BAD ASS COFFEE - FDD UFOC ITEM 7 Detail

ITEM 7

YOUR ESTIMATED INITIAL INVESTMENT STANDARD FRANCHISE STORE

NOTE 1. The initial franchise fee is $25,000 and is paid at the time you sign your franchise agreement. It is not refundable. We do not finance any portion of this fee. In addition, you will be required to purchase your initial inventory of The Bad Ass Coffee Co.� coffee and related goods and supplies from us or other suppliers for a cost between $10,000 to $25,000. The range in cost depends upon the size and location of your store, as well as estimated initial business volume. If you enter into a multiple-unit development agreement, there is an initial fee of $5,000 per unit to be developed in addition to the $25,000 initial franchise fee. We do not finance any portion of this fee. (See Item 5.) If you sign a deposit agreement for this franchise, the deposit fee is $1,000. Except as noted above, these costs and fees are uniform for all standard franchisees and are not refundable.

NOTE 2. You are responsible to pay all travel, living, and other associated expenses for yourself and your employees during training, directly to the supplier (Hotels, airlines, restaurants, rental car companies, etc.).

NOTE 3. You must purchase or lease a suitable location for The Bad Ass Coffee Co.� store and you must employ a local real estate agent to assist you in the selection of the site for your store. Costs of commercial property or leases and improvements vary widely based on location, as well as construction and material costs if you choose to convert an existing facility or build out a brand new one/ We have not included an amount for the lease or purchase of real property because it is impossible to estimate and varies widely per location. ^You should review these costs with a local contractor, commercial real estate agent and other professionals. Your space will vary depending on your needs, but we estimate you will need between 600 and 1.500 square feet. Your landlord must provide You with a shell space that complies with our standard vanilla shell specifications. Your improvements may include plumbing, electrical, finished sheet rock and framing, paint and wall coverings, drop ceiling, HVAC, tile, carpet, bathrooms and flooring all of which must be approved by us. The following items also must meet our design standards and specifications: decor, signs, tables, chairs, display fixtures, lighting, counters, window coverings, color scheme and customer service counters. You must follow our interior design specifications. You must use Land Mind Productions, Inc. and other designated suppliers for the interior finish of your store. Land Mind is an unaffiliated company (See Exhibit "L" for background) This interior package includes: 1) consultation and or review of floor plan/evaluation/research/influence; 2)developing the vision and design for the interior of the store; 3)placing the design in written form ; 4)create and submit outline to the contractor''s for any ancillary electrical or plumbing that derives through the design process; 5)order and ship the materials and elements required for design completion; and 6)crew will arrive and produce the interior design to completion. The cost of the store includes the following expenses: design elements (lighting fixtures, palm trees, neon, surfboards, print, corrugated metals etc. materials (paint, lumber, hardware, foam, etc.) labor, housing, and travel. You will contract directly with Land Mind Productions for these services. The costs of these services are for our standard 1,500 to 2,000 square foot space is 585,000. For stores with more or less space, this price must be negotiated with Land Mind Productions.

Their fee is payable 50% upon execution of the contract with them, 25% within 7 days thereafter, and the balance upon completion. This interior package does not include: 1) cabinets and counter tops; 2) floor staining on floor material 3) sound system; 4) electrical contracting; 5)plumbing contracting; 6)permanent construction contractor cost; and 7)disposaI of trash or any construction debris.

Your site must be located, improvements completed and your store opened within one year from the date of your franchise agreement.

Occasionally we may use your store for training new franchises or employees of other franchisers. There is no fee paid to you for our use of the facilities, but we will reimburse you for any product used. We will also allow You and your employees to receive additional training at the same time.

NOTE 4. You will also be required to purchase an espresso machine, a refrigerator, blender, icemaker, water filter, Bunn equipment, microwave, cash register(s), beverage dispensers, small wares, etc. All purchase agreements or leases must be negotiated with suppliers. For any items purchased from us, we require immediate payment.

NOTE 5. Two signs are required: one exterior sign displaying The Bad Ass Coffee Co.� trademark and one interior sign. These signs will be made locally. All signs must conform to our specifications and should range in cost between $5,000 to $ 15,000. All purchase agreements or leases must be negotiated with suppliers.

NOTE 6. These miscellaneous costs include utility costs, business entity organization expenses, deposits and insurance. If there is more then one franchisee a legal entity must be formed to act as franchisee and each owner must guaranty the franchise agreement. You must obtain comprehensive general liability insurance, commercial automobile liability insurances, workers compensation insurance and other insurances we specify in the franchise agreement and the policies and procedures manual.

NOTE 7. In addition to your initial franchise fee, you must purchase from us or approved suppliers certain opening inventory items like coffee beans, syrups, dairy products, cups and lids, gift bags, accessories, merchandise and gifts, etc.

NOTE 8. We have a standard opening advertising package which you must purchase from us for $5,000 which is.payable upon execution of the franchise agreement (Item 8). In addition, this estimates the costs of promotional materials used for in-store advertising like placards, posters, brochures, etc., as well as the expense involved for a grand opening promotion and associated advertising. You must also have a website. The website must be designed by our approved supplier in accordance with our specifications, at a minimum cost of S3,000. Advertising is essential to the successful operation of your franchise business.

