Casa_De_Corazon 2025 Franchise FAQ - FDD Ninja

Question 1

In 2023, what was the total number of Casa De Corazon terminations across all states listed?

Accepted Answer

|  |  |  |  |  | Non- Renewals |  | Ceased |  |
|---|---|---|---|---|---|---|---|---|
|  |  | Outlets at |  |  |  | Reacquired | Opera- tions – | Outlets |
|  |  | Start of the | Outlets | Termina- |  | by | Other | at End of |
| State | Year | Year | Opened | tions |  | Franchisor | Reasons | the Year |
| Minnesota | 2022 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2023 | 2 | 0 | 1 | 0 | 11 | 0 | 1 |
|  | 2024 | 1 | 1 | 0 | 0 | 0 | 0 | 2 |
| Wisconsin | 2022 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2023 | 1 | 1 | 0 | 0 | 0 | 0 | 2 |
|  | 2024 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
| Totals | 2022 | 3 | 0 | 0 | 0 | 0 | 0 | 3 |
|  | 2023 | 3 | 1 | 1 | 0 | 1 | 0 | 3 |
|  | 2024 | 3 | 1 | 0 | 0 | 0 | 0 | 4 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 48–51)

Question 2

According to the FDD, what is the projected number of new company-owned Casa De Corazon outlets expected to open in 2025?

Accepted Answer

|  | Franchise Agreements Signed as of December 31, 2024, But Outlet Not Opened |  |  |
|---|---|---|---|
|  |  | Projected New Franchised | Projected New Company- |
| State |  | Outlets in 2025 | Owned Outlets in 2025 |
| Florida | 0 | 0-1 | 0 |
| Illinois | 0 | 0-1 | 0 |
| South Dakota | 0 | 0-1 | 0 |
| Massachusetts | 0 | 0-1 | 0 |
| Minnesota | 1 | 1-3 | 0 |
| Wisconsin | 1 | 1 | 0 |
| Total | 2 | 2-3 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 48–51)

Question 3

What is the average full-time student equivalent enrollment across all Casa De Corazon centers listed?

Accepted Answer

to omit costs incurred by the affiliateowned Centers that a franchisee would not have incurred, and to add costs that we reasonably expect a franchisee would incur.

|                                               | Affiliate Center 1 | Affiliate Center 2 | Affiliate Center 3 | Franchised Center 1 | Franchised Center 2 |
|-----------------------------------------------|-----------------------|-----------------------|-----------------------|------------------------|------------------------|
| Year Opened                                   | 2010                  | 2014                  | 2018                  | 2019                   | 2020                   |
| Full-Time Student                             |                       |                       |                       |                        |                        |
| Equivalent Enrollment1                        | 111                   | 142                   | 100                   | 113                    | 121                    |
| Occupancy Rate2                               | 94%                   | 76%                   | 73%                   | 95%                    | 96%                    |
| Revenues                                      |                       |                       |                       |                        |                        |
| Tuition                                       | \$2,790,351           | \$3,290,121           | \$2,343,521           | \$2,

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 43–48)

Question 4

What is the average tuition revenue for the franchised Casa De Corazon centers?

Accepted Answer

to omit costs incurred by the affiliateowned Centers that a franchisee would not have incurred, and to add costs that we reasonably expect a franchisee would incur.

|                                               | Affiliate Center 1 | Affiliate Center 2 | Affiliate Center 3 | Franchised Center 1 | Franchised Center 2 |
|-----------------------------------------------|-----------------------|-----------------------|-----------------------|------------------------|------------------------|
| Year Opened                                   | 2010                  | 2014                  | 2018                  | 2019                   | 2020                   |
| Full-Time Student                             |                       |                       |                       |                        |                        |
| Equivalent Enrollment1                        | 111                   | 142                   | 100                   | 113                    | 121                    |
| Occupancy Rate2                               | 94%                   | 76%                   | 73%                   | 95%                    | 96%                    |
| Revenues                                      |                       |                       |                       |                        |                        |
| Tuition                                       | \$2,790,351           | \$3,290,121           | \$2,343,521           | \$2,650,896            | \$2,844,360            |
| Photography Rebates                           | \$350                 | \$567                 | \$0                   | \$246                  | \$333                  |
| Total Revenues3,4                             | \$2,790,701           | \$3,290,688           | \$2,343,521           | \$2,651,142            | \$2,844,693            |
| Direct Expenses                               |                       |                       |                       |                        |                        |
| Educational and                               |                       |                       |                       |                        |                        |
| Childcare Expenses                            | \$32,661              | \$32,220              | \$23,052              | \$26,441               | \$29,779               |
| Child Assessment | \$2,759 | \$2,966 | \$2,580 | \$2,120 | \$2,025 |
| Tools5 |  |  |  |  |  |
| CPR/First Aid                                 |                       |                       |                       |                        |                        |
| Training                                      | \$1,132               | \$834                 | \$657                 | \$2,085                | \$2,229                |
| Field Trips and                               |                       |                       |                       |                        |                        |
| Activities                                    | \$13,739              | \$14,592              | \$7,238               | \$24,025               | \$13,365               |
| Furniture/Equipment                           | \$9,020               | \$10,692              | \$1,400               | \$348                  | \$240                  |
| Food                                          | \$96,327              | \$99,446              | \$59,092              | \$98,398               | \$73,315               |
| Hiring/Training6                              | \$4,973               | \$8,335               | \$5,922               | \$14,792               | \$6,425                |
| Janitorial and Kitchen                        |                       |                       |                       |                        |                        |
| Supplies                                      | \$19,010              | \$22,346              | \$12,660              | \$13,603               | \$13,825               |
| Licenses & Permits                            | \$852                 | \$1,055               | \$1,960               | \$3,422                | \$2,545                |
| Staff Payroll, Benefits | \$1,506,577 | \$1,800,954 | \$1,239,037 | \$1,173,777 | \$1,541,734 |
| and Payroll Taxes7 |  |  |  |  |  |
| Payroll Processing                            | \$10,085              | \$10,085              | \$7,203               | \$10,048

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 43–48)

Question 5

How many Casa De Corazon outlets opened in total across all listed states during 2024?

Accepted Answer

| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2022 | 3 | 3 | 0 |
|  | 2023 | 3 | 3 | 0 |
|  | 2024 | 3 | 4 | 1 |
| Company-Owned1 | 2022 | 3 | 3 | 0 |
|  | 2023 | 3 | 5 | +2 |
|  | 2024 | 5 | 42 | -1 |
| Total Outlets | 2022 | 6 | 6 | 0 |
|  | 2023 | 6 | 8 | +2 |
|  | 2024 | 8 | 8 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 48–51)

Question 6

How many Casa De Corazon outlets were reacquired by the franchisor in 2023 across all reporting states?

Accepted Answer

|  |  |  |  |  | Non- Renewals |  | Ceased |  |
|---|---|---|---|---|---|---|---|---|
|  |  | Outlets at |  |  |  | Reacquired | Opera- tions – | Outlets |
|  |  | Start of the | Outlets | Termina- |  | by | Other | at End of |
| State | Year | Year | Opened | tions |  | Franchisor | Reasons | the Year |
| Minnesota | 2022 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2023 | 2 | 0 | 1 | 0 | 11 | 0 | 1 |
|  | 2024 | 1 | 1 | 0 | 0 | 0 | 0 | 2 |
| Wisconsin | 2022 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2023 | 1 | 1 | 0 | 0 | 0 | 0 | 2 |
|  | 2024 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
| Totals | 2022 | 3 | 0 | 0 | 0 | 0 | 0 | 3 |
|  | 2023 | 3 | 1 | 1 | 0 | 1 | 0 | 3 |
|  | 2024 | 3 | 1 | 0 | 0 | 0 | 0 | 4 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 48–51)

Question 7

What was the net change in the number of Casa De Corazon outlets in Minnesota between the start of 2022 and the end of 2024?

Accepted Answer

ividual owns or transfers to heirs.

**Table No. 3 Status of Franchised Outlets For Years 2022-2024**

|  |  |  |  |  | Non- Renewals |  | Ceased |  |
|---|---|---|---|---|---|---|---|---|
|  |  | Outlets at |  |  |  | Reacquired | Opera- tions – | Outlets |
|  |  | Start of the | Outlets | Termina- |  | by | Other | at End of |
| State | Year | Year | Opened | tions |  | Franchisor | Reasons | the Year |
| Minnesota | 2022 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2023 | 2 | 0 | 1 | 0 | 11 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 48–51)

Question 8

What was the total number of Casa De Corazon outlets operating at the end of 2022 across all states listed?

