Detailed Information on Pop-A-Lock’s Initial Franchise Fee, Royalty Fee + 8 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $15,500

• The initial franchise fee is $15,500, and not refundable, for an exclusive territory population of 125,000.

• The franchise area population is determined by current statistical data as published and amended by the U. S. Census Bureau.

• The initial franchise fee is payable in one lump sum concurrent with the signing of your Franchise Agreement.

2.  Royalty:  7% of total Gross Sales

• Due Date:  Payable monthly on the last day of the next month.

• In addition to the initial franchise fee, you must pay to Pop-A-Lock during the term of the Franchise Agreement and any extension thereof, a continuing royalty equal to 7% of monthly Gross Sales.

• If the royalty payment is not received by Pop-A-Lock within 5 days after it is due, a service charge will be assessed equal to the lesser of 18% of the amount overdue, or the highest rate permitted by applicable law.

• Payments must be mailed via first class mail, postage prepaid, and properly addressed to Pop-A-Lock.

• There will be a minimum monthly recurring royalty fee of $1,000 for a franchise area as described in the Franchise Agreement, not opened in 12 months of signing the Agreement.

• “Gross Sales” shall mean the aggregate gross amount of all revenues from whatever source, including cash, credit, agreements to pay, or other consideration (whether or not payment is received at the time of the sale) derived by you from operation of the Franchised Business, or from the sale of any services or products associated with the use of the Licensed Marks, excluding sales or other tax receipts, the collection of which is required by law.

3.  Advertising and Marketing:  1% of total Gross Sales

• Due Date:  Same as Royalty.

• You and all other franchisees must pay to Pop-A-Lock a continuing Advertising and Marketing fee (the “Advertising Fee”) equal to 1% of Gross Sales.

• All Advertising Fund contributions shall be used exclusively for advertising, marketing, public relations, and business development purposes for the collective benefit of all members of the Franchise System.

• Pop-A-Lock may expend a portion of the Advertising Fund contributions to reimburse its operating expenses reasonably allocable to the administration of the Advertising Fund, subject to a maximum of 20% of the Fund per year.

4.  Local Advertising:  $15,000 during first year

• Due Date:  First year of operation.

• During the first 12 months of operation of your Franchised Business, you must spend $15,000 on continuing local advertising usually beginning 6 months after opening.

• Not per Franchised Business. For 4 franchises you would spend between $16,000 and $50,000 on local advertising.

5.  Online, Digital, and Directory Advertising:  variable

• Due Date:  Per agreement with Directory Publisher.

• You may, depending on costs and exposure, set up a free and/or purchase a display-type advertisement for publication in the online directory(ies). You will place a listing of your Franchised Business on Google and other specified online directories, as designated by Pop-A-Lock.

• The online directories in which the advertisement and listing are placed must include coverage of your franchise area.

• The cost of the advertisement will vary according to various factors including the size of the advertisement and the size and coverage area of the directory.

6.  Training:  $800 per Technical Trainee and $2,100 per Locksmith Trainee

• Due Date:  1 week before the beginning of training.

• Technical Trainee: You and all of your employees who have signed the nondisclosure and non-competition agreements prescribed by the Franchise Agreement shall be eligible to participate in Pop-A-Lock’s technical training program (the “Pop-A-Lock Training Program”).

• The Pop-A-Lock Training Program consists of a minimum of 5 days at 8 hours per day and includes instruction in (i) the techniques and methods established or adopted by Pop-A-Lock to unlock car doors, (ii) the proper use of opening tools prescribed for use by Pop-A-Lock, and (iii) procedures for performing emergency roadside assistance.

• Each of your employees who will perform car door unlocking services must successfully complete the Pop-A-Lock Training Program for the unlocking services they will perform in accordance with Pop-A-Lock’s standards.

• You must pay Pop-A-Lock a fee of $800 for each trainee who attends the Pop-A-Lock Training Program. You must bear the travel, food, and lodging expenses associated with this technical training.

• In the event the training is conducted at your business location, or at a location other than Pop-A-Lock’s training facility, you shall reimburse Pop-A-Lock for all transportation, meals, and lodging expenses incurred by it in connection with such training.

• Locksmith Trainee: In addition, you must either hire one or more individuals to be trained by Pop-A-Lock or in some cases contract with individuals who have demonstrated skill in locksmith techniques. The cost for this category of locksmith training is $2,100 per trainee.

• Locksmith training program length varies with (i) current level of experience of trainee, (ii) aptitude of trainee, and (iii) specific level of training targeted.

7.  Transfer:  $8,000

• Due Date:  Before consummation of transfer.

• In the event you wish to transfer or assign the Franchise Agreement (which Pop-A-Lock must approve and which gives rise to a right of first refusal), you must pay to Pop-A-Lock a transfer fee in the amount of $8,000 to cover its investigation, administrative, accounting, and related costs and expenses in connection with any such assignment.

• This fee must be received by Pop-A-Lock before the effective date of the sale or assignment.

8.  Audit:  $5,000 to $9,000

• Due Date:  Upon receipt of billing.

• Pop-A-Lock has the right, without prior notice to you, to examine and audit your books of account, records, cash receipts, invoices, and other data pertinent to the Franchised Business so that it can ascertain the Gross Sales of your franchise. If the audit shows that there is a deficiency in payment of any percentage royalty, the deficiency shall be immediately due and payable.

• The cost of the audit shall be paid by Pop-A-Lock unless the audit shows that you understated Gross Sales by more than 2.0%, in which case you shall pay all Pop-A-Lock’s costs of the audit.

• The exact cost of an audit is not possible to estimate with certainty and depends upon a variety of factors.

• You will be required to pay any such deficiency with interest at the rate of 18% or the highest rate permitted by applicable law, whichever is less, from the date of underpayment.

9.  Interest on Delinquent Sums:  1% per annum or the highest rate allowed by law, whichever is less

• Due Date:  Upon receipt of billing.

• You must pay interest on any delinquent sums.

• Owed to Pop-A-Lock.

10.  Locksmith License Fees:  varies by State

• Due Date:  Upon filing of license application.

• Some States require locksmiths to obtain a license to perform locksmith services, including car door unlocking services. Some States may also require an additional license for providing security services.