$53

Business Description

We are a California limited liability company. Our principal business address and that of TL, BBCS, ADC and HFC is 19000 MacArthur Boulevard, California 92612. ACS’s and LCR’s principal business address is 107 Parr Drive, Huntersville, North Carolina 28078. JMF’s principal business address, and the principal business address of our other parents (other than HFC), is 100 Jim Moran Boulevard, Deerfield Beach, Florida 33442. Our agents for service of process are listed in Exhibit G to this disclosure document.

Prior Experience

We are a California limited liability company. Prior to November 24, 2015, we operated as a corporation, Budget Blinds, Inc. (“BBI”). BBI was incorporated under California law on October 5, 1992. BBI converted to a limited liability company on November 24, 2015. We (as BBI) began offering franchises of the type described in this offering in March 1994. We have never offered any other franchise. We have no predecessors. We have six parents. Our immediate parent is Home Franchise Concepts, LLC (“HFC”), and our ultimate parent is JM Family Enterprises, Inc. (“JMF”). JMF controls HFC through JM Franchise Holdings, Inc., TCP HFC, Inc., Home Franchise Concepts Parent, LLC, and Home Franchise Concepts Midco, LLC. JMF is majority-owned by the James M. Moran Intervivos Trust Number Two.

Business Offered

The business you will conduct under a BUDGET BLINDS® franchise is a mobile business ("Franchised Business") for the sale and installation of window coverings, such as shutters, mini blinds, wood blinds, vertical blinds, draperies, pleated shades, cellular shades, roman shades, roller shades and solar shades. You will use a van equipped with signs we specify to make sales calls and perform installation work. You will generate sales in many ways, including local digital marketing such as pay-per-click, social media, reviews, digital listings, email to existing and potential customers as well as canvassing, home shows, other print media and word of mouth referrals. When you place an order for a customer, the product is shipped to you from the vendor and you install the product. The market you will serve consists of residential and business customers within the territory assigned to you. You will compete for customers with department and specialty stores and other businesses in the window covering market.

Initial Fees

You will pay us an Initial Franchise Fee of $19,950 when you sign the franchise agreement for your first Territory. There is no Initial Franchise Fee under a subsequent franchise agreement. If you are purchasing your franchise from us (rather than from an existing franchisee) and you are not a veteran, active service member or spouse of a veteran or active service member of the United States Armed Forces, you will also pay us an Initial Territory fee of $70,000 for the Territory you obtain under your first franchise agreement. If you are purchasing your franchise from us (rather than from an existing franchisee) and are a veteran, active service member or spouse of a veteran or active service member of the United States Armed Forces, you will pay us a discounted (as explained below) Initial Territory Fee of $55,000. If you enter into a second franchise agreement for a second Territory at the same time, the Additional Territory fee will be $60,000. Otherwise, for any subsequent franchise agreement and Territory, the Additional Territory fee will be equal to the then-current Initial Territory fee. Under the International Franchise Association’s VetFran program, we discount the Initial Territory fee by $15,000 to new franchisees who are honorably-discharged veterans of the United States Armed Forces, active service members and their respective spouses. Apart from these discounts, the initial franchise fee, Initial Territory fee and Additional Territory fees are uniform for all franchises currently being granted. If you are preparing to sign your first franchise agreement and you wish to reserve an assigned Territory for a brief specified term (usually 60 days or less) before you sign the franchise agreement, you may sign a Deposit Receipt and pay a "Deposit Fee" of $10,000 for a single Territory or $20,000 for two Territories reserved simultaneously. If you already own a BUDGET BLINDS® Franchised Business, you may not reserve an additional Territory through payment of a Deposit Fee. If you pay a Deposit Fee and later enter into a franchise agreement, the Deposit Fee is fully applicable against the Territory Fee under the franchise agreement. The Deposit Fee is uniform as to all franchises currently being granted. We will generally not grant more than two Territories to a single franchisee unless the franchisee submits a business plan that shows, in our sole judgment, that the franchisee has the ability to properly provide service within all Territories to be acquired. None of the fees described in this Item are refundable under any circumstances. Please see Item 10 for information about financing of these fees.

