Detailed Information on DreamMaker Bath & Kitchen’s Initial Franchise Fee, Royalty Fee + 37 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $40,000 to $48,000, plus $200 per 1,000 population for additional territory

• The minimum initial franchisee fee is $40,000, plus $200 per 1,000 population for additional territory, less applicable discounts.

• You must pay to DreamMaker an initial franchise fee of $40,000 for a Territory containing a population of 200,000, which is the minimum Territory you may purchase for more rural and less densely populated areas; or an initial franchise fee of $48,000 (which includes the Population Discount) for a Territory containing a population of 300,000, which is the minimum Territory you may purchase for more densely populated and urban areas.

• Additional territory, if available, costs $200 per additional 1,000 population and generally consists of no more than 1,000,000 individuals.

2.  Franchise Development Package:  $18,995

• Before you begin the operation of the franchise, you must pay DreamMaker $18,995 for its franchise development package, which includes initial sales training and contains many of the items you will need to equip your franchise in accordance with DreamMaker’s standards and specifications.

3.  Initial Advertising and Promotional Deposit:  $36,000 to $48,000

• When executing the Franchise Agreement, you will pay DreamMaker an amount between $36,000 and $48,000, to be determined in DreamMaker’s discretion, which it will hold as a deposit.

• At least $12,000 of the deposit amount, or such other greater amount DreamMaker determines (the “Franchisor’s Draw”), will be spent by DreamMaker on advertising and promotional activities connected with your franchised business. The remainder of the deposit will be returned to you as you incur expenditures related to approved advertising and promotional activities.

4.  Initial Accounting Services Fee:  $3,225 to $6,600

• When executing the Franchise Agreement, you will pay DreamMaker an amount between $3,225 and $6,600 to be determined in DreamMaker’s discretion, which will pay for services from DreamMaker’s designated bookkeeping and accounting services provider for a period of 12 months following the sale of your first DreamMaker project.

5.  Design Center Buildout Deposit:  $2,500

• When executing the Franchise Agreement, you will pay DreamMaker $2,500, which it will hold as a deposit. The deposit will be returned to you upon submission of an estimate of your design center buildout and you review your submission with your franchise coach.

6.  Software License Fee:  $3,995

• When you sign the Franchise Agreement, you must pay DreamMaker a software license fee of $2,995 for your use of software that DreamMaker owns or otherwise has a right to license to you (“Franchisor’s Software”).

7.  Option for Additional Territory:  10% of the initial franchise fee for the territory you wish to buy when you purchase a franchise

• You may, if qualified, purchase a one-year (18 months in the case of a Start-Up) option on additional territory by paying DreamMaker a fee of 10% of the initial franchise fee for the territory you wish to buy when you purchase a franchise.

• The 10% deposit will be applied to the purchase price. DreamMaker does not refund your deposit if you decide to not purchase the additional territory.

8.  Additional Training Costs:  $1,500

• You must complete DreamMaker’s Foundations Prep Training, attend Foundations Core Training, and complete DreamMaker’s Simulation Training before you begin operating the franchise.

• You may send three people (including you) to Foundations Core Training at no additional cost. If you wish to send additional employees to Foundations Core Training, before training begins, for each employee, you must pay DreamMaker $1,500.

9.  Brand Protection Fund:  $5,000

• DreamMaker has the right to require you to participate in its Brand Protection Fund (“BPF”), and to contribute to the BPF $5,000 when you sign the Franchise Agreement or at such later time as DreamMaker may require.

10.  Royalty Fee Standard:  3% to 7% of Gross Sales (roll-in: 2% to 3% of the “rolled-in” Gross Sales)

• Due Date:  Wednesday of each week.

11.  Minimum Royalty Fee:  beginning (a) eight months after DreamMaker executes the Franchise Agreement or (b) four months after your Start Date, whichever occurs first, you must pay a Royalty Fee of $120 per week. Beginning the week following the first anniversary of the date you and DreamMaker execute the Franchise Agreement, you must also pay DreamMaker an additional $45 per week for each additional 100,000 in population over the minimum population of 200,000.

• Due Date:  Wednesday of each week.

12.  Marketing, Advertising, and Promotion Fee (“MAP Fee”):  2% of Gross Sales for the first $1,000,000 of Gross Sales per year and 1% of Gross Sales for all sales which exceed $1,000,000 in one year. However, if you have an existing business which you “roll-in” to the franchise, DreamMaker will discount the MAP Fee to 1% of the “rolled-in” amount for a certain period of time.

• Due Date:  Wednesday of each week.

13.  Minimum MAP Fee:  1% of Gross Sales “rolled in”

• Due Date:  Wednesday of each week.

• The Minimum MAP Fee applies only if you “roll-in” an existing business.

14.  Advertising Cooperative:  if a local or regional Cooperative is formed for a geographic area that includes your territory, you will determine the annual contribution in cooperation with the other members of the Cooperative. DreamMaker specifies that the maximum annual contribution to a Cooperative cannot exceed 2% of your Gross Sales.

• Due Date:  Determined by members of the Cooperative.

15.  Required Advertising Spending:  the initial advertising and promotional deposit will cover the first year’s advertising spending requirement. During the second year, you must spend at least 5% of your annual Gross Sales, and during the third and each additional year, you must spend at least 3% of your annual Gross Sales.

• Due Date:  When you are billed/as incurred.

16.  Resale Training Fee:  $3,500 for up to three people; $1,500 per additional individual

• Due Date:  Before training.

• If you buy an existing franchised business, you must attend DreamMaker’s Foundations Core Training program. When you pay the $3,500, DreamMaker will provide its Foundations Core Training program for up to three individuals. Any additional persons must pay a training fee of $1,500.

