Detailed Information on Tropical Smoothie Cafe’s Initial Franchise Fee, Royalty Fee + 27 Other Fees (Items 5 and 6, 2022 FDD)

1.  Initial Franchise Fee:  $15,000 to $30,000

• The initial franchise fee for your first Tropical Smoothie Cafe Restaurant is $30,000, payable in full upon execution of the Franchise Agreement.

• If Tropical Smoothie Cafe approves, and you purchase additional Tropical Smoothie Cafe Restaurants, then the initial franchise fee for each such additional Restaurant is $20,000, payable in full upon execution of the Franchise Agreement(s).

• From time to time, Tropical Smoothie Cafe may discount or reduce the initial franchise fees for certain prospects due to special circumstances (e.g., reopening a closed Tropical Smoothie Cafe Restaurant, a franchisee with multiple units who does not need initial training or support, etc.).

• In all cases, the initial franchise fee is deemed fully earned by Tropical Smoothie Cafe upon receipt and is nonrefundable.

• Tropical Smoothie Cafe uses the initial franchise fee to provide training and other services to its franchisees.

• Tropical Smoothie Cafe is a member of the International Franchise Association (“IFA”) and participates in the IFA’s VetFran program, which provides financial incentives to qualified veterans to help them acquire franchised businesses.

• In support of this program, Tropical Smoothie Cafe currently reduces the initial franchise fee for qualified veterans, to $15,000 for the first and each subsequent Franchised Business developed.

2.  Grand Opening Contribution:  at least $10,000

• If you have not previously developed and opened a Tropical Smoothie Cafe Restaurant, then you will pay to Tropical Smoothie Cafe an amount to be used to pay for your Grand Opening Marketing Program in accordance with the Grand Opening Marketing budget and plan you and Tropical Smoothie Cafe develop (the “Grand Opening Contribution”), unless otherwise required by applicable state law.

• The Grand Opening Contribution will require you to spend at least $10,000 and will be payable upon execution of the Franchise Agreement.

• If, for any reason, applicable state law does not permit Tropical Smoothie Cafe to collect the Grand Opening Contribution prior to opening your Franchised Business, then you must pay its approved vendors and service providers for their products and services furnished in accordance with the Grand Opening Marketing Program at the times when due based on invoices presented to you.

• Except as described above, Tropical Smoothie Cafe charges the initial franchise fee uniformly to all franchisees.

• All of the foregoing fees and payments are fully earned by Tropical Smoothie Cafe on receipt and are nonrefundable.

Incentive Referral Program

• From time to time, Tropical Smoothie Cafe and its Area Developers may utilize incentive referral programs for its existing franchisees and their employees, as well as its vendors, to refer franchise prospects to it.

• Under these programs, Tropical Smoothie Cafe may pay cash compensation or provide other benefits and inducements for the referral of qualified franchise prospects.

• In many cases, the compensation or benefit will not be paid unless the franchise prospect enters into a Franchise Agreement with Tropical Smoothie Cafe.

• These referral programs may be altered, modified, suspended, or terminated at any time.

• This referral program is available in all states except the State of Washington.

3.  Royalty Fee:  6% of Gross Sales

• Due Date:  Payable on Wednesday of each week for the prior week’s Gross Sales.

• You must pay the Royalty Fee by electronic funds transfer.

4.  National Marketing Fee:  3-4% of Gross Sales

• Due Date:  Payable on Wednesday of each week for the prior week’s Gross Sales.

• The current National Marketing Fee is 3% of Gross Sales. In the future, Tropical Smoothie Cafe may increase the National Marketing Fee up to 4% of Gross Sales, at a time and in the manner determined by Tropical Smoothie Cafe in its sole discretion.

• Tropical Smoothie Cafe may use these funds to create marketing, advertising, and promotional materials for your use, or it may use these funds for marketing, advertising, and public relations programs and materials on a system-wide basis.

• You must pay the National Marketing Fee by electronic funds transfer.

5.  Local Advertising Cooperative Contribution:  a minimum of 2% of Gross Sales

• Due Date:  Payable on Wednesday of each week for the prior week’s Gross Sales.

• Tropical Smoothie Cafe (or its designee) administers these funds in accordance with the direction of the cooperative members.

• You must pay the Local Advertising Cooperative Contribution by electronic funds transfer.

