Detailed Information on Primrose Schools’ Initial Franchise Fee, Royalty Fee + 32 Other Fees (Items 5 and 6, 2022 FDD)

1.  Initial Franchise Fee:  $42,000 to $80,000

• The initial franchise fee for a Primrose Schools franchise (the “Initial Fee”) for a new franchisee for a new Facility is $80,000.

• If you are an existing franchisee that meets Primrose Schools’ qualifications, the Initial Fee for a new Facility will be $70,000.

• If you are purchasing an existing Facility from an existing franchisee and are approved by Primrose Schools to operate the Facility, the Initial Fee will be 60% of the then-current Initial Fee for existing franchisees purchasing a new Facility.

• Primrose Schools participates in the International Franchise Association’s VetFran program. If you are a qualifying veteran or member of the U.S. Armed Forces, the Initial Fee for your first Facility only will be $50,000.

2.  Real Estate Fees

a.  Real Estate Development Program:  $70,000

• Under the Real Estate Development Agreement, you or your Real Estate Affiliate must pay Primrose Schools a real estate fee (the “Real Estate Fee”) equal to $70,000.

• The Real Estate Fee is payable in two installments, with a deposit (the “Real Estate Fee Deposit”) equal to $25,000 payable at the time of signing the Real Estate Development Agreement and the remaining $45,000 payable at the Closing.

b.  Permanent Lease Program:  $70,000

• Under the Franchise Agreement, you must pay Primrose Schools a Real Estate Fee of $70,000.

• The Real Estate Fee is payable in two installments, with a Real Estate Fee Deposit equal to $25,000 payable at the time of signing the Franchise Agreement and the remaining $45,000 payable at the Closing.

c.  Build-to-Suit Program, Independent Development Program, and Site First Program.:  $25,000

• If Primrose Schools authorizes you to participate in the Build-to-Suit Program, Independent Development Program, or Site First Program, you will pay Primrose Schools a Real Estate Fee of $25,000 upon signing the Franchise Agreement for the various real estate and development related services that Primrose Schools provides under such programs.

3.  Training Fees and Opening Support Fees:  $35,000

• You must also pay Primrose Schools an initial training and opening support services fee (the “Initial Training and Opening Support Fee”) of $35,000, which covers Initial Training and Opening Support (“ITOS”) services that Primrose Schools will provide.

• ITOS services include Primrose Schools’ initial training program (“Initial Training”) for up to two trainees (two Owners or other representatives that Primrose Schools designates or approves) and additional support services during the opening of your Facility.

• Primrose Schools requires your Multi-Unit Managers, and may require or permit additional Owners or your Directors, to attend Initial Training for an additional fee, which is currently $3,500 per each additional attendee over the first two trainees.

• If Primrose Schools determines, in its sole discretion, that you have not satisfactorily completed any part of the required training, it has the right to terminate your Franchise Agreement and the Initial Training and Opening Support Fee deposit will be retained by it.

4.  Development Expenses:  Primrose Schools’ costs

• Under the Real Estate Development Program and Permanent Lease Program, you and your Real Estate Affiliate will also be responsible under the Franchise Agreement or Real Estate Development Agreement for reimbursing Primrose Schools for the expenses that it incurs related to the identification, development, and construction of the Site and the Facility (the “Development Expenses”), including, without limitation, expenses and fees incurred for engineering, environmental studies, soil samples, architectural fees, legal fees, or any and all other fees that Primrose Schools incurs in regard to the identification, investigation, review, and acceptance process (including any expenses Primrose Schools incurs reviewing documents relating to the lease or purchase of the premises for the Facility) and for services rendered on the site.

• Under the Site First Program, once you accept a site, you will be obligated to reimburse Primrose Schools for the Development Expenses it incurs related to such site (including interest but excluding rent that Primrose Schools may owe under the Site First Lease). If you do not open a Facility at such site for any reason (including if a situation arises in which it is determined that it will not be feasible to develop a Facility at such site), you will remain responsible for reimbursing Primrose Schools for any Development Expenses it has incurred related to such site. In addition, if you accept a substitute site, you will be responsible for reimbursing Primrose Schools for any Development Expenses it incurs in connection with such substitute site.

