PORTRAITEFX - FDD UFOC ITEM 7 Detail

ITEM 7 INITIAL INVESTMENT

The following charts describe payments required by the Franchise Agreement and estimated expenditures necessary to begin operation and to operate the Franchised Business for the first three months. All fees and payments made to us are non-refundable.

Your Estimated Initial Investment

I Explanatory Notes: !

:Note 1. You may purchase the required equipment, accessory and software package from us or from ; j _;other vendors that we approve. If you already own equipment including camera, computer, light system j land other items that are accepted by us in writing, we will adjust the package and related requirements accordingly. You will be using most of your own equipment in the Essentials training so you must obtain the required equipment before the Initial Training begins. Refer to Exhibit B for a complete list of required equipment, accessories and software.

Note 2. We do not anticipate that your initial start-up expenses will include any construction costs, or the purchase of any fixed assets or fixtures. Our business model is founded on you operating your franchised business from home.

Note 3. This amount is payable either to us or our approved vendor, and is for an initial supply of marketing and print sample materials, cross-marketing gift cards, a stationary package that includes 1000 business cards and custom letterhead and envelopes (500 of each) and all personalized email and website design/set up.

Note 4. We anticipate that you will spend in the range of $300 to $600 for office supplies, accessories and other miscellaneous expenditures.

Note 5. These amounts are the estimated expenditures you, and up to one other individual may incur for travel, lodging, meals and incidental expenses while attending our Initial Training program. The low end of the estimate assumes that you and/or you and one other individual will have no travel or lodging costs.

Note 6. This amount represents an estimate of your annual premium for the insurance required by the Franchise Agreement. Your actual cost of insurance may vary depending on the insurer, your geographical location and other factors.

Note 7. This amount is based on the assumption that you will be operating from your home rather than from a store front studio, and is an estimate of the costs you may incur in the acquisition of a business license (also referred to as an "assumed name" or fictitious name" certificate), establishing a business bank account and a business telephone line.

Note 8. This amount represents the fee required by our approved merchant card provider to establish credit card services that will be utilized within the e-commerce system we provide for you. This system will enable your customers to make purchases online and will automatically deposit the proceeds from online purchases into your personal bank account.

� Note 9. You will need additional funds during the start-up phase of your business to pay lab processing fees, purchase supplies, obtain sample inventory, provide complimentary promotional services and to cover other expenditures during the first 3 months from the date you open for business. These amounts do not include any estimates for debt service, payroll costs or any draw or salary to you. These figures are estimates, and we cannot guarantee that you will not have additional expenses starting the business. Your actual costs will depend on factor''s such as; your management skill, experience and business acumen; local economic conditions; the local market for your services; competition; and the sales level reached during your initial start-up period.

Note 10. To compile these estimates, we relied on the combined experience of our officers and directors. You should review these figures carefully with a business advisor before making any decision to purchase the franchise.