Detailed Information on Home Clean Heroes’ Initial Franchise Fee, Royalty Fee + 24 Other Fees (Items 5 and 6, 2023 FDD)

1.  Initial Franchise Fee:  $35,000

• If you sign a single Franchise Agreement offered by the disclosure document, you must pay Home Clean Heroes an Initial Franchise Fee of $35,000 within 24 hours of signing.

• In alignment with its Heroes First charitable contribution program, Home Clean Heroes has established a “Community Heroes Program” and may offer a 20% discount to qualifying franchisees for the first Home Clean Heroes franchise they purchase, but no discount will be given for franchises under an Area Development Agreement. Home Clean Heroes includes firefighters, law enforcement, emergency medical technicians and personnel, 911 call operators, teachers, and educational administrative staff in its Community Heroes Program.

• Home Clean Heroes is a member of the International Franchise Association (IFA) and participates in the IFA’s VetFran Program. As part of the VetFran Program, Home Clean Heroes provides veterans of the U.S. Armed Forces a 20% discount on the Initial Franchise Fee for the first Home Clean Heroes franchise they purchase, but no discount will be given for franchises under an Area Development Agreement.

2.  Cumulative Franchise Fee:  $35,000 to $85,000

• If Home Clean Heroes agrees to grant you the exclusive right to develop and operate two or three franchises in a defined Development Area through an Area Development Agreement, you must pay Home Clean Heroes the Cumulative Franchise Fee as follows:

• One Territory (40,000 target households):  $35,000
• Two Territories (80,000 target households):  $60,000
• Three Territories (120,000 target households):  $85,000

• The Cumulative Franchise Fee is due and payable to Home Clean Heroes upon your execution of the Area Development Agreement.

3.  Start-Up Package:  $7,500

• You are required to purchase certain equipment, products, supplies, uniforms, and other items that Home Clean Heroes specifies from it or its affiliate, HCH Services (the “Start-Up Package”). Currently, the cost of the Start-Up Package is $7,500 to equip a single team and is payable immediately upon invoicing by HCH Services.

• The Package should be sufficient to stock one complete vehicle and cleaning team for a 1-3 month period of time once you open the Franchised Business, depending on the number of customers you have and/or procure once you open your Franchised Business.

4.  Royalty and Service Fee:  6% of Total Revenue

• Due Date:  Monthly.

• The Royalty and Service Fee is payable monthly for the previous month and is invoiced at the end of each month. Payment is processed by bank draft 2 days after invoice.

5.  Marketing Fee:  2% of Total Revenue

• Due Date:  Monthly.

• Payable monthly for the previous month and invoiced with the Royalty and Service Fees for brand development, advertising, public relations, production of advertising materials, and expenses related to administration of the marketing fund.

6.  Mailer Program Fees, Consisting of Setup Fee, Mailing List Fee, and Postcard Fee:  Setup Fee: currently, $1,000; Postcard Fee: currently, $0.43 per postcard, $15,050 (35,000 postcards) per year; Mailing List Fee: currently, $0.05 per Targeted Household on the mailing list obtained, $500 to $750 (10,000 to 15,000 Targeted Households) per year

• Due Date:  In advance.

• HCH Services is currently the only approved supplier of the Mailer Program in which you must participate. You must purchase all Mailer Program services from Home Clean Heroes or its affiliate or approved third-party supplier.

• The Mailer Program Fees are subject to change, with notice, to reflect changes in cost. The payment schedule after the first 12 months will require a payment each month in advance of the mailing, for each year thereafter. The amount of each payment will be determined by Home Clean Heroes based on the Targeted Households in your Territory and the mailing list Home Clean Heroes purchases for the Mailer Program.

7.  Digital Advertising Program Fees, Consisting of SEO Fees and Digital Marketing Fees:  SEO Fee: currently, $300 per month ($3,600 per year); Digital Marketing Fee: currently, $1,800 per month ($21,600 per year)

• Due Date:  Monthly or as incurred.

• You must participate in the digital advertising program (“Digital Advertising Program”). Through the Digital Advertising Program, you are required to pay to HCH Services each year the SEO Fees.

