Detailed Information on Spavia Day Spa’s Initial Franchise Fee, Royalty Fee + 25 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $49,500

• You must pay Spavia an initial franchise fee amounting to $49,500 (the “Initial Franchise Fee”) upon execution of your Franchise Agreement, which covers the franchise license to operate your Franchised Business within your Designated Territory.

• Your Initial Franchise Fee is deemed fully earned upon payment, and is not refundable under any circumstances.

2.  Training Fee:  $5,000

• You must pay Spavia an initial training fee amounting to $5,000 (the “Initial Training Fee”), which will cover the tuition associated with you (the Franchisee) and 2 other individuals to attend and otherwise participate in Spavia’s proprietary initial training program (the “Initial Training Program”) that is provided via:

• (a) remote/online instruction and classes that may be completed via a Learning Management System (“LMS”) or other technology;

• (b) training that you will receive at Spavia’s designated training facility in Denver, Colorado (or other location Spavia designates); and

• (c) on-site assistance that Spavia’s training personnel will provide at your Day Spa around the time you are getting ready to open or opening.

3.  Technology Fee:  $910

• You must pay Spavia its then-current technology fee (the “Technology Fee”) commencing 2 months prior to the contemplated or required opening of your Franchised Business, which you must pay as invoiced prior to opening.

• Currently, Spavia’s Technology Fee is $455/month such that a total of $910 in fees will be paid to Spavia prior to opening. The Technology Fee is deemed fully earned upon payment and is not refundable.

4.  Development Fee:  varies

• If Spavia awards you the right to open 3 or more Franchised Businesses under a Development Agreement, you must pay Spavia a one-time Development Fee upon executing your Development Agreement.

• Your Development Fee will depend on the number of Franchised Businesses Spavia grants you the right to open within the Development Area and is calculated as follows:

• (i) $125,000 for the right to open 3 Franchised Businesses, plus an additional $40,000 for the right to open each additional Franchised Business (up to a total of 5);

• (ii) $35,000 per Franchised Business if you agree to open and operate between 6 and 9 Franchised Businesses; and

• (iii) $30,000 per Franchised Business if you agree to open and operate 10 or more Franchised Businesses.

5.  Royalty Fee:  6% of Gross Sales

• Due Date:  On Tuesday of each week based on the Gross Sales generated by the Franchised Business during the preceding Business Week (Monday through Sunday).

• You will be expected to achieve certain levels of Gross Sales in the operation of your Franchised Business each calendar month once your Franchised Business has been open for a period of 1 year (your “Minimum Performance Standards”).

• If your Franchised Business does not achieve the expected Minimum Performance Standards for 3 consecutive months of operation, then you will be required to pay a shortfall payment amounting to the difference between the (a) Royalty Fee due if these Minimum Performance Standards were met in each of these 3 months, and (b) the actual amount you paid in Royalty Fees based on your operation over that time period (the “Royalty Shortfall Payment”).

6.  Local Advertising Requirement:  $50,000 within the first 12 months of operation, with at least $15,000 to $20,000 (as Spavia designates) expended within your first 3 months of operation (your “Initial Marketing Spend”). There is also a Local Advertising Requirement if Minimum Performance Standards are not met.

• Due Date:  As incurred.

• You will not have a local advertising requirement after your first year of operations, unless you fail to meet your Minimum Performance Standards for 3 consecutive months of operation (in which case your Local Advertising Requirement will be a minimum of $15,000 for each 3-month period of operations until you once again achieve your Minimum Performance Standards over a full 3-month period of operations).

7.  Fund Contributions:  1% of Gross Sales (your “Fund Contribution”)

• Due Date:  Same interval and manner as your weekly Royalty Fee.

8.  Renewal Fee:  $10,000

• Due Date:  90 days prior to renewal.

9.  Refresher Training Fee (upon renewal):  then-current training fee for such refresher training. Currently, $2,500 per session.

• Due Date:  30 days before the expiration of the then-current term of your Franchise Agreement.

10.  Transfer Fee (both Franchise Agreement and Development Agreement):  FA: $15,000; ADA: $15,000 per undeveloped franchise

• Due Date:  Payable prior to obtaining Spavia’s consent to your proposed transfer.

11.  Training Fee:  Spavia’s then-current training tuition fee for the kind of training requested or required in connection with the Franchised Business operations or management. Currently, Spavia’s Training Fees are as follows: $2,500 for re-attendance or new trainee attendance of the Initial Training Program; $300/day per trainer personnel Spavia provides in connection with all other training.

