FDD Talk: Our Latest Views on Out-U-Go!’s Average Visit Fees and Visit Labor Cost (2014 FDD)

Highlights of Out-U-Go!’s Item 19 Financial Performance Representations (2014 FDD) – Part 2

Explanatory Notes for Table III – Average Visit Fees vs. Average Visit Labor

• The results displayed in Table III include the reported results of all of the 7 Franchised Businesses.

• The term “Visit Fee” means the total consideration paid by a customer for services performed by a Franchised Business per visit. The average figure provided in the table below reflects the average Visit Fee paid by a customer per visit during the period January 1, 2013 through December 31, 2013 (the “Table III Reporting Period”).

• The 7 Franchised Businesses were required to report the Visit Fee for each customer visit. The stated average is based on information provided to Out-U-Go! from the 7 Franchised Businesses for the Table III Reporting Period.

• The term “Visit Labor” means the total gross payroll costs incurred by the 7 Franchised Businesses per customer visit for their dog walking and sitter staff (not inclusive of labor costs for services provided by owner-operators or management staff paid on an annual salary basis).

• Visit Labor does not include payroll taxes, workers’ compensation insurance, or any other associated visit cost.

• The Visit Labor Expenses are not all-inclusive of the expenses Franchised Businesses incur. You will also incur additional expenses and costs not mentioned in Item 19, including, without limitation, ongoing royalty fees, advertising fund contributions, and other fees.

• The 7 Franchised Businesses were required to report to Out-U-Go! the Visit Labor costs for each customer visit during the Table 3 Reporting Period. The stated average is based on information reported to Out-U-Go! from the 7 Franchised Businesses for the Table 3 Reporting Period.

• Labor costs and expenses are affected by a number of things, including the labor market in the area in which your Franchised Business is located; any applicable federal or state laws relating to employment, including minimum wage requirements; number of employees; employee turnover; training; compensation, salary, and benefits offered to employees; and scheduling.

• Four of the 7 Franchised Businesses, or 57.14%, surpassed the average Visit Fee stated in Table III. Three of the 7 Franchised Businesses fell below the stated average.

• Three of the 7 Franchised Businesses, or 42.86%, surpassed the average Visit Labor figure stated in Table III. Four of the 7 Franchised Businesses fell below the stated average.

• The financial information used in the preparation of the Tables and information provided in this Item was not audited.

• Individual franchisees are likely to experience annual sales volume and cost variations. The geographic area in which the Franchised Business’s territory is encompassed, along with the operational skill and management methods employed by a franchisee, may significantly affect the sales and costs realized in the operation of a given Franchised Business.

• There is no assurance that future revenues and/or expenses will correspond to historical revenues and expenses.

Table III – Average Visit Fees vs. Average Visit Labor