Accepted Answer

| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2022 | 3 | 3 | 0 |
|  | 2023 | 3 | 3 | 0 |
|  | 2024 | 3 | 4 | 1 |
| Company-Owned1 | 2022 | 3 | 3 | 0 |
|  | 2023 | 3 | 5 | +2 |
|  | 2024 | 5 | 42 | -1 |
| Total Outlets | 2022 | 6 | 6 | 0 |
|  | 2023 | 6 | 8 | +2 |
|  | 2024 | 8 | 8 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 48–51)

Question 9

What was the total number of Casa De Corazon outlets at the start of 2024 across all states listed?

Accepted Answer

| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2022 | 3 | 3 | 0 |
|  | 2023 | 3 | 3 | 0 |
|  | 2024 | 3 | 4 | 1 |
| Company-Owned1 | 2022 | 3 | 3 | 0 |
|  | 2023 | 3 | 5 | +2 |
|  | 2024 | 5 | 42 | -1 |
| Total Outlets | 2022 | 6 | 6 | 0 |
|  | 2023 | 6 | 8 | +2 |
|  | 2024 | 8 | 8 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 48–51)

Question 10

What is the difference in requirements for assigning a Casa De Corazon franchise to a franchisee-controlled entity versus another type of entity?

Accepted Answer

IVE FRANCHISEES SHOULD BE ADVISED THAT NO CERTIFIED PUBLIC ACCOUNTANT HAS AUDITED THESE FIGURES OR EXPRESSED HIS/HER OPINION WITH REGARD TO THE CONTENTS AND FORM.

# **ITEM 22 CONTRACTS**

Attached to this Disclosure Document as Exhibit A are state specific addenda to the Disclosure Document. Attached as Exhibit F is a copy of the form Casa de Corazon Franchise Agreement, state specific addenda to the Franchise Agreement, if any, form of a Guaranty to be signed by shareholders of a corporate franchisee, members of a limited liability company franchisee (and their spouses), or partners of a partnership franchisee (and their spouses), as a condition to your transfer of the Franchise Agreement to a corporation, limited liability company or partnership, a Statement of Ownership and Management, Lease Rider, and a Declaration of Restrictions, Notice of Option.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 11

What are all the fees a Casa De Corazon franchisee must pay, considering both the initial fees in Item 5 and the ongoing fees in Item 6?

Accepted Answer

[Item 5: INITIAL FEES]

#### *Initial Franchise Fee*

Our initial franchise fee ("**Initial Franchise Fee**") for a Center is $70,000, payable when you sign the Franchise Agreement. The Initial Franchise Fee is due when you sign the Franchise Agreement, is fully earned by us at that time and is nonrefundable.

We will reduce the Initial Franchise Fee in the following situations. First, if you are purchasing your second or subsequent Center we will reduce the Initial Franchise Fee by 50% of the then-current initial franchise fee you would otherwise pay for that Center. We also provide a 20% discount off the Initial Franchise Fee if you qualify for our Veterans Program. To qualify for this program, you must be a current member of the United States military, or a veteran who received an honorable discharge from a branch of the United States military. You may only use one of these discounts at a time. We can modify or terminate these discounts at any time. These discounts apply to the Initial Franchise Fee for Centers opened under the Development Agreement.

#### *Development Fee*

When you sign a Development Agreement, you must pay us a Development Fee of $10,000 multiplied by the number of Casa de Corazon Centers to be developed under your Development Agreement, with a minimum of at least 2 Casa de Corazon Centers. We will then apply this fee on a pro rata basis toward payment of a portion of the Initial Franchise Fee for each Casa de Corazon Center you open under the Development Agreement (but this portion of your Initial Franchise Fee is not subject to refund under any circumstances). The Development Fee is payable in full when you sign the Development Agreement and it is nonrefundable. These amounts are in addition to the payment of the Initial Franchise Fee.

#### *Casa Branded Items*
[Item 5: INITIAL FEES]
---

#### *Casa Branded Items*

You must also buy from our affiliate branded Casa de Corazon items to begin operations, including staff uniforms and printed tour packet materials. The package you must buy before opening ranges from $4,500 to $7,800 depending upon the quantity and type of items in the package you purchase. You must also purchase from our affiliate the Casa de Corazon Internal Brand Package which includes internal signage, a food board, and other brand identifying materials. The cost for this package ranges from $14,500 to $20,000 depending upon the number of classrooms in the Center. You must pay for all of these items upon receipt of an invoice. None of these amounts are refundable.

#### *Introductory Supplemental Curriculum*

You must also purchase from our affiliate introductory supplemental curriculum for use in your Center's pre-school classrooms. The cost for this curriculum ranges depending upon the number of pre-school classrooms you will have in your Center. A typical Center will have 3-5 pre-school classrooms depending upon its size. The cost for the introductory supplemental curriculum for 3 pre-school classrooms is $600 and $1,000 for 5 classrooms. You must pay this amount upon receipt of an invoice. This amount is not refundable.

### *Grand Opening Advertising*

You must spend at least $10,000 on grand opening advertising before the opening of your Center. If you fail to spend this amount you must pay us the difference and we will put it in the Brand Fund.

---
[Item 6: OTHER FEES]

#### Notes:

- (1) **Increases**. Without your consent, we will not, during the term of your Franchise Agreement, modify the Royalty Fee, Brand Fund Contribution, Grand Opening Advertising, Renewal Fee or Transfer Fee from the amounts disclosed in the chart above. However, we can modify any other fees or other amounts charged to you on 30 days' notice, but any modification of the Technology Fee, New Director/Manager Training amount, Curriculum and Assessment Training amount, Convention Fee, Website Modification Fee and Financial Reporting Fee will be capped at 10% of the then-current fee or other amount, except that we can increase a fee or other amount in any given year by greater than 10% to adjust for prior years when no increase, or an increase of less than 10%, was implemented, regardless of whether the fee or other amount was actually charged or collected. The annual adjustment cap discussed above does not limit our or our affiliates' ability to increase any other fee or amount, or to impose new fees as permitted by the Franchise Agreement.
- (2) **Gross Revenue**. You must pay us a Royalty Fee on the monthly Gross Revenues of your Center. Gross Revenues mean the total amount of revenues, income, receipts and other fees received from all business activities taking place by or through the Center, and all other services and products, if any, sold under the Marks, or otherwise related to the Center.
- (3) **Technology Fee**. This fee covers our provision to you of certain technology services, such as use of an online tool to assist you in your Center's operations, at least 3 email addresses, a project management platform, cloud storage for certain documents and the Casa App. You will still need to purchase various technology.
- (4) **Convention Fee**. You or your Director or Operations Manager, if any, must attend any conference we decide to have for franchisees. This fee will cover the cost of that registration. If you want to

send additional people to the Annual Conference, for each one you will pay an additional registration fee.

For more information as to your initial investment, see Item 7.

Question 12

What is the highest total revenue among the Casa De Corazon centers listed?

Accepted Answer

|  | Affiliate Center 1 | Affiliate Center 2 | Affiliate Center 3 | Franchised Center 1 | Franchised Center 2 |
|---|---|---|---|---|---|
| Year Opened | 2010 | 2014 | 2018 | 2019 | 2020 |
| Full-Time Student | 111 | 142 | 100 | 113 | 121 |
| Equivalent Enrollment1 |  |  |  |  |  |
| Occupancy Rate2 | 94% | 76% | 73% | 95% | 96% |
| Revenues |  |  |  |  |  |
| Tuition | $2,790,351 | $3,290,121 | $2,343,521 | $2,650,896 | $2,844,360 |
| Photography Rebates | $350 | $567 | $0 | $246 | $333 |
| Total Revenues3,4 | $2,790,701 | $3,290,688 | $2,343,521 | $2,651,142 | $2,844,693 |
| Direct Expenses |  |  |  |  |  |
| Educational and | $32,661 | $32,220 | $23,052 | $26,441 | $29,779 |
| Childcare Expenses |  |  |  |  |  |
| Child Assessment | $2,759 | $2,966 | $2,580 | $2,120 | $2,025 |
| Tools5 |  |  |  |  |  |
| CPR/First Aid | $1,132 | $834 | $657 | $2,085 | $2,229 |
| Training |  |  |  |  |  |
| Field Trips and | $13,739 | $14,592 | $7,238 | $24,025 | $13,365 |
| Activities |  |  |  |  |  |
| Furniture/Equipment | $9,020 | $10,692 | $1,400 | $348 | $240 |
| Food | $96,327 | $99,446 | $59,092 | $98,398 | $73,315 |
| Hiring/Training6 | $4,973 | $8,335 | $5,922 | $14,792 | $6,425 |
| Janitorial and Kitchen | $19,010 | $22,346 | $12,660 | $13,603 | $13,825 |
| Supplies |  |  |  |  |  |
| Licenses & Permits | $852 | $1,055 | $1,960 | $3,422 | $2,545 |
| Staff Payroll, Benefits | $1,506,577 | $1,800,954 | $1,239,037 | $1,173,777 | $1,541,734 |
| and Payroll Taxes7 |  |  |  |  |  |
| Payroll Processing | $10,085 | $10,085 | $7,203 | $10,048 | $4,560 |
| Uniforms | $926 | $1,422 | $1,253 | $3,176 | $2,513 |
| Total Direct Expenses | $1,698,061 | $2,004,947 | $1,362,054 | $1,372,236 | 1,692,555 |
|  |  |  |  |  |  |
| Gross Profit | $1,092,640 | $1,285,742 | $981,467 | $1,278,906 | 1,152,138 |
|  |  |  |  |  |  |
| Other Expenses |  |  |  |  |  |
| Accounting8 | $12,000 | $12,000 | $12,000 | $12,128 | $520 |
| Computer, IT, | $17,693 | $16,982 | $6,084 | $7,518 | $830 |
| Software & Website |  |  |  |  |  |
| Human Resources9 | $1,000 | $1,000 | $1,000 | $0 | $0 |
| Insurance | $34,556 | $34,556 | $50,068 | $35,306 | $29,543 |
| Legal & | $5,839 | $5,839 | $5,839 | $14,526 | $9,423 |
| Professional10 |  |  |  |  |  |
| Brand Fund | $55,814 | $65,814 | $46,870 | $53,023 | $56,894 |
| Contribution11 |  |  |  |  |  |
| Marketing & | $13,265 | $13,711 | $11,544 | $12,459 | $10,000 |
| Advertising12 |  |  |  |  |  |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 43–48)

