Detailed Information on Rocky Mountain Chocolate Factory’s Initial Franchise Fee, Royalty Fee + 20 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $35,000

• You must pay a non-refundable initial franchise fee of $35,000 in full when you sign the Franchise Agreement for your Rocky Mountain Chocolate Factory Store.

• Unless agreed in writing by Rocky Mountain Chocolate Factory and you, Rocky Mountain Chocolate Factory may terminate your Franchise Agreement if you fail to open your Store within 180 days after you sign the Franchise Agreement and in this case, Rocky Mountain Chocolate Factory will refund $5,000 of your initial franchise fee.

• Rocky Mountain Chocolate Factory is offering a $10,000 discount from the initial franchise fee for franchisees who are in good standing and wish to open an additional Store, and for qualified veterans.

• In addition, Rocky Mountain Chocolate Factory is offering first and subsequent franchises for an initial fee of only $5,000 to its employees and to college students at schools that participate in Rocky Mountain Chocolate Factory’s University Program. Individuals who are affiliated with Rocky Mountain Chocolate Factory may also pay reduced initial fees.

2.  Opening Factory Candy Inventory:  $7,500 to $22,285

• You must also pay between $7,500 and $22,285 to Rocky Mountain Chocolate Factory for opening Factory Candy inventory and cooking supplies for a full-sized Store within 30 days after the products are shipped to you.

• These costs are non-refundable in all circumstances.

3.  Cost of Factory Candy, Ingredients, and Other Products:  as stated in Rocky Mountain Chocolate Factory’s published price lists

• Due Date:  Net 30 days from invoice.

• Rocky Mountain Chocolate Factory may change its price lists periodically.

4.  Royalty:  5% of Gross Retail Sales each month, with a quarterly adjustment to exclude payments on purchases of Factory Candy, Store Candy ingredients, and other items purchased from Rocky Mountain Chocolate Factory

• Due Date:  Payable monthly on the 15th day of the next month. Any amounts due following the quarterly adjustment are payable on the 15th day of the next month.

• Royalties are paid by electronic transfer of funds.

• Rocky Mountain Chocolate Factory reserves the right to require payments on a bi-monthly or weekly basis.

• Following the end of each quarter, Rocky Mountain Chocolate Factory calculates the number of pounds of Factory Candy and other items you purchased during the previous quarter, multiply those numbers by a fixed amount depending on the item purchased, and subtract the resulting total estimated retail value of items purchased from Rocky Mountain Chocolate Factory from Gross Retail Sales, resulting in an Adjusted Gross Retail Sales figure.

• You owe Rocky Mountain Chocolate Factory 10% of Adjusted Gross Retail Sales each quarter. Rocky Mountain Chocolate Factory then compares total monthly Royalty paid to the amount due on Adjusted Gross Retail Sales and you pay Rocky Mountain Chocolate Factory the difference or you receive a credit for the difference.

5.  Marketing and Promotion Fee:  up to 2% of Gross Retail Sales; currently, Rocky Mountain Chocolate Factory charges 1% of Gross Retail Sales

• Due Date:  Payable monthly on the 15th day of the next month by electronic transfer of funds.

• “Gross Retail Sales” is all revenue from the Store, but does not include taxes, refunded sales, settlements, gift card revenues, non-inventory sales, or shipping expenses charged to a customer.

6.  POS System Maintenance and Support:  approximately $1,000 to $2,000 each year

• Due Date:  Payable monthly or as charged by third-party suppliers.

• You will pay these fees to designated or approved third-party suppliers.

7.  Inspection and Audit Fee:  costs of audit or inspection

• Due Date:  On demand.

• Payable only if Rocky Mountain Chocolate Factory decides to conduct an audit, and (1) you understated your Gross Retail Sales by more than 5%; (2) the audit resulted from your failure to submit reports to Rocky Mountain Chocolate Factory or its inability to collect Royalties due for two consecutive months; or (3) you do not cooperate in Rocky Mountain Chocolate Factory’s request for an inspection and audit.

8.  Transfer Fee:  $5,000

• Due Date:  Upon approval of transferee and before the transferee attends the initial training program.

• Payable by either you or transferee. Non-refundable once paid. The transferee is not charged an initial franchise fee.

9.  Initial Training Fee for Transfers:  $5,000

• Due Date:  Before an approved transferee attends the initial training program.

