ACE DuraFlo

3122 West Alpine StreetSanta Ana, California 92704

[email protected]

The ACE DuraFlo® patented and proprietary technology is a technical process for cleaning and reconditioning pipelines of various compositions, coating pipelines against corrosion and installing pipelines that have been pre-coated using our patented and proprietary methods. The core procedure involves a drying process, followed by cleaning the pipelines with an abrasive material, blowing the pipelines clean with compressed air, and lining the pipelines with specialized, proprietary epoxies by applying controlled pressure and air. This patented and proprietary technology allows the building owner to have its pipe systems restored in place instead of being repaired in place or removed and replaced. This process minimizes the disruption to the building owner and may be more cost effective than repairing or replacing worn out, damaged or corroded pipes and may avoid most of the demolition and repair to the building associated with replacing pipes. The “Franchised Business” that we offer will allow you to identify your business under the ACE DuraFlo® brand name and use our proprietary technology to clean and recondition plumbing pipes of various types (with the exception of fire sprinkler systems) having diameters of up to 2” in three types of applications depending on the package that you buy - mini E™, residential or limited commercial: “mini E™” applications involve restoration applications to single lines or parts of a piping system up to 1” in diameter in small sections. “Residential” applications involve single family homes and multi-family (up to 4 units) residential structures with lines from 1” to 2” in diameter. “Limited commercial” applications involve small commercial structures, like apartment buildings, strip centers, and schools that have no more than 3 stories. In this Franchise Disclosure Document, we sometimes collectively refer interchangeably to the various services performed in connection with these three types of applications as the “Authorized Services.” The Authorized Services expressly exclude the reconditioning of fire sprinkler systems in all types of dwellings and applications. When you apply for a franchise, you will indicate your interest in either the mini E™ or residential/limited commercial package and pay the corresponding Initial Franchise Fee when you sign the Franchise Agreement. If you initially purchase a mini E™ package and we approve your request later to expand the scope of your Authorized Services to include residential/limited commercial services, you must pay us an additional Franchise Fee at that time. However, if you initially purchase the residential/limited commercial package and desire to perform mini E™ applications, you must obtain our prior approval, but no additional Initial Franchise Fee is payable. If we approve your request to expand your Authorized Services, we will amend the Franchise Agreement accordingly. Depending on your qualifications, as long as the Authorized Services include residential/limited commercial applications, you may request that we expand the scope of the Authorized Services so that you may apply our proprietary technology to pipes in “Commercial” applications, including mid-rise and high-rise office buildings (4 stories and greater), larger school facilities, apartment buildings, condominiums and hotels. We may grant or deny your request to expand the scope of Authorized Services in our sole discretion and may consider any factors that we believe are most relevant to the scope of work you propose and your qualifications. If we approve your request, we will amend the Franchise Agreement to expand the scope of Authorized Services, but no additional Initial Franchise Fee is payable. Whether you are currently in the plumbing business and already offering drain repair or are getting into the plumbing business for the first time with the purchase of an ACE DuraFlo® franchise, and whether you initially purchase the mini E™ or the residential/limited commercial package, you may expand the scope of the Authorized Services to include drain pipe and branch pipeline repair by entering into our Drain Repair Addendum (Exhibit M), which is an addendum to the Franchise Agreement (Exhibit A). No additional Initial Franchise Fee is payable to add drain pipe and branch pipeline repair. Under the Drain Repair Addendum, you must use the specific drain pipe and branch pipeline repair equipment, consumables and related products that we designate, which you must buy from the supplier that we designate. We may modify the list of drain products and change the supplier at any time effective upon written notice. You may terminate the Drain Repair Addendum within 30 days after we notify you of a supplier change. To add drain repair services to your Authorized Services, you must complete additional training at your expense, with the supplier we designate. While we permit you to perform other types of drain repair services during the term of the Franchise Agreement from other suppliers, under certain circumstances, you must pay us Royalty Fees on your Gross Receipts from other drain repair services. This will occur if you are not already offering drain repair services when you buy the ACE DuraFlo® franchise from us and decide to add drain repair services later. Because the Franchise Agreement allows you to use the ACE DuraFlo® brand name to promote your business generally, your overall ability to sell other types of plumbing services, including non-ACE DuraFlo approved drain repair, benefits from your association with us. Consequently, if you are not already in the drain repair business when you buy the ACE DuraFlo® franchise, and add drain repair services, you will pay us Royalty Fees on your drain repair Gross Receipts to the same extent as you would if you opt into our drain program and sign our Drain Repair Addendum (Exhibit M). Under the franchise that we grant to you, you may not (i) use or sell our proprietary Epoxy except incidental to performing Authorized Services; (ii) market or solicit customers by, among other activities, placing local advertising in media that circulates or broadcasts outside of your Territory; (iii) market, solicit or advertise for restoration jobs that are outside the scope of the Authorized Services; or (iv) perform Authorized Services outside of your Territory. Ace DuraFlo 6 Multistate FDD 4847-2603-1493v.3 0087467-000022 Among other benefits, we provide ACE DuraFlo® franchisees with marketing support and the opportunity to participate in any future national account referral program that we may implement.