POP-A-LOCK-SYSTEMFORWARD AMERICA - FDD UFOC ITEM 7 Detail

Item 7

INITIAL INVESTMENT

The following table entitled "Your Estimated Initial Investment" describes the initial investment, by a high-low range by expense category, which you should expect to make in connection with the operation of a franchise before commencement of the business and for at least a 6 month period thereafter. With the exception of the initial franchise fee, all the expenses listed are ESTIMATES ONLY. These expenses are expressed as a range from a projected low amount to a projected high amount. The projected low amount assumes that you will employ 2 Pop-A-Lock Technicians in a franchise area having a population of about 100,000; the projected high amount assumes that you will employ 10 Pop-A-Lock Technicians in a franchise area having a population of about 500,000. If you employ more than ten Pop-A-Lock Technicians, your initial investment and operating expenses will exceed the projected maximum amount The number of technicians required and actual costs may vary for many reasons, including, for example, the geographic size of your franchise area, your call volume or logistical consideration.

(1)              
Initial Franchise Fee. The initial franchise fee is variable based upon the population of your franchise area. It is not refundable for any reason.

(2)               Tools. Each Pop-A-Lock Technician you employ must be equipped with 1 Pop-A-Lock Tool Kit and an Unlocking manual. You must lease the Pop-A-Lock Tool Kit from us at a cost of $800.00. We provide the Unlocking manual to you on a loan basis. The term of the lease for each Pop-A-Lock Tool Kit will be the same as the Franchise Agreement and all renewals thereof. Upon termination of the Franchise Agreement, you must return the complete Tool Kit, usual wear and tear excepted, to us. See Article 6.04 of the Franchise Agreement. Your cost of tools will vary according to how many Pop-A-Lock Technicians you intend to employ. The number of Pop-A-Lock Technicians you must employ will depend upon several factors unique to your franchise and the area within which it operates and, therefore, impossible to estimate with accuracy. The projected low amount assumes 2 Pop-A-Lock Technicians and the projected high amount assumes 10 Pop-A-Lock Technicians. If you employ more than ten Pop-A-Lock Technicians your total Tool Kit cost will increase by $800 per technician.

(3)               Printed Materials. You must purchase invoices ("Work Orders") either from us or our approved supplier before the commencement of operations. A quantity of 1000 printed Work Orders costs about $ 125.00. In addition, you will also purchase other printed materials including business cards, letterhead, envelopes, coupons and the like. You are required to purchase a Marketing Power Pack before the commencement of operations. The Marketing Power Pack will cost you between $500.00 - $ 1,000.00 depending on the size of your market.

(4)               CPU Training. We charge $750.00 per technician per 5 day u*aining session for the Pop-A-Lock Training Program. Additional fees may be incurred if training extends beyond 5 days. The projected low amount assumes 2 Pop-A-Lock Technicians and the projected high amount assumes 10 Pop-A-Lock Technicians. If you employ more than ten Pop-A-Lock Technicians your training cost will increase by $750.00 per technician trained.

(5)               Travel and Living Expenses While Training. We provide technical training at our training facility currently in Lafayette, Louisiana. However, we may specify training to take place at another location and facility. You must pay for meals, lodging and travel expenses for each of your employees who travel to Lafayette to receive such technical training. Your actual cost for travel and living expenses while training will depend upon several factors including the number of persons trained, the distance traveled, and mode of transportation.

(6)               Equipment - Communication. Communication equipment required to open and operate a Pop-A-Lock Outlet includes: two-way radios, cellular (or other mobile-type) telephones, and pagers. As with your tool costs described in Note 2 above, your communication equipment costs will vary according to the number of opening technicians you employ. If you equip your Pop-A-Lock Technicians with radios, your communication equipment costs will be approximately $ 1,000.00 per technician. The projected low amount assumes 2 Pop-A-Lock Technicians. The projected high amount assumes 10 Pop-A-Lock Technicians. If you employ more than ten Pop-A-Lock Technicians your equipment cost will increase by approximately $1,000.00 per technician.

(7)               Equipment - Emergency Roadside Service. You must equip your Pop-A-Lock Technicians to perform emergency roadside service consisting of tire changes, jump starts, and fuel delivery. We provide you with a list of suggested emergency roadside service equipment. We estimate that it will cost between $300.00 and $750.00 to equip each Pop-A-Lock Technician, depending upon the quality of equipment.

