Earl of Sandwich’s Initial Franchise Fee, Royalty Fee + 20 Other Fees

Detailed Information on Earl of Sandwich’s Initial Franchise Fee, Royalty Fee + 20 Other Fees (Items 5 and 6, 2021 FDD)

1.  Development Fee:  $25,000

• You must pay a Development Fee in the amount of $25,000 for each Franchised Restaurant that you agree to develop when you sign the Development Agreement.

• The Development Fee is not refundable, but will be credited against the Initial Fees (including the Application Fee and Initial Franchise Fee), which are payable to Earl of Sandwich under each Franchise Agreement that you sign under the Development Agreement. The aggregate amount of the Initial Fee credits will not exceed the Development Fee.

• There is no minimum number of Earl of Sandwich Restaurants that you are required to develop under the Development Agreement.

2.  Initial Fees:  $10,000 (Application Fee); $15,000 (Initial Franchise Fee)

• When you sign the Franchise Agreement, you shall pay the following Initial Fees: (1) an Application Fee in the amount of $10,000 for Earl of Sandwich’s upfront costs associated with site selection, development, and training; and (2) an Initial Franchise Fee in the amount of $15,000 to use the System and the Proprietary Marks during the term of the Franchise Agreement.

• The Initial Fees are fully earned by Earl of Sandwich when paid and are not refundable.

• Under Earl of Sandwich’s veterans program, if you (or a holder of at least a 51% ownership interest in your franchisee entity) provides Earl of Sandwich with a DD Form 214 or other adequate documentation, as determined by Earl of Sandwich, demonstrating honorable discharge from the United States military and you sign a Franchise Agreement to develop and operate a new Franchised Restaurant, then Earl of Sandwich will reduce your Application Fee due under the Franchise Agreement by $5,000. You will sign a Veterans Addendum to the Franchise Agreement.

• If, prior to the first anniversary of the opening date of the Franchised Restaurant, (1) you transfer the Franchised Restaurant, or (2) Earl of Sandwich terminates the Franchise Agreement, you must pay Earl of Sandwich the $5,000 that it waived under the veterans program as a condition of the transfer.

3.  Deposit Fee:  $1,000

• When Earl of Sandwich approves your application to become an Earl of Sandwich restaurant franchisee, and prior to Earl of Sandwich’s preparation of your Franchise Agreement or Development Agreement, you will sign the Agreement Request Form and pay a Deposit Fee in the amount of $1,000.

• The Deposit Fee is not refundable, but will be credited against the Application Fee under the Franchise Agreement or the Development Fee under the Development Agreement as applicable.

4.  Team Member Training:  $2,850 to $5,700 per week (for one to two trainers)

• If you postpone or delay team member training based on your failure to obtain a certificate of occupancy or for any other reason, you must reimburse Earl of Sandwich for any additional costs and expenses, including the salaries and wages for its trainers during the period of such delay.

• If the Franchised Restaurant is not your first Earl of Sandwich Restaurant and if you request that Earl of Sandwich conduct the team member training for non-management staff, you must upon receipt of an invoice from Earl of Sandwich pay all reasonable expenses incurred by it in connection with such on-site training, including without limitation, travel expenses, lodging, accommodations, and other reasonable expenses of all such persons sent to the Franchised Restaurant in connection with the on-site training of the Franchised Restaurant employees. These expenses will range from $2,850 to $5,700 per week (for one to two trainers).

5.  Royalty:  6% of Gross Sales

• Due Date:  Within five days after the end of each fiscal week.

• You must participate in Earl of Sandwich’s electronic funds transfer program to pay your royalty fees and other fees.

6.  Weekly Marketing Obligation:  currently, 3% of Gross Sales

• Currently, your Weekly Marketing Obligation consists of your contribution to the Brand Fund (1% of Gross Sales up to a maximum annual contribution of $30,000) and your Local Store Marketing expenditures (2% of Gross Sales).

• Earl of Sandwich reserves the right to increase your Weekly Marketing Obligation and it may reallocate the Weekly Marketing Obligation among the Brand Fund, a Regional Advertising Fund (or Regional Co-Op), and Local Store Marketing.

• Your Weekly Marketing Obligation will not exceed 5% of Gross Sales.

7.  Additional Training:  Earl of Sandwich does not currently charge these fees; however it may set a tuition fee for additional training programs that it develops in the future. You also must reimburse Earl of Sandwich for costs and expenses incurred for developing, compiling, and distributing any additional training materials, if requested by you.

• Due Date: Within 30 days of receipt of invoice.

• Earl of Sandwich has the right to require certain designated employees to attend training programs in addition to the initial manager training program. You must pay all travel, living, food, and other incidental expenses incurred by your employees while attending training.

8.  Audit and Inspection Costs:  deficiency in royalty fees and advertising contributions, plus interest

• Due Date:  Within ten days after receipt of the audit or inspection report.

• The interest rate is the same as the interest rate for late payments.

• If an inspection or audit is made necessary by your failure to furnish reports or supporting records, or to furnish such reports, records, or information on a timely basis, or if there is an understatement of Gross Sales of greater than 2%, in addition to the understated royalty fees and advertising contributions, you also must pay the reasonable costs of the audit or inspection.

9.  Collection Costs and Expenses:  Earl of Sandwich’s costs and expenses

• Due Date:  On demand, if required.

• These costs and expenses include, but are not limited to, costs and commissions due a collection agency, reasonable attorneys’ fees, costs incurred in creating or replicating reports demonstrating Gross Sales of the Franchised Restaurant, court costs, expert witness fees, discovery costs, and reasonable attorneys’ fees and costs on appeal, together with interest charges on all of the foregoing.