NOTE 9. This estimates your initial start up expenses and includes payroll costs. Employee compensation is between you and your employee and may vary widely. Therefore, this compensation cannot be accurately estimated. In addition, you need to include an amount payable to you. We relied on the experience of our principals to compile these estimates. These figures are estimates and we cannot guarantee that you will not have additional expenses starting your business. Your costs will depend on factors like: how well you follow our method and procedures; your management skill, experience and business acumen; local economic conditions; the local market for our products; the prevailing wage rate; competition; and the sales level reached during the initial period.

NOTE 10. These are the estimated start-up expenses involved in constructing, outfitting and opening a single The Bad Ass Coffee Co.� store. Conversion of an existing store by you may reduce these costs. We cannot guarantee that you will not have additional expenses. You should review these figures carefully with a business advisor before making any decision to purchase the franchise. We do not offer direct or indirect financing for any item.

YOUR ESTIMATED INITIAL INVESTMENT DRIVE THROUGH FRANCHISE STORE

NOTE 1. The initial franchise fee for drive-through franchises is $25,000 and is paid at the rime you sign the franchise agreement. We do not finance any portion of this fee. (See Item 5.) In addition, you will be required to purchase your initial inventory of The Bad Ass Coffee Co. coffee and related goods and supplies from us or other suppliers for a cost between $10,000 to$25,000 . The range in cost depends upon the size and location of your store, as well as estimated initial business volume. There is also an initial fee of $5,000 per unit to be developed and the initial fee for all drive through units is $25,000. If you sign a deposit agreement for this franchise, the deposit fee is $1,000. Except as noted above, these costs and fees are uniform for all drive-through franchisees and are not refundable.

NOTE 2. You are responsible to pay all travel, living, and other associated training expense for yourself and your employees, directly to the supplier (Hotels, airlines, restaurants, rental car companies, etc.) during training.

NOTE 3. You must purchase or lease a suitable location for The Bad Ass Coffee Co.� store and you must employ a local real estate agent to assist you in the selection of the site for your store. Costs of commercial property or leases and improvements vary widely based on location. At your option, we will provide you with a prefabricated building at an approximate cost of $60,000. Otherwise, we have not included an amount for the lease or purchase of real property because it is impossible to estimate and varies widely per location. You should review these costs with a local contractor, commercial real estate agent and other professionals. Your space will vary depending on your needs and the requirements of any city or county where you are located, but we estimate you will need between 130 to 160 square feet. We do not provide standard plans and specifications for construction of improvements; however, you must follow our decor specifications. Your site improvements may include plumbing, electrical, sheet rock and framing, paint and wall coverings, drop ceiling, HVAC, tile, carpet, decor, table and chairs, signs, counters, window coverings, etc., all of which must be approved by us. The following items must meet our design standards and specifications: signs, tables, chairs, display fixtures, lighting, color scheme and customer service counters. Your site must be final and improvements constructed and your store opened within one year from the date of your franchise agreement.

NOTE 4, You will also be required to purchase an espresso machine, a refrigerator, microwave, cash register(s), beverage dispensers, small wares, etc. All purchase agreements or leases must be negotiated with suppliers. For any items purchased from us, we require immediate payment. .

NOTE 5. Two signs are required: one exterior sign displaying TheBad Ass Coffee Co.� trademark and one interior sign. These signs will be made locally. All signs must conform to our specifications and should range in cost between $5,000 to $15,000. All purchase agreements or leases must be negotiated with suppliers.

NOTE 6. These miscellaneous costs include utility costs, business entity organization expenses, deposits and insurance.

NOTE 7. In addition to your initial franchise fee, you must purchase from us or approved suppliers certain opening inventory items like coffee beans, syrups, dairy products, cups and lids, gift bags, accessories, merchandise and gifts, etc.

NOTE 8. We have a standard opening advertising package which you must purchase from us for $5,000 which is payable upon execution of the franchise agreement. In addition, this estimates the costs of promotional materials used for in-store advertising like placards, posters, brochures, etc., as well as fiie expense involved for a grand opening promotion and associated advertising. You must also have a website. The website must be designed by our approved supplier in accordance with our specifications, at a minimum cost of $3,000. Advertising is essential to the successful operation of your franchise business.

NOTE 9. This estimates your initial start up expenses and includes payroll costs. Employee compensation is between you and your employee and may vary widely. Therefore, this compensation cannot be accurately estimated. In addition, you need to include an amount payable to you. We relied on the experience of our principals to compile these estimates. These figures are estimates and we cannot guarantee that you will not have additional expenses starting your business. Your costs will depend on factors like: how well you follow our method and procedures; your management skill, experience and business acumen; local economic conditions; we also reserve the right to require that all items bearing our trademark or private label be purchased from us or other sources designated or approved by us. We derive revenue from the ale of this or these trademark and private label items. Occasionally you will be required to buy special promotional items like: advertising material, related products; cups, shirts, hats, or chocolates form us or from vendors we name in connection with a promotional program or marketing strategy.

NOTE 10. These are the estimated startup expenses involving construction, outfitting and opening a single drive through Bad Ass Coffee Co.� store. We cannot guarantee that you will not have additional expenses. You should review these figures carefully with a business advisor before making any decision to purchase the franchise. We do not offer direct or indirect financing for any item.