Detailed Information on Dippin’ Dots’ Initial Franchise Fee, Royalty Fee + 25 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $10,000 to $15,000

• The initial franchise fee is $15,000 payable in full upon the opening of your Dippin’ Dots Franchised Business. This fee is not refundable.

• If you wish to operate more than one fixed location, store, or kiosk, you may purchase additional Dippin’ Dots franchises at $10,000 per each additional fixed location, store, or kiosk.

• If you are a current member of the U.S. armed forces or an honorably discharged U.S. Veteran and have provided Dippin’ Dots with sufficient proof of the same in the form as Dippin’ Dots may reasonably require, it will offer you a 15% discount off your initial franchise fee for your initial Dippin’ Dots Franchised Business.

2.  Opening Inventory:  $2,500 to $5,250

• Due Date:  This expense must be paid before you begin your retail operations.

• Payable to Dippin’ Dots or approved suppliers based on the amount of inventory ordered. Dippin’ Dots does not provide financing.

3.  Equipment:  $65,700 to $84,900

• Due Date:  This expense must be paid before you begin your retail operations.

• Payable to Dippin’ Dots or approved suppliers as this expense is incurred. Dippin’ Dots does not provide financing.

4.  Printing and Signage:  $499 to $5,000

• Due Date:  This expense must be paid before you begin your retail operations.

• Payable to Dippin’ Dots or approved suppliers as this expense is incurred. Dippin’ Dots does not provide financing.

5.  Advertising Materials:  $500 to $2,500

• Due Date:  This expense must be paid before you begin your retail operations.

• Payable to Dippin’ Dots or approved suppliers as this expense is incurred. Dippin’ Dots does not provide financing.

6.  Office and Retail Supplies:  $100 to $500

• Due Date:  This expense must be paid before you begin your retail operations.

• Payable to Dippin’ Dots or approved suppliers as this expense is incurred. Dippin’ Dots does not provide financing.

7.  Royalty Fee:  $2.16 per bag for bulk ice cream products; $0.09 per unit for prepack units; up to 6% on ancillary items (non-Dippin’ Dots manufactured retail food, drink, and/or non-food approved items)

• Due Date:  Received on or before each Friday by 5:00 p.m. CST (the week begins on Sunday and ends on Saturday).

• These fees are collected by Dippin’ Dots in connection with the sale of Dippin’ Dots products.

• Dippin’ Dots may increase the amount of royalty fee at any time upon written notice to all of its franchisees; provided, however, that the royalty fee for each type of product purchased shall not exceed 6% of the average retail price of the product being purchased.

• Dippin’ Dots may elect to forgo the royalty fees indicated and charge a continuing royalty fee not to exceed 6% of your Gross Sales.

8.  Advertising Fund Contributions:  $0.24 per bag for bulk ice cream products; $0.01 per unit for prepack units; up to 2% on ancillary items (non-Dippin’ Dots manufactured retail food, drink, and/or non-food approved items)

• Due Date:  Same as above.

• These funds are collected by Dippin’ Dots in connection with the sale of Dippin’ Dots products.

• Dippin’ Dots may increase the amount of advertising fund contributions at any time upon written notice to all of its franchisees; provided, however, that the advertising fund contributions for each type of product purchased shall not exceed 2% of the average retail price of the product being purchased.

• Dippin’ Dots may elect to forgo the advertising fund contributions indicated and require contributions not to exceed 2% of your Gross Sales.

9.  Regional Advertising Fund Contributions:  up to 50% of the contributions made to the Advertising Fund

• Due Date:  Same as above.

• Regional Advertising Funds have not been established at this time. Should Dippin’ Dots establish these funds, it will allocate up to 50% of the contributions you make to the Advertising Fund to your Regional Advertising Fund.

10.  Additional Training Fees:  $75 per day per person

• Due Date:  Promptly upon receipt of invoice.

• Payable to Dippin’ Dots if you require more training or related assistance than Dippin’ Dots’ usual training program and routinely scheduled visits.

11.  Relocation Fee for Relocation of Franchised Business:  $1,000

• Due Date:  Promptly upon receipt of invoice.

• You must pay the relocation fee to Dippin’ Dots prior to your relocation of your fixed location retail store or kiosk.

• Any relocation is subject to Dippin’ Dots’ prior approval.

12.  Evaluation and Testing of New Approved Supplier:  reasonable cost of the evaluation and testing

• Due Date:  Promptly upon receipt of invoice.

• If you want to purchase products from suppliers other than approved suppliers, you must submit a request to Dippin’ Dots along with samples of the supplier’s products. Dippin’ Dots shall have the right to inspect the supplier’s facilities and to evaluate and test the supplier’s products.

• You shall pay Dippin’ Dots a charge not to exceed the reasonable costs of evaluation and testing.

13.  Reimbursement of Amounts Paid to Correct Any Deficiencies:  actual cost to Dippin’ Dots

• Due Date:  Promptly upon receipt of invoice.

• Upon notice from Dippin’ Dots, you must take steps to correct any deficiencies in your operations that Dippin’ Dots detects during any inspection. If you do not correct these deficiencies within a reasonable time, Dippin’ Dots may perform your obligations for you, and you must reimburse it for its costs in performing your obligations.

14.  Replacement Fee for Lost Manuals:  at least $200

• Due Date:  Promptly upon receipt of invoice.

