Detailed Information on Pretzelmaker’s Initial Franchise Fee, Royalty Fee + 32 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $15,000 to $25,000

• If Pretzelmaker grants you a franchise for a Traditional Store, then when you sign the Franchise Agreement, you must pay an initial franchise fee (“Franchise Fee”) of $25,000. The Franchise Fee for a Non-Traditional Store is $15,000.

• Pretzelmaker does not offer financing for the Franchise Fee. Except for any special programs or periodic discounts Pretzelmaker may offer or as otherwise described in this Item 5, the Franchise Fee is uniform for all franchisees and is nonrefundable.

• Pretzelmaker participates in the International Franchise Association’s Veterans Transition Franchise Initiative (“VetFran”) program to provide franchise opportunities to qualifying veterans. The Pretzelmaker Patriot Program incentive provides a 25% reduction in the initial Franchise Fee due under the single unit Franchise Agreement for Traditional Stores only.

2.  Satellites:  $5,000

• If Pretzelmaker permits you to operate a Satellite, you must pay Pretzelmaker a Satellite Fee of $5,000 per Satellite location when you sign the Satellite Addendum. The Satellite Fee is fully earned by Pretzelmaker when paid, is not refundable, and is uniform to all franchisees.

3.  Site Selection Assistance:  varies

• Pretzelmaker will review your submittal package for your proposed site and determine whether to accept your proposed site. Pretzelmaker will conduct an on-site evaluation if it considers it necessary and appropriate as part of its evaluation of your submittal package.

• If Pretzelmaker determines that on site evaluation is necessary and appropriate (on its own initiative), it will provide the evaluations (up to 2 days, unless you and Pretzelmaker agree otherwise) at its own expense, although it reserves the right to charge you an additional fee for this service if more than 2 days are necessary to complete the review.

• If Pretzelmaker charges this fee, the fee will be its actual out-of-pocket expenses for each proposed site for which it conducts an on-site evaluation. Pretzelmaker expects this additional fee to be $300 per employee or agent for each full or partial day after the second day, not to exceed 5 days.

• The site selection assistance fee is not refundable.

4.  Initial Inventory:  $1,000 to $5,000

• Before your franchise opens, you must buy an initial inventory of Dough Ingredients from GAC Supply. This inventory costs from $1,000 to $5,000 and is in addition to the Franchise Fee.

• You must continue to purchase Dough Ingredients from GAC Supply through the term of your Franchise Agreement. The amount charged for Dough Ingredients is uniform to all franchisees and not refundable under any circumstances. Discounts may apply depending on your payment arrangements.

5.  Grand Opening Marketing Fee:  $3,000

• Pretzelmaker reserves the right to collect the grand opening marketing fee of $3,000 when you sign your Franchise Agreement. If it collects this fee, Pretzelmaker will either (i) reimburse you for your documented  grand opening marketing expenditures that it has pre-approved, up to the $3,000; or (ii) directly pay your vendors for your grand opening marketing expenditures that it has pre-approved, up to the $3,000.

• The grand opening marketing fee is not refundable.

6.  Development Fee:  $5,000 per Store you are granted the right to develop within your Development Area

• If Pretzelmaker grants you the right to develop three or more franchised Stores pursuant to an Area Development Agreement (ADA), then you will be required to pay Pretzelmaker a development fee amounting to $5,000 per Store you are granted the right to develop within your Development Area (the “Development Fee”) upon execution of your ADA.

• The Development Fee will be deemed non-refundable and fully earned upon payment, and this fee is not tied to any pre-opening or other obligations that Pretzelmaker must provide to you prior to opening any Store you are developing under your ADA.

• Upon payment of the Development Fee, you must pay Pretzelmaker a subsequent franchise fee amounting to $20,000 for the initial Store you are granted the right to develop, and (b) $10,000 for the second and each additional Store you are granted the right to develop (each, a “Subsequent Franchise Fee”).

• The Subsequent Franchise Fee for each Store you have the right to develop under the ADA will be due at the time you execute Pretzelmaker’s then-current Franchise Agreement for that Store.