Question 13

How does the initial franchise fee for Casa De Corazon in Item 5 compare to the estimated initial investment range in Item 7?

Accepted Answer

| Type of Expenditure1 | Low Amount | High | Method of | When Due | To Whom |
|---|---|---|---|---|---|
|  |  | Amount | Payment |  | Payment is to be Made |
| Initial Franchise Fee2 | $70,000 | $70,000 | Lump sum | Upon signing the Franchise Agreement | Us |
| Minibus3 | $3,000 | $55,000 | Lump sum | Before opening | Vendor |
| Real Estate and | $75,000 | $3,000,000 | As Incurred | Before opening | Landlord and |
| Improvements4 |  |  |  |  | vendors |
| Design Fees5 | $60,000 | $120,000 | Lump Sum | Before opening | Vendor |
| Furniture and Equipment6 | $160,000 | $250,000 | Lump sum | Before opening | Us and Vendors |
| Kitchen Equipment | $55,000 | $65,000 | Lump sum | Before opening | Vendors |
| Playground Equipment | $140,000 | $150,000 | Lump sum | Before opening | Us and Vendors |
| and Safety Surfacing |  |  |  |  |  |
| Initial Supplies7 | $44,000 | $55,000 | Lump sum | Before opening | Vendors |
| Internal Brand Package | $14,500 | $20,000 | Lump sum | Before opening | Us |
| Signage | $4,800 | $21,600 | Lump sum | Before opening | Vendors |
| Curriculum8 | $36,000 | $50,000 | Lump Sum | Before opening | Vendor |
| Travel and Living | $1,500 | $5,000 | As incurred | As incurred | Airlines, hotels, |
| Expenses While Training9 |  |  |  | during training | restaurants |
| Grand Opening | $10,000 | $10,000 | As incurred | Before opening | Vendors or us |
| Advertising10 |  |  |  | of the Center |  |
| Ongoing Advertising11 | $1,500 | $3,000 | As incurred | As incurred | Vendors or us |
| Technology Expenses12 | $12,000 | $17,500 | As incurred | Before opening | Vendors |
| Security System13 | $45,000 | $55,000 | Before opening | As agreed | Vendor |
| Insurance14 | $2,500 | $5,000 | Lump sum | As agreed | Vendor |
| Permits and Licenses15 | $4,000 | $7,000 | Lump sum | As incurred | Governmental Agencies |
| Legal and Professional | $10,000 | $15,000 | Lump sum | As incurred | Vendors |
| Fees |  |  |  |  |  |
| Pre-Opening Payroll | $7,500 | $24,000 | Before | As incurred | Employees |
| Expenses |  |  | opening |  |  |
| Miscellaneous Expenses16 | $10,000 | $20,000 | As agreed | As incurred | Vendors |
| Additional Funds for First 3 Months17 | $150,000 | $250,000 | As incurred | As incurred | Vendors and governmental agencies |
| TOTAL18 | $916,300 | $4,268,100 |  |  |  |

Question 14

How does the initial franchise fee for Casa De Corazon in Item 5 relate to the ongoing fees in Item 6?

Accepted Answer

[Item 5: INITIAL FEES]

#### *Initial Franchise Fee*

Our initial franchise fee ("**Initial Franchise Fee**") for a Center is $70,000, payable when you sign the Franchise Agreement. The Initial Franchise Fee is due when you sign the Franchise Agreement, is fully earned by us at that time and is nonrefundable.

[Item 6: OTHER FEES]

#### Notes:

- (3) **Technology Fee**. This fee covers our provision to you of certain technology services, such as use of an online tool to assist you in your Center's operations, at least 3 email addresses, a project management platform, cloud storage for certain documents and the Casa App. You will still need to purchase various technology.
- (1) **Increases**. Without your consent, we will not, during the term of your Franchise Agreement, modify the Royalty Fee, Brand Fund Contribution, Grand Opening Advertising, Renewal Fee or Transfer Fee from the amounts disclosed in the chart above. However, we can modify any other fees or other amounts charged to you on 30 days' notice, but any modification of the Technology Fee, New Director/Manager Training amount, Curriculum and Assessment Training amount, Convention Fee, Website Modification Fee and Financial Reporting Fee will be capped at 10% of the then-current fee or other amount, except that we can increase a fee or other amount in any given year by greater than 10% to adjust for prior years when no increase, or an increase of less than 10%, was implemented, regardless of whether the fee or other amount was actually charged or collected. The annual adjustment cap discussed above does not limit our or our affiliates' ability to increase any other fee or amount, or to impose new fees as permitted by the Franchise Agreement.

Question 15

What is the latest year a Casa De Corazon center included in the 2024 statement opened?

Accepted Answer

|  | Affiliate Center 1 | Affiliate Center 2 | Affiliate Center 3 | Franchised Center 1 | Franchised Center 2 |
|---|---|---|---|---|---|
| Year Opened | 2010 | 2014 | 2018 | 2019 | 2020 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 43–48)

Question 16

What is the lowest occupancy rate among the Casa De Corazon centers listed?

Accepted Answer

|                                               | Affiliate Center 1 | Affiliate Center 2 | Affiliate Center 3 | Franchised Center 1 | Franchised Center 2 |
|-----------------------------------------------|-----------------------|-----------------------|-----------------------|------------------------|------------------------|
| Year Opened                                   | 2010                  | 2014                  | 2018                  | 2019                   | 2020                   |
| Full-Time Student                             |                       |                       |                       |                        |                        |
| Equivalent Enrollment1                        | 111                   | 142                   | 100                   | 113                    | 121                    |
| Occupancy Rate2                               | 94%                   | 76%                   | 73%                   | 95%                    | 96%                    |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 43–48)

Question 17

What is the range of years that the Casa De Corazon centers included in the financial performance representation opened?

