Casiola 2024 Franchise FAQ - FDD Ninja

Question 1

Besides the listed remedies, what other rights does Casiola have if a franchisee breaches the agreement?

Accepted Answer

ities, narrowing the definition of a Competitive Business, shortening the duration of the Post-Term Restricted Period, reducing the geographic scope of the Restricted Territory and/or reducing the scope of any other covenant imposed upon Franchisee under this Article 6 to ensure that the terms and covenants are enforceable under applicable law.

#### **6.G. BREACH OF RESTRICTIVE COVENANTS AND OBLIGATIONS**

Franchisee agrees that Franchisee's failure and/or Franchisee's Owner(s) failure to comply with the restrictive covenants and obligations set forth in this Article 6 will cause irreparable harm to Franchisor and/or other Casiola Business franchisees for which there is no adequate remedy at law. Franchisee agrees that any violation of these Article 6 covenants and obligations by either Franchisee and/or any Owner(s) will entitle Franchisor to injunctive relief. Franchisee agrees that Franchisor may apply for such injunctive relief, without bond, but upon due notice, in addition to such further and other relief as may be available at equity or law, and the sole remedy of Franchisee, in the event of the entry of such injunction, will be the dissolution of such injunction, if warranted, upon a hearing duly held (all claims for damages by reason of the wrongful issuance of any such injunction being expressly waived hereby). If a court requires the filing of a bond notwithstanding the preceding sentence, the Franchisee and Franchisor agree that the amount of the bond shall not exceed \$1,000. Franchisor's remedies under this Article 6.G. are not exclusive of any other, but may be combined with others under this Agreement, or at law or in equity, including injunctive relief, specific performance and recovery of monetary damages.

# **6.H. OWNERSHIP OF INNOVATIONS, IMPROVEMENTS AND CUSTOMER INFORMATION**

Franchisee agrees that with regard to the Franchised Business all customer lists and their contents and information represent Confidential Information and constitute an asset of Franchisor whether or not such information was supplied by Franchisor. During the Term of this Agreement and in connection with the development, establishment, marketing, promotion and operation of the Franchised Business, Franchisee shall disclose to Franchisor all of Franchisee's ideas, concepts, methods and products conceived or developed by Franchisee and Franchisee's affiliates, Owners, agents, and employees relating to the development and operation of Casiola Businesses. Franchisee hereby assigns to Franchisor and Franchisee agrees to procure from Franchisee's Owners, affiliates and employees' assignment of any such ideas, concepts, methods, and products that Franchisee is required to disclose to Franchisor under this Article 6.H. Franchisor shall have no obligation to make any lump sum or on-going payments to Franchisee or Franchisee's Owners, affiliates or employees with respect to any such idea, concept, method, technique or product. Franchisee agrees that Franchisee will not use nor will Franchisee allow any other person or entity to use any such concept, method or product without obtaining Franchisor's prior written approval.

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# **ARTICLE 7 OPERATING STANDARDS**

#### **7.A. OPERATING REQUIREMENTS**

At all times, Franchisee and the Franchised Business shall, as designated by Franchisor in the Operations Manual and/or as otherwise designated by Franchisor in writing and, as may be modified by Franchisor from time to time: (a) exclusively offer and sell the Approved Services and Products; (b) exclusively purchase, lease, license, and use the System Supplies; (c) maintain a complete and updated inventory and supply of System Supplies; (d) maintain, update, replenish and replace Franchisee's System Supplies; (e) maintain, update, replenish and recondition Franchisee's Administrative Office; (f) Exclusively license and use Franchisor's designated Bookings and Management Systems; (g) meet Franchisor's standards, specifications, and approval process for Ancillary Third Party Service Providers;

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 2

Does Item 9 for Casiola contain all of my obligations as a franchisee?

Accepted Answer

- "**Additional Initial Training Fee**" shall have the meaning defined and set forth in Article 4.A. of this Agreement.

- "**Advertising Contributions**" means any and all obligations of Franchisee to contribute to and/or pay fees to Franchisor or Franchisor's affiliate or designees as set forth in this Agreement including, but not limited to, the Brand Development Fund Fees set forth in Article 9.A. of this Agreement and Advertising Cooperative contributions and contributions set forth in Article 9.C. of this Agreement.

- (10) Except as directed by Franchisor in writing and related to Franchisee's performance and completion of Wind-Down Activities as designated and determined by Franchisor in Franchisor's Reasonable Business Judgment, abide by, and comply with, the restrictive covenants and obligations set forth in this Agreement, including, without limitation, the restrictive covenants and obligations set forth in Article 6 of this Agreement; and

- (1) Franchisee must conduct the operations of the Franchised Business from within Franchisee's Operating Market and Franchisee must provide the Approved Services and Products on behalf of customers located within Franchisee's Operating Market. The marketing of the Franchised Business must be targeted to Franchisee's Operating Market and, at all times, must conform and comply with, among other things, the restrictions set forth in Article 9.G. of this Agreement;

Franchisee agrees that under no circumstance is Franchisee entitled to withhold payments due to Franchisor under this Agreement. Among other things and without limitation to the foregoing, Franchisee expressly agrees that any claim by Franchisee as to the alleged non-performance of Franchisor's obligations shall not permit and/or entitle Franchisee to withhold payments due Franchisor under this Agreement.

Franchisor recommends that Franchisee have this Agreement and the Franchise Disclosure Document reviewed by Franchisee's lawyer, accountant, and other business advisors, prior to signing this Agreement.

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD page 24)

Question 3

What was the total number of Casiola outlets at the end of 2023?

Accepted Answer

| Outlet Type   | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---------------|------|----------------------------------|--------------------------------|------------|
|               | 2021 | 0                                | 0                              | 0          |
| Franchised    | 2022 | 0                                | 0                              | 0          |
|               | 2023 | 0                                | 0                              | 0          |
|               | 2021 | 1                                | 1                              | 0          |
| Company Owned | 2022 | 1                                | 2                              | +1         |
|               | 2023 | 2*                               | 2                              | 0          |
|               | 2021 | 1                                | 1                              | 0          |
| Total Outlets | 2022 | 1                                | 2                              | +1         |
|               | 2023 | 2                                | 2                              | 0          |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 45–46)

Question 4

What are all the fees a Casiola franchisee must pay, as detailed in Items 5 and 6?

Accepted Answer

[Item 6: OTHER FEES]

#### Explanatory Notes to Item 6

Note 1: Type of Fee – The above table describes fees and payments that you must pay to us, our affiliates, or that our affiliates may impose or collect on behalf of a third party. All fees are uniformly imposed for all franchises offered under this Disclosure Document, are recurring, are not refundable, and are payable to us, unless otherwise specified. At our election we may directly collect the Gross Sales of your Casiola Business and we will pre-deduct all of the fees and payments due to us, our affiliates, or our designated suppliers, and we will remit the balance to you. If applicable and, at our election, we require payment from you subject to our specification and instruction, including, our election to have fees automatically drafted from your business bank account or automatically debited or charged to your business bank account. You will be required to sign an ACH Authorization Form (Franchise Agreement, Exhibit 4) permitting us to electronically debit your designated bank account for payment of all fees payable to us and/or our affiliates. You must deposit the Gross Sales of your Casiola Business into the designated bank accounts that are subject to our ACH authorization. As directed by us, you must install and use, at your expense, the pre-authorized payment, point of sale, credit card processing, automatic payment, automated banking, electronic debit and/or electronic funds transfer systems that we designate. You must pay all service charges and fees charged to you by your bank so that we may electronically debit your bank account.

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Note 2: Royalty Fees – You must pay to us a continuing royalty fee (the "Royalty Fee"). The continuing Royalty Fee is payable and due instantly on a per transaction basis or as otherwise directed by us and is equal to 4.9% (the "Royalty Rate") of all Gross Rental Revenues+ (defined below). The Royalty Rate is 8% of all Gross Rental Revenues+ for Out of Territory Customers. In most, if not all instances, as directed by us, the Gross Rental Revenues+ of your Casiola Business will be received directly by us or our affiliate. We are authorized to pre-deduct and pay to ourselves all Royalty Fees and other fees due from you to us from the Gross Rental Revenues+ of your Casiola Business. If any federal, state or local tax other than an income tax is imposed on the Royalty Fee which we cannot directly and, dollar for dollar, offset against taxes required to be paid under any applicable federal or state laws, you must compensate us in the manner prescribed by us so that the net amount or net effective royalty fees received by us is not less than 4.9% of your Gross Rental Revenues+.

"Ancillary Third Party Service Fees" means fees paid to a Casiola Business as reimbursement for services, parts, and supplies provided to a customer of the Casiola Business by a third party provider of ancillary services such as cleaning, plumbing, and handyman services as authorized and designated by us.

Your Royalty Fee obligations are subject to a minimum requirement equal to and calculated based on the following monthly minimum royalty fee requirements (the "Monthly Minimum Royalty Fee Requirement"):

Note 4: Franchisee Directed Local Marketing – On an on-going monthly basis, you must spend not less than $450 per month for your first Territory plus an additional $450 per month for each Additional Territory on the local marketing of your Casiola Business within your Operating Market and in accordance with our standards and specifications. We may require that this fee be paid directly to us and that we allocate and spend these funds on behalf of your Casiola Business.

Note 5: Local and Regional Advertising Cooperatives – If two or more Casiola Businesses are operating within a geographic area, region, or market designated by us (a "designated market"), we reserve the right to establish and require your participation in a local or regional advertising cooperative within the designated market. If an advertising cooperative is established within a designated market that includes your Casiola Business(s), you will be required to participate in the cooperative and make on-going payments to the cooperative in such amounts and subject to such caps as established by the cooperative members. We anticipate that each Casiola Business franchisee will have one vote for each Casiola Business located within the cooperative market and those cooperative decisions shall be made based on approval of a simple majority vote with a quorum of not less than 25% of the designated cooperative members. Contributions to a local or regional cooperative that we designate will count toward satisfaction of your minimum local marketing requirements and shall not exceed the local marketing requirement.