5.  National Architect Fee:  a fee of $8,000 for the release of prototype plans to you, and a fee of $2,500 to review your proposed plans, including subsequent change orders

• Primrose Schools may designate one or more architects to develop prototype plans for all facilities in the system and to review any adaptations of such plans for the Facility (the “National Architects”).

• If you are developing the Facility through the Build-to-Suit Program or the Independent Development Program and you or the Approved Developer use an architect other than a National Architect to design the Facility, Primrose Schools may require you or the Approved Developer to pay the National Architects or Primrose Schools (so that it may pay the National Architects on your behalf) (i) a fee of $8,000 for the release of prototype plans to your architects and (ii) a fee of $2,500 to review your architect’s proposed plans, including subsequent change orders.

6.  Rent Guarantee:  $15,000

• In limited and unique circumstances under the Build-to-Suit Program and Permanent Lease Program, Primrose Schools may provide a limited rent guarantee in favor of your independent third-party landlord specifically for the purposes of renting the real property, building, and improvements for the Facility from such party.

• If Primrose Schools provides the guarantee, you will be required to pay Primrose Schools a non-refundable limited rent guarantee fee equal to 5% of the guarantee amount (Primrose Schools estimates the rent guarantee fee may be up to $25,000).

• For all Facilities developed under the Site First Program, Primrose Schools (or another affiliate that it designates) may provide a limited rent guarantee in favor of the Approved Developer specifically for the purposes of renting the real property, building, and improvements for the Facility from such party. If Primrose Schools provides the guarantee, you will be required to enter into a Rent Guarantee Agreement with Primrose Schools and pay Primrose Schools at the time of signing such agreement a non-refundable limited rent guarantee fee equal to 5% of the estimated guarantee amount. The estimated guarantee amount will be the aggregate base rent and additional rent that is projected to be due during the third year of the Site First Lease. Primrose Schools estimates the rent guarantee fee may be between $25,000 and $50,000.

7.  Option Fees Under Option Addendum:  $30,000 for each Facility you obtain the option to develop under the Option Addendum

• The total amount of the option fee varies based on the number of Facilities you obtain the option to develop.

• If you sign an Option Addendum, you must pay an option fee equal to $30,000 for each Facility you obtain the option to develop under the Option Addendum.

• Each time you exercise an option for a Facility, you must pay Primrose Schools its then-current initial franchise fee minus the portion of the option fee paid for the option on the Facility.

8.  Grand Opening Marketing:  $40,000 minimum

• You must spend a minimum amount that Primrose Schools specifies after the site has been selected for grand opening advertising, including advertising and promotional activities that you will conduct prior to operating your Facility (the “Minimum Grand Opening Amount”).

• The Minimum Grand Opening Amount will be $40,000, $52,000, $76,000, or $100,000 for new Facilities and $15,000, $29,000, $52,000, or $100,000 for Conversion Facilities. Primrose Schools will consider media costs in your market, your experience, and, for Conversion Facilities, whether the Facility had been closed prior to the conversion in determining the Minimum Grand Opening Amount for your Facility.

9.  Continuing Services and Royalty Fee (the “Royalty Fee”):  7% of Gross Revenues

• Due Date:  Payable monthly on the 10th day of the next month.

10.  Primrose Brand Fund Fee (the “Brand Fund Fee”):  currently, 2% of Gross Revenues, but may be increased by Primrose Schools at any time, but not more than a total of 3% of Gross Revenues

• Due Date:  Payable monthly on the 10th day of the next month.

• Used to contribute to the Primrose Brand Fund (the “Brand Fund”).

11.  Local Advertising:  in 2022, 0.5% of Gross Revenues for any Facility that is in a Cooperative; and for any Facility that is not in a cooperative, 1% of Gross Revenues for the preceding month or $1,000, whichever is greater. Beginning in 2023, 1% of Gross Revenues for the preceding month or $1,000, whichever is greater.

• Due Date:  Payable as incurred.

