Valvoline Instant Oil Change’s Initial Franchise Fee, Royalty Fee + 20 Other Fees

Detailed Information on Valvoline Instant Oil Change’s Initial Franchise Fee, Royalty Fee + 20 Other Fees (Items 5 and 6, 2021 FDD)

1.  License Fee:  $30,000

• You must pay to Valvoline a license fee of $30,000 for your first Center, with half of the fee to be paid upon execution of the License Agreement and half of the fee to be paid on the 20th day of the following month after the Center has opened.

• The license fees for additional Centers you open are as follows: (i) $20,000 for the first newly constructed Center that is not the first License Agreement entered into by you with Valvoline, and (ii) $5,000 for each subsequent (a) newly constructed Center, and (b) existing oil change facility that is converted to a Center.

• If you purchase a Center from an existing Valvoline franchisee, the license fee you will pay to Valvoline is (i) $5,000 for the first Center that is purchased from the existing Valvoline franchisee, and (ii) $2,500 for each subsequent Center that is purchased from the same, existing Valvoline franchisee.

2.  Development Fee:  $1,250 to $5,000 for each existing oil change facility that is not currently branded as part of the System that you intend to acquire and convert into a Center, and $1,250 to $15,000 for each newly constructed Center

• If you are approved to develop multiple Centers within a given geographic market and you choose to sign a Development Agreement, you must pay Valvoline a development fee of $1,250 to $5,000 for each existing oil change facility that is not currently branded as part of the System that you intend to acquire and convert into a Center, and $1,250 to $15,000 for each newly constructed Center.

• In determining the range of fees you will pay for each Center, Valvoline considers the amount of resources that it will need to devote to the development of the Centers and the training of in-store personnel employed by franchisee.

• If you are a new franchisee signing a Development Agreement, the license fee under the first License Agreement will be $30,000. As disclosed above, the license fee will be $20,000 for the first newly constructed Center that is not the first License Agreement entered into by you with Valvoline.

• Each license fee under subsequent License Agreements executed in connection with the Development Agreement will be $5,000 in the case of the conversion of an existing oil change facility (that is not currently branded as part of the System) to a Center and up to $5,000 in the case of a newly constructed Center.

• If you are an existing franchisee signing a Development Agreement, the license fee under each License Agreement executed in connection with the Development Agreement will be $5,000 in the case of the conversion of an existing oil change facility (that is not currently branded as part of the System) to a Center and $5,000 in the case of a newly constructed Center.

• Development fees are due upon signing of the Development Agreement, and are considered earned when paid, and the fees are not refundable.

3.  Conversion Fee:  $5,000 to $30,000

• If you own or will buy an existing oil change facility, including a Center, Valvoline may agree to sell you a franchise to convert to a Center or agree to your assignment of the existing franchise. Valvoline’s conversion fee is $30,000 if it is your first Center regardless of whether you are acquiring a service center from a third party or from one of Valvoline’s existing franchisees.

• If the conversion is for other than your first Center and is a qualifying, independent, existing, and currently operating quick lube facility that provides similar services in a similar business format as required by Valvoline’s standards, then the conversion fee is $5,000.

• You will be required to sign Valvoline’s then-current form of License Agreement.

4.  Operating Equipment:  $15,000 to $100,000

• For each Center that you operate, you must purchase certain operating equipment, including radiator flush equipment, tire rotation and balance equipment, a fluid exchange system, and a point of sale system, from Valvoline, its affiliates, or other vendors designated by Valvoline.

• Valvoline estimates the range of fees for this operating equipment to be $15,000 to $100,000 per Center.

• These fees are not refundable.

5.  Royalties:  6% of Adjusted Gross Revenue (“AGR”) or a graduated royalty rate between 4% and 6% of AGR

• Due Date:  Payable monthly by electronic funds transfer on the 20th day.

• A Graduated Royalty Conversion Incentive Program is available for conversion of competitor centers.

• A graduated royalty rate is available to franchisees that are not currently on a graduated royalty schedule that add at least one non-Valvoline store. The graduated royalty rate is also available to franchisees who buy existing franchise Centers that are on the graduated royalty schedule even if they sign new agreements.