Note 6: Technology Fee – The continuing monthly technology fee is an administrative fee and is not associated with any particular service but is used, at our discretion, to defray some of our costs related to system website and intranet (the "Technology Fee").

Note 7: Customer Services and Refunds – This fee will be based on the costs incurred by us, including refunds and/or credits that we may undertake on behalf of a customer that was not satisfied with the services or products provided by the Franchised Business. You must guarantee your services to your customers. If we determine that your customer is entitled to reimbursement of fees paid to you or an obligation that you assumed, we may reimburse your customer directly. You must reimburse us for the amounts that we reimburse your customer. You must also participate in any warranty insurance programs that we designate.

As designated by Franchisor in this Agreement, the Manual or otherwise, Franchisee shall pay the following additional fees to either Franchisor, Franchisor's affiliate(s), or Franchisee's designee(s):

- (1) Brand Development Fund Fee Franchisee shall pay to Franchisor, Franchisor's affiliates, or Franchisor's designees, the Brand Development Fund Fee as set forth in Article 9 of this Agreement.

- (2) Customer Satisfaction Non-Compliance Fee Franchisee shall pay to Franchisor, Franchisor's affiliates, or Franchisor's designees, a Customer Satisfaction Non-Compliance Fee upon demand of Franchisor following the occurrence of a Customer Satisfaction Non-Compliance Event.

- (3) Non-Compliance Fees Franchisee shall pay to Franchisor all Non-Compliance Fees in accordance with the terms of this Agreement including, but not limited to, Payment Non-Compliance Fees, Operations Non-Compliance Fees, and Reporting Non-Compliance Fees.

- (4) Supplemental Training Fees Franchisee shall pay to Franchisor all training fees in accordance with the terms of this Agreement including, but not limited to, Additional Initial Training Fees and Supplemental Training Fees.

- (5) Quality Assurance Fees Franchisee shall pay to Franchisor, Franchisor's affiliates, or Franchisor's designees on-going weekly, monthly, and/or per use fees related to quality assurance fees assessed by Franchisor related to periodic inspections of Franchisee's Casiola Business, quality inspections related to short-term rental properties and rental customer experiences, and secret shopper type evaluations.

Quality assurance fees shall be assessed and determined by Franchisor, in Franchisor's Reasonable Business Judgment.

- (6) Annual Conference Attendance Fees Franchisee shall be responsible for all expenses of its personnel attending the Annual System Conference including travel, meals and lodging.

Franchisee shall be required to pay to Franchisor an Annual Conference Attendance Fee.

"**Customer Satisfaction Non-Compliance Event**" means any circumstance and/or event whereby Franchisee's monthly customer satisfaction and/or approval ratings, as measured on a monthly basis by a reputation management and/or customer satisfaction platform designated or selected by Franchisor, fails to achieve an aggregate customer satisfaction and/or approval rating of not less than 4.0 stars out of 5 stars or below a net promoter score of 50, you must pay to us a non-compliance fee of between $250 to $750 per month for each month of non-compliance. If a condition of non-compliance occurs for more than three months, then we may increase this non-compliance fee to a monthly fee of not more than $750 per month.

"**Customer Satisfaction Non-Compliance Fee**" means a fee payable by Franchisee in an amount equal to not less than $250 per month. If a Customer Satisfaction Non-Compliance Event(s) occurs or lasts for more than three consecutive months then Franchisor, in Franchisor's Reasonable Business Judgment, may increase the Customer Satisfaction Non-Compliance Fee to a monthly amount determined by Franchisor but not in excess of $750 per month.

Question 5

What are the initial fees for a Casiola franchise (Item 5) and how do they compare to the ongoing monthly fees (Item 6)?

Accepted Answer

Note 1: Initial Franchise Fee and Initial Training Fee – The Initial Franchise Fee for a Casiola Business under a Franchise Agreement is $35,000 for a single Territory. At time of signing your Franchise Agreement you must pay to us a non-refundable initial training fee in the amount of $7,500. All fees are non-refundable. We do not finance any portion of your initial fees.

Note 4: Franchisee Directed Local Marketing – On an on-going monthly basis, you must spend not less than $450 per month for your first Territory plus an additional $450 per month for each Additional Territory on the local marketing of your Casiola Business within your Operating Market and in accordance with our standards and specifications. We may require that this fee be paid directly to us and that we allocate and spend these funds on behalf of your Casiola Business.

Note 5: Local and Regional Advertising Cooperatives – If two or more Casiola Businesses are operating within a geographic area, region, or market designated by us (a "designated market"), we reserve the right to establish and require your participation in a local or regional advertising cooperative within the designated market. If an advertising cooperative is established within a designated market that includes your Casiola Business(s), you will be required to participate in the cooperative and make on-going payments to the cooperative in such amounts and subject to such caps as established by the cooperative members. We anticipate that each Casiola Business franchisee will have one vote for each Casiola Business located within the cooperative market and those cooperative decisions shall be made based on approval of a simple majority vote with a quorum of not less than 25% of the designated cooperative members. Contributions to a local or regional cooperative that we designate will count toward satisfaction of your minimum local marketing requirements and shall not exceed the local marketing requirement.

Note 6: Technology Fee – The continuing monthly technology fee is an administrative fee and is not associated with any particular service but is used, at our discretion, to defray some of our costs related to system website and intranet (the "Technology Fee").

Note 7: Customer Services and Refunds – This fee will be based on the costs incurred by us, including refunds and/or credits that we may undertake on behalf of a customer that was not satisfied with the services or products provided by the Franchised Business. You must guarantee your services to your customers. If we determine that your customer is entitled to reimbursement of fees paid to you or an obligation that you assumed, we may reimburse your customer directly. You must reimburse us for the amounts that we reimburse your customer. You must also participate in any warranty insurance programs that we designate.

Note 1: Initial Franchise Fee – The Initial Franchise Fee for an Operating Market comprised of a single Territory is $35,000. If you elect to increase the size of your Operating Market by adding Additional Territories the total Initial Franchise Fee will range from a low of $65,000 for a total of two Territories to $140,000 for a total of five Territories.

Question 6

What are the initial fees for a Casiola franchise (Item 5) and how do they compare to the ongoing monthly fees (Item 6) and the estimated initial investment (Item 7)?

Accepted Answer

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# **ITEM 5 INITIAL FEES**

### **Initial Franchise Fee**

When you sign a Franchise Agreement you must pay to us a non-refundable initial franchise fee (the "Initial Franchise Fee"). The Initial Franchise Fee is \$35,000 for a geographic area that operates as a single territory with approximately 250 to 5,000 potential rentable short-term rental properties located within the geographic territory (a "Territory"). The Initial Franchise Fee is fully earned by us upon payment. The method we use to calculate the Initial Franchise Fee is uniform for all franchises, except, as described below, we offer a veteran's discount, qualified employee discount, and multi-territory discount.

# Veteran's Discount

For qualified individuals who were honorably discharged from any branch of the United States Military we offer a 15% discount off of the Initial Franchise Fee for your first Franchise Agreement for your first territory. This discount must be requested at the time of your initial franchise application and requires documented military service and is subject to our approval and agreement to award a franchise.

### Qualified Employee Discount

For qualified individuals who have been employed by us or our affiliate for two or more years we offer a 50% discount off of the Initial Franchise Fee for your first Franchise Agreement for your first territory. This discount must be requested at the time of your initial franchise application and is subject to our approval and agreement to award a franchise.

### Initial Training Fee

When you sign a Franchise Agreement you must pay to us a non-refundable initial training fee (the "Initial Training Fee") in the amount of \$7,500. This fee is an attendance fee for your participation and the participation of up to three additional authorized individuals to attend our initial training program.

#### **Additional Territories and Territory Discounts**

Subject to market type, availability, and our discretion, at the time of signing your Franchise Agreement, you may request the right to purchase additional territories (each referred to as an "Additional Territory") to be added to your Operating Market and operated under one Franchise Agreement. Each Additional Territory will be comprised of approximately up to 5,000 potential rentable individual short-term rental properties within a 40 minute drive time from your administrative office. Your first Territory and, if applicable, each Additional Territory is collectively referred to collectively as your "Territories" and, individually, as a "Territory." When purchasing Additional Territories, the following initial franchise fees shall apply:

| Total Territories Purchased | Initial Franchise Fee per Territory | Cumulative Fee             |
|-----------------------------|-------------------------------------|----------------------------|
|                             |                                     | (Includes First Territory) |
| 1                           | \$35,000                            | \$35,000                   |
| 2                           | \$32,500                            | \$65,000                   |
| 3                           | \$30,000                            | \$90,000                   |
| 4                           | \$28,750                            | \$115,000                  |
| 5                           | \$28,000                            | \$140,000                  |

Subject to market type, availability, and our discretion, if you elect to enter multiple Franchise Agreements, we will apply the same Territory discounts as set forth in the above table. The discounts are only applicable for Franchise Agreements signed at the same time.

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# **ITEM 6 OTHER FEES**

|  |  |  |  |
|---|---|---|---|
|  |  |  | account by ACH or other means we designate. |
| Property Management System (PMS) | Currently $40 per month, per active rental property and subject to increase | Monthly on the first Thursday of each month | Monthly license for property management system. Payable to us or supplier as we designate. |
| Sales CRM | Currently $49 per month, per user and subject to increase | Monthly on the first Thursday of each month | Will be pre-deducted from Gross Sales received by us from customers of the Franchised Business, or, if applicable, automatically deducted from your bank account by ACH or other means we designated. |
| Customer Service and Refunds (Note 7) | Varies under the circumstances | On demand | Applies if, in our discretion, we elect to resolve a complaint or refund request by a customer. |
| Phone System | Currently $30 per month, per line established | Monthly on the first Thursday of each month | Will be pre-deducted from Gross Sales received by us from customers of the Franchised Business, or, if applicable, automatically deducted from your bank account by ACH or other means we designate. |
| Annual Conference Attendance Fee | Our then current conference fee, not greater than $1,000 per person | When invoiced | Applies to conference fee for an annual System conference. |
| Additional Employee Initial Training | Our then current training fee, currently $500 per person per day | When invoiced and prior to training | Our initial pre-opening training is provided at no additional cost for you or your Managing Owner and one designated manager at no additional charge. This fee applies to additional individuals that we authorize to attend training. You are responsible for all fees, wages, and expenses associated with attendance. |
| Supplemental Training | Our then current daily rate per trainer, plus expenses we incur.

