Under what circumstances might Belocal increase the fees outlined in Item 6?

Additionally, the amounts of the inflation adjustments are cumulative and, if not applied in one year, may be applied in future years. For example, if the COLA adjustment for 2027 were 3%, then in 2027 we could raise each flat fee by up to 3%. However, if we elected to raise a particular flat fee by 1% in 2027, we would have the right to carry forward the additional 2% increase to be applied in a future year. If the COLA adjustment for 2028 were 2%, then, because of the inflation adjustment we did not apply in 2027, we would have the right to increase such flat fee in 2028 by up to 4% (2% for 2028 and 2% for the unapplied adjustment in 2027). If we were to increase such flat fee in 2028 by only 2%, then the remaining 2% adjustment would continue to be available to be applied to increases in such flat fee in future years, and so on.

(8) Each of these fees can be increased upon notice to you; however, the total increase of each fee during the term of the Franchise Agreement will not be more than 25% of the fee currently identified in this Item 6.

[Remainder of Page Intentionally Left Blank]

ITEM 7. ESTIMATED INITIAL INVESTMENT

YOUR ESTIMATED INITIAL INVESTMENT

• (1) The initial franchise fee for a Franchised Business is $735. However, we are waiving the initial franchise fee for franchises offered or entered into on or after the Issuance Date of this disclosure document that facilitate the publishing of a new Publication, unless this disclosure document is amended to reflect otherwise. We reserve the right to charge the initial franchise fee of $735 if the franchise is for the facilitation of a publication that was formerly a Bridge Publication.
• The zero-dollar amount assumes that you will initially operate out of your home and that you presently have office furniture and other equipment that you will use to operate your Franchised Business, such as a phone. The range of costs in the chart is an estimate for items such as a desk, chair, and miscellaneous office provisions you choose. We do not require that you purchase any particular amount, type, or brand of furniture or other items that you choose to purchase. If you choose to lease commercial office space, your expenses will increase by the amount of rent you pay, which will depend on the size, condition, and location of the leased premises. This rent estimate is not included in the chart. If you elect to establish your Office in a location other than your home, you may need additional furniture or fixtures that will increase your expenditures, and you will have rent deposit expenses and other expenses not contemplated in this chart.

• (3) This estimate is for the purchase of a phone and a computer or tablet that has Internet and email capability. We have no other requirements regarding the type or brand of computer or tablet you purchase. (See Item 11.) The low end of the range assumes that you already own a phone and computer or tablet that can be used in your Franchised Business.
• (4) This estimate is for office supplies such as note pads, pens, file folders, stationery, business cards, etc. The low end of the estimate assumes you already have many of these supplies and/or that you operate "paperless" or mostly paperless.
• (5) You are required to obtain and maintain the minimum amount of insurance specified in Item 8 of this disclosure document. This estimate reflects the cost of insurance premiums for one year. You will need to check with your local insurance carrier for the actual cost of any deposits and premiums. The cost of coverage will vary based upon the area in which your Franchised Business will be located, your experience with the insurance carrier, the loss experience of the carrier, and other factors beyond our control. You should also check with your insurance agent or broker regarding any additional insurance that you may wish to carry above our stated minimums.
• (6) We do not charge tuition or for materials for the initial training. We provide the initial training virtually and so the low estimate assumes you will not incur any travel-related costs. You have the option to attend in-person training. The in-person training may be held in Indianapolis, Indiana or another location we designate upon notice. The high estimate assumes you select in-person training and pay for airfare and two nights in a hotel. The cost of the travel will vary based upon your point of origin, method of travel, classes of accommodation, dining choices, etc.
• (7) The low end of the estimate assumes that you do not engage legal and/or accounting professionals to advise you in the start-up of the Franchised Business. However, we strongly recommend that you seek the assistance of an experienced franchise attorney and accountant to review and advise you concerning this franchise opportunity, this disclosure document, and subsequently, the Franchise Agreement. The amounts in this range are based on professional fees typically charged in the Irving, Texas area.
• (8) You are solely responsible for obtaining and maintaining all licenses and permits necessary to operate the Franchised Business. You should check with your local agencies to determine if any permits or licenses are required to operate your Franchised Business.
• (9) You must create an entity to be the franchisee. This is typically done with your state government and requires a filing fee. If the entity is not created before signing the Franchise Agreement, it must be completed in order for you to qualify to receive your first Commission.
• (10) This is an estimate of the additional funds you may need to operate your Franchised Business during the first three months after you complete initial training. This estimate is based upon the experience of our franchisees. We cannot guarantee that you will not have additional expenses in starting the Franchised Business. This range includes estimated travel and other sales related expenses you will incur during the first three months. Additional operating expenses will be incurred in connection with the ongoing operation of your Franchised Business. You are responsible for your living expenses during the term of the Franchise Agreement and those expenses are not reflected in this estimate.