• This fee will be applied toward payment of the Transfer Fee if the transfer is successfully completed.

10.  Successor Franchise Fee:  $2,500 if you renew on time or $5,000 if you do not

• Due Date:  When you sign the then-current Franchise Agreement.

• Rocky Mountain Chocolate Factory will charge $2,500 if you renew by signing the then-current Franchise Agreement within 30 days after you receive the Franchise Agreement for signature.

• If more than 30 days elapses, you will pay $5,000.

11.  Extension Fee:  $200 per month, up to a maximum of 12 months

• Due Date:  As incurred.

• Payable only if you wish to renew the term of your Franchise Agreement and are in negotiations with a landlord, and you do not want to make upgrades to the Store premises before renewing the lease.

• Rocky Mountain Chocolate Factory will permit only one extension of the term of a Franchise Agreement under these circumstances.

12.  Training Program Expenses:  Rocky Mountain Chocolate Factory estimates the costs associated with attending initial training and mandatory additional training sessions to range from $300 to $500 per person per day

• Due Date:  As incurred.

• When you sign a lease for your Store, and before commencing operations of your Store, you must attend initial training in Durango, Colorado.

• Rocky Mountain Chocolate Factory may also require you to attend meetings in person that include training once a year and webinars occasionally.

13.  Store Upgrades:  estimated range is $3,000 to $190,000

• Due Date:  As incurred.

• Payable if you transfer your Store or renew your Franchise Agreement.

• The amount varies depending on the items upgraded or remodeled. These amounts will be paid to Rocky Mountain Chocolate Factory or to designated suppliers.

• A Design Fee may apply depending on the extent of the upgrades.

14.  Costs and Attorneys’ Fees:  varies under circumstances

• Due Date:  As incurred.

• Payable only if you do not comply with the Franchise Agreement.

15.  Interest:  18% per annum

• Due Date:  On demand, but only if you are delinquent in your payments to Rocky Mountain Chocolate Factory.

• Begins to accrue the day after payments are due.

16.  Liquidated Damages/Administrative Fee:  $500 per day for liquidated damages; 15% of amount owed for administrative fee

• Due Date:  As incurred.

• Payable only if you commit breaches described in Sections 18.1 or 18.2 of your Franchise Agreement.

17.  Design Fee for the Interior and Layout of Relocated or Remodeled Stores:  $2,500

• Due Date:  As incurred.

• Payable only if you relocate or remodel your Store during the term of your Franchise Agreement.

18.  Indemnification Under Franchise Agreement:  varies under circumstances

• Due Date:  As incurred.

• You must reimburse Rocky Mountain Chocolate Factory if it is held liable for claims resulting from your Store.

19.  Insurance Premiums:  varies under circumstances

• Due Date:  As incurred.

• If you do not pay your premiums, Rocky Mountain Chocolate Factory can pay them for you and you must reimburse Rocky Mountain Chocolate Factory.

20.  Gift Card Program Fees:  Rocky Mountain Chocolate Factory estimates between $15-$35 per month for gift card servicing. If your POS System is not capable of processing Rocky Mountain Chocolate Factory’s gift cards, you must acquire a card reader that is compatible with Worldpay processing systems. As of the date of the current Disclosure Document, a compatible Worldpay card reader is available for $19.95 per month plus $120 for a minimum of 500 (one bundle) gift cards.

• Due Date:  Payable monthly to Rocky Mountain Chocolate Factory’s designated gift card vendor.

• You must participate in the Gift Card Program. Rocky Mountain Chocolate Factory reserves the right to require all Stores to pay additional fees and purchase equipment related to the Gift Card Program on 30 days’ notice.

21.  Administrative Fee:  varies up to 15% of the amount collected by Rocky Mountain Chocolate Factory

• Due Date:  As incurred.

• If you do not pay your landlord or any other third party, Rocky Mountain Chocolate Factory can collect the money from you and pay the person owed and you must pay Rocky Mountain Chocolate Factory a fee for this service.

22.  Operations Manual Return Fee:  currently, $150 per volume not returned to Rocky Mountain Chocolate Factory or not transferred to buyer

• Due Date:  As incurred.

• Payable if you sell your Store or close it for any reason and do not return all volumes of the Operations Manual to Rocky Mountain Chocolate Factory or transfer them to the buyer.

• As of the date of the current Disclosure Document, there are currently 3 volumes of the Operations Manual.