• Due Date:  As incurred.

12.  Conference Attendance Fee:  Spavia’s then-current registration fee to attend any Annual Conference Spavia designates, currently $400 to $600

• Due Date:  As incurred.

13.  Call Center:  Spavia’s then-current fee

• Due Date:  As incurred.

• Spavia reserves the right to establish a System-wide call center (the ‘Call Center”) and, if Spavia does so, it reserves the right to charge you for related subscription fees at its then-current rate or the then-current rate changed by Spavia’s approved supplier for call center services.

14.  Advertising Cooperative Fee:  currently, Spavia has not established any such Cooperatives or required its System franchisees to participate in the same

• Due Date:  Upon demand.

15.  Audit Fees:  actual cost of audit

• Due Date:  Upon billing after audit.

• Payable if audit reveals that you have underreported the Gross Sales of your Franchised Business by 2% or more for any designated reporting period.

16.  New Product or Supplier Testing:  the actual costs Spavia incurs in connection with the evaluation/testing procedure (which Spavia estimates could be anywhere between $500 and $2,000 for a given proposal). Spavia also reserves the right to charge an evaluation fee amounting to $500 in the event you decide to make multiple proposals in a given year of operations.

• Due Date:  As incurred.

• If you propose an alternate supplier or product/service that Spavia has not already authorized for use in connection with your Franchised Business, you may be required to reimburse Spavia for the actual costs it incurs in connection with evaluating your proposal.

17.  Collection Charges:  varies

• Due Date:  Upon demand.

• You must pay all collection charges associated with Spavia’s efforts in collecting any amounts owed to you or Spavia under the Franchise Agreement.

18.  Fees on Default and Indemnity:  attorneys’ fees, costs, interest, audit costs, default fees

• Due Date:  Upon demand.

19.  Late Reporting Fees:  $10 per day, starting the 11th day after a report is due to Spavia

• Due Date:  Upon demand.

• Payable in addition to other payments to Spavia.

20.  Costs and Attorneys’ Fees:  will vary according to circumstance

• Due Date:  Upon demand.

• You must reimburse Spavia for its attorneys’ fees and any court costs that it is forced to incur in connection with enforcing or protecting its rights under your Franchise and/or Development Agreement.

21.  Indemnification:  will vary according to circumstance

• Due Date:  Upon demand.

• You must reimburse Spavia for its attorneys’ fees and other costs that it incurs in connection with any third-party claims brought against it that arise out of, or are related to, the operation of your Franchised Business.

22.  Insurance:  will vary according to circumstance

• Due Date:  Upon demand.

• If you fail to obtain required insurance, Spavia may obtain such insurance at your expense (but is not required to do so) and charge you a service fee to do so. Otherwise, these payments are made directly to your third-party insurance provider.

23.  Interest:  1.5% per month or highest commercial contract interest rate applicable laws permit

• Due Date:  Upon demand.

• Payable on all delinquent payments that are due to Spavia for more than 30 days.

24.  Dishonored Check Charge:  $30

• Due Date:  Upon demand.

• Payable if a check you provide to Spavia is returned or dishonored by the bank, or if your EFT Account does not have sufficient funds to cover amounts you owe under the Franchise Agreement as they become due and owing to Spavia.

25.  Relocation Fee:  $2,000 if you decide to relocate your Franchised Business

• Due Date:  When you submit a letter requesting consideration of a new location.

• Payable to Spavia to defray its costs associated with evaluating and approving/rejecting your relocation proposal.

26.  Management Fee:  up to 8% of the Gross Sales of your Franchised Business during the period of time Spavia or its representative manages your Franchised Business on your behalf (the “Management Fee”), plus the costs and expenses Spavia incurs

• Due Date:  As incurred.

• The Management Fee will only be due to Spavia if (a) you are in material default under your Franchise Agreement or become disabled (and unable to perform as the “Franchisee” under your Franchise Agreement), and (b) Spavia exercises its right to temporarily operate your Franchised Business in an effort to assist in getting the operations of the Franchised Business back into compliance with the Franchise Agreement and System standards.

27.  De-Identification:  the costs and expenses associated with de-identifying your former Franchised Business (upon expiration or termination of your Franchise Agreement)

• Due Date:  Within 30 days of expiration/termination, unless otherwise agreed.

• Payable if Spavia must take on any of these de-identification obligations on your behalf or payable to third-party providers to ensure compliance with the de-identification obligations (post-term) under your Franchise Agreement.