Detailed Information on Bodybar Pilates’ Initial Franchise Fee, Royalty Fee + 30 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $49,500

• You must pay to Bodybar Pilates a lump sum initial franchise fee of $49,500 (the “Initial Franchise Fee”) when you sign a Franchise Agreement. The Initial Franchise Fee shall be fully earned upon payment and is not refundable, in whole or in part, under any circumstances.

• Except as described in this Item, Initial Franchise Fees are calculated uniformly for all franchisees. Bodybar Pilates does not offer financing for the Initial Franchise Fee.

2.  Proprietary Initial Inventory Kit:  $15,000

• Prior to opening your Bodybar Pilates Studio, you must purchase from Bodybar Pilates its proprietary opening inventory (“Initial Inventory Kit”), which includes Bodybar Pilates apparel, including t-shirts, yoga pants, toe socks, and related accessories.

• The cost of the Initial Inventory Kit is $15,000 and is not refundable upon payment under any circumstances.

3.  Initial Furniture, Fixtures and Equipment, and Inventory Purchases:  $90,500

• Prior to opening your Bodybar Pilates Studio, you must purchase Bodybar Pilates’ required initial package of Pilates and other exercise equipment (the “Pilates Equipment Package”). The Pilates Equipment Package includes 14 Pilates Reformers with springs, 14 jump boards, 14 Allegro II Towers, 14 EXO Chairs, and smaller pieces of related exercise equipment (e.g. Pilates balls, weights, magical circles, and other related items).

• The cost of the Pilates Equipment Package is approximately $90,500. However, you may be able to finance up to $20,500 of the cost of the Pilates Equipment Package directly through the manufacturer or their representative.

• The cost of the Pilates Equipment Package is not refundable under any circumstances.

• You will purchase the Pilates Equipment Package from Bodybar Pilates’ designated third-party vendor. However, Bodybar Pilates will facilitate the purchase and shipment and will collect the payment from you and remit the same to its vendors on your behalf.

4.  Business Owner Training Program:  included in the Initial Franchise Fee (for up to two attendees)

• Prior to opening your first Bodybar Pilates Studio, you or your Operating Principal must satisfactorily complete Bodybar Pilates’ Business Owner Training Program. The Business Owner Training Program for up to two attendees is included in the Initial Franchise Fee.

• You are solely responsible for all other costs and expenses incurred by your attendees, including travel and lodging.

5.  Studio Manager Training Program:  included in the Initial Franchise Fee (for up to two attendees)

• Prior to opening your first Bodybar Pilates Studio, you or your Operating Principal and your Studio Manager must satisfactorily complete Bodybar Pilates’ Studio Manager Training Program. The Studio Manager Training Program for up to two attendees is included in the Initial Franchise Fee.

• You are solely responsible for all other costs and expenses incurred by your attendees, including travel and lodging.

6.  Instructor Training Program:  $1,500

• Prior to opening your first Bodybar Pilates Studio, all instructors must satisfactorily complete Bodybar Pilates’ Instructor Training Program. The Instructor Training Program costs $1,500 and covers the training of all instructors you hire and who attend up until 30 days prior to your studio opening.

• You are solely responsible for all other costs and expenses incurred by your attendees, including travel and lodging.

• Any additional Instructor Training will cost $1,500 per attendee plus the other costs and expenses incurred by your attendees, including travel and lodging.

7.  Area Development Fee:  depends on the number of Studios Bodybar Pilates grants you the right to open within the Development Area

• In addition to Bodybar Pilates’ single-unit offering, Bodybar Pilates grants qualified individuals the right to own and operate multiple Bodybar Pilates Studios in a designated territory through an “Area Development Agreement”.

• Upon signing the Area Development Agreement, you will pay Bodybar Pilates an area development fee depending on the number of Studios Bodybar Pilates grants you the right to open within the Development Area (the “Area Development Fee”).

