly encourage you to work with a qualified accountant or other qualified business, advisor in considering this opportunity, its potential and to develop a business plan to determine if you are suited for this franchise opportunity. We further encourage you to consult with an attorney and other advisors before executing the Franchise Agreement.