Question 7

What are the initial fees for a Casiola franchise (Item 5) and how do they compare to the ongoing monthly fees (Item 6) and the estimated initial investment (Item 7) and the potential for financing (Item 10)?

Accepted Answer

[Item 5: INITIAL FEES] # **ITEM 5 INITIAL FEES** ### **Initial Franchise Fee** When you sign a Franchise Agreement you must pay to us a non-refundable initial franchise fee (the "Initial Franchise Fee"). The Initial Franchise Fee is $35,000 for a geographic area that operates as a single territory with approximately 250 to 5,000 potential rentable short-term rental properties located within the geographic territory (a "Territory"). The Initial Franchise Fee is fully earned by us upon payment. The method we use to calculate the Initial Franchise Fee is uniform for all franchises, except, as described below, we offer a veteran's discount, qualified employee discount, and multi-territory discount. # Veteran's Discount For qualified individuals who were honorably discharged from any branch of the United States Military we offer a 15% discount off of the Initial Franchise Fee for your first Franchise Agreement for your first territory. This discount must be requested at the time of your initial franchise application and requires documented military service and is subject to our approval and agreement to award a franchise. ### Qualified Employee Discount For qualified individuals who have been employed by us or our affiliate for two or more years we offer a 50% discount off of the Initial Franchise Fee for your first Franchise Agreement for your first territory. This discount must be requested at the time of your initial franchise application and is subject to our approval and agreement to award a franchise. ### Initial Training Fee When you sign a Franchise Agreement you must pay to us a non-refundable initial training fee (the "Initial Training Fee") in the amount of $7,500. This fee is an attendance fee for your participation and the participation of up to three additional authorized individuals to attend our initial training program. #### **Additional Territories and Territory Discounts** --- [Item 6: OTHER FEES] Note 4: Franchisee Directed Local Marketing – On an on-going monthly basis, you must spend not less than $450 per month for your first Territory plus an additional $450 per month for each Additional Territory on the local marketing of your Casiola Business within your Operating Market and in accordance with our standards and specifications. We may require that this fee be paid directly to us and that we allocate and spend these funds on behalf of your Casiola Business. --- [Item 6: OTHER FEES] Your Royalty Fee obligations are subject to a minimum requirement equal to and calculated based on the following monthly minimum royalty fee requirements (the "Monthly Minimum Royalty Fee Requirement"): Requirement1 Monthly Minimum Royalty Fee Months2 1 Territory 2 Territories 3 Territories 4 Territories 5 Territories 1 $0 $0 $0 $0 $0 – 24 25 $7,250 $14,500 $21,750 $29,000 $36,250 – 36 37 $10,875 $21,750 $32,625 $43,500 $54,375 – 48 49 $14,500 $29,000 $43,500 $58,000 $72,500 and each month thereafter ¹ Monthly Fee – The fees set forth in this table are monthly fees and vary depending on the applicable month and the number of Territories. --- [Item 7: ESTIMATED INITIAL INVESTMENT] | Type of Expenditure | Amount | Method of Payment | When Due | | |---|---|---|---|---| | | | | | | | | | | | | | | | | | | | Initial Franchise Fee (Note 1) | $35,000 | Lump sum | When Franchise Agreement is signed | Us | | Initial Training Fee (Note 1) | $7,500 | Lump sum | When Franchise Agreement is signed | Us | | Equipment (Note 2) | $1,000 – $3,000 | As arranged | As incurred | Suppliers | | Computer, Software, and | $1,500 – $3,000 | As arranged | As incurred | Suppliers | | Bookings and Management | | | | | | System (Note 3) | | | | | | Vehicle (Note 4) | $250 – $4,250 | As arranged | As incurred | Automobile dealers | | Start-Up Marketing (Note 6) | $1,000 | As arranged | As incurred | Suppliers | | Insurance Deposits – Three | $1,000 – $3,000 | As arranged | As incurred | Insurers | | Months (Note 7) | | | | | | Travel for Initial Training | $1,000 – $3,000 | As arranged | As incurred | A --- [Chunk 1 | Item 7: Estimated Initial Investment] (chunk_id: dc17eac0-0e6a-4496-a78c-cb6a926a22a5) [Item 7: ESTIMATED INITIAL INVESTMENT] #### Explanatory Notes to Item 7 for a Single Territory Note 1: Initial Franchise Fee and Initial Training Fee – The Initial Franchise Fee for a Casiola Business under a Franchise Agreement is $35,000 for a single Territory. At time of signing your Franchise Agreement you must pay to us a non-refundable initial training fee in the amount of $7,500. All fees are non-refundable. We do not finance any portion of your initial fees.

Question 8

How does the Casiola Initial Franchise Fee in Item 5 compare to the estimated equipment costs in Item 7?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due |  |
|---|---|---|---|---|
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |
| Initial Franchise Fee (Note 1) | $35,000 | Lump sum | When Franchise Agreement is signed | Us |
| Initial Training Fee (Note 1) | $7,500 | Lump sum | When Franchise Agreement is signed | Us |
| Equipment (Note 2) | $1,000 – $3,000 | As arranged | As incurred | Suppliers |

Question 9

How does the Casiola Initial Franchise Fee in Item 5 compare to the estimated equipment costs in Item 7 and the Initial Training Fee in Item 7?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due |  |
|---|---|---|---|---|
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |
| Initial Franchise Fee (Note 1) | $35,000 | Lump sum | When Franchise Agreement is signed | Us |
| Initial Training Fee (Note 1) | $7,500 | Lump sum | When Franchise Agreement is signed | Us |
| Equipment (Note 2) | $1,000 – $3,000 | As arranged | As incurred | Suppliers |

Question 10

How does the Casiola Initial Franchise Fee in Item 5 compare to the estimated equipment costs in Item 7 and the Initial Training Fee in Item 7 and the ongoing monthly fees in Item 6?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due |  |
|---|---|---|---|---|
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |
| Initial Franchise Fee (Note 1) | $35,000 | Lump sum | When Franchise Agreement is signed | Us |
| Initial Training Fee (Note 1) | $7,500 | Lump sum | When Franchise Agreement is signed | Us |
| Equipment (Note 2) | $1,000 – $3,000 | As arranged | As incurred | Suppliers |
| Computer, Software, and | $1,500 – $3,000 | As arranged | As incurred | Suppliers |
| Bookings and Management |  |  |  |  |
| System (Note 3) |  |  |  |  |
Note 4: Franchisee Directed Local Marketing – On an on-going monthly basis, you must spend not less than $450 per month for your first Territory plus an additional $450 per month for each Additional Territory on the local marketing of your Casiola Business within your Operating Market and in accordance with our standards and specifications. We may require that this fee be paid directly to us and that we allocate and spend these funds on behalf of your Casiola Business.

Question 11

How does the Casiola Initial Franchise Fee in Item 5 compare to the estimated equipment costs in Item 7 and the Initial Training Fee in Item 7 and the ongoing monthly fees in Item 6 and the potential for financing in Item 10?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due |  |
|---|---|---|---|---|
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |
| Initial Franchise Fee (Note 1) | $35,000 | Lump sum | When Franchise Agreement is signed | Us |
| Initial Training Fee (Note 1) | $7,500 | Lump sum | When Franchise Agreement is signed | Us |
| Equipment (Note 2) | $1,000 – $3,000 | As arranged | As incurred | Suppliers |
| Computer, Software, and | $1,500 – $3,000 | As arranged | As incurred | Suppliers |
| Bookings and Management |  |  |  |  |
| System (Note 3) |  |  |  |  |
| Vehicle (Note 4) | $250 – $4,250 | As arranged | As incurred | Automobile dealers |
| Start-Up Marketing (Note 6) | $1,000 | As arranged | As incurred | Suppliers |
| Insurance Deposits – Three | $1,000 – $3,000 | As arranged | As incurred | Insurers |
| Months (Note 7) |  |  |  |  |
| Travel for Initial Training | $1,000 – $3,000 | As arranged | As incurred | Airlines, hotels, |
| (Note 8) |  |  |  | restaurants |
| Professional Fees (Note 9) | $250 – $3,000 | As arranged | As incurred | Attorneys, accountants, advisors |
| Licenses and Permits | $1,000 – $3,000 | As arranged | As incurred | Government |
| (Note 10) |  |  |  |  |
| Additional Funds – Three Months (Note 11) | $15,000 – $35,000 | As arranged | As incurred | Us, employees, suppliers, landlord, utility suppliers |
| Total Estimate (Note 12) |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |

Question 12

What are the ongoing monthly fees for a Casiola franchise as detailed in Item 6, and how do they relate to the initial investment in Item 7?

Accepted Answer

rized and designated by us.

Note 4: Franchisee Directed Local Marketing – On an on-going monthly basis, you must spend not less than \$450 per month for your first Territory plus an additional \$450 per month for each Additional Territory on the local marketing of your Casiola Business within your Operating Market and in accordance with our standards and specifications. We may require that this fee be paid directly to us and that we allocate and spend these funds on behalf of your Casiola Business.