• You must spend this amount each month on approved local community awareness, advertising, and public relations; and community involvement activities, sponsorships, business partnerships, and promotions in accordance with an annual marketing plan that you submit to Primrose Schools (“Approved Local Advertising”).

12.  Cooperative Contributions:  in 2022, 0.5% of Gross Revenues for the previous month, unless members of the Cooperative agree to a higher amount. Beginning in 2023, 1% of Gross Revenues for the previous month, unless members of the Cooperative agree to a higher amount.

• Due Date:  Payable as defined by the Cooperative.

• If Primrose Schools establishes a market level business cooperative (a “Cooperative”) in your market, you must join and make contributions to the Cooperative. Currently, all markets with five or more Facilities will have a Cooperative.

• The contribution will not exceed 1% of Gross Revenues, unless members of the Cooperative agree to a higher amount.

13.  Cognia Accreditation:  currently, $900

• Due Date:  Payable on demand.

• You must pay this amount each school year to maintain Cognia accreditation.

14.  Late Fee:  interest at 1.5% per month, plus a 5% late fee on past due amounts, along with NSF charges

• Due Date:  Payable on demand.

• Applies to all payments to be made by you to Primrose Schools.

15.  Transfer Fee:  for any Control Transfer, (i) you must pay a transfer fee of 40% of the then-current Initial Fee for existing franchisees purchasing a new Facility, plus all costs and expenses incurred by Primrose Schools, and (ii) your transferee must pay a non-refundable Initial Fee equal to 60% of the then-current Initial Fee for existing franchisees purchasing a new Facility. For a transfer that is not a Control Transfer, you must pay Primrose Schools’ then-current transfer fee for transfers that do not result in a Control Transfer (currently, $3,250 for each new Owner added and $1,250 for each Owner removed).

• Due Date:  Payable at closing.

• For a Control Transfer, Primrose Schools may require you to pay it or a third party, prior to the closing of such transfer, an inspection fee between $1,000 and $3,000 to cover the costs of inspecting your Facility.

16.  Transfer Training and Support Fee:  the transfer training and support fee is the same amount as Primrose Schools’ Initial Training and Opening Support Fee. Currently, this amount is $35,000.

• Due Date:  $5,000 must be paid at least 10 days prior to the Owners attending Initial Training, with the balance due at closing of the transfer.

• In the event that you transfer a Facility to an existing franchisee who meets certain previous training requirements, Primrose Schools may charge a reduced transfer training fee of $18,000.

17.  Successor Term Fee:  10% of the then-current Initial Fee for existing franchisees purchasing a new Facility

• Due Date:  Prior to the expiration of the initial term.

• Payable if you enter into a successor term.

18.  Successor Term Training Fee:  currently, the successor term training fee is $5,000, which covers training for two Owners

• Due Date:  Within one year (before or after) the expiration of the initial term.

• If more than two Owners are trained, you must pay an additional fee of $1,250 per additional Owner.

19.  Additional Training Fee:  Primrose Schools’ current hourly rate, plus all costs and expenses that Primrose Schools incurs (currently, $100 per hour for each trainer, not to exceed $750 per day for each trainer; subject to adjustment upon 30 days’ written notice)

• Due Date:  Payable when services are provided.

• Payable if Primrose Schools provides additional training to your existing or future employees.

20.  National Conference Registration Fee:  Primrose Schools’ current rate per attendee. Currently, the fee is $550 per attendee at the National Conference if the registration is made by a certain deadline, and $750 per attendee thereafter, but it is subject to change.

• Due Date:  Payable prior to the National Conference.

• Payable if Primrose Schools conducts an annual national conference or business meeting.

21.  Training Programs Fee:   a fee that Primrose Schools may set for each training program, which will vary from program to program

• Due Date:  Payable when services are provided.

• Payable if your owners or representatives attend optional or mandatory refresher training programs, seminars, or workshops.

22.  Additional Consulting Services Fees:  a reasonable fee, currently up to $750 per day, plus travel and living expenses, including transportation, lodging, and meals

• Due Date:  Payable when services are provided.

• Primrose Schools may offer you consultation services beyond the support services under the Franchise Agreement, and if you accept them, Primrose Schools can charge you a consulting fee.