We recommend that you use the categories and estimates in this Item 7 as a guide to develop your own business plan and budget and that you investigate specific laws, regulations, and licensing requirements and associated costs that may apply in your area. You should review these figures carefully with your business advisor before deciding to acquire the franchise.

Unless otherwise stated above, these estimates are subject to increases based on changes in market conditions, our cost of providing services and future policy changes. We do not offer any financing for your initial franchise fee or any portion of your initial investment. Unless otherwise stated, the amounts described above are not refundable.

ITEM 8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

Purchases According to Specifications; Approved Suppliers

You must comply with all of our standards and specifications relating to the purchase of all supplies, materials, equipment (including computer hardware and software), and other products and services used in the Franchised Business. We formulate our standards and specifications based on a variety of factors and can issue such standards and specifications to you from time to time, including in writing in the Franchise Brand Standards Manual. If we have approved suppliers for any supplies, products, and/or services used or offered by your Franchised Business, you must use those suppliers. We may change the number of approved suppliers at any time and may designate ourselves, an affiliate, or a third party as the exclusive source for any particular item or service. We may profit from your purchases and leases from approved suppliers, and we and/or our affiliates may receive payments, fees, commissions, or reimbursements from such suppliers in respect of your purchases and leases.

Required Purchases

Currently, except as described below, you have no obligation to purchase or lease from us, our affiliates, or other designated third-party suppliers any of the products, services, supplies, fixtures, equipment (including computer hardware and software and payment systems), inventory, or real estate used in establishing or operating your Franchised Business.

Optional Purchases

Our affiliate, The N2 Company, is approved to supply you with optional services for your Franchised Business. Currently, these optional services include client ad strategy services and lead generation services. The service offerings are subject to change. Additional services may be approved while other existing services may be discontinued. To receive these optional services, you must enter into an N2 Franchisee Services Agreement with our affiliate. The current form of N2 Franchisee Services Agreement is attached to this disclosure document as Exhibit F. There are additional fees associated with these optional services. Future optional services may include premium versions of the client ad strategy services, content services, writing and editing services, business strategy coaching, social media management services, administrative services, consulting services, or client care services. This is not an exhaustive list of potential optional services and neither we nor our affiliate is obligated to make any such services available to our franchisees. Our affiliate may establish and change the prices for current and future services in its discretion.

Revenue Derived

Our Directors, Duane Hixon and Earl Seals, have ownership interests in The N2 Company, which is approved to supply you with optional services. Neither we, nor our affiliate, nor any of our respective officers owns an interest in any other privately held suppliers or a material interest in any publicly held suppliers of our franchise system. During our fiscal year July 1, 2024 through June 30, 2025, we received no revenue or other material consideration from required purchases or leases by franchisees. During its fiscal year July 1, 2024 through June 30, 2025, The N2 Company received no revenue from our franchisees' required purchases or leases.

Requirements for Specific Goods and Services

Technology: At our option, we may make available to you, for a fee, software developed by us, our affiliates, or a designated third party for the Franchised Business. We are not required to develop or acquire such software programs. These software programs assist with client relationship management, sales order and commission management, and Publication production management.

Signage: If you display signage at your Office location, it must comply with our specifications and standards, which we will issue to you upon request.

Business Cards: You must use the third-party provider we designate to purchase your business cards.

Digital Signature Software: We require you to use our approved vendors for digital signature software. You must not use any digital signature software we have not approved.

Insurance: You must obtain and maintain in full force and effect the levels of insurance specified in the Franchise Agreement and the Franchise Brand Standards Manual or applicable law. At a minimum, you must carry (i) Comprehensive General Liability Insurance, including broad-form contractual liability, broad-form property damage, personal injury, advertising injury, completed operations, products liability, and fire damage coverage, in the amount of $2,000,000 combined single limit per occurrence and $4,000,000 general aggregate; (ii) automobile liability coverage, including coverage of owned, non-owned, and hired vehicles, with coverage in amounts not less than $300,000 combined single limit; (iii) event insurance for each event you host or sponsor in connection with the Publication in the amount of $1,000,000 per occurrence, $2,000,000 in the aggregate, regardless of where the event is located; and (iv) such other insurance as may be required by the state or locality in which you operate the Franchised Business. All policies must be acceptable to us. From time to time in our sole discretion, we may increase or modify such limits of liability or require additional types of coverage. In each of these policies, except for workers' compensation (if applicable), you agree to name us and our affiliates, and the officers, directors, shareholders, partners, agents, representatives, independent contractors, servants, and employees of each of them, as additional insureds (each, an "Additional Named Insured"), which will expressly protect both you and each Additional Named Insured and will require the insurer to defend both you and each Additional Named Insured in any action while reserving the right of each Additional Named Insured to involve counsel of their own choosing in protection of their own and system-wide interests.

Source: Item 6 — OTHER FEES (FDD pages 14–31)