• Currently, the Local Advertising Cooperative Contribution required by Tropical Smoothie Cafe is equal to 2% of Gross Sales; however, the by-laws for such cooperatives allow each cooperative to vote to increase the contribution above this rate for a certain period of time.

6.  BOH Fees:  one-time implementation fee of $145, and $179/month subscription fee

• Due Date:  Implementation fee payable upon implementation/opening of the Franchised Business, and subscription fee payable monthly.

• You must pay Tropical Smoothie Cafe the amounts it designates for the use of its mandated back of house/back office (“BOH”) system.

• Tropical Smoothie Cafe deducts the BOH fees from your account by electronic funds transfer.

7.  Online Ordering:  currently, $55 per month

• Due Date:  Payable the 3rd week of each month.

• You must participate in the online ordering services. For the mandated online ordering services, you pay Tropical Smoothie Cafe for installation based on its prepayment to the vendor then Tropical Smoothie Cafe pays the online ordering vendor the monthly fee on your behalf and invoices you.

• Currently, the monthly fee is $55 per month, but it may change.

8.  Managed Firewall Fee:  currently, $103 per month per Restaurant

• Due Date:  Payable the 3rd week of each month.

• You must pay Tropical Smoothie Cafe the amount it designates for the use of its mandated managed firewall system. Currently, the monthly fee is $103 per month, but it may change.

• Tropical Smoothie Cafe deducts the Managed Firewall Fee from your account by electronic funds transfer.

9.  Interest Charge on Late Payments:  the lower of (i) 18% per annum, or (ii) the highest rate permitted by applicable state law

• Due Date:  On demand.

• Only required if payment is late.

10.  Late Fee:  $25 per week (or portion thereof)

• Due Date:  On demand.

• Only required if any payment is late.

11.  Non-Compliance Fee:  up to $500 each time you default and for each week (or portion thereof) that the default continues

• Due Date:  As stated in Tropical Smoothie Cafe’s notice.

• Only required, at Tropical Smoothie Cafe’s option, if it reasonably believes you have committed an event of default under the Franchise Agreement.

12.  Reimbursement:  Tropical Smoothie Cafe’s out-of-pocket expenses

• Due Date:  Within 15 days of request.

• Only required if Tropical Smoothie Cafe pays (or has become obligated to pay) monies that you owed to a third party or that you were obligated to pay a third party as part of Tropical Smoothie Cafe’s system.

13.  Audit Fee:  cost of audit, plus interest on late payment

• Due Date:  Immediately upon determination by audit.

• Payable only if (i) Tropical Smoothie Cafe, or a third party selected by Tropical Smoothie Cafe, conducts an audit of your business because you failed to submit required reports or were otherwise not in compliance with its system, or (ii) it finds, based on an audit, that you have understated amounts owed to it by 2% or more.

14.  Transfer Fee:  5% of the total sales price or $10,000, whichever is greater; or, $2,500 upon transfer of minority interest

• Due Date:  Before transferring.

• Payable when more than a 49% interest in the Franchised Business is transferred to anyone including an unrelated third party.

• The Transfer Fee is $2,500 if you transfer an interest of 49% or less to someone other than a direct family member or the guarantor of your obligations.

15.  Management Fee:  10% of Gross Sales for the period in which Tropical Smoothie Cafe operates the Franchised Business

• Due Date:  As agreed.

• Pursuant to the terms of the Franchise Agreement, payable during the period that Tropical Smoothie Cafe’s appointed manager manages the Franchised Business to avoid interruption of business operations, at its option, in the event that (i) you or your majority owner dies or becomes disabled, (ii) Tropical Smoothie Cafe elects to purchase the business assets upon expiration or termination of the Franchise Agreement, or (iii) you operate the Franchised Business in a manner that presents a danger to the health or safety of any person.

• Tropical Smoothie Cafe’s management of the Franchised Business will not exceed 90 days without your consent.

• Tropical Smoothie Cafe will account to you for all income of the Franchised Business during the period in which its manager manages the business.

16.  Default Cure:  Tropical Smoothie Cafe’s costs and expenses (including the allocation of any internal costs) for such action, plus 10% as an administrative fee

• Due Date:  On demand.

• Payable if you breach or default under any provision of the Franchise Agreement, and Tropical Smoothie Cafe acts to cure the default on your behalf.