Accepted Answer

to omit costs incurred by the affiliateowned Centers that a franchisee would not have incurred, and to add costs that we reasonably expect a franchisee would incur.

|                                               | Affiliate Center 1 | Affiliate Center 2 | Affiliate Center 3 | Franchised Center 1 | Franchised Center 2 |
|-----------------------------------------------|-----------------------|-----------------------|-----------------------|------------------------|------------------------|
| Year Opened                                   | 2010                  | 2014                  | 2018                  | 2019                   | 2020                   |
| Full-Time Student                             |                       |                       |                       |                        |                        |
| Equivalent Enrollment1                        | 111                   | 142                   | 100                   | 113                    | 121                    |
| Occupancy Rate2                               | 94%                   | 76%                   | 73%                   | 95%                    | 96%                    |
| Revenues                                      |                       |                       |                       |                        |                        |
| Tuition                                       | \$2,790,351           | \$3,290,121           | \$2,343,521           | \$2,650,896            | \$2,844,360            |
| Photography Rebates                           | \$350                 | \$567                 | \$0                   | \$246                  | \$333                  |
| Total Revenues3,4                             | \$2,790,701           | \$3,290,688           | \$2,343,521           | \$2,651,142            | \$2,844,693            |
| Direct Expenses                               |                       |                       |                       |                        |                        |
| Educational and                               |                       |                       |                       |                        |                        |
| Childcare Expenses                            | \$32,661              | \$32,220              | \$23,052              | \$26,441               | \$29,779               |
| Child Assessment | \$2,759 | \$2,966 | \$2,580 | \$2,120 | \$2,025 |
| Tools5 |  |  |  |  |  |
| CPR/First Aid                                 |                       |                       |                       |                        |                        |
| Training                                      | \$1,132               | \$834                 | \$657                 | \$2,085                | \$2,229                |
| Field Trips and                               |                       |                       |                       |                        |                        |
| Activities                                    | \$13,739              | \$14,592              | \$7,238               | \$24,025               | \$13,365               |
| Furniture/Equipment                           | \$9,020               | \$10,692              | \$1,400               | \$348                  | \$240                  |
| Food                                          | \$96,327              | \$99,446              | \$59,092              | \$98,398               | \$73,315               |
| Hiring/Training6                              | \$4,973               | \$8,335               | \$5,922               | \$14,792               | \$6,425                |
| Janitorial and Kitchen                        |                       |                       |                       |                        |                        |
| Supplies                                      | \$19,010              | \$22,346              | \$12,660              | \$13,603               | \$13,825               |
| Licenses & Permits                            | \$852                 | \$1,055               | \$1,960               | \$3,422                | \$2,545                |
| Staff Payroll, Benefits | \$1,506,577 | \$1,800,954 | \$1,239,037 | \$1,173,777 | \$1,541,734 |
| and Payroll Taxes7 |  |  |  |  |  |
| Payroll Processing                            | \$10,085              | \$10,085              | \$7,203               | \$10,048               | \$4,560                |
| Unif

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 43–48)

Question 18

How does the tuition revenue compare between the affiliate-owned and franchised Casa De Corazon centers?

Accepted Answer

|  | Affiliate Center 1 | Affiliate Center 2 | Affiliate Center 3 | Franchised Center 1 | Franchised Center 2 |
|---|---|---|---|---|---|
| Year Opened | 2010 | 2014 | 2018 | 2019 | 2020 |
| Full-Time Student | 111 | 142 | 100 | 113 | 121 |
| Equivalent Enrollment1 |  |  |  |  |  |
| Occupancy Rate2 | 94% | 76% | 73% | 95% | 96% |
| Revenues |  |  |  |  |  |
| Tuition | $2,790,351 | $3,290,121 | $2,343,521 | $2,650,896 | $2,844,360 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 43–48)

Question 19

If a Casa De Corazon franchisee chooses not to use the approved supplier for market analysis and site selection services, what must the franchisee do?

Accepted Answer

We have one supplier who will provide you with market analysis and site selection services, at no additional charge to you. If you choose not to use this supplier we must approve the supplier(s) you use for these services and you will need to pay their fees for these services. If you choose to purchase additional services beyond those our supplier provides without additional charge, you will need to pay for those services.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 18–20)

Question 20

If a Casa De Corazon franchisee is located in an area with only one type of supplier, what is the franchisee required to do?

Accepted Answer

We only have one approved supplier for reusable food storage bags, child assessment tools, curriculum, and certain software you will use at your Center. We do not plan on approving any other suppliers from whom you could purchase these items. If you are located in an area where there is only one type of supplier we require you to purchase certain items from, you must purchase the items only from that supplier. For example, a local food cooperative.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 18–20)

Question 21

If a Casa De Corazon franchisee purchases additional market analysis and site selection services beyond those provided without additional charge, who is responsible for the fees?

Accepted Answer

We have one supplier who will provide you with market analysis and site selection services, at no additional charge to you. If you choose not to use this supplier we must approve the supplier(s) you use for these services and you will need to pay their fees for these services. If you choose to purchase additional services beyond those our supplier provides without additional charge, you will need to pay for those services.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 18–20)

Question 22

According to the Casa De Corazon agreement, what happens if the Developer is not a resident of Minnesota?

Accepted Answer

The parties agree, however, that if Developer is not a resident of Minnesota, or if the Development Business is not located in Minnesota, then they hereby waive the provisions of the Minnesota Franchise Act, Minn. Stat. Ch. 80C, and the regulations promulgated thereunder.

Source: Item 23 — RECEIPTS (FDD pages 51–215)

Question 23

According to the Casa De Corazon agreement, what happens if the Development Business is not located in Minnesota?

Accepted Answer

Notwithstanding anything to the contrary set forth in the Casa de Corazon Development Agreement, the following provisions shall supersede any inconsistent provisions and apply to all Casa de Corazon franchises offered and sold in the State of Minnesota or if the Casa de Corazon business will be located in the State of Minnesota.

This Minnesota Addendum is only applicable if Developer is a resident of Minnesota or if Developer's business will be located in Minnesota.

Source: Item 23 — RECEIPTS (FDD pages 51–215)

Question 24

According to the Casa De Corazon agreement, what happens if no franchise agreement has been executed by Franchisor and Developer?

Accepted Answer

Developer understands and agrees that any activities undertaken in reliance on this Agreement or the potential grant of a franchise hereunder prior to signing a franchise agreement with Franchisor are at Developer's own risk and expense.

Source: Item 23 — RECEIPTS (FDD pages 51–215)

Question 25

According to the Casa De Corazon agreement, what happens if a franchise agreement has been executed by Franchisor and Developer?

Accepted Answer

- (a) **Development Obligations**. Developer (and/or its Affiliate) shall develop, open for business, and continuously operate the agreed-upon cumulative number of Franchised Business(es) within the Development Territory by the dates set forth on the Development Schedule. Developer or its Affiliate will develop, open, and operate each Franchised Business under a separate franchise agreement (and related documents) with Franchisor. The franchise agreement (and related documents) that Developer or its Affiliate will sign for each Franchised Business will be Franchisor's then-current form of franchise agreement and related documents, including, without limitation, personal guarantees (collectively, the "Franchise Documents") in effect and being used by Franchisor for the granting of new franchises, any or all of the terms and conditions of which may differ substantially from the terms and conditions contained in the form of franchise agreement currently used by Franchisor as of the Effective Date. On the date this Agreement is executed by Developer, Developer shall also execute a franchise agreement for its first Franchised Business.
- (b) **Franchise Approval**. Developer acknowledges and agrees that franchise agreements are granted by Franchisor only after submission and approval of a formal application for a Casa de Corazon franchise based on Franchisor's then-current requirements for franchisees and provided that Developer (and/or its Affiliate) supplies all information requested by Franchisor and pays all required fees. Franchisor may, in its sole discretion, choose to grant or deny applications for franchise agreements. Developer shall comply in all respects with Franchisor's franchise application policies and procedures in force at such time as Developer (and/or its Affiliate) may apply for a franchise agreement. Developer understands and agrees that any activities undertaken in reliance on this Agreement or the potential grant of a franchise hereunder prior to signing a franchise agreement with Franchisor are at Developer's own risk and expense.

Source: Item 23 — RECEIPTS (FDD pages 51–215)

Question 26

According to the Casa De Corazon agreement, what happens if there is a statute in the state in which the Development Territory is situated that specifically governs relationships between franchisees and franchisors?

Accepted Answer

If there is a statute in the state in which the Developer or the Development Territory is situated that specifically governs relationships between franchisees and franchisors and that law would otherwise apply, then that particular law shall apply.

Source: Item 23 — RECEIPTS (FDD pages 51–215)

Question 27

According to the Casa De Corazon Franchise Agreement, what ownership stake must the license holder have in the entity, if required by applicable state law?

Accepted Answer

We will grant the right to open Centers under the Development Agreement only to you or your affiliates that we approve, and subject to applicable local, state, and federal laws and regulations. The affiliate must generally be a corporation, limited liability company, or partnership, of which you or one or more of your majority owners owns at least 51% of the total authorized ownership interests, but only if you or the owner(s) also has the right to control the day-to-day management of the corporation, limited liability

company, or partnership.

Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 35–36)

Question 28

What actions can the Secured Party take if Casa De Corazon fails to perform an agreement regarding the collateral?

Accepted Answer

- (e) If Debtor at any time fails to perform or observe any agreement contained in paragraph (d) above, and such failure shall continue for a period of 10 calendar days after Secured Party gives Debtor written notice thereof, Secured Party may (but need not) (i) perform or observe such agreement on behalf of Debtor (or, at Secured Party's option, in Secured Party's own name), or (ii) take any and all other actions which Secured Party may reasonably deem necessary to cure or correct such failure (including without limitation the payment of taxes, the satisfaction of security interests, liens or encumbrances (other than Permitted Interests), the performance of obligations under contracts or agreements with account debtors or other obligors, the procurement and maintenance of insurance, the execution of financing statements, the endorsement of instruments, and the procurement of repairs, transportation or insurance).

