Detailed Information on Sylvan Learning’s Initial Franchise Fee, Royalty Fee + 13 Other Fees (Items 5 and 6, 2023 FDD)

1.  Initial License Fee:  $34,900

• The combined initial license fee for the Sylvan System and the SylvanSync System under the License Agreement is $34,900 and payable in two parts. Once paid, the initial license fee is fully earned and non-refundable.

• Application Fee ($5,000) – When you sign an Application for a Sylvan and SylvanSync License Agreement. The Application Fee is credited toward your initial license fee if you receive a license. If you do not receive a license, Sylvan Learning will refund the Application Fee to you.

• Balance of Initial License Fee ($29,900) – When you sign the Sylvan and SylvanSync License Agreement. If Sylvan Learning does not approve the proposed location that you submit to it, it may cancel the License Agreement. Sylvan Learning does not refund the initial license fee under any other circumstances.

• If you choose to participate in the optional Sylvan EDGE Program, you must pay an initial license fee of $2,000 at the time you sign the Sylvan EDGE Package License Agreement.

• If you choose to participate in the optional Ace it! Program, you must pay an initial license fee of $2,000 at the time you sign the Ace it! Tutoring System License Agreement.

• If you choose to sign the Sylvan EDGE Package License Agreement and the Ace it! Tutoring System License Agreement at the same time as you sign your License Agreement, then Sylvan discounts the total amount of initial license fees due for the three licenses from $38,900 to $36,900.

• Sylvan Learning may elect to charge a refundable initial training fee of up to $1,000 in the future for franchisees who purchase a new territory. The fee would be due upon the signing of the License Agreement and would be refunded to you upon your completion of the initial training requirements, provided that you complete all such initial training requirements within the specified timeframe. Alternatively, Sylvan may elect to charge the fee only to franchisees who do not complete the initial training requirements within the specified timeframe.

• You may open additional Centers within your Territory if you pay Sylvan Learning a fee of $1,000 to compensate it for its expenses incurred in site review and plan approval.

• Sylvan Learning may discount the Initial License Fee by 10% for qualified veterans of the United States military seeking to become new franchisees.

• Sylvan also offers a reduced Initial License Fee if you agree to purchase multiple territories concurrently as part of a “Multi-Territory Incentive Plan.” The development schedule for the Centers that you develop pursuant to a Multi-Territory Incentive Plan must be for a maximum of 36 total months for all Centers included therein.

• The modified Initial License Fees that are offered as part of the Multi-Territory Incentive Plan are set forth below, and the Initial Franchise Fee for each License Agreement is due upon execution of the respective License Agreement:

• First Territory:  $34,900
• Second Territory:  $20,000
• Third Territory:  $20,000
• Fourth Territory:  $20,000
• Fifth Territory:  $20,000
• Sixth Territory:  $20,000

2.  Royalty:  16% of monthly gross revenues, with a total Minimum Annual Royalty of not less than $32,000

• Due Date:  Payable by the 15th day of each month.

• Non-refundable.

• A portion of the royalty may be directed by Sylvan Learning toward Sylvan Advertising.

• For each calendar year, your monthly royalties paid to Sylvan Learning must total at least the Minimum Annual Royalty.

3.  Territory Advertising Minimum for Local Advertising and Co-op Expenditures:  8% of monthly gross revenues, capped at a maximum of $40,000 per territory per calendar year

• Due Date:  Payment liability accrues monthly, up to the cap.

• Paid to third-party vendors you select and/or your co-op.

• Local advertising expenditures are always required, and you will incur them either through advertising activities you undertake directly and/or through a local or regional advertising co-op.

• Sylvan Learning can request that you contribute 100% of your required local advertising expenditure to an advertising co-op.

• Non-refundable.

4.  1-800-Educate or Other Toll-Free Number:  $0.20/minute

• Due Date:  Payable by the 25th day of each month.

• Invoicing for these fees commences after 30 seconds have elapsed, and fees accrue in six-minute increments.

• These fees are billed on franchisees’ monthly billing statements following the month that the charges are incurred.

• Non-refundable.

5.  Hub Technology Platform:  $114/Center per month

• Due Date:  Payable by the 25th day of each month.

• Sylvan Learning requires full utilization of the Hub Technology Platform in all Centers.

• Hub fees are included on franchisees’ monthly billing statements for each Center.

• Non-refundable.

6.  Audit:  cost of audit, plus late fee on deficiency

• This charge applies only if the audit discloses that you failed to pay 3% or more of the fees actually due to Sylvan Learning during the period covered by the audit.

• Non-refundable.

7.  Contact Center Program Fee:  two payment models: (a) $700 flat fee per month + $10/inquiry, or (b) $350 flat fee per month + $30/inquiry

• Due Date:  Payable by the 25th day of each month.

• Payable for call center services that are provided in connection with Sylvan Learning’s “Contact Center Program.”

• A portion of this fee is remitted by Sylvan Learning to a third-party vendor, and Sylvan Learning retains a portion of this fee for Contact Center Program services that Sylvan Learning provides.

• Participating franchisees select their payment model based upon their anticipated call volume.

• This charge does not apply until you commence operations and utilize the Contact Center Program services.

8.  Transfer Fee:  $6,000; $3,000 in case of transfer to existing Sylvan Learning licensee

• Due Date:  Before transfer.

• You or the transferee must pay the transfer fee.

• One half of the transfer fee is due to Sylvan Learning at the time you submit your transfer request and is not refundable. The other half is due at the time the transfer closes.

• There is no charge if you transfer your franchise to a corporation that you wholly control.

• Non-refundable, except in the event that the proposed transfer does not close, in which case the second half of the fee is abated.

9.  Taxes and Income Taxes:  varies

• Due Date:  Upon billing.

• You will be responsible for paying Sylvan for all taxes that it must pay on the amounts you pay to it, unless the tax is credited against Sylvan’s payment.

• Taxes vary and cannot be estimated in advance.

10.  Renewal Fee:  $6,000

• Due Date:  Before renewal.

• Non-refundable.

11.  Additional Center Administrative Fee:  $1,000 for each additional Center opened in existing territory

• Non-refundable.

12.  Territory Expansion Fee:  $10,000 for territory expansion, plus incremental fee of $2 per school-age child over 5,000

• Non-refundable.

13.  Territory Split Fee:  $5,000 per territory split

• Non-refundable.

14.  Resale Assistance Program:  up to 5% of the purchase price, and may include a $500 fee payable upon enrollment

• Due Date:  Before transfer.

• Voluntary program licensee may use to obtain assistance with transferring/selling its franchise.

• Fee is subject to change.

• Non-refundable.

15.  Liquidated Damages for Breach:  average monthly royalty over preceding 36 months multiplied by 24

• Due Date:  Upon demand by, or notice from, Sylvan.

• Applies to the period from breach until injunction issues for breach of paragraphs 3, 12.1, or 12.5 of the License Agreement; applies to lost future profits if you cease operation of the Center prior to expiration or renewal of the License Agreement; applies for two years from the date of Center closure if closure occurs prior to the expiration of the then-current term of the License Agreement.

• Non-refundable.