• You must sign your Franchise Agreement for the initial Store you are developing under the ADA at the same time you sign your ADA, and all Franchise Agreements signed in connection with your ADA must be executed by you and Pretzelmaker early enough so that you can subsequently open each Store in accordance with the Development Schedule.

7.  Royalty Fee:  7% of your Net Sales for the preceding week

• Due Date:  Currently, 8:00 P.M. Eastern Time on the following Wednesday of each week.

8.  Marketing Fee:  1.5% of your Net Sales for the preceding week

• Due Date:  Currently, 8:00 P.M. Eastern Time on the following Wednesday of each week.

9.  Local Marketing Requirement:  2% of your Net Sales

• Due Date:  Annually.

10.  Continuing Inventory:  cost plus a reasonable mark-up

• Due Date:  Within 15 days of demand.

• Payable to GAC Supply for your purchase of Dough Ingredients.

11.  Interest:  18% per year (or maximum legal rate, if less)

• Due Date:  On demand.

• If you fail to make a payment due to Pretzelmaker on time, you must pay it interest on the amount owed from the due date until paid in full.

12.  Late Fee:  $25 per week

• Due Date:  On demand.

• If you fail to make a payment due to Pretzelmaker on time, you must pay it the Late Fee. Pretzelmaker may increase the Late Fee on 60 days written notice. However, Pretzelmaker may not increase the Late Fee more than once in any 12-month period.

13.  ACH and Check NSF Fee:  Pretzelmaker’s out-of-pocket costs and an administrative fee (currently $30 to $50)

• Due Date:  On demand.

• If Pretzelmaker drafts money from your account under its electronic funds system or under your check, and there are insufficient funds to cover the draft, Pretzelmaker will charge you the return costs charged by its bank and an administrative fee to cover its costs of addressing the nonpayment.

• This fee is in addition to interest on the amount due.

14.  Additional Training:  currently, $300 per employee or agent for each full or partial day

• Due Date:  Before training begins.

• Pretzelmaker may charge for additional training for (i) training persons repeating a course or replacing a person who did not pass, (ii) training new employees, and (iii) optional training it provides.

• You must pay for any travel and living expenses, wages, and other expenses your trainees incur.

15.  Additional Consulting Services:  currently, $300 per employee or agent for each full or partial day, plus their travel and living expenses

• Due Date:  Within 15 days after services are rendered.

• Payable if Pretzelmaker provides requested consulting services in person at a place other than its offices.

16.  Assigned Trainers:  Pretzelmaker’s actual costs and expenses, including travel and living expenses for its trainers

• Due Date:  Within 10 days of invoice.

• If you fail to maintain Pretzelmaker’s quality and service standards, it may, in its sole judgment, assign trainers to the Store to retrain your employees and restore service levels.

17.  Product, Service, Supplier, and Service Provider Review:  Pretzelmaker’s reasonable cost of inspecting the supplier, testing the proposed product, or evaluating the service provider or proposed service, including personnel and travel costs; this cost will not exceed $5,000

• Due Date:  On demand.

• Payable if you wish to offer products or use any supplies, equipment, or services that Pretzelmaker has not approved or wish to purchase from a supplier or service provider that Pretzelmaker has not approved, whether or not it approves the item, service, supplier, or service provider.

18.  60-Day Extension Fee:  $5,000

• Due Date:  Upon expiration of the Site Securitization Deadline.

• If you do not enter into and provide Pretzelmaker with a copy of the purchase agreement or Site Lease, as applicable, in accordance with the requirements of the Franchise Agreement on or before the Site Securitization Deadline, so long as you are otherwise in compliance with your obligations under the Franchise Agreement and are using best efforts to secure an extension to the Site Securitization Deadline, Pretzelmaker will grant you a 60-day extension to the Site Securitization Deadline in exchange for your payment of a $5,000 extension fee.

19.  Relocation Charge:  $2,000

• Due Date:  On demand.

• Payable if you ask Pretzelmaker to review a new proposed Site, whether or not Pretzelmaker approves the Site.

20.  Transfer Fee:  $10,000 for a transfer of your Store or Franchise Agreement

• Due Date:  At or before transfer.

• Payable only on transfer of Franchise.