For purposes of this Section 2(e), Debtor hereby appoints (which appointment is coupled with an interest) Secured Party as its attorney-in-fact with the right (but not the duty) to create, prepare, complete, execute, deliver, endorse or file, in the name and on behalf of Debtor, any and all instruments, documents, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by Debtor to carry out Debtor's duties under this Agreement until Debtor's default(s) under this paragraph has been cured hereunder.

#### 3. Remedies.

Upon the occurrence of an Event of Default under the Note, or any breach of default of any term of this Agreement by Debtor, Secured Party may exercise any one or more of the following rights

or remedies if any of the Secured Obligations are not paid when due: (i) exercise and enforce any or all rights and remedies available after default to a secured party under the Minnesota Uniform Commercial Code, including but not limited to the right to take possession of any Collateral and the right to sell, lease or otherwise dispose of or use any or all of the Collateral; (ii) examine or inspect any Collateral, wherever located, and examine, inspect and copy Debtor's books and records pertaining to the Collateral and its business and financial condition; (iii) send requests to account debtors or other obligors for verification of amounts owed to Debtor; (iv) require Debtor to assemble the Collateral and make it available to Secured Party at a place to be designated by Secured Party which is reasonably convenient to both parties; and (v) exercise or enforce any or all other rights or remedies available to Secured Party by law or agreement against the Collateral, against Debtor or against any other person or property. Secured Party is hereby granted a non-exclusive, worldwide and royalty-free license to use or otherwise exploit all trademarks, franchises, copyrights and patents of Debtor that Secured Party deems necessary or appropriate to the disposition of any Collateral, so long as such use or exploitation shall in no way impair the proprietary value of such trademarks, franchises, copyrights and patents. If notice to Debtor of any intended disposition of Collateral or any other intended action is required by law in a particular instance, such notice shall be deemed commercially reasonable if given in writing (in the manner specified in Section 5 hereof) at least ten calendar days prior to the date of intended disposition or other action. Any deficiency with respect to the Secured Obligations that exists after the disposition or liquidation of the Collateral shall be a continuing liability of the Debtor to the Secured Party and shall be immediately paid by the Debtor to the Secured Party. For the sake of clarity, the payment of any Secured Obligations by Debtor pursuant to this Section shall not release Debtor's obligation to pay and fully satisfy any and all future earned Secured Obligations hereunder.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 29

Does the addendum apply if the jurisdictional requirements of Minnesota Statutes, Chapter 80C are not met independently for Casa De Corazon?

Accepted Answer

Each provision of this Addendum shall be effective only to the extent, with respect to such provision, that the jurisdictional requirements of the Minnesota Statutes, Chapter 80C, are met independently without reference to this Addendum.

Source: Item 23 — RECEIPTS (FDD pages 51–215)

Question 30

Does the addendum to the Casa De Corazon Disclosure Document apply if the jurisdictional requirements of Minnesota Statutes, Chapter 80C are not met independently?

Accepted Answer

- 8. Each provision of this addendum to the Disclosure Document shall be effective only to the extent that with respect to such provision, the jurisdictional requirements of Minnesota Statutes, Chapter 80C are met independently without reference to this Addendum.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 36–43)

Question 31

In the Casa De Corazon agreement, what happens if the context requires a different meaning for terms defined in the Uniform Commercial Code?

Accepted Answer

- (e) Except to the extent otherwise required by law, this Agreement shall be governed by the laws of the State of Minnesota without regard to its conflicts-of-law principles and, unless the context otherwise requires, all terms used herein which are defined in Articles 1 and 9 of the Uniform Commercial Code, as in effect in said state shall have the meanings therein stated and all capitalized terms used herein which are defined in the Note shall have the meanings stated therein. DEBTOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN HENNEPIN COUNTY, MINNESOTA AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATED TO THIS AGREEMENT, THE NOTE OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 32

What agreements must a Casa De Corazon developer be in full compliance with to maintain exclusive rights within the Development Territory?

Accepted Answer

Provided Developer and its Affiliates are in full compliance with this Agreement (including with respect to the cumulative number of Franchised Businesses opened and in operation as required by the Development Schedule) and all other agreements between Developer (or any of its Affiliates) and Franchisor (or any of Franchisor's affiliates), including any franchise agreement between any of the foregoing parties, then, during the Term only, except as otherwise provided in this Agreement, neither Franchisor nor any of its affiliates will operate, or authorize any other party to operate, a Spanish immersion intercultural early childhood learning center under the Casa de Corazon mark, that is physically located within the Development Territory.

Source: Item 23 — RECEIPTS (FDD pages 51–215)

Question 33

What agreements must a Casa De Corazon franchisee be in compliance with to prevent Casa De Corazon from operating a competitive center in their Designated Territory?

Accepted Answer

As long as you are in compliance with your Franchise Agreement and any other agreements with us and any of our affiliates, we will not operate or grant a third party the right to operate under the Casa de Corazon name an early childhood learning center physically located in your Designated Territory. Other than this limitation there are no other prohibitions on us in your Designated Territory. For example, we can operate or allow others to operate similar or identical businesses within the Designated Territory if such businesses do not operate under our Marks, and to operate similar or identical business outside of your Designated Territory under any trademarks even if the businesses compete with your Center in your Designated Territory. We can also operate or allow others to operate businesses inside the Designated Territory under the Marks so long as the businesses are not competitive with your Center. We can sell any products we or our affiliates provide to you for use in your Center to any person, whether in or outside your Designated Territory. We can sell or grant third parties the right to sell goods or services competitive with those sold by your Center under the Marks or otherwise through other distribution channels including the Internet, catalog sales, telemarketing or other direct marketing, inside and out of your Designated Territory. We can acquire businesses in the Designated Territory that are similar to your Center or sell our business whether through a sale of assets or stock to anyone, regardless of whether they operate or franchise the operation of businesses similar to your Center. We can also operate or allow others to operate businesses located inside or outside of your Designated Territory that sell to locations in or outside of your Designated Territory our proprietary curriculum, our recipes or both, either under the Marks or otherwise.

You will not receive an exclusive territory. You may face competition from other Casa de Corazon franchisees, from outlets that we own, or from other channels of distribution or competitive businesses that we control.

Source: Item 12 — TERRITORY (FDD pages 31–33)

Question 34

Does applicable law affect the notice periods for termination outlined in the Casa De Corazon franchise agreement?

Accepted Answer

y provision of this Agreement or any specification, standard or operating procedure prescribed by Franchisor and does not correct such failure within thirty (30) days after notice to Franchisee.
- (b) Compliance with Applicable Law The foregoing notwithstanding, to the extent that the provisions of this Agreement provide for periods of notice less than those required by applicable law, or provide for termination, cancellation, nonrenewal or the like other than in accordance with applicable law, such provisions shall, to the extent such are not in accordance with applicable law, be superseded by said law, and Franchisor shall comply with applicable law in connection with each of these matters.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 35

Is the application of Minnesota law to the Casa De Corazon Development Agreement subject to state law?

Accepted Answer

|  | Section in |  |
|---|---|---|
|  | Franchise, Development Agreement, or Other |  |
| Provision | Agreements | Summary |
| a. Length of the franchise term | Franchise Agreement - Section 2(a) Development Agreement - Section 5 | 10 years. Expires on date when last Center under the Development Schedule opens, or should have opened, for business, or the Development Agreement is terminated (subject to applicable state law). |
| b. Renewal or extension of the term | Franchise Agreement - Section 2(b) Development Agreement - None | If you are in good standing and you meet our conditions, you can renew your franchise for an additional 10-year period. There are no renewal rights under the Development Agreement. |
| c. Requirements for you to renew or extend | Franchise Agreement - Section 2(c) Development Agreement - None | Give written notice, sign new franchise agreement (which may contain materially different terms and conditions than your original Franchise Agreement); upgrade your Center and update your equipment to comply with then-current standards; provide us with evidence of property control; sign general release, subject to applicable state law; pay renewal fee. Not Applicable |
| d. Termination by you | Franchise Agreement - Section 21(f) Development Agreement - None Section in Franchise, Development Agreement, or Other | You may terminate on 10 days’ notice to us, if you are in compliance with the Franchise Agreement and we materially breach the agreement and fail to cure the breach within 30 days after you give us notice of the breach. You may not terminate (subject to applicable state law). |
| Provision | Agreements | Summary |
| v. Choice of forum | Franchise Agreement - Section 22(b) and (e) Development Agreement - Section 7(d) | Mediation to be held in a metropolitan area with a population of at least 250,000 people that is not located within 200 miles of your Center or our principal office. In most cases, litigation must be brought in the state or federal courts located in Hennepin County, Minnesota, except as provided in a state specific addendum. Subject to state law, mediation to be held in accordance with requirements of franchise agreement. |
| w. Choice of law | Franchise Agreement - Section 25(a) Development Agreement - Section 9(c) | Subject to state law, Minnesota law generally applies. Subject to state law, Minnesota law generally applies. |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 36–43)

Question 36

Is the application of Minnesota law to the Casa De Corazon Franchise Agreement subject to state law?