17.  Additional Voluntary or Mandatory Training:  ranges between $250 to $1,000 per person per day. If training is conducted on-site at your location, you must also reimburse DreamMaker for its actual costs.

• Due Date:  Before training.

• The training provided may be business or technical, classroom or workshop-based in nature, which will affect the daily cost of the training.

• If DreamMaker or its designee travels to your location to provide the training, you must also reimburse DreamMaker for actual costs, including travel, lodging, and dining costs.

18.  Convention Registration Fee:  usually $250 to $350 per person, with discounts for early registration. For non-participants, there is a separate charge for the Awards Banquet, usually $35 for children under 12 and $75 for persons over 12.

• Due Date:  Currently, drafted on April 1st before Reunion.

19.  Continuing Education Fee:  $100

• Due Date:  The 15th of each month or such other time as DreamMaker designates.

• If you are current in payments, you may qualify for reimbursement of certain training-related expenses.

20.  Monthly Software Maintenance and Support Fee:  currently, $250

• Due Date:  Monthly beginning after Foundations Core Training.

21.  Construction Design Review Fee:  $2,500

• Due Date:  On demand.

22.  Transfer Fee:  $1,500 for transfer to a controlled entity

• Due Date:  Upon transfer.

23.  Transfer Fee:  10% of selling price for the business or $20,000, whichever is greater

• Due Date:  Upon transfer.

24.  Warranty Escrow Upon Transfer:  up to 10% of sales price

• Due Date:  Upon transfer.

• If you sell your franchised business, DreamMaker may hold up to 10% of the purchase price in an escrow fund for a period of one year. If a warranty or service agreement claim is made, DreamMaker will charge the escrow fund its then-current hourly service fee (a minimum of $75 per hour) for labor, plus the actual cost of materials and supplies, a handling fee equal to 10% of the cost of materials and supplies, plus a $150 handling fee for each claim.

• At the end of the one-year period, DreamMaker will release any remaining escrowed funds to you minus a handling fee of $250.

25.  Late Report or Amended Report Fee:  $15 per late Report; $35 per amended Report

• Due Date:  On demand.

• The Late Report Fee applies to Royalty Reports received from you more than five days after the due date. The Amended Report Fee applies to Royalty Reports which require amending after submission due to inaccuracy or error.

26.  Administrative Enforcement Fee:  $250 per violation or enforcement action

• Due Date:  On demand.

• Applies only if you are in default of your obligations under the Franchise Agreement.

27.  Software Administrative Enforcement Fee:  $1,000 per occurrence

• Due Date:  On demand.

• Applies only if you fail to purchase, install, or enter into license or user agreements related to any software or required technology you must use in connection with your franchise.

28.  Dishonored Check or ACH Draft:  $75

• Due Date:  On demand.

• If your financial institution returns a check or ACH draft for insufficient funds, you must pay DreamMaker this fee for each item returned.

29.  Interest:  12% on unpaid balances or the maximum interest rate permitted by law, whichever is less

• Due Date:  On demand.

• Payable on all overdue amounts.

30.  Failure to Maintain Insurance:  DreamMaker’s actual cost

• Due Date:  On demand.

• If you fail to maintain the required insurance coverage on your franchise, DreamMaker may acquire and pay for the insurance coverage and charge you.

31.  Audit:  cost of audit plus expenses if underpayment is 3% or more

• Due Date:  When you are billed.

• Payable only if DreamMaker finds an understatement of Gross Sales of 3% or more by audit.

32.  Renewal Fee:  $7,500

• Due Date:  On renewal.

33.  Amendment Fee:  DreamMaker’s actual out-of-pocket costs, including legal costs, with a minimum fee of $500

• Due Date:  When you are billed.

• You must pay DreamMaker a processing fee for modifications to your Franchise Agreement that are made at your request.

34.  Unapproved Vendors:  DreamMaker’s actual out-of-pocket costs of inspection, review, or testing, whether or not DreamMaker approves the item

• Due Date:  On demand.

• If you want to purchase items under specification from an unapproved vendor, you must make a written request. If DreamMaker is not familiar with the vendor or if it believes it necessary, DreamMaker may request a sample of the item for inspection, review, or testing before either granting or withholding its approval.

35.  Liquidated Damages:  according to a formula based on your two-year Royalty Fee history or the length of time you violated the co-branding provision

• Due Date:  On demand.

• If you violate the covenant against competition or other confidential provisions or the co-branding provisions and DreamMaker is unable to obtain equitable relief, it may demand liquidated damages.

36.  Tax Reimbursement:  varies according to tax

• Due Date:  When you are billed.

• You must pay DreamMaker an amount equal to any sales tax, gross receipts tax, income tax, or other taxes or assessments imposed on it with respect to any payments due to it under the Franchise Agreement.

37.  Holdover Amounts:  Royalty Fee and MAP Fee payments will equal 150% of the rates described in your Franchise Agreement

• Due Date:  Weekly.

• If you continue to operate the franchised business after the expiration of the initial term before completing the requirements to renew, the Royalty Fee and MAP Fee will automatically increase at the initiation of any holdover period.

38.  Indemnification:  varies according to loss

• Due Date:  On demand.

• If DreamMaker must engage an attorney to enforce its rights under the Franchise Agreement and it prevails, you must reimburse it for all reasonable attorneys’ fees, court costs, and expenses expended or incurred in enforcing its rights.

• If DreamMaker is sued because of something you do or fail to do, you must indemnify it and/or reimburse it for all costs, including reasonable attorney’s fees (which may include outside counsel fees and in-house legal costs charged at rates comparable to outside attorneys), court costs, and expenses it incurs.

39.  Brand Protection Fund:  $5,000

• Due Date:  On demand.

• A brand protection fund may be established. If such a fund is established, you must pay DreamMaker $5,000 for contribution to the fund. This contribution is not refundable.