(8)               Equipment and Training - Locksmith Service. You must either hire or contract with individuals who have demonstrated skill in locksmith techniques or provide one or more employees with locksmith training. Based upon our experience, it takes approximately 1 -30 days to provide an individual with sufficient training to perform automotive and light residential and commercial locksmithing services. Any additional training required for certification, licensing or acquiring of a locksmith permit in accordance with local, state or federal mandates is your burden. We can make no guarantee or promise that any or all persons trained by us or our designee will be capable of meeting local, state or federal standards for licensing, permit nor certification. The cost for this category of locksmith training can range from $250.00 - $7,500.00. For purposes of this estimate, we have used an average cost of $4,500.00 for 30 days of training. Locksmith training is customarily provided through locksmith schools or independent locksmith trainers. We wiil offer locksmith training to you, at our option, through a designated and approved locksmith school, an independent locksmith trainer or through our employees at a training facility. In addition, you must equip the locksmith employees with locksmith equipment and inventory. We estimate that it costs an average of $20,000 to equip one locksmith to provide automotive, residential and some commercial locksmith services, exclusive of the cost of a vehicle. We may occasionally permit you to perform locksmith service to a lesser degree or with a reduced inventory of machines, tools, equipment, supplies or stock so long as we are informed of exactly what services are to be rendered, what material resources will be available and what level of training the service provider has achieved and we give prior approval of the arrangement. The projected low amount assumes 1 locksmith technician, receiving a technical overview of the locksmithing service. The projected high amount assumes 10 locksmith technicians. If you employ more than 10 locksmith technicians, the training cost will increase by approximately $250 - $7,500.00 per technician. We reserve the right to limit admission to locksmith service training as our scheduling capacity dictates.

(9)               Equipment - Office. You must purchase, from us or designated sources, and use the Pop-A-Lock computer system which may contain proprietary software, and other software specified by us, for the Pop-A-Lock Franchise System. See Item 11 regarding the computer hardware specifications. We estimate that the computer system described above will cost you from $1,500.00 to $5,000.00.

(10)           Telephone Directory Display Advertisement. Pursuant to Article 8.02 of the Franchise Agreement, you must obtain a display-type advertisement in the yellow pages of the primary telephone directory(ies) covering your Franchise Area. The cost of your display advertisement will depend upon a variety of factors unique to your franchise. The projected high-low amounts reflect estimated expenditures in this category for 6 months.

(11)           Initial Advertising. Pursuantto Article 8.01 of the Franchise Agreement, you must spend on continuing local advertising during the first 12 months of operation a monthly amount of $2,000 - $3,000 per month for a territory of 100,000 - 250,000 population or $3,000 - $5,000 per month for a territory of251,000 - 500,000 population.

(^Miscellaneous Opening Costs. This category includes security deposits (telephone lines), legal and other professional fees, and insurance premium costs. You must secure and maintain the following insurance coverage: (i) Workers'' Compensation insurance as prescribed by state law, (ii) comprehensive general liability insurance covering the operation of the Franchised Business with limits of not less than $1 million, (iii) automobile and general liability insurance on all vehicles owned by the Franchised Business with limits of not less than $1 million and (iv) hired, non-owned automobile liability insurance covering vehicles owned by your employees and used in the performance of their duties with limits of not less $ 1 million. All insurance coverage required must include our name as an additional "named insured".

(13) Working Capital. The Working Capital figures include payments with respect to government licenses and operational expenses for a start-up period of twelve months, including employee compensation, answering service, telephone service, pager rental, two-way pagers, GPS tracking devices, insurance and vehicle lease or finance payments, if applicable. The range of funds needed to cover these costs merely provides a base minimum estimate of start-up working capital requirements. These figures do not include any provision for a salary or draw by the franchise owner. Therefore, in addition to the stated working capital requirements, you should provide for sufficient capital reserves or income from sources other than the franchised business to cover your salary or draw (based on your personal financial requirements) during the start-up phase of your franchise. We recommend that you provide for the possibility that your expenses may exceed revenues and maintain sufficient cash reserves to carry you through the start-up and development stage of your business. The exact amount of the reserves will vary from franchise operation to franchise operation and cannot

be meaningfully estimated by us. We cannot and do not make any guarantee regarding the point at which your Franchise will earn revenue which will exceed its operating expenses on a sustained basis.

(14) Vehicles. You may use your current owned vehicle for your Pop-A-Lock business, however, you must logo/paint your vehicle to our specifications. The cost for obtaining and applying the logos/paint can range from $500 - $1000. The projected low assumes you have put the appropriate logos on your current owned vehicle. The projected high assumes you purchased ten vehicles, at an average cost of $ 15,000 per vehicle (the vehicles purchased can be used vehicles), and painted and logos applied to each vehicle at a cost of $ 1,000 per vehicle. You should consult with your accountant or financial advisor in order to develop a business plan for your specific business operation.

(15) Mentor Program. You must participate in the New Franchisee Mentor Program, which will cost you $1, 000, plus travel expenses for the mentor''s visit to you. Such expenses will be between $1,200 and $2,500. Mentor will have access to Financial, Dispatch, Phone Records, and other Financial and Operational data of Franchisee during the term of the Mentor Program.

(16) New Franchisee Second Field Visit. You must participate, if we deem it advised, in the New Franchisee Second Field Visit Program, which will cost you travel expenses for an additional field visit by one of our employees or an outside professional. Such expenses will be between $ 1,200 and $2,500.