Detailed Information on Junk King’s Initial Franchise Fee, Royalty Fee + 20 Other Fees (Items 5 and 6, 2022 FDD)

1.  Initial Franchise Fee:  $54,000 to $78,000

• You must pay Junk King an initial franchise fee (the “Initial Franchise Fee”) upon executing your Franchise Agreement. Your Initial Franchise Fee depends on the number of persons that live in your Territory based on the most recently published data from the U.S. Census Bureau or such other source as Junk King may indicate.

• The Initial Franchise Fee is $0.12 (twelve cents) for each person living in your Territory. As a Territory will contain between 450,000 and 650,000 people, the Initial Franchise Fee will range between $54,000 and $78,000.

2.  Option Fee:  $10,000

• If you sign an Option Agreement, you must pay an option fee equal to $10,000 (the “Option Fee”). When you exercise the option, you must pay Junk King its then-current Initial Franchise Fee minus the Option Fee paid.

• The Initial Franchise Fee and Option Fee are non-refundable, must be paid in a lump sum, and are uniform for all similarly-situated franchisees.

3.  Royalty:  (a) 8% of Gross Revenue for the first 18 months immediately following the opening of the Franchised Business; and (b) beginning in the 19th month of operation of the Franchised Business, the greater of (i) 8% of Franchisee’s Gross Revenue, or (ii) $2,000

• Due Date:  Due no later than the 10th of the month.

4.  National Account Fees:  varies, typically a fee equal to 1% to 20% of the invoice amount

• Due Date:  At time of invoicing.

• When Junk King handles billing or invoicing on national account clients, Junk King charges this fee to the customer on top of the job price to cover its costs for administering the work and billing and invoicing the client.

• Junk King determines the fee for each job based on the size of the load and its arrangement with the national account.

5.  Customer Care Center Fee:  5% of Gross Revenue

• Due Date:  Same as Royalty.

• Junk King will not charge the Customer Care Center Fee on the Gross Revenue derived from recycling services and resale services.

• Contributed to a fund used to finance the operation of the Center (the “Customer Care Center Fund”).

6.  Outgoing Customer Care Center Fee:  $250 per month

• Due Date:  Upon demand.

• Paid to Junk King on behalf of the Customer Care Center for optional outgoing customer service calls.

7.  Interest and Administrative Fee on Overdue Invoices and Payments:  10% per annum

• Due Date:  Upon demand.

• If you do not pay your Royalties, Customer Care Center Fees, or other amounts owed to Junk King on time and in the amount due, Junk King may require you to pay interest on the overdue amounts.

8.  Administrative Fee for Late Payments:  $150 per event

• Due Date:  Upon demand.

• If you do not pay any amount due to Junk King by the specified due date, Junk King may require you to pay it this fee.

9.  Minimum Local Advertising Expenditure:  the greater of (i) 10% of the average Gross Revenue of the Franchised Business per month during the immediately preceding calendar quarter or (ii) $3,000

• For the first three years after the Scheduled Opening Date of the Franchised Business, you must expend the amount listed here as the “Minimum Local Advertising Expenditure”.

• Junk King may reduce the Minimum Local Advertising Expenditure after the third anniversary of the Scheduled Opening Date based upon the depth of your market penetration in the Territory.

10.  Advertising Fund Fee:  currently, $525 per month for the first 12 months of operation and then $745 per month each month thereafter

• Due Date:  Same as Royalty.

• This amount is contributed to an advertising fund maintained and controlled by Junk King or its affiliates (the “Advertising Fund”). This amount is credited towards your Minimum Local Advertising Expenditure.

• This may be increased to an amount up to 10% on an annual basis.

11.  Cooperative Advertising:  as determined by the Advertising Cooperative, if one is formed in your area. Currently, $400 per month for initial regional advertising campaign.

• Due Date:  As determined by the Advertising Cooperative.

