Detailed Information on The Patch Boys’ Initial Franchise Fee, Royalty Fee + 27 Other Fees (Items 5 and 6, 2023 FDD)

1.  Initial Franchise Fee:  $29,500

• Upon signing the Franchise Agreement, you must pay an initial franchise fee of $29,500 (the “Initial Franchise Fee”). The Initial Franchise Fee is due when you sign the Franchise Agreement and is non-refundable. The Initial Franchise Fee purchases a Territory that will encompass 250,000 to 350,000 people (“Standard Territory”).

2.  Initial Package:  $8,500

• You must also obtain, from The Patch Boys, an initial package (“Initial Package”) that will cost $8,500 (the “Initial Package Fee”). The Initial Package includes logo wear, printed material, digital marketing, consumables, vehicle magnets, promotional items, an allowance for the purchase of required van graphics, and a $749 convention allowance (the “Convention Allowance”) for The Patch Boys’ annual convention (the “Annual Convention”).

• The Convention Allowance is intended to offset expenses (primarily the convention fees, but any remaining balance may be applied towards travel, lodging, and/or meals) associated with attending the first Annual Convention that is scheduled to commence within one year of your successful completion of The Patch Boys’ initial training programs.

• The Patch Boys is a member of the International Franchise Association (IFA) and participates in the IFA’s VetFran Program. The Patch Boys provides a 20% discount on the Initial Franchise Fee for the first Territory to veterans of the U.S. Armed Forces who have been honorably discharged or otherwise meet the requirements of the VetFran program.

• The Patch Boys also offers a $2,500 discount on the Initial Franchise Fee on the first Territory to first responders, which include sworn police officers, paid and volunteer firefighters, and paid and volunteer emergency medical technicians and paramedics. This discount may not be used in conjunction with the VetFran discount.

3.  Royalty:  8% of Gross Sales generated; if you fail to achieve the Minimum Gross Sales that The Patch Boys designates, it may collect a minimum Royalty

• Due Date:  This fee is due by automatic debit on the 10th day of each month for Gross Sales generated during the preceding month.

4.  Technology Fee:  The Patch Boys’ then-current fee, which is presently $289 per month

• Due Date:  Monthly.

• Fees for website hosting, required software licensing, including the mandatory Customer Relations Management Software, email hosting, and other required technology related expenses.

5.  Field Training:  The Patch Boys’ then-current fee, which is presently $2,000 per person

• Due Date:  Prior to scheduling The Patch Boys’ staff to visit your location.

• Payable if The Patch Boys sends an employee to your location for additional training; due regardless of whether you request the additional training or The Patch Boys determines, in its sole discretion, your work performance requires additional training.

6.  National Marketing Fee:  none currently assessed; with 120 days’ written notice, 2% of Gross Sales

• Due Date:  Deducted monthly at the same time and in the same manner as the Royalty.

• Although The Patch Boys has not established a National Marketing Fund at this time, The Patch Boys reserves the right to create a National Marketing Fund.

7.  Business Phone Fee:  then-current fee, which is presently $27.99 per month

• Due Date:  Deducted monthly at the same time and in the same manner as the Royalty.

• Covers the cost of the business phone line you are required to maintain.

8.  Annual Convention, Regional Meetings, and/or Additional Training:  the then-current fee, which is currently (a) $749 maximum per person to attend the Annual Convention, and (b) $0 to $500 per person per event for Regional Meetings and/or Additional Training

• Due Date:  Before the start of the event.

• To help offset The Patch Boys’ out-of-pocket expenses for meeting space, meals, audio visual rental, workbooks, speakers, etc. Does not include travel, lodging, or all meals.

• Location varies.

• These fees are payable to and imposed and collected by third parties.

9.  Transfer Fee:  25% of the then-current Initial Franchise Fee

• Due Date:  Due upon the transferee signing the new Franchise Agreement.

• Due upon transfer to a third party. The Patch Boys reserves the right to increase this fee. These fees are non-refundable.

10.  Transfer Fee to Spouse or Adult Offspring of Franchisee:  the current Administration Fee which is presently $500

• Due Date:  When you request The Patch Boys’ approval of a transfer.

• Due upon transfer to spouse or adult offspring of franchisee.

11.  Referral Fee – Transfer:  then-current fee which is presently 10% of sales price or 25% of then-current Initial Franchise Fee, whichever is greater

• Due Date:  Due upon the transferee signing the new Franchise Agreement.

• Due upon transfer to a third party referred to you by The Patch Boys.

• The Patch Boys reserves the right to increase this fee. These fees are non-refundable.

12.  Transfer of Corporation Fee:  the current fee which is presently $500

• Due Date:  Due upon signing transfer documents.

• Due if you change the legal entity that owns the Franchise more than once.

13.  Outstanding Royalties, Support Fees, and Other Fees of Transferor:  will vary under circumstances

• Due Date:  Due 6 weeks from the transferee’s execution of the Franchise Agreement.