Note 5: Local and Regional Advertising Cooperatives – If two or more Casiola Businesses are operating within a geographic area, region, or market designated by us (a "designated market"), we reserve the right to establish and require your participation in a local or regional advertising cooperative within the designated market. If an advertising cooperative is established within a designated market that includes your Casiola Business(s), you will be required to participate in the cooperative and make on-going payments to the cooperative in such amounts and subject to such caps as established by the cooperative members. We anticipate that each Casiola Business franchisee will have one vote for each Casiola Business located within the cooperative market and those cooperative decisions shall be made based on approval of a simple majority vote with a quorum of not less than 25% of the designated cooperative members. Contributions to a local or regional cooperative that we designate will count toward satisfaction of your minimum local marketing requirements and shall not exceed the local marketing requirement.

Note 6: Technology Fee – The continuing monthly technology fee is an administrative fee and is not associated with any particular service but is used, at our discretion, to defray some of our costs related to system website and intr

Question 13

What are the ongoing monthly fees for a Casiola franchise (Item 6) and how do they relate to the franchisee's obligation to pay them as described in Item 6?

Accepted Answer

[Item 6: OTHER FEES]

Note 4: Franchisee Directed Local Marketing – On an on-going monthly basis, you must spend not less than $450 per month for your first Territory plus an additional $450 per month for each Additional Territory on the local marketing of your Casiola Business within your Operating Market and in accordance with our standards and specifications. We may require that this fee be paid directly to us and that we allocate and spend these funds on behalf of your Casiola Business.

Note 5: Local and Regional Advertising Cooperatives – If two or more Casiola Businesses are operating within a geographic area, region, or market designated by us (a "designated market"), we reserve the right to establish and require your participation in a local or regional advertising cooperative within the designated market. If an advertising cooperative is established within a designated market that includes your Casiola Business(s), you will be required to participate in the cooperative and make on-going payments to the cooperative in such amounts and subject to such caps as established by the cooperative members. We anticipate that each Casiola Business franchisee will have one vote for each Casiola Business located within the cooperative market and those cooperative decisions shall be made based on approval of a simple majority vote with a quorum of not less than 25% of the designated cooperative members. Contributions to a local or regional cooperative that we designate will count toward satisfaction of your minimum local marketing requirements and shall not exceed the local marketing requirement.

Note 6: Technology Fee – The continuing monthly technology fee is an administrative fee and is not associated with any particular service but is used, at our discretion, to defray some of our costs related to system website and intranet (the "Technology Fee").

Note 7: Customer Services and Refunds – This fee will be based on the costs incurred by us, including refunds and/or credits that we may undertake on behalf of a customer that was not satisfied with the services or products provided by the Franchised Business. You must guarantee your services to your customers. If we determine that your customer is entitled to reimbursement of fees paid to you or an obligation that you assumed, we may reimburse your customer directly. You must reimburse us for the amounts that we reimburse your customer. You must also participate in any warranty insurance programs that we designate.

[Item 6: OTHER FEES]

#### Explanatory Notes to Item 6

Note 1: Type of Fee – The above table describes fees and payments that you must pay to us, our affiliates, or that our affiliates may impose or collect on behalf of a third party. All fees are uniformly imposed for all franchises offered under this Disclosure Document, are recurring, are not refundable, and are payable to us, unless otherwise specified. At our election we may directly collect the Gross Sales of your Casiola Business and we will pre-deduct all of the fees and payments due to us, our affiliates, or our designated suppliers, and we will remit the balance to you. If applicable and, at our election, we require payment from you subject to our specification and instruction, including, our election to have fees automatically drafted from your business bank account or automatically debited or charged to your business bank account. You will be required to sign an ACH Authorization Form (Franchise Agreement, Exhibit 4) permitting us to electronically debit your designated bank account for payment of all fees payable to us and/or our affiliates. You must deposit the Gross Sales of your Casiola Business into the designated bank accounts that are subject to our ACH authorization. As directed by us, you must install and use, at your expense, the pre-authorized payment, point of sale, credit card processing, automatic payment, automated banking, electronic debit and/or electronic funds transfer systems that we designate. You must pay all service charges and fees charged to you by your bank so that we may electronically debit your bank account.

"**Customer Satisfaction Non-Compliance Event**" means any circumstance and/or event whereby Franchisee's monthly customer satisfaction and/or approval ratings, as measured on a monthly basis by a reputation management and/or customer satisfaction platform designated or selected by Franchisor, fails to achieve an aggregate customer satisfaction and/or approval rating of not less than 4.0 stars out of 5 stars or below a net promoter score of 50, you must pay to us a non-compliance fee of between $250 to $750 per month for each month of non-compliance. If a condition of non-compliance occurs for more than three months, then we may increase this non-compliance fee to a monthly fee of not more than $750 per month.

"**Customer Satisfaction Non-Compliance Fee**" means a fee payable by Franchisee in an amount equal to not less than $250 per month. If a Customer Satisfaction Non-Compliance Event(s) occurs or lasts for more than three consecutive months then Franchisor, in Franchisor's Reasonable Business Judgment, may increase the Customer Satisfaction Non-Compliance Fee to a monthly amount determined by Franchisor but not in excess of $750 per month. The Customer Satisfaction Non-Compliance Fee is payable by Franchisee to Franchisor on demand by Franchisor.

Question 14

What are the ongoing monthly fees for a Casiola franchise (Item 6) and how do they relate to the franchisee's obligation to pay them as described in Item 6 and the initial investment in Item 7?

Accepted Answer

[Item 6: OTHER FEES] Note 4: Franchisee Directed Local Marketing – On an on-going monthly basis, you must spend not less than $450 per month for your first Territory plus an additional $450 per month for each Additional Territory on the local marketing of your Casiola Business within your Operating Market and in accordance with our standards and specifications. We may require that this fee be paid directly to us and that we allocate and spend these funds on behalf of your Casiola Business. Note 5: Local and Regional Advertising Cooperatives – If two or more Casiola Businesses are operating within a geographic area, region, or market designated by us (a "designated market"), we reserve the right to establish and require your participation in a local or regional advertising cooperative within the designated market. If an advertising cooperative is established within a designated market that includes your Casiola Business(s), you will be required to participate in the cooperative and make on-going payments to the cooperative in such amounts and subject to such caps as established by the cooperative members. We anticipate that each Casiola Business franchisee will have one vote for each Casiola Business located within the cooperative market and those cooperative decisions shall be made based on approval of a simple majority vote with a quorum of not less than 25% of the designated cooperative members. Contributions to a local or regional cooperative that we designate will count toward satisfaction of your minimum local marketing requirements and shall not exceed the local marketing requirement. Note 6: Technology Fee – The continuing monthly technology fee is an administrative fee and is not associated with any particular service but is used, at our discretion, to defray some of our costs related to system website and intranet (the "Technology Fee"). Note 7: Customer Services and Refunds – This fee will be based on the costs incurred by us, including refunds and/or credits that we may undertake on behalf of a customer that was not satisfied with the services or products provided by the Franchised Business. You must guarantee your services to your customers. If we determine that your customer is entitled to reimbursement of fees paid to you or an obligation that you assumed, we may reimburse your customer directly. You must reimburse us for the amounts that we reimburse your customer. You must also participate in any warranty insurance programs that we designate. Your Royalty Fee obligations are subject to a minimum requirement equal to and calculated based on the following monthly minimum royalty fee requirements (the "Monthly Minimum Royalty Fee Requirement"): Requirement1 Monthly Minimum Royalty Fee Months2 1 Territory 2 Territories 3 Territories 4 Territories 5 Territories 1 $0 $0 $0 $0 $0 – 24 25 $7,250 $14,500 $21,750 $29,000 $36,250 – 36 37 $10,875 $21,750 $32,625 $43,500 $54,375 – 48 49 $14,500 $29,000 $43,500 $58,000 $72,500 and each month thereafter ¹ Monthly Fee – The fees set forth in this table are monthly fees and vary depending on the applicable month and the number of Territories. On a quarterly basis, if the total amount of the Royalty Fees paid by your Casiola Business is less than the aggregate amount of your Monthly Minimum Royalty Fee Requirements for each month within the respective quarter, then you must pay to us and/or we may pre-deduct from your Gross Sales the difference as a supplemental royalty fee (the "Supplemental Royalty Fee"). The Supplemental Royalty Fee is calculated as the difference between the aggregate amount of the Monthly Minimum Royalty Fee Requirements applicable within the particular calendar year quarter, less the aggregate amount of the Royalty Fees that you paid to us during the respective calendar year quarter. #### Note 3: Gross Rental Revenues+, Commission+ Fees, and Ancillary Third Party Service Fees #### Explanatory Notes to Item 6 Note 1: Type of Fee – The above table describes fees and payments that you must pay to us, our affiliates, or that our affiliates may impose or collect on behalf of a third party. All fees are uniformly imposed for all franchises offered under this Disclosure Document, are recurring, are not refundable, and are payable to us, unless otherwise specified. At our election we may directly collect the Gross Sales of your Casiola Business and we will pre-deduct all of the fees and payments due to us, our affiliates, or our designated suppliers, and we will remit the balance to you. If applicable and, at our election, we require payment from you subject to our specification and instruction, including, our election to have fees automatically drafted from your business bank account or automatically debited or charged to your business bank account. You will be required to sign an ACH Authorization Form (Franchise Agreement, Exhibit 4) permitting us to electronically debit your designated bank account for payment of all fees payable to us and/or our affiliates. You must deposit the Gross Sales of your Casiola Business into the designated bank accounts that are subject to our ACH authorization. As directed by us, you must install and use, at your expense, the pre-authorized payment, point of sale, credit card processing, automatic payment, automated banking, electronic debit and/or electronic funds transfer systems that we designate. You must pay all service charges and fees charged to you by your bank so that we may electronically debit your bank account.

Question 15

What are the ongoing monthly fees for a Casiola franchise (Item 6) and how do they relate to the franchisee's obligation to pay them as described in Item 6 and the initial investment in Item 7 and the potential for financing in Item 10?

