Detailed Information on Dogtopia’s Initial Franchise Fee, Royalty Fee + 21 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $40,095 to $49,500

• You will pay Dogtopia a $49,500 initial franchise fee for your franchise. The entire initial franchise fee is payable in full at the time you sign the Franchise Agreement.

• If you are purchasing your second or subsequent franchise and you are in good standing with Dogtopia, you will receive a 10% discount on your initial franchise fee. In these circumstances, you will pay Dogtopia a $44,550 initial franchise fee.

• Dogtopia is a member of the International Franchise Association (“IFA”) and participates in IFA’s VetFran Program. Under this program, Dogtopia offers a 10% discount on the initial franchise fee for qualified veterans of the U.S. Armed Forces.

• If you are a qualified veteran and you are purchasing your first franchise, your initial franchise fee will be $44,550. If you are a qualified veteran and you are purchasing your second or subsequent franchise, your initial franchise fee will be $40,095.

2.  Real Estate and Facility Coordination Fee:  $15,500 for Conversion Franchisee; $35,000 for Non-Conversion Franchisee (property owned by franchisee at the time Franchise Agreement is signed); $44,500 for Non-Conversion Franchisee (property not owned by franchisee at the time Franchise Agreement is signed)

• The Real Estate and Facility Coordination Fee compensates Dogtopia for the various Development Services that it provides.

3.  Initial Training Fee:  $2,000 for each person you send (other than the 3 people that may attend for no additional fee)

• Dogtopia will provide its pre-opening initial training program for up to 3 individuals at no additional charge. If you send more than 3 people to this training program, Dogtopia reserves the right to charge an initial training fee of $2,000 for each person you send (other than the 3 people that may attend for no additional fee).

• The initial training fee, if applicable, would be due 10 days after invoicing.

4.  Microsite and Social Media Account Fees:  setup fee of $500

• Dogtopia will setup your microsite and your Facebook social media account. At the time your microsite launches, you must pay Dogtopia a $500 setup fee for this service.

5.  Development Fee:  if you sign an Area Development Agreement, you will pay a $49,500 initial franchise fee for your first franchise and a $44,550 discounted initial franchise fee for each additional franchise that you commit to develop under your development schedule

6.  Royalty Fee:  7% of weekly Gross Sales

• Due Date:  Day of week Dogtopia specifies (currently Wednesday).

• You must pay Dogtopia weekly royalties based on Gross Sales generated during the preceding reporting period. Dogtopia’s current payment due date is Wednesday and its current reporting period runs from Sunday morning through Saturday night.

7.  Brand and System Development Fund Fee:  up to 3% of weekly Gross Sales (currently 2% of weekly Gross Sales)

• Due Date:  Same as royalty payment due date.

8.  Cooperative Advertising Fee:  up to 2% of weekly Gross Sales (not currently charged)

• Due Date:  Same as royalty payment due date.

9.  Training Fee:  Initial Training: $2,000 per person; Ongoing Training: up to $400 per person per day (plus reimbursement of expenses for onsite training)

• Due Date:  10 days after invoice.

10.  Conference Registration Fee:  $389 for first attendee and $299 for each additional attendee

• Due Date:  30 days prior to conference.

11.  Digital Marketing Fee:  varies (currently, $200 per month)

• Due Date:  15th day of month.

• Dogtopia utilizes this fee to manage your microsite and Facebook account.

• Dogtopia may increase or decrease this fee from time to time upon at least 30 days’ prior notice. Changes to the fee will reflect changes to the costs Dogtopia incurs to provide the services.

12.  Technology Fee (post-opening):  varies (currently, $275 per month, plus $50 per month for optional Email Package and $40 per month for optional Power BI Package)

• Due Date:  10 days after invoice.

13.  Audit Fee:  actual cost of audit (including travel and lodging expenses for audit team)

• Due Date:  10 days after invoice.

• Payable only if the audit (i) reveals that you have understated any amount that you owe Dogtopia by at least 3%, or (ii) is necessary because you fail to furnish required information or reports to Dogtopia in a timely manner.

14.  Fines:  up to $500 per incident

• Due Date:  Upon demand.

• Payable if you fail to comply with a mandatory standard or operating procedure and you do not cure the non-compliance within the time period Dogtopia requires.

• Dogtopia will deposit all fines into the brand and system development fund.

15.  Renewal Fee:  50% of then-current initial franchise fee

• Due Date:  At time you sign Renewal Agreement.

16.  Transfer Fee:  50% of then-current initial franchise fee

• Due Date:  Before transfer.

• Payable when you transfer or sell your franchise. No charge if franchise is transferred to an entity that you control or for certain transfers of ownership interests between existing owners.

17.  Relocation Fee:  $15,500 to $44,500

• Due Date:  At time Dogtopia approves site.

• If Dogtopia allows you to relocate, you must pay its then-current relocation fee it imposes for the Development Services it provides relating to site selection, design, planning, and construction of your new facility.

• Dogtopia’s current relocation fee is the same as its Real Estate and Facility Coordination Fee and varies depending on whether you are converting a preexisting dog daycare company and whether you already own the property at the time you sign the Franchise Agreement.

18.  Late Fee:  lesser of 18% of amount past due or highest rate allowed by applicable law

• Due Date:  10 days after invoice.

• In addition, you must pay Dogtopia an additional $100 NSF fee for each electronic funds transfer returned for non-sufficient funds and for each check or draft returned for non-sufficient funds.

• The NSF fee is payable only if your electronic funds transfer from your depository account or any check you remit to Dogtopia is returned for non-sufficient funds.

19.  Management Fee:  commercially reasonable rate

• Due Date:  10 days after invoice.

• If you default under the Franchise Agreement (and fail to cure within the applicable cure period) or the Managing Owner dies, Dogtopia can designate a temporary manager to manage your Business until you cure the default or find a replacement Managing Owner, as applicable.

20.  Indemnification:  will vary with circumstances

• Due Date:  10 days after invoice.

• You must indemnify and reimburse Dogtopia for any damages, losses, or expenses it incurs as a result of the operation of your Business or your breach of the Franchise Agreement.

21.  Attorneys’ Fees and Costs:  will vary with circumstances

• Due Date:  Upon demand.

• You must reimburse Dogtopia for all attorneys’ fees and other costs it incurs relating to your breach of any term of the Franchise Agreement or any other agreement with Dogtopia or its affiliates.

22.  Liquidated Damages:  varies

• Due Date:  On demand.

• Payable if Dogtopia terminates Franchise Agreement due to your default or you terminate the Franchise Agreement in a manner that violates the Franchise Agreement.

23.  Insurance:  actual cost of premiums, plus Dogtopia’s costs and expenses

• Due Date:  10 days after invoice.

• If you fail to obtain and maintain the insurance Dogtopia requires, and it elects to do so on your behalf, you must reimburse it.