• Junk King may establish organizations or associations of franchisees or advertising cooperatives for the purpose of promoting, coordinating, and purchasing advertising in local, regional, or national areas where there are multiple Franchised Businesses (“Advertising Cooperatives”).

• If an Advertising Cooperative is formed in your area, you may be required to contribute additional funds for marketing programs it conducts in addition to the Advertising Fund Fee and Minimum Local Advertising Expenditure.

• Junk King will provide new franchisees with a six-month waiver beginning on the execution of the Franchise Agreement.

12.  Alternative Supplier Fee:  Junk King’s actual costs to evaluate the alternative supplier

• Due Date:  At the time Junk King incurs the costs.

• Junk King reserves the right to require you to reimburse it for reasonable expenses it incurs in approving new items or suppliers. To purchase from an alternative supplier, you are required to submit the request to Junk King in writing.

13.  Initial Training Fee for Additional or Replacement Trainees:  currently, $1,200 per trainee

• Due Date:  As incurred.

• Junk King will provide initial training for up to four representatives at one time at no charge.

• Junk King reserves the right to charge a reasonable fee for training (i) more than four trainees, even if they attend the same training session, (ii) persons who are repeating the course or replacing a person who did not pass, and (iii) subsequent employees.

14.  Third-Party Payments:  Junk King’s actual costs, including interest and penalties, plus a fee of the greater of $35 or 5% of the payment amount

• Due Date:  As incurred.

• If Junk King pays monies to a third party on your behalf (including a supplier due to your nonpayment), you agree to reimburse these costs to Junk King, along with these fees to compensate Junk King for its administrative costs.

15.  Cost of Audit:  varies

• Due Date:  On demand.

• Junk King has the right to audit at any time without notice. You will only be charged if the audit reveals underreporting of 2% or more.

16.  Liquidated Damages for Material Default:  36 months times the average monthly ongoing fees that Junk King was owed in the prior 12 months

• Due Date:  At time of breach.

• Payable if Junk King terminates the Franchise Agreement due to a material default.

• Ongoing monthly fees include Royalties, Customer Care Center Fund Fees, and Advertising Fund Fees.

17.  Renewal Fee:  $5,000

• Due Date:  30 days before expiration of current term.

• Payable if you enter into a successor term.

18.  Transfer:  $7,500

• Due Date:  $2,500 due upon announcing your intention to sell; balance due upon transfer.

• Payable if you transfer an interest in the Franchise Agreement, the Franchised Business, or your entity. No charge if transferred to an entity you control or immediate family member.

19.  Costs and Attorneys’ Fees:  Junk King’s costs and attorneys’ fees

• Due Date:  Upon request.

• If Junk King is the substantially prevailing party as to any claims or incurs expenses related to enforcing the Franchise Agreement, you agree to reimburse Junk King’s costs and attorneys’ fees incurred in pursuing or defending the claims or enforcing the agreement.

20.  Indemnification:  will vary under circumstances

• Due Date:  Upon request.

• You must reimburse Junk King for the costs it incurs if it is sued or held liable for claims that arise from your operation of the Franchised Business.

21.  Penalty Fee:  $20/day of noncompliance

• Due Date:  Upon request.

• If you fail to comply with the Manual, and fail to remedy the non-compliance within the cure period provided by Junk King, it may charge you a penalty fee for each day that the noncompliance remains uncured.

22.  Technology Fee:  $1,800/year. Junk King reserves the right to increase this fee by no more than 20% on an annual basis, plus any increase based on third-party price increases.

• Due Date:  Annually, due on June 1 of each year for the then-current calendar year.

• You must pay Junk King a technology fee equal to $1,800 per year, which covers the cost of the following technology platforms: license fee for Junk King Junkware, enhanced security platforms for all areas of the Franchised Business, financial reporting platform (currently Qivinchi), and overall upgrades and maintenance of the servers, data warehouse platforms, and the Junk King proprietary software system.