Accepted Answer

|  | Section in |  |
|---|---|---|
|  | Franchise, Development Agreement, or Other |  |
| Provision | Agreements | Summary |
| a. Length of the franchise term | Franchise Agreement - Section 2(a) Development Agreement - Section 5 | 10 years. Expires on date when last Center under the Development Schedule opens, or should have opened, for business, or the Development Agreement is terminated (subject to applicable state law). |
| b. Renewal or extension of the term | Franchise Agreement - Section 2(b) Development Agreement - None | If you are in good standing and you meet our conditions, you can renew your franchise for an additional 10-year period. There are no renewal rights under the Development Agreement. |
| c. Requirements for you to renew or extend | Franchise Agreement - Section 2(c) Development Agreement - None | Give written notice, sign new franchise agreement (which may contain materially different terms and conditions than your original Franchise Agreement); upgrade your Center and update your equipment to comply with then-current standards; provide us with evidence of property control; sign general release, subject to applicable state law; pay renewal fee. Not Applicable |
| d. Termination by you | Franchise Agreement - Section 21(f) Development Agreement - None Section in Franchise, Development Agreement, or Other | You may terminate on 10 days’ notice to us, if you are in compliance with the Franchise Agreement and we materially breach the agreement and fail to cure the breach within 30 days after you give us notice of the breach. You may not terminate (subject to applicable state law). |
| Provision | Agreements | Summary |
| v. Choice of forum | Franchise Agreement - Section 22(b) and (e) Development Agreement - Section 7(d) | Mediation to be held in a metropolitan area with a population of at least 250,000 people that is not located within 200 miles of your Center or our principal office. In most cases, litigation must be brought in the state or federal courts located in Hennepin County, Minnesota, except as provided in a state specific addendum. Subject to state law, mediation to be held in accordance with requirements of franchise agreement. |
| w. Choice of law | Franchise Agreement - Section 25(a) Development Agreement - Section 9(c) | Subject to state law, Minnesota law generally applies. Subject to state law, Minnesota law generally applies.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 36–43)

Question 37

Is the choice of law for the Casa De Corazon Development Agreement subject to state law?

Accepted Answer

|  | Section in |  |
|---|---|---|
|  | Franchise, Development Agreement, or Other |  |
| Provision | Agreements | Summary |
| a. Length of the franchise term | Franchise Agreement - Section 2(a) Development Agreement - Section 5 | 10 years. Expires on date when last Center under the Development Schedule opens, or should have opened, for business, or the Development Agreement is terminated (subject to applicable state law). |
| b. Renewal or extension of the term | Franchise Agreement - Section 2(b) Development Agreement - None | If you are in good standing and you meet our conditions, you can renew your franchise for an additional 10-year period. There are no renewal rights under the Development Agreement. |
| c. Requirements for you to renew or extend | Franchise Agreement - Section 2(c) Development Agreement - None | Give written notice, sign new franchise agreement (which may contain materially different terms and conditions than your original Franchise Agreement); upgrade your Center and update your equipment to comply with then-current standards; provide us with evidence of property control; sign general release, subject to applicable state law; pay renewal fee. Not Applicable |
| d. Termination by you | Franchise Agreement - Section 21(f) Development Agreement - None Section in Franchise, Development Agreement, or Other | You may terminate on 10 days’ notice to us, if you are in compliance with the Franchise Agreement and we materially breach the agreement and fail to cure the breach within 30 days after you give us notice of the breach. You may not terminate (subject to applicable state law). |
| Provision | Agreements | Summary |
| v. Choice of forum | Franchise Agreement - Section 22(b) and (e) Development Agreement - Section 7(d) | Mediation to be held in a metropolitan area with a population of at least 250,000 people that is not located within 200 miles of your Center or our principal office. In most cases, litigation must be brought in the state or federal courts located in Hennepin County, Minnesota, except as provided in a state specific addendum. Subject to state law, mediation to be held in accordance with requirements of franchise agreement. |
| w. Choice of law | Franchise Agreement - Section 25(a) Development Agreement - Section 9(c) | Subject to state law, Minnesota law generally applies. Subject to state law, Minnesota law generally applies. |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 36–43)

Question 38

Is the choice of law for the Casa De Corazon Franchise Agreement subject to state law?

Accepted Answer

|  | Section in |  |
|---|---|---|
|  | Franchise, Development Agreement, or Other |  |
| Provision | Agreements | Summary |
| a. Length of the franchise term | Franchise Agreement - Section 2(a) Development Agreement - Section 5 | 10 years. Expires on date when last Center under the Development Schedule opens, or should have opened, for business, or the Development Agreement is terminated (subject to applicable state law). |
| b. Renewal or extension of the term | Franchise Agreement - Section 2(b) Development Agreement - None | If you are in good standing and you meet our conditions, you can renew your franchise for an additional 10-year period. There are no renewal rights under the Development Agreement. |
| c. Requirements for you to renew or extend | Franchise Agreement - Section 2(c) Development Agreement - None | Give written notice, sign new franchise agreement (which may contain materially different terms and conditions than your original Franchise Agreement); upgrade your Center and update your equipment to comply with then-current standards; provide us with evidence of property control; sign general release, subject to applicable state law; pay renewal fee. Not Applicable |
| d. Termination by you | Franchise Agreement - Section 21(f) Development Agreement - None Section in Franchise, Development Agreement, or Other | You may terminate on 10 days’ notice to us, if you are in compliance with the Franchise Agreement and we materially breach the agreement and fail to cure the breach within 30 days after you give us notice of the breach. You may not terminate (subject to applicable state law). |
| Provision | Agreements | Summary |
| v. Choice of forum | Franchise Agreement - Section 22(b) and (e) Development Agreement - Section 7(d) | Mediation to be held in a metropolitan area with a population of at least 250,000 people that is not located within 200 miles of your Center or our principal office. In most cases, litigation must be brought in the state or federal courts located in Hennepin County, Minnesota, except as provided in a state specific addendum. Subject to state law, mediation to be held in accordance with requirements of franchise agreement. |
| w. Choice of law | Franchise Agreement - Section 25(a) Development Agreement - Section 9(c) | Subject to state law, Minnesota law generally applies. Subject to state law, Minnesota law generally applies. |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 36–43)

Question 39

What is the condition regarding the Secured Party's consent to modify, amend, or cancel obligations for Casa De Corazon?

Accepted Answer

Debtor will not agree to modify, amend or cancel any such obligation (other than those arising in the ordinary course of business) without Secured Party's prior written consent, which shall not be unreasonably withheld, nor will Debtor subordinate any such right to payment to claims of other creditors of such account debtor or other obligor.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 40

What conditions must a Casa De Corazon franchisee meet to be in 'good standing' for renewal?

Accepted Answer

|  | Section in |  |
|---|---|---|
|  | Franchise, Development Agreement, or Other |  |
| Provision | Agreements | Summary |
| a. Length of the franchise term | Franchise Agreement - Section 2(a) Development Agreement - Section 5 | 10 years. Expires on date when last Center under the Development Schedule opens, or should have opened, for business, or the Development Agreement is terminated (subject to applicable state law). |
| b. Renewal or extension of the term | Franchise Agreement - Section 2(b) Development Agreement - None | If you are in good standing and you meet our conditions, you can renew your franchise for an additional 10-year period. There are no renewal rights under the Development Agreement. |
| c. Requirements for you to renew or extend | Franchise Agreement - Section 2(c) Development Agreement - None | Give written notice, sign new franchise agreement (which may contain materially different terms and conditions than your original Franchise Agreement); upgrade your Center and update your equipment to comply with then-current standards; provide us with evidence of property control; sign general release, subject to applicable state law; pay renewal fee. Not Applicable |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 36–43)

Question 41

What conditions must a Casa De Corazon franchisee satisfy for renewal, as imposed by the franchisor?

Accepted Answer

urriculum specified by Franchisor and that provides natural organic meals made on-site for the students from Franchisor's proprietary recipes or recipes otherwise meeting Franchisor's standards.