• Upon the submission of the proposal to transfer, you must pay Pretzelmaker a non-refundable deposit of $2,000 in connection with the costs it will incur in evaluating that transfer.

• If you move forward with the transfer, the deposit will be applied toward the transfer fee.

21.  Transfer Fee for Development Rights:  $2,000 for a transfer of your Development Agreement

• Due Date:  At or before transfer.

• If you sign a Development Agreement, payable only on transfer of the Development Agreement.

22.  Successor Fee for Traditional and Co-Brand Store:  Pretzelmaker’s then-current Successor Fee; currently, $7,500

• Due Date:  On signing a successor Franchise Agreement.

• You may enter into a successor Franchise Agreement for one additional 10-year term, if you meet certain conditions.

23.  Successor Fee (Renewal) for Satellite Store:  $2,500

• Due Date:  On signing a successor Franchise Agreement.

• You may enter into a successor Franchise Agreement for one additional 10-year term, if you meet certain conditions.

24.  Insurance:  cost of the premium (usually $2,500 to $5,000), plus a reasonable fee ($50 per hour) for Pretzelmaker’s services in procuring the insurance

• Due Date:  On demand.

• Payable only if you fail to maintain the minimum insurance Pretzelmaker requires and it chooses to procure the required insurance for you.

25.  Audit:  cost of audit, plus travel and living expenses, plus interest on the amount of the underpayment at an annual rate of the lesser of 18% or the maximum interest rate permitted by law

• Due Date:  Within 15 days of demand.

• Payable if audit or review shows an understatement of 3% or more of your Net Sales for any period.

26.  Inspection:  Pretzelmaker’s reasonable expenses incurred in inspecting your business, including travel and living expenses, wages, and other expenses for its employees; this cost will not exceed $5,000

• Due Date:  On demand.

• Payable if inspection is needed due to your repeated or continuing failure to comply with any provision of the Franchise Agreement.

27.  Maintenance and Repair:  your actual costs associated with maintaining and repairing your Store on an annual or as-needed basis

• Due Date:  As incurred.

• You should expect and budget for annual maintenance and repair related to customer comfort, cleaning, safety, accessibility, ADA requirements, and food handling.

• This is separate from fees related to remodeling to maintain brand image and is currently estimated at $7,500 per year.

28.  Convention or Meeting Attendance:  as Pretzelmaker determines based on its costs of holding the convention or meeting

• Due Date:  On demand.

• Pretzelmaker does not currently charge an attendance fee, but it reserves the right to do so.

29.  Remedial Expenses:  Pretzelmaker’s reasonable expenses incurred in correcting your operational deficiencies; this cost will not exceed $10,000 per deficiency

• Due Date:  On demand.

• Payable if Pretzelmaker corrects deficiencies that it has identified during a Site inspection and that you failed to correct within a reasonable time after notice from Pretzelmaker.

30.  Enforcement Expenses:  Pretzelmaker’s reasonable cost of de-identifying your Store

• Due Date:  On demand.

• Payable if your Franchise Agreement expires or is terminated, you fail to de-identify Store, and Pretzelmaker takes steps to do so.

31.  Indemnification:  Pretzelmaker’s liabilities, fines, losses, damages, costs, and expenses (including reasonable attorneys’ fees) (“Losses”)

• Due Date:  On demand.

• Payable if Pretzelmaker incurs Losses due to your activities under the Franchise Agreement or your activities relating to the Store.

32.  Liquidated Damages:  varies

• Due Date:  On demand.

• Payable if Pretzelmaker terminates your Franchise Agreement based on your default or if you terminate the Franchise Agreement in violation of its terms.

33.  Test Products:  $50 to $500

• Due Date:  On demand.

• If Pretzelmaker requires, you must participate in market research programs or test marketing of new products and services and must purchase a reasonable quantity of the test products.

34.  Architect Approval:  $1,500

• Due Date:  On demand.

• Payable if you choose to use an architect that is not on Pretzelmaker’s approved vendor list.

• This fee may be paid to Pretzelmaker or directly to an approved architect Pretzelmaker designates to onboard your architect for approval qualification to become an approved vendor.