• The Area Development Fee is as follows:

• 2 Studios:  $89,500
• 3 Studios:  $124,500
• 4 Studios:  $157,000
• 5 Studios:  $187,000
• 6 Studios:  $212,000
• 7 Studios:  $236,000
• 8 Studios:  $259,000
• 9 Studios:  $281,000
• 10 Studios:  $299,500

• You will be required to enter into Bodybar Pilates’ then-current form of Franchise Agreement for each Bodybar Pilates Studio you wish to open under the Area Development Agreement, but you will not be required to pay any additional Initial Franchise Fee at the time you execute each of these Franchise Agreements.

• If you enter into a Development Agreement, you must concurrently execute Bodybar Pilates’ current form of Franchise Agreement for the first Studio Bodybar Pilates grants you the right to open within your Development Area concurrently with the Area Development Agreement.

8.  Royalty:  7% of Gross Sales

• Due Date:  Payable daily via ClubReady Merchant Services as incurred, based on the Gross Sales of your Franchised Business.

• You will be required to start paying your Royalty once your Franchised Business begins collecting revenue from operations.

9.  Marketing Fund Fee:  2% of Gross Sales

• Due Date:  Payable via ClubReady Merchant Services as incurred, based on the Gross Sales of your Franchised Business.

• Bodybar Pilates requires you to pay the Marketing Fund Fee to the National Marketing Fund (“Marketing Fund”) by electronic funds transfer via ClubReady merchant services.

• The Marketing Fund Fee is paid as directed.

10.  Local Advertising Requirement:  a minimum of $3,000 per month

• Due Date:  As incurred.

• Local advertising, marketing, and promotional expenditures are paid to third parties or to vendors Bodybar Pilates designates for customer acquisition, social media, and customer retention.

11.  Technology Fee:  currently $270 per month, subject to change

• Due Date:  Monthly via ClubReady Merchant Services.

• You will be required to pay Bodybar Pilates a monthly service fee to cover the increasing cost of supplying technology solutions to the network and/or to fund the continued development of new and innovative features for the System support site(s).

• The current fee covers the cost of the marketing management software, website hosting, two email addresses, and email marketing software. Such fees are subject to change at any time.

12.  Additional Training Fee:  at Bodybar Pilates’ option, its then-current per diem or hourly rate, plus out-of-pocket costs and expenses. Bodybar Pilates’ current hourly rate is $250.

• Due Date:  10 days prior to start of training.

• If Bodybar Pilates determines additional training is needed for any one of your current teachers, instructors, managers, or Operating Principal.

• You must also pay the expenses of your personnel attending additional training and the out-of-pocket expenses of Bodybar Pilates’ personnel providing the training at your Studio, as applicable.

13.  On-site Remedial Operations Training:  the then-current per diem fee or hourly rate for remedial training, plus out-of-pocket costs and expenses. Bodybar Pilates’ current rate is $500 per day.

• Due Date:  10 days prior to remedial training date.

• If you ask or if Bodybar Pilates believes it is appropriate, Bodybar Pilates will (subject to availability) provide trained representatives to conduct onsite remedial training at your Studio.

14.  Continuing Education (“CE”) Training:  the then-current fee or hourly rate, plus out-of-pocket costs and expenses. Bodybar Pilates’ current rate is $300 per day.

• Due Date:  10 days prior to start of training.

• If you fail to complete the required CE training in any given year, you must pay the cost for a Bodybar Pilates trainer to provide CE training at your Studio.

15.  Business Training Program for Additional or Replacement Personnel:  $1,500 per person, plus expenses

• Due Date:  Prior to training.

• You must pay this amount for any additional or replacement personnel who are required to attend the Business Training Program.

• You must also pay all expenses your trainee incurs, including travel, lodging, meals, and applicable wages.

16.  Studio Manager Training:  travel, meals, and lodging expenses incurred

• Due Date:  As incurred.

• You must have your Studio Manager, Assistant Studio Manager, and/or General Manager satisfactorily complete Bodybar Pilates’ Studio Manager training program before they can start.

17.  Instructor Training Program Fee:  $1,500 for the first group(s) up until 30 days before studio opening. Any additional sessions will cost $1,500 per person.

• Due Date:  Prior to training.

• To open your studio, your instructors must have successfully completed the Instructor Training Program.

• These individuals will attend Bodybar Pilates’ Instructor Training Program prior to opening the location. At this training, they will learn the Bodybar Pilates method and beforehand will have viewed the online training and completed the test out.