- (b) Renewal Franchisee may renew the Franchise for an additional term of ten (10) years, subject to the satisfaction of any conditions imposed by Franchisor upon renewal, including those set forth in Section 2(c) below.
- (c) Conditions Franchisee must satisfy such conditions for renewal as Franchisor may impose, including that upon expiration of the Term of the Franchise, Franchisee shall have: (a) complied with all provisions of this Agreement; (b) operated the Franchised Business utilizing and conforming to the System of Operation; (c) utilized exclusively the Names and Marks in the operation of the Franchised Business; (d) upgraded the Franchised Center, including equipment, to meet Franchisor's standards; and (e) provided Franchisor with evidence of control of the premises for the Center for the renewal term. Additionally, Franchisee shall:
  - (i) Provided Franchisor at least two hundred ten (210) days prior written notice of its election to renew the Franchise; and
  - (ii) Within thirty (30) days after delivery to Franchisee of all agreements and documents required by Franchisor for renewal: (a) executed Franchisor's then current form of franchise agreement offered to prospective new franchisees and all other agreements and legal instruments and documents then customarily employed by Franchisor in the grant of Franchises to prospective new franchisees, including a general release; and (b) paid to Franchisor a renewal fee of Seven Thousand Five Hundred Dollars (\$7,500).
- (d) Renewal Acknowledgments Franchisee acknowledges that the right of renewal set forth herein does not give Franchisee the right to renew any specific provisions of this Agreement, and Franchisee recognizes that the terms of franchise agreements utilized by Franchisor upon renewal are likely to be substantially different than the terms offered by Franchisor as of the date hereof. Franchisee fur

Source: Item 22 — CONTRACTS (FDD page 51)

Question 42

What conditions must be met for the Addendum to the Casa De Corazon Development Agreement for the State of Minnesota to apply?

Accepted Answer

This Minnesota Addendum is only applicable if Developer is a resident of Minnesota or if Developer's business will be located in Minnesota.

Source: Item 23 — RECEIPTS (FDD pages 51–215)

Question 43

What are the conditions under which a Casa De Corazon franchisee, its affiliates, and its owners are prohibited from selling, leasing, or disposing of Center Assets?

Accepted Answer

Franchisee acknowledges and agrees that it, its affiliates, and its owners may not sell, lease, or otherwise dispose of any of the Center Assets until the earlier of: (i) the expiration of the Option Period (unless Franchisor gives notice of its intent to exercise the option within the Option Period); (ii) its receipt from Franchisor of a written notice that Franchisor does not intend to exercise its option; or (iii) the expiration of the option due to Franchisor's failure to comply with the deadlines set in this Section. If Franchisor provides written notice that it will not be exercising its option to purchase certain Center Assets, Franchisee, its affiliates, and its owners may sell, lease, or otherwise dispose of such assets in accordance with and subject to the provisions of this Agreement.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 44

In the context of Casa De Corazon's financial statements, what is the potential impact if actual results differ from the management's estimates and assumptions?

Accepted Answer

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Casa Franchising, LLC's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

Minneapolis, MN March 8, 2025

Source: Item 23 — RECEIPTS (FDD pages 51–215)

Question 45

Can a Casa De Corazon debtor modify obligations related to the collateral without consent?

Accepted Answer

Debtor will not agree to modify, amend or cancel any such obligation (other than those arising in the ordinary course of business) without Secured Party's prior written consent, which shall not be unreasonably withheld, nor will Debtor subordinate any such right to payment to claims of other creditors of such account debtor or other obligor.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 46

What are the dependencies for the Casa De Corazon Franchisor to issue the Franchise Documents?

Accepted Answer

- (b) **Franchise Approval**. Developer acknowledges and agrees that franchise agreements are granted by Franchisor only after submission and approval of a formal application for a Casa de Corazon franchise based on Franchisor's then-current requirements for franchisees and provided that Developer (and/or its Affiliate) supplies all information requested by Franchisor and pays all required fees. Franchisor may, in its sole discretion, choose to grant or deny applications for franchise agreements. Developer shall comply in all respects with Franchisor's franchise application policies and procedures in force at such time as Developer (and/or its Affiliate) may apply for a franchise agreement. Developer understands and agrees that any activities undertaken in reliance on this Agreement or the potential grant of a franchise hereunder prior to signing a franchise agreement with Franchisor are at Developer's own risk and expense.
- (c) **Franchise Documents**. Within twenty (20) days after Franchisor approves Developer's (or its Affiliate's) application for a Franchised Business and the issuance of

Source: Item 23 — RECEIPTS (FDD pages 51–215)

Question 47

What is the dependency for Casa De Corazon to change the general nature of the occupancy of the property?

Accepted Answer

- F.

Not suffer or permit any material change in the general nature of the occupancy of the Property without the prior written consent of Lender, not to be unreasonably withheld, conditioned or delayed.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 48

What is the dependency between compliance with the Development Schedule and the exclusive rights within the Casa De Corazon Development Territory?

Accepted Answer

- (c) **Development Territory**.

Provided Developer and its Affiliates are in full compliance with this Agreement (including with respect to the cumulative number of Franchised Businesses opened and in operation as required by the Development Schedule) and all other agreements between Developer (or any of its Affiliates) and Franchisor (or any of Franchisor's affiliates), including any franchise agreement between any of the foregoing parties, then, during the Term only, except as otherwise provided in this Agreement, neither Franchisor nor any of its affiliates will operate, or authorize any other party to operate, a Spanish immersion intercultural early childhood learning center under the Casa de Corazon mark, that is physically located within the Development Territory.

Source: Item 23 — RECEIPTS (FDD pages 51–215)

Question 49

What is the dependency for Casa De Corazon to grant easements or make changes to zoning?

Accepted Answer

- G.

Not grant any easement or dedication, file or record any plat, condominium declaration or restriction, or initiate or acquiesce in any zoning reclassification or similar changes in applicable laws, rules and ordinances provided the value of the Property is not materially impaired without the prior written consent of Lender, not to be unreasonably withheld, conditioned or delayed.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 50

What is the dependency between Casa De Corazon's Grantor's actions and the Lender's actions regarding the application of proceeds?

Accepted Answer

Application of Proceeds.Grantor shall promptly notify Lender of any loss or damage to the Property.

Lender may make proof of loss if Grantor fails to do so within ten (10) business days of the casualty.

Whether or not Lender's security is impaired, Lender may, at Lender's election, receive and retain the proceeds of any insurance and apply the proceeds to the reduction of the Indebtedness, payment of any lien affecting the Property, or the restoration and repair of the Property.

If Lender elects to apply the proceeds to restoration and repair, Grantor shall repair or replace the damaged or destroyed Improvements in a manner satisfactory to Lender.

Lender shall, upon satisfactory proof of such expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration if Grantor is not in default under this Mortgage.

Any proceeds which have not been disbursed within 180 days after their receipt and which Lender has not committed to the repair or restoration of the Property shall be used first to pay any amount owing to Lender under this Mortgage, then to pay accrued interest, and the remainder, if any, shall be applied to the principal balance of the Indebtedness.

If Lender holds any proceeds after payment in full of the Indebtedness, such proceeds shall be paid to Grantor as Grantor's interests may appear.

- 16.

Lender's Performance and Expenditures.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 51

What is the dependency between Casa De Corazon's Grantor's actions and the Lender's actions regarding insurance?

Accepted Answer

Unless Grantor provides Lender with evidence of the insurance coverage required hereunder at least twenty (20) days before the expiration of any existing policy or policies, with evidence of premium paid, Lender may purchase insurance at Grantor's expense to protect Lender's interests in the collateral.

The insurance may, but need not, protect Grantor's interests.

The coverage that Lender purchases may not pay any claim that Grantor makes or any claim that is made against Grantor in connection with the collateral.

Grantor may later cancel any insurance purchased by Lender, but only after providing Lender with evidence that Grantor has obtained insurance as required by their agreement.

If Lender purchases insurance for the collateral, Grantor shall be responsible for the costs of that insurance, including interest and any other charges Lender may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance.

The costs of the insurance may be added to Grantor's total outstanding balance or obligation.

The costs of the insurance purchased by Lender may be more than the cost of the insurance Grantor may be able to obtain on Grantor's own.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 52

What is the dependency between Casa De Corazon's Grantor's actions and the Lender's actions regarding performance and expenditures?

Accepted Answer

If any action or proceeding is commenced that would materially affect Lender's interest in the Property or if Grantor fails to comply with any provision of this Mortgage or any Loan Documents, after the expiration of any applicable grace or cure period including, but not limited to, Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Mortgage or any Loan Documents, Lender on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all Taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Property and paying all costs for insuring, maintaining and preserving the Property and complying with all governmental requirements (including, without limitation, any claims, costs or obligations arising under Environmental Laws).