Accepted Answer

rized and designated by us.

Note 4: Franchisee Directed Local Marketing – On an on-going monthly basis, you must spend not less than \$450 per month for your first Territory plus an additional \$450 per month for each Additional Territory on the local marketing of your Casiola Business within your Operating Market and in accordance with our standards and specifications. We may require that this fee be paid directly to us and that we allocate and spend these funds on behalf of your Casiola Business.

Note 5: Local and Regional Advertising Cooperatives – If two or more Casiola Businesses are operating within a geographic area, region, or market designated by us (a "designated market"), we reserve the right to establish and require your participation in a local or regional advertising cooperative within the designated market. If an advertising cooperative is established within a designated market that includes your Casiola Business(s), you will be required to participate in the cooperative and make on-going payments to the cooperative in such amounts and subject to such caps as established by the cooperative members. We anticipate that each Casiola Business franchisee will have one vote for each Casiola Business located within the cooperative market and those cooperative decisions shall be made based on approval of a simple majority vote with a quorum of not less than 25% of the designated cooperative members. Contributions to a local or regional cooperative that we designate will count toward satisfaction of your minimum local marketing requirements and shall not exceed the local marketing requirement.

Note 6: Technology Fee – The continuing monthly technology fee is an administrative fee and is not associated with any particular service but is used, at our discretion, to defray some of our costs related to system website and intranet (the "Technology Fee").

Note 7: Customer Services and Refunds – This fee will be based on the costs incurred by us, including refunds and/or credits that we may undertake on behalf of a customer that was not satisfied with the services or products provided by the Franchised Business. You must guarantee your services to your customers. If we determine that your customer is entitled to reimbursement of fees paid to you or an obligation that you assumed, we may reimburse your customer directly. You must reimburse us for the amounts that we reimburse your customer. You must also participate in any warranty insurance

Question 16

What are the pre-opening obligations for a Casiola franchisee, combining information from Items 9 and 11?

Accepted Answer

[Item 11: FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING]

### **Pre-Opening Obligations**

- 1.

Grant of Franchise We will grant to you the right to operate the Franchised Business within a designated Operating Market. (Franchise Agreement, Article 2);

- 2.

Site Review and Approval of Operating Market At the time of signing your Franchise Agreement you will have selected and we will have approved of the Operating Market within which you will operate the Franchised Business. (Franchise Agreement, Article 2).

If permitted by law, you may manage your Casiola Business from a home based administrative office.

If you elect to lease a back-end administrative office and/or operations center, your administrative office and/or operations center must be located within your Operating Market and be approved by us;

- 3.

Manuals We will provide you with access to our confidential and proprietary Manuals.

You must operate the Franchised Business in accordance with the Manuals and all applicable laws, rules and regulations.

At all times, we reserve the right to supplement, modify and update the Manuals. (Franchise Agreement, Article 4.C.).

The operations manual as of the Issuance Date of this Disclosure Document currently consists of 850 pages and the table of contents to the operations manual is attached as Exhibit C to this Disclosure Document (Franchise Agreement, Article 4).

Major subjects contained in the operations manual consist of establishing, developing, marketing and operating the Franchised Business;

- 4.

Approved Suppliers and Distributors We will provide you with a list of our approved suppliers and distributors, to the extent that we have designated them, either as part of the Manuals or otherwise in writing. (Franchise Agreement, Articles 3, 4, and 7.F.);

- 5.

Signs and Equipment We will provide you with a list of our approved signage and equipment to the extent that we have designated them, either as part of the Manuals or otherwise in writing and we will review and approve, in our discretion, your proposed signage and equipment.

We do not provide assistance in delivering or installing signs and equipment. (Franchise Agreement, Articles 3 and 4);

- 6.

#### **Advertising**

- 1. Generally All advertising, marketing, marketing materials and all marketing mediums used by you in the marketing and promotion of the Franchised Business must be pre-approved by us in writing and conform to our standards and specifications. You may only use those advertising and marketing materials and mediums that we designate and approve in writing. In our discretion we may make available to you approved marketing templates comprised of pre-approved ads, ad copy and digital media that you may utilize at your own expense. If you wish to utilize marketing materials and/or marketing mediums that are not currently approved by us in writing, you may submit a written request requesting permission and we will approve or disapprove of your request within 15 days of your submission of the written request and sample marketing materials. We are not required to conduct any advertising or spend any amount on your behalf on advertising in your Operating Market. (Franchise Agreement, Article 9);
- 2. Franchisee Directed Local Marketing You are not authorized to engage in any marketing unless it is preapproved by us, in our discretion. (Franchise Agreement, Article 9.B.). You are required to engage in local marketing and you are required to commit specific minimum amount of funds to your local marketing efforts. We will make available to you and provide you with access, in the form of a source document, to our approved marketing campaigns, media, and messaging that may be used by you. In those instances where we provide you with access to our marketing campaigns, we provide you with the source designs, copy, and design specifications. However, you will incur the direct costs associated with customizing, duplicating and using such marketing campaigns and having them printed, distributed and placed with media sources. (Franchise Agreement, Article 9);
- 3. Digital Media and Website All digital media and marketing must be approved by us. We will designate for your Operating Market information about your Casiola Business on the www.casiola.com website or such other websites as we may designate for the System. (Franchise Agreement, Article 9.F.);

Within 30 days of our written receipt and submission of all information and documentation that we may request, we will respond to your proposed request for our approval or disapproval of the proposed location of your administrative office. Factors taken into consideration include characteristics of the proposed site, whether or not the proposed site meets our criteria for non-retail back-office operations, and the location of your proposed site relative to your overall Operating Market and proximity to other franchisee operating territories.

#### **Time to Open**

You may not open your Casiola Business until you have completed our initial training requirements, obtained the necessary licensing and authorization from state and regulatory agencies within your Operating Market and have obtained and provided us with written proof of the required insurance. Within 120 days from the signing of your Franchise Agreement you must open and offer services and products of your Casiola Business to the customers within your Operating Market. We estimate that the length of time between the signing of your Franchise Agreement and opening your Casiola Business to be one to three months. Factors that may affect this estimated time period include the length of time undertaken by you to satisfactorily complete our initial training program, obtaining third party lender financing, if necessary, obtaining the necessary licenses, and training staff.

Question 17

What is the total estimated initial investment for a Casiola franchise, considering the fees in Item 5 and the expenditures in Item 7?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due |
|---|---|---|---|
|  |  |  | To Whom Payment is Made |
|  |  |  |  |
| Initial Franchise Fee (Note 1) | $65,000 – $140,000 | Lump sum | When Franchise Agreement is signed with Multi-Franchise Addendum |
| Estimated Initial Investment to Open Single Territory | $29,500 – $65,750 $94,500 – $205,750 | Estimated Initial Investment is based on the estimate contained in Table A, above, of this Item 7, for a single Territory, but less the Initial Franchise Fee reported in Table A. |  |
|  |  |  |  |

Question 18

What is the total estimated initial investment for a Casiola franchise, considering the Initial Franchise Fee (Item 5), Initial Training Fee (Item 7) and Equipment costs (Item 7)?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due |  |
|---|---|---|---|---|
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |
| Initial Franchise Fee (Note 1) | $35,000 | Lump sum | When Franchise Agreement is signed | Us |
| Initial Training Fee (Note 1) | $7,500 | Lump sum | When Franchise Agreement is signed | Us |
| Equipment (Note 2) | $1,000 – $3,000 | As arranged | As incurred | Suppliers |

Question 19

What is the total estimated initial investment for a Casiola franchise, considering the Initial Franchise Fee (Item 5), Initial Training Fee (Item 7) and Equipment costs (Item 7) and the ongoing monthly fees (Item 6)?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due |
|---|---|---|---|
|  |  |  | To Whom Payment is Made |
|  |  |  |  |
| Initial Franchise Fee (Note 1) | $65,000 – $140,000 | Lump sum | When Franchise Agreement is signed with Multi-Franchise Addendum |
| Estimated Initial Investment to Open Single Territory | $29,500 – $65,750 $94,500 – $205,750 | Estimated Initial Investment is based on the estimate contained in Table A, above, of this Item 7, for a single Territory, but less the Initial Franchise Fee reported in Table A. |  |

Question 20

What is the total estimated initial investment for a Casiola franchise, considering the Initial Franchise Fee (Item 5), Initial Training Fee (Item 7) and Equipment costs (Item 7) and the ongoing monthly fees (Item 6) and the potential for financing (Item 10)?

Accepted Answer

| Type of Expenditure | Amount | Method of Payment | When Due |  |
|---|---|---|---|---|
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |
| Initial Franchise Fee (Note 1) | $35,000 | Lump sum | When Franchise Agreement is signed | Us |
| Initial Training Fee (Note 1) | $7,500 | Lump sum | When Franchise Agreement is signed | Us |
| Equipment (Note 2) | $1,000 – $3,000 | As arranged | As incurred | Suppliers |
| Computer, Software, and | $1,500 – $3,000 | As arranged | As incurred | Suppliers |
| Bookings and Management |  |  |  |  |
| System (Note 3) |  |  |  |  |
| Vehicle (Note 4) | $250 – $4,250 | As arranged | As incurred | Automobile dealers |
| Start-Up Marketing (Note 6) | $1,000 | As arranged | As incurred | Suppliers |
| Insurance Deposits – Three | $1,000 – $3,000 | As arranged | As incurred | Insurers |
| Months (Note 7) |  |  |  |  |
| Travel for Initial Training | $1,000 – $3,000 | As arranged | As incurred | Airlines, hotels, |
| (Note 8) |  |  |  | restaurants |
| Professional Fees (Note 9) | $250 – $3,000 | As arranged | As incurred | Attorneys, accountants, advisors |
| Licenses and Permits | $1,000 – $3,000 | As arranged | As incurred | Government |
| (Note 10) |  |  |  |  |
| Additional Funds – Three Months (Note 11) | $15,000 – $35,000 | As arranged | As incurred | Us, employees, suppliers, landlord, utility suppliers |
| Total Estimate (Note 12) |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |

Question 21

What happens if more than four individuals attend the initial training for a Casiola franchise?