10.  Costs and Attorneys’ Fees:  Earl of Sandwich’s costs and expenses

• Due Date:  As incurred.

• If Earl of Sandwich prevails in litigation regarding enforcement of the terms of any agreement, you must pay its attorneys’ fees and costs.

11.  Gift Card Reconciliation:  total amount of gift cards sold from Franchised Restaurant

• Due Date:  Monthly.

• On a monthly basis, you must pay Earl of Sandwich the total amount of any gift cards sold from your Franchised Restaurant, and Earl of Sandwich will reimburse you for the amount of any gift cards redeemed at your Franchised Restaurant.

12.  Indemnification:  Earl of Sandwich’s and its affiliates’ losses and expenses

• Due Date:  As incurred.

• You must indemnify and hold Earl of Sandwich and its affiliates harmless in all actions arising out of or resulting from the development or operation of your Franchised Restaurant (and, for a Non-Traditional Restaurant, your other businesses at the Facility), excluding any gross negligence or willful misconduct by an indemnitee.

13.  Interest:  interest on the amount owed from the date due until paid

• Due Date:  When any payment is overdue.

• The interest rate is the maximum rate permitted for indebtedness of this nature in the state in which the Franchised Restaurant is located not to exceed 1.5% per month (or a portion of a month).

14.  New Product and Supplier Testing:  reasonable cost of inspection and actual cost of testing

• Due Date:  As incurred.

• If you request Earl of Sandwich’s authorization to sell new products or use an alternate supplier of products or services, you must pay its reasonable expenses to evaluate the supplier.

15.  Reimbursement of Insurance Costs:  Earl of Sandwich’s out-of-pocket costs of obtaining coverage

• Due Date:  Immediately upon receipt of invoice.

• If you fail to procure or maintain the required insurance, Earl of Sandwich may procure the insurance and charge its cost along with its out-of-pocket expenses to you.

16.  Relocation:  Earl of Sandwich’s reasonable expenses and an agreed minimum royalty fee during the period in which the Franchised Restaurant is not in operation

• Due Date:  On demand, if required.

• You may not relocate the Franchised Restaurant without Earl of Sandwich’s prior written consent.

17.  Renewal Fee:  $5,000

• Due Date:  At the time you sign the renewal Franchise Agreement.

• The renewal fee is in addition to any costs for remodeling that Earl of Sandwich may require as a condition of renewal.

18.  Software Licenses and Updates:  actual cost of license fee and updates

• Due Date:  As incurred.

• You must purchase and use any new or upgraded proprietary software programs, system documentation manuals, and other proprietary materials that Earl of Sandwich may develop or designate for use in the System in the future.

19.  Taxes:  Earl of Sandwich’s expenses

• Due Date:  Within 30 days of receipt of invoice.

• You must reimburse Earl of Sandwich for any taxes, fees, or assessments imposed on it for acting as franchisor or licensing the Proprietary Marks.

20.  Transfer:  $10,000

• Due Date:  Prior to consummation of transfer.

• Earl of Sandwich has the right to approve all transfers.

• There is no fee if you transfer an agreement to a corporation or limited liability company that your owners control.

21.  Website Fee:  $0 to $1,000

• Due Date:  As incurred.

• Although Earl of Sandwich does not currently do so, in the future it may charge you a fee for developing, reviewing, and approving your website and/or for hosting the website.

22.  Early Termination Damages:  amount of the average weekly Royalty Fee that you owed for the one-year period prior to termination, multiplied by the lesser of 104 weeks or the number of weeks remaining in the term of the Franchise Agreement

• Due Date:  Within 30 days following termination.

• Payable if you default on your obligations and Earl of Sandwich terminates the Franchise Agreement prior to the expiration of the Initial Term.

Notes

• Unless otherwise noted, all fees are imposed by and payable to Earl of Sandwich and are non-refundable. Generally, all fees are uniformly imposed on Earl of Sandwich’s franchisees, however, in certain unique circumstances, Earl of Sandwich may reduce or waive a fee for a particular franchisee for a limited period of time.

• You must participate in Earl of Sandwich’s electronic funds transfer program authorizing it to utilize a pre-authorized bank draft system. All royalty fees and other amounts owed to Earl of Sandwich under the Franchise Agreement, including advertising fees, where applicable, and interest charges, must be received by Earl of Sandwich before 5:00 p.m. on the 5th day after the end of each fiscal week or at a later point, or due date, specified by Earl of Sandwich.

• No later than 30 days prior to opening, you must designate an account at a commercial bank and furnish to Earl of Sandwich all authorizations (including the ACH Authorization form) necessary to permit it to make withdrawals by electronic funds transfer.

• Gross Sales include all revenue from the sale of all food products, beverages, and all other income of every kind and nature related to the Franchised Restaurant (including the redemption value of stored value gift cards and gift certificates when purchases are made), whether for cash or credit and regardless of collection in the case of credit, monies or credit received from the sale of food and merchandise, from tangible property of every kind and nature, promotional or otherwise, and for services performed from or at the Franchised Restaurant, including, but not limited to, such off-premises services as catering and delivery.

• Gross Sales do not include sales taxes or other taxes collected from customers for transmittal to the appropriate taxing authority, promotional discounts and coupons, the value of any employee discounts provided to your bona fide employees during the fiscal week in which the discounts are provided, all proceeds from the sale of gift certificates or stored value cards, customer refunds made in good faith to customers, or the sale of equipment used in the operation of the Franchised Restaurant.