• Payable to replace any Manual that is lost, stolen, or damaged to render it, in Dippin’ Dots’ sole determination, unusable.

15.  P.O.S. System Transaction Fee:  $100 to $150 per month

• Due Date:  Promptly upon receipt of invoice.

• Payable for transaction fees in connection with P.O.S. System.

16.  Late Fee for Sales Reports:  $5 per day

• Due Date:  Promptly upon receipt of invoice.

• Sales reports are due no later than the 20th day of each month showing Gross Sales for each retail venue you operate within your territory during the immediately preceding month.

17.  Late Fee for Profit and Loss Statement:  $5 per day

• Due Date:  Promptly upon receipt of invoice.

• Profit and loss statements are due no later than March 31st of each year showing the results of operations for the preceding calendar year.

18.  Interest on Understated Amounts Payable:  18% per annum or the maximum rate permitted by law, whichever is less

• Due Date:  Promptly upon receipt of invoice.

• If an audit reveals that amounts payable to Dippin’ Dots have been understated, you shall pay Dippin’ Dots the amount understated plus interest from the date such amount was due until the amount due was paid.

19.  Reimbursement of Audit Costs:  actual cost to Dippin’ Dots

• Due Date:  Promptly upon receipt of invoice.

• Dippin’ Dots has the right to have an audit made of your records and conduct a physical inventory. If any inspection discloses an understatement of any reported amount of any type, in any report, of 2% or more of Gross Sales, you will, in addition to paying Dippin’ Dots the amount of the understatement, reimburse it for all expenses, including, without limitation, travel, lodging, and wage expenses and reasonable accounting and legal costs.

20.  Insurance Coverage:  actual cost to Dippin’ Dots

• Due Date:  Promptly upon receipt of invoice.

• If you fail to maintain the insurance required by the Franchise Agreement, Dippin’ Dots may obtain the required insurance and charge you the cost of the insurance.

21.  Late Fee for Certificates of Insurance:  $5 per day

• Due Date:  Promptly upon receipt of invoice.

• You are required to provide Dippin’ Dots with certificates of insurance evidencing that you have the proper types and amounts of insurance coverages required by the Franchise Agreement prior to your commencement of operations and, thereafter, at least 20 days prior to the expiration of any policy.

22.  Transfer Fee:  the lesser of $7,500 or 10% of the sales consideration, plus any attorneys’ fees incurred by Dippin’ Dots in connection with its review of and processing of the transfer. For existing Dippin’ Dots Franchisees transferring their interests to an existing Dippin’ Dots Franchisee: the lesser of $1,000 or 10% of the sales consideration per franchise sold, plus any attorneys’ fees incurred by Dippin’ Dots in connection with its review of and processing of the transfer.

• Due Date:  At the time of transfer.

• Payable for the training, supervision, administrative costs, counsel fees, accounting, and Dippin’ Dots’ other expenses in connection with a transfer.

• In the case of a transfer to a corporation or limited liability company formed by you for the convenience of ownership, no transfer fee shall be required.

• This fee is payable to Dippin’ Dots.

23.  Fee to Add Minority Equity Owner:  $1,000

• Due Date:  At the time the new equity owner is added.

• If you add a minority shareholder, partner, member, or owner, you must pay Dippin’ Dots this fee.

24.  Damages, Costs, and Expenses Upon Default:  actual damages, costs, and expenses, including reasonable attorneys’ fees, incurred by Dippin’ Dots as a result of the default

• Due Date:  Promptly upon receipt of invoice.

25.  Indemnification:  actual cost to Dippin’ Dots

• Due Date:  Promptly upon receipt of invoice.

• You agree to indemnify Dippin’ Dots and its affiliated companies and each of their officers, directors, and employees against any claims, legal proceedings, investigations, damages, costs, and expenses, and the cost of defending them, if they arise directly or indirectly from, or as a result of, your operation of the Franchised Business.

26.  Fee for Infringement of Rights of Other Franchisee or Customer of Dippin’ Dots:  $250 for freezer placements (FDMC Channel, Food, Drug, Mass Convenience/Club). Fairs, festivals, events: $1,000 for first breach, $2,500 for subsequent breaches.

• Due Date:  Immediately upon receipt of Notice of Default.

• You must pay a fee of $250 for each freezer placement that is found to be unauthorized by Dippin’ Dots; i.e. prior approval was not granted before a freezer was placed at the account.

• You must pay a fee of $1,000 (first breach)/$2,500 (subsequent breaches) if you infringe upon the rights of any other franchisee or customer of Dippin’ Dots by operating at any unauthorized location or event currently serviced by another franchisee or customer of Dippin’ Dots.

• Dippin’ Dots collects this fee and remits it to the franchisee or customer whose territory or event you encroached upon.

27.  Franchisee Council Membership Dues:  $100 per year

• Due Date:  Time of the meeting (varies).

• Dippin’ Dots collects this on behalf of DDF Franchisee Council, Inc.

• You, all franchisees, and Dippin’ Dots are required to be members of the Franchisee Council.

• All members of the Franchisee Council will be entitled to 1 vote on all matters which members are authorized to vote under the Franchise Agreement and the By-Laws of the Franchisee Council.

• The membership dues for the Franchisee Council has no maximum or minimum cap.