Accepted Answer

If this is your first Casiola Business, we will provide initial training for you or, if you are a Corporate Entity, your Managing Owner, plus up to three designated managers. At the time of signing your Franchise Agreement you will pay to us our Initial Training Fee. Either you or your Managing Owner, plus your general manager, must successfully complete the initial training program to our satisfaction no later than 20 days prior to the scheduled opening of your Casiola Business. The initial training program takes place over an approximate 10 day period. If more than four individuals attend initial training, you will be charged an additional fee per additional person attending initial training. You will be responsible for all travel expenses and employee wages related to your attendance and completion of training. (Franchise Agreement, Article 4). Currently, we provide our initial training program no less frequently than quarterly and on an as-needed basis.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 25–30)

Question 22

If Casiola modifies the list of approved suppliers, am I required to abide by the modification after receiving written notice?

Accepted Answer

Franchisee shall operate the Franchised Business in strict accordance with the standards, specifications, and requirements set forth in the Operations Manual as, such standards, specifications, and requirements including, but not limited to, the Approved Services and Products, System Supplies, and, authorized and designated suppliers, as of the Effective Date of this Agreement, and, as they may be supplemented, modified, changed, and/or replaced in the future and, from time to time, by Franchisor, in Franchisor's Reasonable Business Judgment. Franchisee shall keep and maintain the confidentiality of the Operations Manual and shall keep and maintain all files, data and information contained in the Operations Manual in a secure location and/or in a protected confidential state and, as otherwise directed by Franchisor. The master copy and official version of the Operations Manual is and shall be the copy and/or version maintained and designated by Franchisor in Franchisor's ordinary course of business.

Franchisor shall provide Franchisee with reasonable notice of modifications and changes made to the Operations Manual and, such notice may take form of electronic communications includ

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 23

According to the Casiola agreement, what happens if the dispute resolution procedures in this agreement conflict with those in the Franchise Agreement?

Accepted Answer

Any dispute between the parties relating to this Agreement shall be brought in accordance with the dispute resolution procedures set forth in the Franchise Agreement. Notwithstanding the foregoing, if any of the dispute resolution procedures set forth in the Franchise Agreement conflict with any of the terms of this Agreement, the terms of this Agreement shall prevail. Without limitation to the foregoing, you agree that:

(a) Arbitration – Except, at our option, as to any claims or disputes related to or concerning a breach of this Agreement by you that may entitle us to the award of injunctive relief, you agree that any and all disputes, controversies, and claims, arising from and/or related to this Agreement, shall be submitted to the American Arbitration Association ("AAA") for binding arbitration. Arbitration shall be conducted by one arbitrator in accordance with the AAA's then current rules for commercial disputes, except as may be otherwise required in this Agreement. All arbitration proceedings shall be conducted in Orange County, Florida or, if suitable AAA facilities are not available in Orange County, Florida, then at a suitable AAA location selected by the arbitrator that is located closest to Orange County, Florida.

In connection with binding arbitration, you agree that:

- (i) All matters relating to arbitration, will be governed by the United States Federal Arbitration Act, except as expressly or otherwise set forth in this Agreement;
- (ii) The arbitration hearing shall be conducted within 180 days of the demand for arbitration;
- (iii) The arbitrator shall render written findings of fact and conclusions of law;
- (iv) Except as may be otherwise required and/or prohibited by this Agreement, the arbitrator has the right to award or include in his or her award any relief that he or she determines to be proper, including monetary damages, interest on unpaid sums, specific

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 24

According to the Casiola agreement, what happens if the terms of the Franchise Agreement conflict with the terms of this agreement?

Accepted Answer

In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW will prevail.

RCW 19.100.180 may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise. There may also be court decisions which may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 25

According to the Casiola franchise agreement, if I fail to pay any obligations due to an affiliate, how is the cure period determined?

Accepted Answer

| v. Choice of forum | 18.G. | All mediation, arbitration and, if applicable, litigation proceedings |
|---|---|---|
|  |  | must be conducted in, or closest to, State court of general |
|  |  | jurisdiction that is within or closest to Orange County, Florida or, |
|  |  | if appropriate, the United States District Court nearest to our |
|  |  | corporate headquarters at the time such action is filed. This |
|  |  | provision is subject to applicable state law. |
| w. Choice of law | 18.F. | Florida law will govern. However, this provision is subject to state |
|  |  | law and as otherwise disclosed in Exhibit I to this Disclosure |
|  |  | Document. |
![](_page_35_Picture_0.jpeg)

| g. | "Cause" defined-curable defaults        | 16.A.(3), 16.A.(4) | You have 10 days to cure a default where you fail to pay any fees and/or obligations due to us and/or to an affiliate of ours or if you fail to pay a supplier without, as determined by us, a legal justification, provided that the foregoing defaults were not intentionally and knowingly in violation of the Franchise Agreement. You will have 30 days to cure a default where you fail to: timely lease a location that we approve for your Casiola Business; timely develop and open your Casiola Business; operate your Casiola Business in accordance with the specifications, standards, and requirements set forth in our Manuals; develop or operate your Casiola Business in compliance with all federal, state, and local laws, rules, and regulations, unless, such violation poses a threat to public health or safety; maintain insurance coverage that we require; comply with our standards, systems or specifications as we may designate or as otherwise designated in the operations manual; fail to operate your Casiola Business in conformity with our System or otherwise violate the Franchise Agreement, except as to events of default that are not curable.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 35–39)

Question 26

According to the Hawaii Franchise Agreement Amendment, what jurisdictional requirements must be met for each provision of the amendment to be effective for Casiola?

Accepted Answer

- 3. Each provision of this amendment shall be effective only to the extent, with respect to such provision, that the jurisdictional requirements of the Hawaii Franchise Investment Law are met independently without reference to this amendment.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 27

Is a Casiola Administrative Office permitted to be a home-based office if permitted by law?

Accepted Answer

- "**Administrative Office(s)**" means the non-retail, back-end, administrative office and/or facilities from which a Casiola Business is managed.

An Administrative Office may be comprised of, if permitted by law, a home based office, or a non-retail, non-public back-end office and/or facility for managing the operations of the Franchised Business.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 28

How does applicable law potentially limit the enforcement of Article 16.A.(2) regarding defaults and automatic termination for Casiola franchises in Minnesota?

Accepted Answer

5. Under Article 16 of the Franchise Agreement, under the heading "Defaults and Automatic Termination Upon Written Notice Without Cure Period," the subarticle 16.A.(2) shall be supplemented by the addition of the following:

Article 16.A.(2) will not be enforced to the extent prohibited by applicable law.

![](_page_196_Picture_0.jpeg)

- 6.

Under Article 16 of the Franchise Agreement, under the heading "Defaults and Automatic Termination After 30 Day Cure Period," the subarticle 16.A.(4)(f), shall be supplemented by the addition of the following:

- Subarticle 16.A.(4)(f) will not be enforced to the extent prohibited by applicable law.

- 7.

Under both subarticles 16.A.(2) and 16.A.(4) of the Franchise Agreement, the following is added:

- Minnesota law provides a franchisee with certain termination rights.

Minn.

Stat.

Sect. 80C.14 Subdivisions 3, 4, and 5 require, except in certain specified cases, that franchisee be given 90 daysnotice of termination (with 60 days to cure) of this Agreement.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 29

How does applicable law potentially limit the enforcement of subarticle 16.A.(4)(f) regarding defaults and automatic termination for Casiola franchises in Minnesota?

Accepted Answer

- 6.

Under Article 16 of the Franchise Agreement, under the heading "Defaults and Automatic Termination After 30 Day Cure Period," the subarticle 16.A.(4)(f), shall be supplemented by the addition of the following:

- Subarticle 16.A.(4)(f) will not be enforced to the extent prohibited by applicable law.

- 7.

Under both subarticles 16.A.(2) and 16.A.(4) of the Franchise Agreement, the following is added:

- Minnesota law provides a franchisee with certain termination rights.

Minn.

Stat.

Sect. 80C.14 Subdivisions 3, 4, and 5 require, except in certain specified cases, that franchisee be given 90 daysnotice of termination (with 60 days to cure) of this Agreement.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 30

Besides the explicitly listed insurance types, what other insurance coverage might be required for a Casiola franchise?

Accepted Answer

(d) All other insurance that we require in the Manuals or that is required by law.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 20–24)

Question 31

Is a Casiola Business required to have specific licensing in certain jurisdictions, such as a real estate agent or broker license?

Accepted Answer

Many states and local jurisdictions have laws, rules, and regulations that may apply to the Franchised Business, including laws, rules, and regulations related to property management services, short-term property rentals, and property use restrictions. In certain jurisdictions your Casiola Business may require licensing including, a real estate agent or broker license. You must evaluate and obtain the necessary licenses, certification, permits and approval necessary to establish and operate your Casiola Business.

Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 8–10)

Question 32

After ceasing to be a Casiola franchisee, under what circumstances can a former franchisee represent themselves as a Casiola franchisee?

Accepted Answer

Upon expiration, termination, or Transfer of this Agreement for any reason, Franchisee shall immediately:

- (2) Refrain from directly or indirectly, holding oneself/itself out to any person or entity, or represent themselves/itself as a present or former Casiola franchisee, except as directed by Franchisor in writing and related to Franchisee's performance and completion of Wind-Down Activities as designated and determined by Franchisor in Franchisor's Reasonable Business Judgment;

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 33

Is the choice of forum for Casiola subject to applicable state law?