All such expenses will become a part of the Indebtedness and, at Lender's option, will: (i) be payable on demand; (ii) be added to the balance of the Note; and (iii) be apportioned among and be payable with any installment payments to become due during either: (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (3) be treated as a balloon payment which will be due and payable at the Note's maturity.

The Mortgage also will secure payments of these amounts.

Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 53

What is the dependency between Casa De Corazon's Grantor's actions and the Lender's actions regarding the purchase of insurance?

Accepted Answer

Unless Grantor provides Lender with evidence of the insurance coverage required hereunder at least twenty (20) days before the expiration of any existing policy or policies, with evidence of premium paid, Lender may purchase insurance at Grantor's expense to protect Lender's interests in the collateral.

The insurance may, but need not, protect Grantor's interests.

The coverage that Lender purchases may not pay any claim that Grantor makes or any claim that is made against Grantor in connection with the collateral.

Grantor may later cancel any insurance purchased by Lender, but only after providing Lender with evidence that Grantor has obtained insurance as required by their agreement.

If Lender purchases insurance for the collateral, Grantor shall be responsible for the costs of that insurance, including interest and any other charges Lender may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance.

The costs of the insurance may be added to Grantor's total outstanding balance or obligation.

The costs of the insurance purchased by Lender may be more than the cost of the insurance Grantor may be able to obtain on Grantor's own.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 54

What is the dependency for Casa De Corazon to make material alterations to the property?

Accepted Answer

- D.

Not make any material alterations to any part of the Property that would materially impair the value of the Property without the prior written consent of Lender, not to be unreasonably withheld, conditioned or delayed.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 55

What is the dependency related to the Lender's consent for alterations to the Casa De Corazon property?

Accepted Answer

- D.

Not make any material alterations to any part of the Property that would materially impair the value of the Property without the prior written consent of Lender, not to be unreasonably withheld, conditioned or delayed.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 56

What is the dependency related to the Lender's consent for changes in the occupancy of the Casa De Corazon property?

Accepted Answer

- F.

Not suffer or permit any material change in the general nature of the occupancy of the Property without the prior written consent of Lender, not to be unreasonably withheld, conditioned or delayed.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 57

What is the dependency related to the Lender's consent for granting easements on the Casa De Corazon property?

Accepted Answer

- G.

Not grant any easement or dedication, file or record any plat, condominium declaration or restriction, or initiate or acquiesce in any zoning reclassification or similar changes in applicable laws, rules and ordinances provided the value of the Property is not materially impaired without the prior written consent of Lender, not to be unreasonably withheld, conditioned or delayed.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 58

What is the dependency between the transferee's obligations and the franchisor's approval in a Casa De Corazon franchise assignment?

Accepted Answer

- (ii) If an assignment (other than an assignment as set forth in Section 18(c)(i) above), alone or together with other previous, simultaneous or proposed transfers, would have the effect of transferring control of the Franchise created hereby or the Franchised Business:

- (a) the transferee shall meet Franchisor's then current standards for the issuance of a franchise, including satisfying any licensure requirements imposed by applicable law, be of good moral character and reputation and shall have a good credit rating, financial capabilities and competent business qualifications reasonably acceptable to Franchisor.

Franchisee shall provide Franchisor with the information it may reasonably require to make a determination concerning each proposed transferee;

- (b) the transferee, including all shareholders, members and partners of the transferee, shall jointly and severally execute a new franchise agreement with Franchisor, on the terms then offered by Franchisor to new franchisees, except that all pre-opening obligations of the parties, other than the transferee's obligation to complete the Initial Training Program to Franchisor's satisfaction, shall be waived, including the obligation of the transferee to pay a new initial franchise fee;

- (c) if the transferee is a corporation, limited liability company or partnership, each stock or membership certificate, or the partnership agreement, shall have conspicuously endorsed upon it a statement that it is held subject to, and further assignment or transfer of any interest therein is subject to, all restrictions imposed upon assignments by this Agreement;

- (d) if the transferee is a corporation, partnership, or limited liability company, the transferee will be newly organized and its charter shall provide that its activities are confined exclusively to operating the Franchised Business, and no new voting interest in the transferee shall be issued to any person or entity without obtaining Franchisor's prior written consent;

- (e) Franchisee shall have fully paid and satisfied all of Franchisee's obligations to Franchisor and its affiliates, and Franchisee shall pay to Franchisor a transfer fee equal to the then current franchise fee being charged by Franchisor in connection with the sale of a new franchise; provided, however, if Franchisor is not then selling franchises the fee shall be equal to the franchise fee paid hereunder;

Source: Item 22 — CONTRACTS (FDD page 51)

Question 59

What discount on the Initial Franchise Fee does Casa De Corazon offer to franchisees purchasing their second or subsequent Center?

Accepted Answer

We will reduce the Initial Franchise Fee in the following situations. First, if you are purchasing your second or subsequent Center we will reduce the Initial Franchise Fee by 50% of the then-current initial franchise fee you would otherwise pay for that Center. We also provide a 20% discount off the Initial Franchise Fee if you qualify for our Veterans Program. To qualify for this program, you must be a current member of the United States military, or a veteran who received an honorable discharge from a branch of the United States military. You may only use one of these discounts at a time. We can modify or terminate these discounts at any time. These discounts apply to the Initial Franchise Fee for Centers opened under the Development Agreement.

Source: Item 5 — INITIAL FEES (FDD pages 10–11)

Question 60

What discount on the initial franchise fee does Casa De Corazon offer to veterans?

Accepted Answer

We will reduce the Initial Franchise Fee in the following situations. First, if you are purchasing your second or subsequent Center we will reduce the Initial Franchise Fee by 50% of the then-current initial franchise fee you would otherwise pay for that Center. We also provide a 20% discount off the Initial Franchise Fee if you qualify for our Veterans Program. To qualify for this program, you must be a current member of the United States military, or a veteran who received an honorable discharge from a branch of the United States military. You may only use one of these discounts at a time. We can modify or terminate these discounts at any time. These discounts apply to the Initial Franchise Fee for Centers opened under the Development Agreement.

Source: Item 5 — INITIAL FEES (FDD pages 10–11)

Question 61

What enrollment percentage must a Casa De Corazon Center achieve by its 2-year anniversary to avoid potential consequences?

Accepted Answer

If on the 2-year anniversary of the date you opened your Center the Center does not have actual enrollment equal to 90% of its actual capacity on a full-time equivalency basis or if annually thereafter you do not maintain student enrollment at your Center of at least 90% of its actual capacity on a full-time equivalency basis, in either case determined by the number of students you are licensed to care for, we can decrease the size of your Designated Territory. If we exercise either of these rights we will provide you notice of our decision and the results of that decision. Other than these rights, we cannot unilaterally change your Designated Territory, and there are no minimum quotas required. If you are in compliance with your Franchise Agreement, including satisfaction of the minimum enrollment requirements discussed above, you will retain the rights described above.

Source: Item 12 — TERRITORY (FDD pages 31–33)

Question 62

In what fiscal year will payments be made for real estate taxes by the Casa De Corazon Grantor?

Accepted Answer

Payments shall be made in the fiscal year designated by Grantor, provided sufficient funds are available and such Taxes are not delinquent.

If the sums so deposited are insufficient to pay any such amounts for any period when the same shall become due and payable, the Grantor shall on demand deposit such additional funds as may be necessary to pay such amounts in full.

If the sums so deposited exceed the amount required to pay such amounts for any year, the excess shall be credited to a subsequent deposit or deposits required hereunder.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 63

In the Casa De Corazon franchise agreement, what is the radius restriction from the Search Area included in the 'Restricted Area'?

Accepted Answer

- (i) "Restricted Area" shall mean the Designated Territory, a radius of ten (10) miles from the Designated Territory, and a radius of ten (10) miles from any other Casa de Corazon early childhood learning center in existence as of the date of termination, expiration or assignment of this Agreement.

If there is no Designated Territory at the time of termination or assignment of this Agreement, the Restricted Area shall mean the Search Area, a radius of ten (10) miles from the Search Area, and a radius of ten (10) miles from any Casa de Corazon early childhood learning center in existence as of the date of termination or assignment of this Agreement.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 64

In the Casa De Corazon franchise application, if an applicant answers 'Yes' to questions 6-10, must they provide a full explanation of each 'Yes' answer?

Accepted Answer

| 10. | Have you paid any money to us concerning the purchase of your Casa de Corazon franchise prior |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | to today? |
|  | Yes |
|  |  |
|  | No |
|  |  |
| 11. | If you have answered "Yes" to any one of questions 6-10, please provide a full explanation of each |
|  | "Yes" answer in the following blank lines. (Attach additional pages, if necessary, and refer to them |
|  | below.) |

Source: Item 22 — CONTRACTS (FDD page 51)

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