Detailed Information on Anago Cleaning Systems’ Initial Franchise Fee, Royalty Fee + 23 Other Fees (Master Franchise) (Items 5 and 6, 2021 FDD)

1.  Initial Fees/Subfranchise Fee Deposit:  $98,000

• In order to apply to become Anago’s master franchisee or subfranchisor, you must submit to Anago a completed application, sign a purchase agreement (the “Purchase Agreement”), and pay the Initial Fee. The Initial Fee to obtain Anago Subfranchise Rights for the counties and/or cities that will comprise your territory is $98,000.

• The Initial Fee is payable to Anago in full upon signing the Purchase Agreement. The Initial Fee is then fully earned and non-refundable upon signing the Subfranchise Rights Agreement.

• However, if Anago does not offer you the right to enter into an Anago Subfranchise Rights Agreement or it offers you the right but you fail to enter into the agreement, in either case, within 30 days following your execution of the Purchase Agreement, Anago will refund the amount you paid when you signed the Purchase Agreement, less any commissions that Anago has been required to pay to any third parties in connection with your application.

• Angao is a member of the International Franchise Association (“IFA”) and participates in the IFA’s VetFran Program, in which Anago provides a 10% discount on the initial franchise fee and charges no royalty for the first year of operation for veterans of the U.S. Armed Forces who meet the requirements of the VetFran Program.

• A qualified U.S. veteran must have at least 51% interest in the franchised business at all times.

2.  Royalty Fee:  5% of your Gross Revenues, subject to a minimum monthly amount as follows: (a) through the 12th month of operation, no minimum; (b) from the 13th-24th months of operation, the minimum Royalty Fee is $1,500 per month; (c) from the 25th-36th months of operation, the minimum Royalty Fee is $3,000 per month; (d) from the 37th-48th months of operation, the minimum Royalty Fee is $4,500 per month; (e) from the 49th-60th months of operation, the minimum Royalty Fee is $6,000 per month; and (f) beginning the 61st month of operation until the termination of the agreement, the monthly minimum Royalty Fee shall increase each 12 months by $1,500 over the prior minimum amount

• Due Date:  Monthly on the 16th of every month.

3.  Training Fees:  $500 per day, if charged. There are no other fees charged for training.

• Due Date:  As incurred.

• Charged in the following circumstances: If you receive unsatisfactory audit/inspection reports from Anago and fail to promptly remedy the deficiencies, Anago may require you and designated employees to attend refresher training at its location as soon as reasonably possible.

• If you fail the Anago Training Program, you must attend retraining classes in the areas the training officer feels are necessary for you to successfully complete the Anago Training Program for Subfranchisors.

4.  Administrative Support Fee:  1% of the Total Monthly Billing collected by the Subfranchisor

• Due Date:  By Wednesday for the previous week (with weeks running from Sunday through Saturday).

• This fee is for continued assistance Anago may provide to you, including advisory assistance in the promotion of Unit Franchises, sale of clients, and referral of leads. Additionally, it includes a support phone line and email ticketing system for general use and troubleshooting within the NBDS software.

5.  Billing and Collection Fees:  an invoice servicing fee of the greater of $1,000 or 1% of your Total Monthly Billing and $25 for each unit franchise statement (waived for first 12 months)

• Due Date:  Monthly on the 20th day of each month.

• Under the Unit Franchise Agreement, your Unit Franchise will appoint you as its billing and collections agent.

• For 12 months after you begin operating and indefinitely after an event of default, you will delegate that responsibility to Anago.

• Anago provides this service at no charge during the initial 12-month period (except for the cost of postage). If Anago provides the service after an event of default or, at your request, beyond the initial 12-month period, this fee will be assessed by Anago.

6.  Deficiencies:  reimbursement of Anago’s costs in performing your obligations

• Due Date:  Immediately upon receipt of invoice.

• If you do not satisfy your obligations under the Subfranchise Rights Agreement, Anago may perform your obligations for you but has no obligation to do so.

7.  Anago NBDS Support and Access Fees:  currently, $200 per month

• Due Date:  Immediately upon receipt of invoice (billed monthly).

• Paid directly to Anago.

8.  Anago Direct Marketing Call Center Fee:  currently $1,525 to $3,050 per month, plus commission per sale

• Due Date:  Immediately upon receipt of invoice (billed monthly).

• This program is voluntary.

• Paid to Anago’s affiliate.

9.  Website Maintenance Fee:  currently $1,000 per month

• Due Date:  Monthly on the 10th day of each month.

• Includes costs of maintaining the relationship with and reimbursement of costs Anago pays to an outside vendor for maintaining and providing certain services (such as search engine optimization, design and maintenance, and chat) in connection with the Anago website and your individual webpages on the website.

10.  Technology Fee:  not currently assessed, but if initiated, up to 1.5% of Subfranchisor’s monthly Gross Revenues

• Due Date:  Monthly on the 16th day of each month.

• Consideration for computer system hardware and/or the development, license, and/or use of proprietary or third-party software, whether for Anago’s or Subfranchisor’s use in connection with services provided by Anago to Subfranchisor.

11.  Transfer Fee:  $10,000 transfer fee in lieu of an Initial Fee. If the transferee is a spouse or child of the transferor, no Transfer Fee will be charged.

• Due Date:  At the time of transfer.

• Upon a transfer, you or your personal representative or other legal representative must pay a Transfer Fee in lieu of an Initial Fee.