• The payment schedule for SEO Fees in each year after the first year will require you to pay $300 per month starting after the twelfth month that your website went live, payable in advance 1 month prior to the month of service. SEO is a per-website requirement.

• In addition to the required purchase of SEO, Home Clean Heroes’ Digital Advertising Program also requires a minimum monthly spend of $1,800 per month for online placement services, such as pay-per-click advertising, social media advertising, remarketing, and various digital advertising services (the “Digital Marketing Fees”).

• The Digital Marketing Fees are to be paid to Home Clean Heroes’ approved third-party supplier. The Digital Marketing Fees will typically be billed 1 month in advance.

• The SEO Fees and the Digital Marketing Fees are collectively referred to as the “Digital Advertising Program Fees.”

8.  National Call Center Fees:  one-time setup fee: $300; currently, $275 per month per entity for unlimited call answering and lead response, as well as $30 per booked estimate or service

• Due Date:  Monthly and as incurred.

• To ensure timely response to new customer service requests, along with quality customer service, Home Clean Heroes requires you to use its National Call Center.

• All new customer phone and online leads are directed to the National Call Center for booking and scheduling of in-home estimates and onetime cleaning services. All overflow and after-hours calls are also directed to the call center.

9.  Integrated Business Management System:  currently, $395 per month; includes 2 VOIP seats; additional VOIP seats are $30 per seat per month. Additional territories are an additional $50 per month.

• Due Date:  Monthly or as incurred.

• To maintain the integrity of the System and provide the Franchised Businesses with an integrated business management solution, Home Clean Heroes has contracted with suppliers for the following: a web-based field service management system, website hosting, a franchise management system, email marketing management, a learning management system, email services, and telephone services.

• Provider rates are subject to change and you must pay Home Clean Heroes in advance each month based on the then-current rates.

• Home Clean Heroes may approve an affiliate or third-party supplier in the future.

10.  Local Marketing:  $5,000

• Due Date:  Annually or as incurred.

• You must spend a minimum of $5,000 annually on local marketing within your Territory.

11.  Employee Background Checks:  typically, $35 to $40 per employee

• Due Date:  As incurred.

• You must do a thorough background check on every employee providing customer services through Home Clean Heroes’ designated supplier or an approved alternate supplier.

12.  National/Regional Accounts:  10% on collected monies

• Due Date:  After receipt of payment.

• If Home Clean Heroes enters into a service agreement for a national/regional customer, secured by Home Clean Heroes, another franchisee, or others with sites in your territory, for which you provide service, you must pay 10% to Home Clean Heroes on collected monies from these agreements for their term and on any future renewal periods.

• Upon payment by the customer, Home Clean Heroes remits 90% to you, less royalty and advertising fees owed by you on that bill.

• You have the right to refuse to service any national/regional customer under a service agreement. But, in the event that you refuse to service a national/regional customer under the terms of a service agreement, Home Clean Heroes may provide service to such national/regional customer through another franchisee and/or through an affiliate, without any compensation to you.

13.  Transfer Fee:  50% of the then-current Initial Franchise Fee for transfer of the Franchise Agreement

• Due Date:  No transfer fee for transfer of the Area Development Agreement.

• Upon approval by Home Clean Heroes of the transfer.

• No fee is imposed for transfer to other Home Clean Heroes franchise owners, family members, siblings, or qualified employees.

14.  Sales Commission:  the commission on Home Clean Heroes finding a buyer for your Franchised Business will typically not be less than 10% of the sales price

• Due Date:  Upon the execution of the Purchase and Sales Agreement by both the buyer and seller.

• You may engage Home Clean Heroes to sell your existing Franchised Business for a fee agreed upon in a Commission Agreement, which will typically not be less than 10% of the sales price.

15.  Renewal:  $5,000 per Franchise Agreement

• Due Date:  At time of renewal.

• You will sign a then-current Franchise Agreement and execute a general release upon renewal.

16.  Complaint Fee and Customer Refunds:  $50

• Due Date:  As incurred.

• Applies only if Home Clean Heroes responds to a customer complaint about your service.

• Complaint fees are subject to change on 30 days’ notice to reflect changes in cost and must be paid weekly.

• Home Clean Heroes may in its sole discretion refund all or a portion of revenue from a customer to resolve a customer complaint and you must reimburse Home Clean Heroes for such refunds.