6.  General System Fund:  2% of AGR until the cap amount has been reached

• Due Date:  General System Fund contributions are payable monthly on the 20th day of the next month by electronic funds transfer.

• Percentage indicates required contributions. The annual cap amount for new franchise Centers opened in 2020 is $6,685 per Center.

7.  Transfer:  $30,000 for your first Center if transferred to a new franchisee; $5,000 for your first Center if transferred to an existing franchisee; and $2,500 for any additional Centers transferred in the same transaction

• Due Date:  Upon signing.

• Transfer fee is waived for certain transfers, including transfers within an existing ownership group or to family members who are qualified to operate the licensed business.

8.  Renewal:  $2,500 to $5,000

• Due Date:  Upon signing.

• $2,500 for a 5-year renewal; $5,000 for a 10-year renewal; $5,000 for a 15-year renewal.

9.  Specialized Computer Services:  $150 per hour as needed

• Due Date:  Upon demand.

10.  Computer Hardware Upgrade:  varies, costs may range from $150 to $15,000

• Due Date:  Upon demand.

• Technological advances may make some computer equipment obsolete. In order to run POS and other programs, you may be required to obtain additional equipment, the costs of which vary depending upon equipment needed and amounts charged by suppliers.

11.  Testing:  cost of testing

• Due Date:  When billed.

• This covers the costs of testing new products or inspecting new suppliers you propose. These amounts vary depending upon the proposed product and proposed supplier.

12.  Audit:  cost of inspection or audit

• Due Date:  15 days after billing.

• Due if you do not give Valvoline reports, supporting records, or other required information, or if you understate required continuing support and Royalty payments or GSF contributions by more than 2%.

• Valvoline’s costs may vary depending on auditor used, rates charged by the auditor, and if travel is required.

13.  Interest:  lesser of 1.5% per month or highest commercial contract interest rate law allows

• Due Date:  15 days after billing.

• Due on all overdue amounts.

14.  Insurance:  reimburse Valvoline’s costs

• Due Date:  15 days after billing.

• If you fail to obtain insurance, Valvoline may obtain insurance for you and you must reimburse Valvoline its costs, which may vary depending on insurance carrier used and rates charged by the carrier.

15.  Insufficient Funds Processing Fee:  $100

• Due Date:  As incurred.

• Due if you have insufficient funds in your EFTA to cover a payment, or, if you pay by check, a check is returned for insufficient funds.

16.  Costs and Attorneys’ Fees:  will vary under circumstances

• Due Date:  As incurred.

• Due when you do not comply with the License Agreement and Valvoline has to incur expenses to enforce the License Agreement.

17.  Center Upgrading Costs:  the greater of 2% of AGR during the previous 5-year period or $50,000 per Center

• Due Date:  Upon demand.

• Amount varies depending on the amount and costs of needed work.

• These costs are paid directly to Valvoline or to unrelated 3rd party contractors.

18.  Fleet Program:  recapture 3rd party costs

• Due Date:  Upon demand.

• Fee represents recapture of program administrative expenses and may be adjusted from time to time.

• Participation in the fleet program is mandatory, including participation in national fleet pricing programs for certain services.

• Payments due you may be offset in the event of failure to make timely payments to Valvoline or one of its affiliates.

19.  Warranty & Guarantee Costs:  varies, depending on amount of customer claim

• Due Date:  Within 30 days of customer complaint.

• Varies depending upon level of customer service and quality provided by you.

• Licensee may be required to participate in a social monitoring and customer relations program at a fee of $20 per store per month in addition to cost of settlement of claims which will vary.

20.  Additional Training Costs:  up to $250 per trainer/per day

• Due Date:  Upon demand.

• You must reimburse Valvoline for all costs associated with the training.

21.  Additional Site Selection Assistance Costs:  actual costs incurred

• Due Date:  Upon demand.

• You must reimburse Valvoline for all costs associated with additional onsite assistance provided in connection with your selection of a site for your Center.

• These costs may vary depending upon the extent of assistance provided and Valvoline’s costs for travel, lodging, employee wages, and meals.

22.  Fee Related to Development Agreement:  varies depending on location of new market and anticipated performance of Centers in new market

• Due Date:  Upon the expiration or termination of the Development Agreement due to franchisee’s default.

• This fee is negotiable between you and Valvoline.