12.  Replacement of Manuals:  no charge for initial set of manuals. The replacement fee is $500 payable to Anago.

• An initial complete set of Manuals will be provided to you at no cost. If you lose your copy of the Manuals, you must obtain a replacement.

13.  Indemnification:  varies

• Due Date:  Immediately upon receipt of invoice.

• You must reimburse Anago and its affiliates if any of them are held liable for claims resulting from:

• (a) Subfranchisor’s operation of the Subfranchise Business, (b) the nonperformance of, or other acts or omissions relating to, the Unit Franchise Agreements of Subfranchisor, (c) Subfranchisor’s negligence or willful misconduct, (d) Subfranchisor’s violation of any law or regulation, (e) Subfranchisor’s breach of any covenant, representation, or warranty in the Agreement, (f) any claim that Anago or its affiliates are the employer or joint employer of you, your Subfranchisees, or your Subfranchisees’ employees, or (g) because of any act or omission of Subfranchisor or any person associated with, employed by, or affiliated with Subfranchisor, including any action that may be made or asserted by a Unit Franchisee, a prospective Unit Franchisee, or any third party.

14.  Enforcement Costs:  varies

• Due Date:  Immediately upon receipt of invoice.

• If any legal action or other proceeding is begun for the enforcement of your Subfranchise Rights Agreement, or because of an alleged dispute, breach, default, or misrepresentation under any provision of your Subfranchise Rights Agreement, the prevailing party in such action or proceeding is entitled to recover reasonable pre-institution and post-institution attorneys’ fees, court costs, and all expenses even if not taxable as court costs.

• If, short of filing a legal proceeding or action, Anago takes measures to enforce your compliance with the obligation to pay when due any monies owed under your Subfranchise Rights Agreement or submit when due any reports, information, or supporting records, or for any failure otherwise to comply with your Subfranchise Rights Agreement, you must reimburse Anago for all of the costs and expenses (including reasonable attorneys’ fees) it incurs in doing so.

15.  Miscellaneous Merchandise:  varies, depending on which and how many items you purchase from Anago

• Due Date:  Immediately upon receipt of invoice.

• Anago makes available miscellaneous and sundry items embossed with the Proprietary Marks which you may, but are not required to, purchase. These items can be purchased through Anago for the then-current price.

• Items include polo and T-shirts, aprons, caps, and other miscellaneous and sundry items.

16.  Sale of Unit Franchise Fee:  $400 per Unit Franchise that you sell

• Due Date:  Upon sale of Unit Franchise.

17.  Performance Schedule Deficiency Fee:  the amount will be $400 for each Unit Franchise below the required minimum, which is nonrefundable

• Due Date:  In January of each year following the Subfranchisor’s failure to satisfy the minimum performance schedule (attached to the Subfranchise Rights Agreement), if applicable.

• If this fee has not been paid within 30 days from receipt of notice, at the sole discretion of Anago, you may be granted a 60-day extension which will increase the fee to $1,000 per Unit Franchise not sold.

18.  Client Bid Schedule Deficiency Fee:  $150 for each client bid below the required minimum that you failed to conduct

• Due Date:  In January of each year based on the prior 12-month averages or, at Anago’s option, in January and July, based on the prior 6-month averages.

• Due only if you fail to schedule and conduct the minimum number of client bids with prospective cleaning clients during the measurement period in accordance with the required Appointment Schedule.

19.  Banking Fees:  credit card charges of 4.75% per transaction unless Anago’s cost to provide you this service is greater, in which case you will be required to pay the higher cost

• Due Date:  Monthly.

• If you choose to utilize Anago’s credit card processing services, you will pay Anago the per transaction fee. This fee may exceed the amount actually charged to Anago by the banking institution, which may vary as determined solely by such banking institution.

20.  Advertising Enforcement Cost:  varies

• Due Date:  Immediately upon receipt of the invoice.

• If you fail to spend $18,000 annually or fail to provide Anago satisfactory proof that you have spent $18,000 annually to advertise the Anago business, you must pay Anago the difference, and Anago may use it at its sole discretion.

21.  Advertising Fee:  up to 2.2% of your Gross Revenues during the preceding month to the Fund

• Due Date:  When invoiced.

• Anago does not currently charge this fee.

22.  Supplier Testing Fee:  reimbursement of Anago’s reasonable costs of the inspection and the actual cost of the testing

• Due Date:  Immediately upon receipt of invoice.

• If you propose to purchase or lease any equipment, supplies, advertising materials, or other products or services from an unapproved supplier, you must first submit to Anago a written request for approval, or request the supplier to do so itself.

23.  Audit:  varies

• Due Date:  Immediately upon receipt of invoice.

• If an audit by Anago discloses an understatement of Gross Revenues in excess of 2% for any period or periods, you will be required to reimburse it for all costs of the audit in addition to paying past due Royalties, Advertising Fees (when imposed), plus any late charges that may have accrued.

24.  Insurance:  actual cost to maintain your insurance policy (insurance premium), plus an additional 1% of your Total Monthly Billing

• Due Date:  Monthly on the 20th day of each month.

• You are required to be covered under the Anago National Insurance program during the entire Term. This fee will be paid to Anago or its designee.

25.  Non-compliance Fees:  $100 per day, per report, late fee for failing to submit reports on time

• Due Date:  Immediately upon notice of violation.

• If you fail to submit required monthly reports on time. Or fail to deposit client receipts properly into the required bank accounts.