AUTO APPRAISAL NETWORK - FDD UFOC ITEM 7 Detail

ITEM 7 INITIAL INVESTMENT

Explanatory Notes

¹������ Franchise Fee - The Franchise Fee is between $15,000 and $35,000 based on the territory population of the first franchise purchased. If you decide to purchase a second or subsequent franchise, you will pay the price for the second/subsequent franchise units in effect at that time which may be higher than $35,000, unless you have signed an Area Development Agreement with your first franchise.

²������ Area Development Fee - The Area Development Fee shown in the chart above represents the minimum of 1 additional Auto Appraisal Network franchises to be developed and opened by you in a specific territory if you choose to become an Area Developer. The -0- represents no additional franchises and the high represents the minimum of two additional franchises. A portion of the Area Development Fee will be credited against the Franchise Fee for the Franchised Business to be developed to satisfy the Development Schedule. The Franchise Fee and Area Development Fee are fully non-refundable. See Item 5 for additional details regarding the Franchise Fees and Area Development Fees. At the time you sign the single unit franchise agreement and the area development agreement, you will only be required to pay the initial fee and the deposits on additional franchises. You will not incur additional expenses other than those listed in the above chart until the time that you prepare to open the second and each consecutive franchise according to the development schedule. We do not provide financing for any of these fees.

³�������� Travel/Living Expenses for Training - These costs will vary depending on factors such as mode of travel, distance traveled to training and quality of hotel accommodations selected by you. These costs are not normally refundable. The low represents the estimates for one person from a close proximity to our training location and the high represents the estimates for two people traveling with air fare.

Rent - You are not required to establish an office in a commercial location for the franchise and we suggest that you operate from a home based office to control costs. You will be traveling to the customer''s location to evaluate and appraise their vehicles. If you decide to operate your franchise from a commercial location you will not need more than a space of 100 sq. ft. to set up a desk and file cabinet space. We will not approve a specific location for you to operate your franchise from Refunds for these costs are available only with supplier approval.

⁵������ Security Deposit - If you decide to lease a commercial office space, most office spaces will require a minimum security deposit that is normally based on your monthly rent and only refundable with supplier approval.

⁶������ Utility Deposits - As outlined in #4 above, we recommend that you operate from a home based office. If you rent from a commercial location, you may be responsible for paying deposits and utility costs before opening for business as agreed to between you, your landlord and the utility companies. These deposits will only be refundable with supplier approval.

⁷������ Equipment and Fixtures - The low represents you already having a space with a desk to operate your business and the high represents you buying a desk, chair and all in one printer, fax and copy machine for use you''re your business. Refunds will be available upon supplier approval.

⁸������ Business Licensing, Legal, Accounting - You must comply with all state and local laws, including those requiring persons and entities doing business within a state or locality to qualify to do business and, if applicable in your situation, laws governing corporations or other business entities. You will incur costs to comply with these laws. These costs will vary from region to region and will also depend upon the form in which you do business (for example, as a sole proprietor or as a corporation). We cannot determine whether any of these expenses will be refundable.

⁹������ Phones and Internet Service - You will need to have a business line for the franchise and a cell phone when traveling to meet with your customers. You are required to subscribe to an Internet Service Provider ("ISF'') offering cable, DSL or some other form of high speed Internet. We recommend a high quality, reliable and nationally recognized ISP. We reserve the right to specify a mandatory ISP at any point in the future, and we reserve, in our sole discretion, the right to prohibit the use of specific ISPs whose level of service/method of operation may not be acceptable to us. Refunds for these expenses are available with supplier approval.

¹⁰���� Extranet Service - We have established a Franchise Support System through a system wide Extranet that uses
proprietary software. You are required to subscribe to this service and it is mandatory that you check the Extranet at
least once each business day and appropriately respond to all communications. The chart shows the current pricing
for the Extranet Service listed with the low representing one user per month and the high figure representing 3 users
per month. No payments made for the Extranet Service will be refundable.

¹¹���� Insurance Deposit - The estimate represents an initial deposit for the coverage necessary to operate the business
and represents approximately 3 months of coverage. Insurance costs will vary depending on factors such as the size
and location of the Franchised Business. Insurance deposits are only refundable with supplier approval. Your
obligations with respect to insurance are more fully described in Item 8.

¹³ Initial Advertising - The amount shown is for advertising to be conducted together with the opening of your franchise and does not include any contributions to the Advertising Fund. The opening advertising plan is to be approved by us and is payable to third party suppliers. Any initial advertising is only refundable with supplier approval.

¹³ Marketing/Networking-It is suggested that you join local car clubs and similar affiliated clubs in your area for lead sourcing. This represents industry associations, chamber of commerce, and other similar networking associations in your area. This fee is only refundable with supplier approval.

^M Additional Funds - You are required to have from $3,000 to $10,000 as initial additional funds for start-up expenses and miscellaneous operating costs for approximately 3 months. These figures are estimates and we cannot guarantee that you will not have additional expenses starting the business. The additional funds requirements depend on several factors including, location of your franchise, if you hire employees, and other economic factors. This estimate does not include any amount for your salary or draw during that 3-month period. We relied on our founders experience in setting up and operating a business of this type to complete this estimate. You should review these figures carefully with a business advisor before making any decision to purchase the franchise. We cannot determine whether any of these funds will be refundable.

¹⁵ Estimated Initial Investment - This represents an estimate of the expenditures you will need to make to purchase the Franchise and operate during the first 3 months. We do not offer direct or indirect financing to franchisees for any item. None of the fees paid to us are refundable except as expressly stated in Item 5.

All total investment figures represent approximate costs based on the size of your area of operation, location and if you sign an Area Development Agreement. A lower cost franchise does not include the Area Developer Agreement being signed; you owning the suggested office furniture and fixtures. The high costs franchises require office rents and deposits, furniture, equipment costs, employee salaries and other related expenditures. Additionally, if you sign the Area Developer Agreement, you will agree to open a minimum of 1 additional Outlets and be required to pay the initial deposits on each one at the time of signing the Area Development Agreement We have based the listed expenditures, estimated figures and additional funds in the above chart on previous and present experience of our founder, who currently owns and has operated a similar business in California for over 19 years. You should review these figures carefully with a business advisor before making any decision to purchase the franchise. We do not offer financing directly or indirectly for any part of the initial investment The availability and terms of financing will depend on factors such as the availability of financing generally, your credit worthiness, collateral you may have and lending policies of financial institutions. The estimate does not include any finance charge, interest or debt service obligation.