Financing

If you meet our credit standards, we will, at your request, provide financing as shown below. Financing is not available if you receive a discounted Territory Fee under the VetFran program. To obtain financing, you must sign a Promissory Note and General Security Agreement substantially in the form of Exhibits B and C to this disclosure document. No separate personal guaranty is required to obtain financing. Payments begin with the first royalty due date. The note can be prepaid without penalty at any time during its term. The General Security Agreement grants us a security interest in substantially all of your assets to secure your payments under the Secured Promissory Note. You waive your right to notice of a collection action and to assert any defenses to collection against us. We do not receive any direct or indirect payments or other consideration from any person for the placement of financing. Although we have never done so, we have a right to sell your promissory note at a discount rate to a third party which may be immune under the law to any defenses to payment you may have against us. We do not guarantee any notes, leases, or obligations.

Franchisee Revenue and Profit

The following is information concerning the reported annual gross sales (i.e., total revenues) and other financial measures of those franchisees who were open for business for all of calendar year 2018 and who reported their gross sales for all of 2018. We do not have data to establish whether the experiences of the franchisees who reported are typical of all franchisees, so you must consider the possibility that these data may not be typical. A. Annual Sales Levels The following table shows annual gross sales reported by franchisees with a single territory, with two territories, and with three or more territories, that were in business throughout calendar year 2018 and who reported sales for the full year. These franchisees represent 72% of the system. Figures for franchisees that had two or more territories are total sales for all territories – not average per territory – and if a franchisee’s additional territory opened during 2018, the total sales do not represent a full year of sales for the additional territory. All gross sales figures are presented without regard to the size of the territory. Although we currently grant territories that are at least 30,000 households, not all territories are that size. These variations in size arise both because we formerly sold territories of differing sizes and because territories can experience either growth or contraction after a franchise is sold. During 2018 there were 327 reporting franchisees who operated a single territory throughout the year, 143 franchisees who operated two territories each throughout the year and 45 franchisees who operated three or more territories each throughout the year. These sales results are based upon sales reported to us by the franchisees. We have not audited or verified these sales results, and we generally depend upon the franchisees to report their sales accurately. We do not have information concerning how our franchisees maintain their records, or whether those records are kept in accordance with generally-accepted accounting principles. Some franchisees have sold this amount. Your individual results may differ. There is no assurance that you will sell as much. The following is information from franchisees responding to a survey that we conducted in February and March, 2019. The survey was sent to all our franchisees, and franchisees representing 72% of territories returned fully completed surveys. The questions asked as part of the survey and the results are described below. B. Cost of Goods Sold As part of the survey, we asked our franchisees to report their experiences concerning average cost of goods sold (that is, the cost to franchisees of window coverings sold by the franchisees) as a percentage of the price at which the franchisees sold those same window coverings to their customers. According to that survey, the average cost of goods sold was 47% of the gross (retail) sales price. We have not independently verified this amount, but that figure is consistent with information concerning suggested mark-ups taught to franchisees in our training class. Your cost of goods sold may vary from this average, depending upon the number and nature of competitors in your area, the prices at which they sell similar window coverings, your abilities and efforts, and other factors. In addition to the cost of goods sold, you will also incur other expenses that are not included in this calculation, such as monthly payments (lease or financing) for the required van, labor costs for anyone you hire, rent for office/warehouse space (especially if you do not work out of your home), telephone and other utility expenses, automobile, general liability, and other types of insurance, royalties and advertising expenses, federal, state and local taxes, and financing expenses (see Item 10) if you finance any part of your investment. You may also incur other expenses, depending upon the manner in which you operate the business. You should consult with your advisors and with other business owners concerning the other types and amounts of expenses you will incur. C. Closing Rate As part of the survey referred to above, we also asked our franchisees about their “closing rate” (that is, the number of sales calls that result in an actual sale). The average closing rate was 68%. We have not independently verified this amount. Your closing rate may vary from this average, depending upon how well you follow our system, the number and nature of competitors in your area, the prices at which your competitors sell similar window coverings, your abilities and efforts, and other factors. We offer substantially the same services to all franchisees. Additionally, all literature and marketing materials we have developed are available to all franchisees. A franchisee is not limited in the amount or type of efforts it may make to sell window coverings. However, these actions must comply with the standards and guidelines we have outlined in the Manual or otherwise. Consequently, your annual gross sales, sales per transaction, expenses, and closing rate may be directly affected by the amount, type, and effectiveness of the business development efforts you conduct. D. Employees As part of the survey, we asked our franchisees how many employees were employed in their Franchised Business and received the following responses. Your financial results may differ from the results shown above. Written substantiation for this financial performance representation will be made available to you upon reasonable request. Other than the preceding financial performance representation, we do 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 Scott Barrett at 19000 MacArthur Boulevard, Suite 100, Irvine, California 92612, telephone (949) 404-1100, the Federal Trade Commission, and the appropriate state regulatory agencies.