17.  Supplier Approval:  reasonable costs and expenses of inspection and testing currently estimated to range from $500 to $2,000

• Due Date:  As invoiced.

• Tropical Smoothie Cafe may require you to pay it for its reasonable costs and expenses if it evaluates a proposed product, service, or supplier at your request.

18.  Guest Satisfaction:  reimbursement of Tropical Smoothie Cafe’s costs and expenses

• Due Date:  As invoiced.

• You must participate in any guest satisfaction and/or franchise compliance programs (e.g. guest surveys, mystery shoppers, social monitoring/response, guest resolution, etc.) that Tropical Smoothie Cafe designates.

• Tropical Smoothie Cafe may require you to reimburse it for the cost of such programs or to pay the vendors directly.

• You must also reimburse Tropical Smoothie Cafe if you fail to respond to and resolve any customer complaints or negative feedback, and it chooses to do so on your behalf.

19.  Indemnification: will vary under circumstances

• Due Date:  On demand.

• You must indemnify Tropical Smoothie Cafe when certain of your actions result in loss or damages to it.

20.  Liquidated Damages:  amount equal to the average Royalty Fees for the last 12 months (or shorter period, if the Franchised Business has been in operation less than 12 months), multiplied by the lesser of (i) 18 or (ii) the number of months remaining in the term

• Due Date:  On demand.

• Tropical Smoothie Cafe may require you to pay it this amount in the event you terminate the Franchise Agreement without cause, or it terminates the Franchise Agreement for cause.

• If applicable law does not permit Tropical Smoothie Cafe to collect liquidated damages, it will be entitled to collect actual damages.

21.  Costs and Attorneys’ Fees:  will vary under circumstances

• Due Date:  On demand.

• The prevailing party in any legal proceeding is entitled to reimbursement of its costs and expenses, including reasonable accounting and attorneys’ fees.

22.  Business Interruption/Loss of Revenue Insurance Proceeds:  will vary under circumstances

• Due Date:  On demand.

• You must pay Tropical Smoothie Cafe 5% of the insurance proceeds of any business interruption or loss of revenue insurance proceeds that you received in the case of fire or other event that results in damage or destruction of the Franchised Business.

• If you do not repair or rebuild the Franchised Business in a prompt and timely manner, your Franchise Agreement will automatically terminate.

23.  Relocation of Franchised Business:  will vary under circumstances

• Due Date:  On demand.

• You must reimburse Tropical Smoothie Cafe for the out of-pocket expenses it incurs in helping you relocate.

24.  Training:  will vary under circumstances.

• Due Date:  As incurred.

25.  Remodel Marketing Expense:  $3,750

• Due Date:  As incurred.

• Tropical Smoothie Cafe may require you to spend $3,750 on marketing for any remodel.

26.  P&L/Financial Data Software Subscription:  currently, $50 start-up fee (currently paid by Tropical Smoothie Cafe); $14.95 monthly subscription (currently paid by Tropical Smoothie Cafe)

• Due Date:  On demand.

• You must use a web-/cloud-based subscription software, to capture and benchmark profit and loss and related financial data and report such information to Tropical Smoothie Cafe.

27.  Tax Reimbursement:  will vary under circumstances

• Due Date:  On demand.

• You must reimburse Tropical Smoothie Cafe any amounts a taxing authority imposes on it, any “franchise” tax or other tax that is based on your gross sales, gross revenues, business activities, or operation of the Franchised Business.

28.  Third Party Inspection Fees:  will vary under circumstances

• Due Date:  On demand.

• If you have failed to meet Tropical Smoothie Cafe’s standards after two inspections, and it chooses to conduct a third inspection by it or a third party, then you must reimburse Tropical Smoothie Cafe for expenses related to the third inspection, including service fees, travel, and living expenses.

29.  Tropical Smoothie Cafe Loyalty Platform (“App”):  $75 per month

• Due Date:  On demand for setup and scanner; monthly on invoice.

• You must pay a monthly fee for use of the loyalty platform either to Tropical Smoothie Cafe or directly to the vendor as Tropical Smoothie Cafe determines. The amount of this fee may change.

• Currently, Tropical Smoothie Cafe withdraws this fee out of your Local Advertising Cooperative Contribution Account if your local advertising cooperative has voted to pay for the fee. If your cooperative has not voted to pay for the fee, Tropical Smoothie Cafe withdraws the fee from your account by electronic funds transfer.