What requirements must a C3 Wellness Spa location meet?

e any portion of your initial fees.

Note 2: Construction and Leasehold Improvements – This estimate is for the cost of construction, construction management and build-out of a Spa Location Franchise but does not including furniture, fixtures and equipment. This estimate also includes flooring, wallpaper and other specialized décor that we required for your Spa Location Franchise. Our estimates are based on the assumption that the typical square footage of a spa is approximately 4,000 square feet. These estimates are based on the assumption that the site for your Spa has been obtained in the "vanilla box" stage which refers to the interior condition of either a new or existing building in which the existing improvements generally consist of heating/cooling with delivery systems, essential lighting, electrical switches and outlets, lavatories, a finished ceiling, walls that are prepped for painting and a concrete slab floor. These numbers are not inclusive of any architect fees or other fees charged by licensed professionals other than general contractors and licensed tradesmen and do not include any special heating cooling or ductwork required by a Spa. The costs for developing your Spa may be higher or lower than the estimates provided.

Note 3: Lease Deposits – You must operate your Spa Location Franchise from a commercial retail Spa Location that we approve and complies with state and local laws. If you do not already own or lease a suitable location, you will be required to lease a location that meets our standards and is approved by us. This estimate is based on the assumption that you will be leasing your Spa Location and is for the estimated amount of the initial lease deposit that you will be required to pay to the landlord at the time of signing your lease and before opening your Spa Location Franchise. The estimate is based on the assumption that your lease deposit will be equal to three months of rent payments. The typical square footage for a Spa is approximately 4,000 square feet. The amount of your lease deposit is something that you will directly negotiate with the landlord and will vary significantly based on a number of factors that include location and your own negotiations. This estimate does not include the purchase of real property should you elect to purchase the real property of your Spa Location.

Note 4: Furniture, Fixtures and Equipment – You will be required to purchase certain types of furniture, fixtures and equipment for your Spa Location Franchise. The costs for furniture and fixtures may differ depending on the material quality and on other factors. Significant factors that will influence and will increase the cost of furniture, fixtures and equipment will depend on the size of the facility for your Spa

Location Franchise. It is assumed that some of the equipment will be leased. If you elect to purchase such equipment, your costs may be higher. Third party financing may be available for qualified candidates for some of the leasehold improvement costs, however, with such financing comes associated costs and fees which will cause the cost to exceed what is indicated in this chart.

Note 5: Initial Retail Inventory – Before opening your Spa Location Franchise you must purchase from us or our affiliates an initial supply of branded C3 Wellness retail inventory for sale to customers. This is only an initial supply and will require replenishment on a regular an on-going basis based on the volume of sales of your Spa Location Franchise.

Note 6: Initial Supply Inventory – Before opening your Spa Location Franchise you must purchase from us or our affiliates your initial supply of non-retail supplies that include injectables, fillers, IV Drip supplies, and other supplies used for providing services for customers of your Spa. This is only an initial supply and will require replenishment on a regular an on-going basis based on the volume of sales of your Spa Location Franchise.

Note 7: Signage – You are required to purchase, subject to our design and construction specifications and approval, interior and exterior signs and displays that we designate. This estimate is for the cost to produce wall signage to be mounted to the outside of the building as well as all interior signage. This estimate includes other elements of brand identification within the Spa Location Franchise such as wall graphics.

Note 8: Grand Opening Marketing Expenses – You must spend a minimum of $15,000 commencing not later than 30 days prior to the opening of your Spa Location Franchise for the purpose of promoting your grand opening. We will provide you with a selection of approved marketing plans, strategies and mediums to utilize in your grand opening marketing. You will be required to adopt or develop a marketing plan specific to the grand opening of your Spa Location Franchise. You must submit your grand opening marketing plan to us for our pre-approval not less than 60 days prior to the opening of your Spa Location Franchise.

Note 9: Utility Deposits – To secure the appropriate utilities required for the operation of your Spa Location Franchise including gas, electric, water, sewer and internet access, you will be required to pay upfront deposits to each applicable utility company.

Note 10: Insurance Deposits – You are required to maintain certain insurance coverage. Your actual payments for insurance and the timing of those payments will be determined based on your agreement with your insurance company and agent. This estimate is for the cost of an initial deposit to obtain the minimum required insurance and we estimate this deposit to be equal to the amount of three months of monthly insurance premium payments.

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 21–25)