Accepted Answer

| v. Choice of forum | 18.G. | All mediation, arbitration and, if applicable, litigation proceedings |
|---|---|---|
|  |  | must be conducted in, or closest to, State court of general |
|  |  | jurisdiction that is within or closest to Orange County, Florida or, |
|  |  | if appropriate, the United States District Court nearest to our |
|  |  | corporate headquarters at the time such action is filed. This |
|  |  | provision is subject to applicable state law.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 35–39)

Question 34

Is the choice of law, non-binding mediation, binding arbitration, and consent to jurisdiction provision in Article 18.G of the Casiola Franchise Agreement subject to any exceptions?

Accepted Answer

r and Franchisee cannot agree on a mediator then the mediator shall be selected by AAA. Mediation shall be conducted within 45 days of AAA's designation and/or acknowledgment of the selected mediator or such longer period as may be agreed to between Franchisor and Franchisee in writing and signed by each respective party. Franchisor and Franchisee shall each be responsible for their own costs associated with mediation and Franchisor and Franchisee shall each be responsible for and shall each pay 50% of the mediator's fee and AAA's mediation fees.

Notwithstanding the preceding paragraph, Franchisor and Franchisee agree this Sub-Article 18.G.(1) and, thereby, the prerequisite requirement of non-binding mediation, shall not, at Franchisor's election, apply to: (a) any claims or disputes related to or concerning a breach of this Agreement by Franchisee that, under the terms of this Agreement, may entitle Franchisor to the award of injunctive relief including, but not limited to, Franchisee's violation or purported violation of Article 6 of this Agreement; and/or (b) claims by either Franchisor or Franchisee under this Agreement that relates to either Franchisor's or Franchisee's failure to pay fees or other monetary obligations due under this Agreement.

(2) **Arbitration** – Subject to the prerequisite requirements of non-binding mediation as set forth in Sub-Article 18.G.(1), and, except at Franchisor's election, as to any claims or disputes related to or concerning a breach of this Agreement by Franchisee that, under the terms of this Agreement, may entitle Franchisor to the award of injunctive relief including, but not limited to, Franchisee's violation or purported violation of Article 6 of this Agreement, Franchisor and Franchisee agree that all disputes, controversies, and claims, arising from and/or related to this Agreement, the relationship between Franchisor and Franchisee, the System, and/or the validity of this Agreement and/or the Ancillary Agreements, shall be submitted, on demand of either Franchisor or Franchisee, to AAA for binding arbitration. Arbitration shall be conducted by one arbitrator in accordance with AAA's then current rules for commercial disputes, except as may be otherwise required in this Article 18.G. All arbitration proceedings shall be conducted in Orange County, Florida, or, if suitable AAA facilities are not available in Orange County,

![](_page_137_Picture_0.jpeg)

Florida, then at a suitable AAA location selected by the arbitrator that is located closest to Orange County, Florida.

In connection with binding arbitration, Franchisor and Franchisee further agree that:

- (a) All matters relating to arbitration, will be governed by the United States Federal Arbitration Act, except as expressly or otherwise set forth in this Agreement;
- (b) The arbitration hearing shall be conducted within 180 days of the demand for arbitration;
- (c) The arbitrator shall render written findings of fact and conclusions of law;
- (d) Except as may be otherwise required and/or prohibited by this Agreement including, but not limited to Articles 18.I., 18.J., 18.N., 18.O., 18.R., 18.T., and 18.X. of this Agreement, the arbitrator has the right to award or include in his or her award any relief that he or she determines to be proper, including monetary damages, interest on unpaid sums, specific performance, injunctive relief, attorneys' fees, and costs and expenses as allowable under this Agreement. Notwithstanding the foregoing, under no circumstance shall the Arbitrator be authorized to award or declare the Licensed Marks to be descriptive or invalid;
- (e) They shall each be bound to the limitation's periods set forth in Article 18.I. of this Agreement and that, in any arbitration proceeding, Franchisor and Franchisee must each timely submit, within the same arbitration proceeding, any claim that would constitute a compulsory counterclaim as such claims are defined and set forth under Rule 13 of the United States Federal Rules of Civil Procedure. Any claim that is not submitted or filed as required shall be forever barred;

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 35

Is the choice of law provision for Casiola franchise agreements subject to state law?

Accepted Answer

| v. Choice of forum | 18.G. | All mediation, arbitration and, if applicable, litigation proceedings |
|---|---|---|
|  |  | must be conducted in, or closest to, State court of general |
|  |  | jurisdiction that is within or closest to Orange County, Florida or, |
|  |  | if appropriate, the United States District Court nearest to our |
|  |  | corporate headquarters at the time such action is filed. This |
|  |  | provision is subject to applicable state law. |
| w. Choice of law | 18.F. | Florida law will govern. However, this provision is subject to state |
|  |  | law and as otherwise disclosed in Exhibit I to this Disclosure |
|  |  | Document. |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 39–45)

Question 36

Is the choice of law for Casiola subject to state law?

Accepted Answer

| v. Choice of forum | 18.G. | All mediation, arbitration and, if applicable, litigation proceedings |
|---|---|---|
|  |  | must be conducted in, or closest to, State court of general |
|  |  | jurisdiction that is within or closest to Orange County, Florida or, |
|  |  | if appropriate, the United States District Court nearest to our |
|  |  | corporate headquarters at the time such action is filed. This |
|  |  | provision is subject to applicable state law. |
| w. Choice of law | 18.F. | Florida law will govern. However, this provision is subject to state |
|  |  | law and as otherwise disclosed in Exhibit I to this Disclosure |
|  |  | Document. |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 35–39)

Question 37

What is the condition for Casiola's agreement not to operate or grant a franchise within the Franchisee's Operating Market?

Accepted Answer

- (5) Except as otherwise provided in this Agreement including, but not limited to, the Reserved Rights and Closed Markets, provided that, at all times, Franchisee is and remains in compliance with the terms of this Agreement, during the Term of this Agreement, Franchisor will not and Franchisor's affiliates will not operate, or grant a franchisee the right to operate a Casiola Business using the Licensed Marks and System within Franchisee's Operating Market, provided that an Operating Market has been designated and approved by Franchisor in accordance with the terms of this Agreement; and

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 38

What is the condition for Casiola to receive money, goods, or services from a third party that a franchisee does business with in Indiana?

Accepted Answer

Under Indiana Code Section 23-2-2.7-1(4), the franchisor will not obtain money, goods, services, or any other benefit from any other person with whom the franchisee does business, on account of, or in relation to, the transaction between the franchisee and the other person, other than for compensation for services rendered by the franchisor, unless the benefit is promptly accounted for, and transmitted by the franchisee.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 39

What is the condition regarding the transferee's employees, directors, officers, independent contractors, and agents who will have access to the Casiola business?

Accepted Answer

- (13) Transferee's employees, directors, officers, independent contractors, and agents who will have

![](_page_121_Picture_0.jpeg)

access to Confidential Information shall execute the Confidentiality Agreement attached hereto as Exhibit 2;

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 40

What conditions must be met to add Additional Territories to a Casiola franchise?

Accepted Answer

l properties within a 40 minute drive time from your administrative office. Subject to availability, our approval, and payment of additional Initial Franchise Fees identified in Item 5 of this Disclosure Document, you may add Additional Territories. Each Additional Territory will consist of a geographic area that includes up to approximately 5,000 potential rentable individual short-term rental properties. The number of potential rentable individual short-term rental properties will be determined by us at the time of signing your Franchise Agreement and will be determined based on our evaluation of industry data related to potential available individual unit rental properties that may be rented on a short-term basis. Your Minimum Monthly Royalty Fee Requirement and local marketing expenditure will increase if you add Additional Territories.

Source: Item 12 — TERRITORY (FDD pages 30–32)

Question 41

What are the conditions for receiving the veteran's discount on the Casiola initial franchise fee?

Accepted Answer

For qualified individuals who were honorably discharged from any branch of the United States Military we offer a 15% discount off of the Initial Franchise Fee for your first Franchise Agreement for your first territory. This discount must be requested at the time of your initial franchise application and requires documented military service and is subject to our approval and agreement to award a franchise.

Source: Item 5 — INITIAL FEES (FDD pages 11–12)

Question 42

What is the consequence if a Casiola franchisee fails to cease operations after termination?

Accepted Answer

- (1) To void and terminate this Agreement, and thereafter to market, sell, transfer, convey and assign the rights granted to Franchisee under this Agreement to any other person or entity in Franchisor's sole discretion and without compensation to Franchisee.
- (2) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, all payments, fees, monetary obligations, financial obligations, interest, and charges due and owing to Franchisor from Franchisee pursuant to this Agreement, the Ancillary Agreements, and/or any other agreements between Franchisee and Franchisor, including, without limitation, Royalty Fees and Advertising Contributions with each and every payment and obligation to be accelerated and due immediately.
- (3) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, lost revenues, profits, and fees including, but not limited to Royalty Fees, Brand Development Fund Fee, Advertising Contributions, and all other fees, revenues and/or expenses that would have been paid to Franchisor, under the terms of this Agreement and throughout the Term of this Agreement, had a breach not occurred and had Franchisor not terminated this Agreement. In calculating and determining the foregoing, Franchisee agrees that in calculating and in determining such damages that it is fair and reasonable to use Franchisee's most recent calendar year Gross Sales in calculating and determining Franchisor lost revenues and fees and by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. If, however, the Franchised Business has been open and in operation for less than one calendar year, Franchisee agrees that it is fair and reasonable to use an average of Casiola Business Gross Sales across the System during the year in which this Agreement was terminated and to use such average Gross Sales for the purpose of calculating and determining Franchisor lost revenues and fees and, in doing so, by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. Franchisee agrees that the foregoing is a form of

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 43

What are the consequences for Casiola franchisee receipts if the franchisee provides intentionally inaccurate or materially misleading information to the franchisor?