17.  Late Payment:  $100 per occurrence, plus lesser of the daily equivalent of 18% per year simple interest or the highest rate allowed by law

• Due Date:  As incurred.

• Payable if any payment due to Home Clean Heroes is not made by the due date. Interest accrues from the original due date until payment is received in full.

• The maximum rate which may be charged in California is 10% annually.

18.  Interest on Overdue Payments:  18% or the highest interest rate permitted by law, whichever is less

• Due Date:  Due with the payment of outstanding amounts.

• Payable on overdue amounts.

19.  Indemnification:  will vary under circumstances

• Due Date:  As incurred.

• You will be required to reimburse Home Clean Heroes for any and all damages and claims (including reasonable attorneys’ fees) arising out of any suits, actions, proceedings, or claims filed against Home Clean Heroes, unless such claim is solely the result of actions by Home Clean Heroes.

20.  Audit:  cost of audit will include Home Clean Heroes’ employees’ and/or agents’ travel, room, and board expenses

• Due Date:  On receipt of invoice.

• You must pay any cost Home Clean Heroes incurs for any audit it performs which results in a finding that you have failed to comply with the Franchise Agreement or you have understated by 3% or more in any weekly period your Total Revenue.

21.  Training Fees:  costs and expenses incurred by your trainees in connection with any training programs and seminars. In addition, there is a $500 per day per trainee charge, plus any cost of travel, for additional training requested by you.

• Due Date:  As incurred.

• Costs and expenses incurred by your trainees in connection with any training programs (after your initial training) and seminars are your responsibility.

• In addition, there is a $500 per day per trainee charge for additional training requested by you outside of Home Clean Heroes’ regularly scheduled training and seminar programs. There will be no charge for Home Clean Heroes’ regularly scheduled training and seminars.

22.  Regional Meetings/Annual Convention:  Annual Convention fee; costs and expenses incurred by your attendees, plus the costs of travel, lodging, and entertainment; $1,200 if you fail to attend the Annual Convention

• Due Date:  As incurred; on receipt of notice for failure to attend the Annual Convention.

• Home Clean Heroes does not charge a fee to attend required regional meetings, but it may charge a nominal fee to attend the required annual conventions. In addition, you are responsible for all costs and expenses incurred by your attendees, including travel, lodging, and entertainment.

• The annual franchisee convention is a critical learning and networking experience for franchisees to continue to grow their business. As a result, attendance is key and if you fail to attend the annual convention, you must pay to Home Clean Heroes $1,200 upon receipt of notice from it.

23.  Taxes:  varies

• Due Date:  As incurred.

• You must reimburse Home Clean Heroes for any taxes that it must pay to any state or local taxing authority on account of your operation of your Home Clean Heroes Business or payments you make to Home Clean Heroes.

24.  Purchased Zip Codes:  $1.00 per Targeted Household within the unoccupied zip code(s) that is immediately adjacent to your Territory

• Due Date:  As incurred.

• Home Clean Heroes may, in its sole discretion, permit you to add Purchased Zip Codes (defined as unoccupied zip codes, which are immediately adjacent to your Territory) at a cost of $1.00 per Targeted Household located within that unoccupied zip code.

• The fee for the Purchased Zip Codes will be due at the time Home Clean Heroes agrees, and you purchase, the Purchased Zip Codes.

25.  Attorneys’ Fees and Other Costs:  will vary under the circumstances

• Due Date:  As incurred.

• Payable if Home Clean Heroes prevails in any legal dispute with you.

26.  Charitable Contribution Fee:  $0.50 per each recurring or one-time service performed by Franchisee

• Due Date:  As incurred.

• You must participate in Home Clean Heroes’ Heroes First charitable contribution program (“Heroes First”). As part of Heroes First, you must pay to Home Clean Heroes $0.50 per each recurring service and one-time service that you perform (the “Charitable Contribution Fee”).

• Home Clean Heroes will match (up to $0.50 per each recurring service and one-time service) your Charitable Contribution Fee and remit your Charitable Contribution Fee and its matching contribution to the First Responders Children’s Foundation, or other non-profit(s) organization selected by Home Clean Heroes.