• If such services are provided on-site, then you must reimburse Primrose Schools for its representative’s travel and living expenses, including transportation, lodging, and meals.

23.  Temporary Management Fee:  Primrose’s current daily rate (currently, $750), plus all costs and expenses that Primrose Schools incurs

• Due Date:  Payable when services are provided.

• Payable if Primrose Schools opts to operate your franchise after you have defaulted under the Franchise Agreement and have failed to cure the default within 30 days, or if your On-Site Owner is absent, incapacitated, or deceased.

24.  Remedial Expense:  all costs and expenses that Primrose Schools incurs

• Due Date:  Payable upon demand.

• Payable if you fail to correct any maintenance issues that Primrose Schools identifies within 30 days, and Primrose Schools, in its sole discretion, enters the Facility to make such repairs or improvements.

25.  Follow-up Inspection Fee:  all costs and expenses that Primrose Schools incurs

• Due Date:  Payable upon demand.

• Payable if Primrose Schools performs a follow-up inspection to review any corrective actions you take to cure deficiencies.

26.  Product, Service, or Supplier Review Fee:  Primrose Schools’ current daily rate (currently, $750), plus all costs and expenses that Primrose Schools incurs testing or reviewing such items or suppliers

• Due Date:  Payable upon demand.

• Payable if you propose to use any Goods, or to purchase from any suppliers, that Primrose Schools has not approved.

27.  ACH Fees:  amount of Primrose Schools’ expenses

• Due Date:  Payable monthly on the 10th day of the next month.

• Royalty Fees and Brand Fund Fees will be collected via Automated Clearing House on the 10th of each month and on the 20th of each month (or, if necessary, the next business day after such date) for Franchisees with outstanding Notes due to Primrose Schools.

• Other amounts will be collected via ACH as they come due.

28.  Indemnification:  Primrose Schools’ losses, costs, expenses (including attorneys’ fees), and damages

• Due Date:  Payable on demand.

• Payable if Primrose Schools incurs losses due to your operation of the business and the Facility, your breach of any agreement with Primrose Schools or its affiliates, or the acts or failures of your employees.

29.  Damages Upon Expiration or Termination:  Primrose Schools’ damages, costs, and expenses (including, without limitation, lost future royalties and reasonable attorneys’ fees)

• Due Date:  Payable on demand.

• Payable if (i) Primrose Schools terminates the Franchise Agreement due to your default and it incurs damages or expenses due to such termination or (ii) it incurs damages or expenses related to your failure to adhere to post-termination or expiration covenants.

30.  Facility Expansion Fee:  $10,000

• Due Date:  Payable upon Primrose Schools’ approval of your request.

• If Primrose Schools does not approve your expansion request, your payment of $10,000 will be refunded.

• Payable if you would like to expand the size of the Facility.

31.  Relocation Fee:  Primrose Schools’ actual costs and expenses, plus any other development fees that would be charged to develop a new Facility

• Due Date:  Payable on demand.

• Payable if you relocate the Facility to a new site.

32.  Rent Guarantee Deposit:  a refundable deposit equal to the balance of the rent guarantee amount

• Due Date:  Payable on demand.

• Payable if you refinance or take on additional debt during the period in which a Rent Guarantee Agreement is in place.

• Primrose Schools will refund the deposit upon the expiration of the Rent Guarantee Agreement, less any amounts that it has paid to third parties under such agreement.

33.  Lease Review Fee:  Primrose Schools’ actual costs and expenses, including attorneys’ fees

• Due Date:  Payable on demand.

• Payable if Primrose Schools engages its attorneys to review your proposed lease, lease renewal, or guarantee (not applicable under the Site First Program).

34.  Academic Curriculum Material License Fee:  $450 to $480 per certain specified classrooms as specified annually, plus $1,400 to $1,600 per Facility annually

• Due Date:  Payable on demand.

• If Primrose Schools requires you to license academic curriculum materials from it or its affiliates, it may require you to pay a reasonable license fee for such materials, which may vary based on the materials licensed.

• Primrose reserves the right to change this fee.