18.  Annual Conference:  will vary based on Bodybar Pilates’ costs of establishing and running the conference. Not to exceed $500.

• Due Date:  As incurred.

• Bodybar Pilates may charge you a reasonable fee to attend an annual franchisee convention (besides your travel and living expenses); the fee will depend on Bodybar Pilates’ costs of establishing and running the conference.

19.  Transfer Fee – Franchise Agreement:  if transferring to a third party, the transfer fee is 50% of Bodybar Pilates’ then-current Initial Franchise Fee. If transferring to an existing Bodybar Pilates franchisee, then the transfer fee is $10,000.

• Due Date:  With transfer application.

• There are additional conditions for transfer.

20.  Transfer Fee – Development Agreement:  if transferring to a third party, the transfer fee is equal to 50% of the Initial Franchise Fee for each Studio

• Due Date:  With transfer application.

• There are additional conditions for transfer.

21.  Renewal Fee:  $10,000

• Due Date:  Signing of renewal Franchise Agreement.

• There are additional conditions for renewal.

22.  Indemnification:  all losses, liabilities, costs, and expenses, including attorneys’ fees

• Due Date:  On demand.

• You must defend and indemnify Bodybar Pilates against certain losses relating to your actions.

23.  Audit Fee:  cost of audit (including legal and accounting fees) and understated amounts, plus interest

• Due Date:  When billed.

• Payable only if audit shows an understatement.

24.  Insurance Fee:  reimbursement of Bodybar Pilates’ costs, plus an administrative fee equal to 10% of the insurance premium

• Due Date:  On demand.

• If you fail to maintain the required insurance, Bodybar Pilates may, but is not obligated to, obtain this insurance for you.

25.  Proof of Insurance Certificates Non-Compliance Fee:  $500

• Due Date:  On demand.

• You must pay Bodybar Pilates $500 per certificate if you fail to submit certificates of insurance Bodybar Pilates requires you to have in the time period specified, and you will continue to be required to obtain the required insurance coverage.

26.  Operating Days:  $500 per day each day Franchise is closed without permission

• Due Date:  On demand.

• You must open and operate the Franchise 360 days a year; except, you may elect to close the Franchise on New Year’s Day, Easter, Fourth of July, Thanksgiving, and Christmas Day; all other closings require Bodybar Pilates’ prior written permission.

27.  Enforcement Costs:  will vary

• Due Date:  As incurred.

• You must pay Bodybar Pilates’ costs of enforcement (including attorneys’ fees and costs) if you do not comply with the Franchise Agreement.

28.  De-identification Fee:  will vary

• Due Date:  On demand.

• Bodybar Pilates has the right upon termination or expiration, at its option and at your expense, to enter the Franchise premises and take all actions necessary to de-identify the premises as a Franchise.

• Such costs incurred due to Bodybar Pilates’ de-identification efforts must be paid by you immediately upon notice.

29.  Unauthorized Advertising:  $250 per occurrence

• Due Date:  When billed.

• Without limiting Bodybar Pilates’ rights to any other damages, Bodybar Pilates has the right, at its option, to assess you a $250 fee per occurrence for the use of any unauthorized marketing and advertising materials.

30.  Management Fee:  15% of Gross Sales, plus expenses

• Due Date:  Payable weekly out of Franchise proceeds.

• The Management Fee is paid to Bodybar Pilates in the event it exercises its right to step in and operate your Studio in certain circumstances, including your default, death, disability, or prolonged absence.

• The reimbursable expenses include travel, lodging, and meals.

31.  Business Management Software Fee:  then-current fee charged by Bodybar Pilates’ Approved Supplier, which is currently $304

• Due Date:  Charged directly by ClubReady.

32.  Merchant Services:  then-current fee charged by Bodybar Pilates’ Approved Supplier, currently ranging between 2.5% and 3.0% per transaction

• Due Date:  Payable at time of transaction.

• Bodybar Pilates’ designated Merchant Services provider is required to accept credit card and ACH payments.

• Bodybar Pilates utilizes ClubReady Managed Billing solution for systemwide Merchant Services.