Detailed Information on HouseMaster’s Initial Franchise Fee, Royalty Fee + 25 Other Fees (Items 5 and 6, 2022 FDD)

1.  Initial Franchise Fee:  $.57 per owner-occupied home located in your Territory

• The initial franchise fee you must pay to HouseMaster is $.57 per owner-occupied home (“OOH”) located in your Territory. A typical Territory will include approximately 75,000 OOHs, making the initial franchise fee $42,500 (“Minimum Initial Franchise Fee”).

• The minimum Territory of 75,000 OOHs is not appropriate or available in all cases and in all areas, depending on demographics, proximity to larger population centers, percentage of area population, the need to buy whole counties, and also how well the Territory size fits within HouseMaster’s current plan for development of the applicable larger area or region.

• The maximum Territory size is generally 150,000 OOHs, although a larger Territory may be allowed under certain circumstances (e.g., in densely populated urban areas or in areas where a high percentage of the Territory is impoverished); provided that if you wish to purchase Territory that will have 150,000 or more OOHs, HouseMaster will require you to purchase the Territory under multiple separate Franchise Agreements.

• As a member of the International Franchise Association (“IFA”), HouseMaster participates in the IFA’s VetFran Program. If you are a United States or Canadian honorably discharged veteran who meets HouseMaster’s qualifications for purchasing a franchise, you will receive a $6,000 discount.

2.  Deposit for an Option for Additional Territory:  $10,000

• If qualified, you may purchase an option for an additional Territory by paying HouseMaster, at the time you purchase your franchise, a deposit of $10,000 for such additional Territory and executing an Option to Purchase Agreement.

• Under the Option to Purchase Agreement, at any time prior to January 15th of the calendar year immediately following the effective date of your franchise agreement, you may purchase the additional Territory if you are in compliance with your franchise agreement by paying HouseMaster the balance of the initial franchise fee applicable to such Territory.

• The $10,000 deposit will be applied to the purchase price. HouseMaster does not refund your deposit if you decide not to purchase the additional Territory.

3.  License Fee:  7.5% of first $125,000 in Gross Sales per year, 7% on Gross Sales of $125,001-$250,000, 6.5% on Gross Sales of $250,001-$500,000, 6% on Gross Sales of $500,001-$1,000,000, 5.5% on Gross Sales of $1,000,001-$1,500,000, and 5% on Gross Sales over $1,500,000, in each case other than “roll-in” sales. You must pay a minimum monthly License Fee for each Territory.

• Due Date:  10th day of the month for Gross Sales for the previous calendar month.

• HouseMaster requires payment by electronic transfer of funds.

• If the Gross Sales of a franchised business exceed $700,000 during a calendar year, in the immediately following calendar year, the franchised business will be subject to a 6% License Fee for Gross Sales up to $1,000,000, and the Licensee Fee for Gross Sales above $1,000,000 in such calendar year will be calculated according to the License Fee Chart.

4.  Marketing, Advertising, and Promotions (MAP) Fee:  2.5% of first $125,000 in Gross Sales per year, 2.25% on Gross Sales of $125,001-$250,000, and 2% on Gross Sales over $250,000

• Due Date:  Same as License Fee.

• If the Gross Sales of a franchised business exceed $700,000 during a calendar year, in the immediately following calendar year, the franchised business will be subject to a 2% MAP Fee for all Gross Sales generated during such calendar year.

5.  Local Marketing Groups (LMG):  not to exceed 3% of Gross Sales. As of the issuance date of the current Franchise Disclosure Document, HouseMaster may require that a portion of your LMG contribution (currently, 2% of your Gross Sales) be paid for use towards the Neighborly marketing and brand awareness initiatives.

• Due Date:  Determined by LMG members.

• HouseMaster may designate local advertising markets and advertising cooperatives and/or local marketing groups for such markets (collectively, “LMGs”), and if designated, you must participate in and contribute to the LMG’s advertising and marketing programs in your market.

• Your contribution to the LMG will count towards any required Minimum Local Marketing Spending but any required Minimum Local Marketing Spending will not represent a limit on your LMG contributions.

6.  Technology Fee:  currently $75/month, subject to increase

• Due Date:  Same as License Fee.

• You must use the technology HouseMaster specifies, which currently includes Lavasurf, Pure Chat, and HouseMaster’s intranet, required office management and related software, email security software, and review generation software (the “Technology Package”).

7.  Late Fees (on Technology Fee):  $25 per month or the maximum amount allowed under the law, whichever is less

• Due Date:  As incurred.

• If you fail to pay the Technology Fee within 30 days of the invoice date, you will be required to pay this late fee.

8.  Proprietary Inspection Report Writing Software License Fee:  if HouseMaster develops proprietary inspection report writing software, it reserves the right to charge you up to $200 per month upon 60 days notice, subject to increase upon 60 days’ notice

• Due Date:  When you are billed.

9.  Key Accounts/Management Fee:  up to 5% of total Gross Sales related to Key Account work

• Due Date:  When you are billed or when the fee is deducted from your payment(s) for work performed or added to the invoice.

• If you participate in HouseMaster’s Key Accounts program, HouseMaster reserves the right to require you to pay a Key Accounts/Management Fee to it or its designee.