• In a transfer, the transferee promises to pay The Patch Boys at the time of closing the following fees if they are not timely paid by the transferor: Royalties, Referral Fees, amounts owed for purchases from The Patch Boys, Late Payment Fees, Late Report Fees, Interest Fees, NSF Fees, and any other fees owed, plus interest, as well as any applicable broker fees.

14.  Renewal Term Fee:  then-current fee which is currently $2,500

• Due Date:  At the time you sign a Franchise Agreement for a renewal term.

• Payable if you renew your Franchise Agreement term.

15.  Renovation, Refurbishing, and Remodeling Fees:  actual costs

• Due Date:  When incurred.

• The Patch Boys may require you to replace, renew, refurbish, or remodel your vehicles, vehicle wrap, and equipment to meet The Patch Boys’ current System Standards and condition requirements at any time during the Term, in The Patch Boys’ sole discretion, and at your expense.

• You must maintain all vehicles in good working condition at all times.

• You are not required to maintain an office premises, and these fees are limited to maintenance of your vehicle(s).

16.  Late Report Fee:  then-current fee which is currently $100 per week that a report is late

• Due Date:  Due by automatic debit the Friday after the report is late.

• Due for each month a report is late.

17.  Late Payment Fee:  then-current fee which is currently 5% of amount due or $50 per week, whichever is greater

• Due Date:  Due by automatic debit on the Friday following the due date for each late payment.

• Due for any payment that is not paid when due.

18.  Collection Fee:  The Patch Boys’ then-current fee, which is presently up to 35% of gross amounts collected on your behalf

• Due Date:  As incurred.

• Due when The Patch Boys collects payment on your behalf for customers who are delinquent in their payment of 90 days or more.

19.  Non-Sufficient Funds (NSF) Fee:  The Patch Boys’ then-current fee, which is presently $50 per NSF

• Due Date:  Due by automatic debit the Friday after the NSF occurs.

• Due if and when The Patch Boys debits your account for monies owed and there are insufficient funds available.

20.  Convention Non-Attendance Fee:  The Patch Boys’ then-current fee, which is presently $1,000

• Due Date:  As incurred.

• Due to The Patch Boys if you fail to attend the Annual Convention and did not receive The Patch Boys’ prior written permission.

• If you miss your first Annual Convention, the Convention Allowance included in the Initial Package will be applied toward the Convention Non-Attendance Fee.

21.  Out-of-Territory Fee:  the current fee for marketing or servicing outside of your Territory and in another franchisee’s Territory without permission is the greater of (a) $500 or (b) 50% of job invoice amount on the default job

• Due Date:  Due by automatic debit 30 days after written notice.

• Due after default of marketing or servicing outside of your Territory.

22.  Non-Compliance Fee:  the current fee for any non-compliance with The Patch Boys’ system specifications or provision of the Franchise Agreement; currently, $100 per week

• Due Date:  Due by automatic debit 30 days after written invoice.

• Due after any noncompliance with The Patch Boys’ system specifications or any provision of the Franchise Agreement.

• If such noncompliance is ongoing, The Patch Boys may charge you $100 per week until you cease such non-compliance.

23.  Audit:  due only if an inspection is necessary. Amount due is The Patch Boys’ actual cost(s), which are generally estimated at $2,500 to $3,500, plus 100% of understated Royalty and interest, at the rate of 18% per annum or the maximum rate permitted by applicable law, whichever is greater, and all late fees, from the date originally due until the date of payment; if an understatement of Royalty is greater than 3%, you also must pay The Patch Boys an additional penalty fee equal to 10% of the total amount of the understated Gross Sales.

• Due Date:  Due by automatic debit 15 days after billing.

• Due if an inspection or audit is made necessary by your failure to (a) furnish reports, supporting records, or other information as required, (b) furnish these items on a timely basis, (c) use The Patch Boys’ Required Software for scheduling and invoicing, or if an understatement of Royalty is greater than 3% for any period reviewed.

24.  Insurance:  cost of insurance; if you fail to maintain the required insurance, The Patch Boys has the right to procure insurance on your behalf and you must pay The Patch Boys, on demand, for the costs and premiums it incurs

• Due Date:  As invoiced.

• You are required to maintain the types and amounts of insurance specified in Item 8 and, as more detailed, the Franchise Agreement.

25.  Interest Fee:  18% per annum or the maximum permitted by law

• Due Date:  Due by automatic debit each Friday.

• Due on all overdue amounts from the date the amounts were originally due.

26.  Indemnification:  will vary under circumstances

• Due Date:  As incurred.

• You must reimburse The Patch Boys if it is held liable for claims directly or indirectly arising out of your The Patch Boys Business’s operation.

• Your obligation to indemnify The Patch Boys will survive the termination or expiration of your Franchise Agreement.

27.  Costs and Attorneys’ Fees:  will vary under circumstances

• Due Date:  As incurred.

28.  NORA Fee:  none currently assessed; if The Patch Boys manages accounts through a national or regional accounts program, you will pay up to 3% of Gross Sales

• Due Date:  As incurred.

29.  Administrative Fee:  then-current fee which is presently $500 per transaction

• Due Date:  As incurred.

• Due when you request or when your actions require The Patch Boys to amend the Franchise Agreement.