The Human Bean’s Initial Franchise Fee, Royalty Fee + 11 Other Fees

Detailed Information on The Human Bean’s Initial Franchise Fee, Royalty Fee + 11 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $30,000 (includes a non-refundable Site Application Fee of $5,000)

• The Initial Franchise Fee is $30,000. This includes a non-refundable Site Application Fee of $5,000.

• When you have paid the Site Application Fee, signed the Site Evaluation Agreement, and submitted all the required information about the proposed site(s), The Human Bean will evaluate up to 10 proposed sites.

• You may not sign a Franchise Agreement with The Human Bean until it has approved a site for your drive-thru (unless you are an Area Developer). If The Human Bean does not approve any of your proposed sites, it will retain the Site Application Fee to cover its costs of evaluating the proposed sites.

• If you and The Human Bean agree on a site, The Human Bean will apply the Site Application Fee to the Initial Franchise Fee, and the remainder of the $25,000 will be due and payable in full, in a lump sum only, when you sign the Franchise Agreement.

• You must sign a Franchise Agreement within 90 days of gaining approval of your proposed sites, or you will forfeit your right to apply the Site Application Fee to the Initial Franchise Fee.

• If within one year after signing the Franchise Agreement you do not open the store for any reason, including your failure to satisfactorily complete the training program, or to lease, purchase, or otherwise obtain an approved premises for your drive-thru, the Franchise Agreement will terminate. In that case, The Human Bean will retain $10,000 of the Initial Franchise Fee and refund the remainder to you.

2.  Development Fee:  $10,000 for each additional The Human Bean outlet (after the first) to be opened within the development area

• If you sign an Area Development Agreement, you will still pay the Initial Franchise Fee for each franchise outlet to be opened within the development area, but the payment will be distributed over time as follows:

• The Initial Franchise Fee of $30,000 for the first The Human Bean outlet to be opened, plus $10,000 for each additional The Human Bean outlet to be opened within the development area (the “Development Fee”) are payable at the time the Area Development Agreement is signed.

• The Site Application Fee is waived for Area Developers, and Area Developers are not required to have a first site approved by The Human Bean before signing the Franchise Agreement.

• The Development Fee is credited towards the future Initial Franchise Fee for each subsequent franchise outlet that is opened, with the balance of each additional Initial Franchise Fee ($20,000) due upon execution of the Franchise Agreement for each new outlet.

• Although the Initial Franchise Fee is refundable as stated above, the Development Fee is not refundable under any circumstances. Development Fees and Initial Franchise Fees are uniformly imposed.

3.  Transfer Fee:  $4,000

• If you obtain your The Human Bean store by purchasing a franchise from one of The Human Bean’s existing franchisees, then you or the existing franchisee, who is selling you the franchise, must pay The Human Bean a transfer fee in the amount of $4,000 (the “Transfer Fee”) instead of the Franchise Fee.

• The Transfer Fee is payable immediately upon approval of the transfer.

• The Transfer Fee is fully refundable if the transfer request is withdrawn before any action by The Human Bean.

• Any proposed transfer of the franchise by you must be approved by The Human Bean.

• If you become a developer, your development rights under the Area Development Agreement will not be transferable except in the event of a death or incapacity.

4.  Training Fee:  $3,000

• Also, if you obtain a franchise from one of The Human Bean’s existing franchisees, in The Human Bean’s reasonable judgment, it may require you to receive training from it and pay a training fee in the amount of $3,000 (the “Training Fee”) plus any associated costs of travel, room, and board expenses.

5.  Equipment:  $80,000 to $95,000

• Certain kinds of equipment used at your drive-thru must be purchased from The Human Bean or one of its approved suppliers. Equipment purchase costs range from $80,000 to $95,000, and vary based on the size and needs of the proposed outlet. The cost of the equipment is not refundable.

6.  Initial Inventory:  $20,000 to $25,000

• Coffee beans and certain other supplies must be purchased from The Human Bean or Portland Coffee Roasters, LLC. Other inventory must be purchased from one of The Human Bean’s designated suppliers.

• Initial inventory costs range from $20,000 to $25,000 and varies based on the size of the proposed outlet. The cost of initial inventory is not refundable.

• The Human Bean does not charge a royalty fee. The company’s business model calls for it to derive an ongoing revenue stream, directly or indirectly, from the franchisees through the sale of coffee beans and certain other supplies to you by it or its designated suppliers.

7.  Renewal Fee:  $2,000

• Due Date:  Before signing successor Franchise Agreements.

• Applicable if you renew your franchise.

8.  The Human Bean’s Costs and Attorneys’ Fees for Breach:  will vary

• Due Date:  When incurred.

• You must pay The Human Bean for its costs and attorneys’ fees in obtaining injunctive or other relief if you breach (violate) any provisions of the Franchise Agreement and, if the Franchise Agreement allows you time to cure the breach, you do not cure the breach within the time allowed.

9.  Audit Fee:  cost of audit

• Due Date:  When incurred.

• If audit results indicate your failure to maintain and provide records as required by the Franchise Agreement or your underreporting of sales or purchases by more than 2 percent during the period covered by the audit, you must reimburse The Human Bean for the cost of the audit and pay interest on any applicable revenue at a rate of 18 percent per year or the highest rate permitted by law, whichever is less.

10.  Brand Fee:  1% of gross revenue (may increase up to 2%)

• Due Date:  Monthly, by EFT.

• The Brand Fee is 1% of your gross sales revenue, paid monthly via electronic funds transfer.

• Gross sales revenue is the aggregate of all sales of branded products and third-party products and all revenue from services rendered in connection with the operation of each drive-thru, including sales made at or away from the premises, whether for cash or credit, but excluding all taxes collected from customers and paid to the appropriate authority.

• The Human Bean will not increase the Brand Fee to more than 2% of gross sales revenue.

11.  Additional Training Pre-Opening:  $40/hour

• Due Date:  When incurred.

• If you do not successfully complete the training described in Item 11, The Human Bean may require you to undergo additional training at the hourly rate.

12.  Additional On-Site Assistance Post-Opening:  $400/day

• Due Date:  When incurred.

• If you request additional on-site assistance after opening, The Human Bean will provide it at the daily rate, plus reasonable expenses for travel, room, and board.

13.  POS Software and System Fees:  $325 to $425, plus transactional fees on card purchases

• Due Date:  Monthly.

• The monthly software fee is payable to The Human Bean’s approved suppliers and ranges from $325 for a single point-of-sale station to $425 for two stations. Franchisees will also pay a fee based on a percentage of each non-cash payment made using the point-of-sale or stored value systems, and may pay an additional fee for support, to the approved suppliers.