10.  Annual Convention (“Reunion”) Fee:  currently, $1,000 or less per registrant

• Due Date:  When you are billed, which may be via automatic bank draft, or within 30 days after Reunion via automatic bank draft.

• HouseMaster charges you a per-person registration fee to attend the Reunion. The registration fee for one attendant to your first Reunion is included in the initial franchise fee.

• You must attend the Reunion each year. HouseMaster will charge you this fee regardless of whether you actually attend.

11.  Transfer Fee:  $10,000, plus 5% of the portion of the purchase price of the Business that is in excess of $500,000

• Due Date:  Before transfer.

• You must pay HouseMaster this fee on the total gross sales price of the Business, including all assets of the Business, when you sell your Business, but HouseMaster may discount or waive the transfer fee if the transfer is to a legal entity you control or to a member of your immediate family.

12.  Late Fees:  $10 per day

• Due Date:  On demand.

• Applies to overdue fees from the due date until all sums are paid.

13.  Dishonored Check of ACH Draft:  $25

• Due Date:  On demand.

• You must pay HouseMaster for each check returned or ACH draft refused by your financial institution for insufficient funds in your account.

14.  Interest:  12% on unpaid balances

• Due Date:  On demand.

• Payable on all overdue amounts.

• The twelve percent (12%) charge is calculated as a per annum rate but may be collected on demand, including weekly or monthly, through automatic bank draft.

15.  Internet Training Fee (NIBI Distance Learning Program):  currently $0, but HouseMaster reserves the right to charge up to $50 per module (approximately 11 modules for initial training), or up to $500 for all modules

• Due Date:  Upon registration for this optional program.

• Currently, NIBI Distance Learning modules are available at no cost to HouseMaster franchisees. However, HouseMaster reserves the right to implement these fees for this NIBI online training.

16.  NIBI Technical Training Materials Fee:  the cost of training materials, up to $350, plus shipping for each additional trainee

• Due Date:  Before training.

• Payable if you want to purchase a set of training materials when you send more than one person to NIBI Technical Training.

17.  Additional Training Fees:  HouseMaster’s then-current fee per trainee per day; currently, $0

• Due Date:  When you are billed.

• If you request any other training in addition to the Initial Training Program, HouseMaster may charge you a training fee, plus you must pay your costs and expenses in connection with such training.

18.  Insurance Fine:  the greater of $5,000 or the cost of extended reported period insurance, plus HouseMaster’s expenses

• Due Date:  Upon demand.

• Payable if you fail to purchase the required extended reported period insurance within 30 days of expiration or termination of the franchise agreement.

19.  Reimbursement for Insurance:  cost of insurance, plus HouseMaster’s expenses

• Due Date:  When billed.

• Payable only if HouseMaster pays your premium when you fail to do so.

20.  Audit:  cost of audit plus expenses, plus any amount owed as shown by the audit, plus interest and late fees

• Due Date:  When you are billed.

• Payable only if HouseMaster finds an understatement of Gross Sales of 3% or more or if you fail to provide requested information within 30 days of HouseMaster’s request.

21.  Renewal Fee:  $2,500 for a 5-year renewal term; $3,500 for a 10-year renewal term

• Due Date:  On renewal.

• HouseMaster will waive the Renewal Fee if your Business has been a Top Gun every year during your currently expiring term.

22.  Amendment Fee:  $250

• Due Date:  When you are billed.

• You must pay HouseMaster a processing fee for modifications to your franchise agreement that are made at your request. When you request an amendment to your franchise agreement or related agreements. HouseMaster may require that you sign a general release releasing it from all claims you may have except claims which, under state law, may not be released.

23.  Unapproved Suppliers:  HouseMaster’s actual out-of-pocket costs of inspection or testing

• Due Date:  On demand.

24.  Indemnification and Attorneys’ Fees and Costs:  varies according to loss

• Due Date:  On demand.

• If HouseMaster must engage an attorney to enforce its rights under the franchise agreement and it prevails, or if it is sued because of something you do or fail to do, you must indemnify HouseMaster and/or reimburse it for all costs, including reasonable attorneys’ fees (which may include outside counsel fees and in-house legal costs charged at rates comparable to outside attorneys), interest, court costs, and expenses expended or incurred in enforcing its rights.

25.  Tax Reimbursement:  varies according to tax

• Due Date:  When you are billed.

• You must pay HouseMaster or to taxing authorities (as applicable) an amount equal to any sales tax, use tax, gross receipts tax, documentary stamp tax, or similar tax (other than income tax), fees, or charges imposed on HouseMaster due to any required payments you make to it. You must pay HouseMaster such additional amounts as necessary so that it receives all payments from you in full as if no such tax applied.

26.  Customer Refund:  inspection fee paid by customer

• Due Date:  Upon demand.

• Payable if you do not resolve a customer service complaint, the customer contacts HouseMaster and HouseMaster determines a request for refund of inspection fee is reasonable, and HouseMaster pays a refund to the customer to resolve the complaint.

27.  Cross Territory Fine:  up to $5,000 per occurrence, plus 50% of revenue generated from such infringing activity

• Due Date:  Upon demand.

• Payable if you conduct an inspection in an Excluded Territory or if you engage in prohibited marketing activities. Fine is in addition to HouseMaster’s right to terminate for breach.