Accepted Answer

- (f) As to information, records, statements, and/or data that Franchisee must maintain and/or report to Franchisor pursuant to the terms of this Agreement, the Operations Manual, or as otherwise requested by Franchisor from time to time, the information, records, statements, and/or data maintained by Franchisee and/or reported by Franchisee contains intentional inaccuracies and/or material inaccuracies that are either misleading or false;

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 44

What are the consequences regarding receipts if a Casiola franchisee attempts to transfer the agreement without approval?

Accepted Answer

- (1) To void and terminate this Agreement, and thereafter to market, sell, transfer, convey and assign the rights granted to Franchisee under this Agreement to any other person or entity in Franchisor's sole discretion and without compensation to Franchisee.
- (2) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, all payments, fees, monetary obligations, financial obligations, interest, and charges due and owing to Franchisor from Franchisee pursuant to this Agreement, the Ancillary Agreements, and/or any other agreements between Franchisee and Franchisor, including, without limitation, Royalty Fees and Advertising Contributions with each and every payment and obligation to be accelerated and due immediately.
- (3) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, lost revenues, profits, and fees including, but not limited to Royalty Fees, Brand Development Fund Fee, Advertising Contributions, and all other fees, revenues and/or expenses that would have been paid to Franchisor, under the terms of this Agreement and throughout the Term of this Agreement, had a breach not occurred and had Franchisor not terminated this Agreement. In calculating and determining the foregoing, Franchisee agrees that in calculating and in determining such damages that it is fair and reasonable to use Franchisee's most recent calendar year Gross Sales in calculating and determining Franchisor lost revenues and fees and by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. If, however, the Franchised Business has been open and in operation for less than one calendar year, Franchisee agrees that it is fair and reasonable to use an average of Casiola Business Gross Sales across the System during the year in which this Agreement was terminated and to use such average Gross Sales for the purpose of calculating and determining Franchisor lost revenues and fees and, in doing so, by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. Franchisee agrees that the foregoing is a form of liquidated damages, and that it is fair and reasonable.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 45

What are the consequences regarding receipts if an owner of a Casiola corporate entity franchisee attempts to transfer ownership interests without approval?

Accepted Answer

- (1) To void and terminate this Agreement, and thereafter to market, sell, transfer, convey and assign the rights granted to Franchisee under this Agreement to any other person or entity in Franchisor's sole discretion and without compensation to Franchisee.
- (2) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, all payments, fees, monetary obligations, financial obligations, interest, and charges due and owing to Franchisor from Franchisee pursuant to this Agreement, the Ancillary Agreements, and/or any other agreements between Franchisee and Franchisor, including, without limitation, Royalty Fees and Advertising Contributions with each and every payment and obligation to be accelerated and due immediately.
- (3) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, lost revenues, profits, and fees including, but not limited to Royalty Fees, Brand Development Fund Fee, Advertising Contributions, and all other fees, revenues and/or expenses that would have been paid to Franchisor, under the terms of this Agreement and throughout the Term of this Agreement, had a breach not occurred and had Franchisor not terminated this Agreement. In calculating and determining the foregoing, Franchisee agrees that in calculating and in determining such damages that it is fair and reasonable to use Franchisee's most recent calendar year Gross Sales in calculating and determining Franchisor lost revenues and fees and by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. If, however, the Franchised Business has been open and in operation for less than one calendar year, Franchisee agrees that it is fair and reasonable to use an average of Casiola Business Gross Sales across the System during the year in which this Agreement was terminated and to use such average Gross Sales for the purpose of calculating and determining Franchisor lost revenues and fees and, in doing so, by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. Franchisee agrees that the foregoing is a form of liquidated damages, and that it is fair and reasonable.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 46

What is the dependency between a casualty event and the requirement for a Casiola franchisee to continuously operate the business?

Accepted Answer

If Franchisee's Administrative Office, Service Vehicle(s) and/or System Supplies is and/or are damaged or destroyed by fire or any other casualty, Franchisee must, as soon as practicable but in no event later than one month after such casualty, initiate repairs or reconstruction, and thereafter, in good faith and with due diligence, continue until completion of the repairs or reconstruction, to their/its original condition before casualty and otherwise in accordance with Franchisor's standards and specifications.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 47

What is the dependency between a Casiola franchisee's Ancillary Agreement and the Franchise Agreement regarding default?

Accepted Answer

- (3) Franchisee and each Owner must not be in default or material breach of this Agreement or the Ancillary Agreements;

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 48

What is the dependency between a Casiola franchisee's right to operate and compliance with laws and regulations?

Accepted Answer

#### **7.H. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES**

- (1) Franchisee shall, at all times, secure and maintain in full force all required licenses, permits and certificates relating to the operation of the Franchised Business, and Franchisee must operate the Franchised Business in full compliance with all applicable laws, ordinances, codes and regulations.

- (2) Franchisee shall, at all times, investigate, review, and comply with all laws applicable to the operation of the Franchised Business, including, without limitation, all labor laws and obligations, wage and hour laws and obligations, employer practices laws and obligations, labor department rules and regulations, workers compensation and unemployment laws and rules, insurance obligations, and health and safety laws, rules and obligations.

- (3) Franchisee shall, at all times, investigate, review, and comply with all laws, rules, and regulations related to all laws, rules, and regulations related to customer and employee privacy obligations and protections and, all laws, rules, and regulations, related to the privacy and protection of customer and employee information and data and, all laws, rules, and regulations related to customer and employee solicitations.

- (4) Franchisee must, at all times, immediately notify Franchisor in writing of any of the following concerning Franchisee, and/or the Franchised Business: (a) any cause of action, claim, lawsuit, proceeding, and investigation; (b) issuance of any order, writ, injunction, award, and/or decree by any court, agency, or other governmental entity; and (c) any notice of violation of any law, ordinance, code, permit, or regulation.

- (5) Franchisee shall, at all times, ensure that all advertising and promotion of the Franchised Business by Franchisee is completely factual and conforms to the highest standards of ethical advertising, and is in conformity with

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 49

Can Casiola directly collect the Gross Sales of my Casiola Business?

Accepted Answer

Note 1: Type of Fee – The above table describes fees and payments that you must pay to us, our affiliates, or that our affiliates may impose or collect on behalf of a third party. All fees are uniformly imposed for all franchises offered under this Disclosure Document, are recurring, are not refundable, and are payable to us, unless otherwise specified. At our election we may directly collect the Gross Sales of your Casiola Business and we will pre-deduct all of the fees and payments due to us, our affiliates, or our designated suppliers, and we will remit the balance to you. If applicable and, at our election, we require payment from you subject to our specification and instruction, including, our election to have fees automatically drafted from your business bank account or automatically debited or charged to your business bank account. You will be required to sign an ACH Authorization Form (Franchise Agreement, Exhibit 4) permitting us to electronically debit your designated bank account for payment of all fees payable to us and/or our affiliates. You must deposit the Gross Sales of your Casiola Business into the designated bank accounts that are subject to our ACH authorization. As directed by us, you must install and use, at your expense, the pre-authorized payment, point of sale, credit card processing, automatic payment, automated banking, electronic debit and/or electronic funds transfer systems that we designate. You must pay all service charges and fees charged to you by your bank so that we may electronically debit your bank account.

Source: Item 6 — OTHER FEES (FDD pages 12–18)

Question 50

Does Casiola have discretion in taking action regarding unauthorized use of the Manuals?

Accepted Answer

- (6) Immediately notify Franchisor, in writing, of any and all locations where Franchisee may have maintained and/or stored digital files and/or media containing all or parts of the Operations Manual, any Confidential Information, and all other standards and specifications of Franchisor, immediately turn over such digital files and media to Franchisor, and follow Franchisor's instructions as to the destruction of such digital files and media;

- (7) (a) modify and alter Franchisee's former Casiola Business, Franchisee's former Casiola Administrative Office, and Franchisee's Administrative Office, as reasonably necessary or otherwise required by Franchisor, to ensure that Franchisee's Administrative Office has been completely deidentified and differentiated from its former appearance to prevent any confusion by the public as to the continued existence of a Casiola Business at your Administrative Office; (b) remove from Franchisee's Administrative Office all distinctive physical and structural features identifying a Casiola Business and all distinctive signs, trade dress and emblems associated with the System including, without limitation, signs, trade dress, and emblems bearing the Licensed Marks; and (c) make specific additional changes to Franchisee's Administrative Office as Franchisor reasonably requests for the purpose of completely de-identifying Franchisee's former Casiola Business.

Franchisee shall immediately initiate the foregoing actions and complete such actions within the period of time designated by Franchisor, and Franchisee agrees that Franchisor and/or Franchisor's designated agents may enter the premises of Franchisee's Administrative Office at any time to make foregoing alterations at Franchisee's sole risk and expense.

Franchisee agrees that Franchisee's failure to timely make modifications and alterations to Franchisee's Administrative Office will cause irreparable injury to Franchisor, and Franchisee consents to the entry, at Franchisee's expense, of any ex-parte order by any court of competent jurisdiction authorizing Franchisor or its agents to take action, if Franchisor seeks such an order;

- (8) Take all actions necessary and/or reasonably required to cancel all fictitious or assumed names or equivalent registrations relating to the Licensed Marks;

Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD page 34)

Question 51

What is the effect of the Maryland Franchise Registration and Disclosure Law on the Casiola franchise agreement's arbitration clause?

Accepted Answer

Amendments to the Casiola Franchise Agreement:

In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law, the parties to the attached Casiola Franchise LLC Franchise Agreement (the "Franchise Agreement"), as follows:

- 1. The franchise agreement provides that disputes are resolved through arbitration. A Maryland franchise regulation states that it is an unfair or deceptive practice to require a franchisee to waive its right to file a lawsuit in Maryland claiming a violation of the Maryland Franchise Law. In light of the Federal Arbitration Act, there is some dispute as to whether this forum selection requirement is legally enforceable.
- 2. The general release required as a condition of renewal, sale, and/or assignment/transfer shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
- 3. Article 18.G. of the Franchise Agreement, under the heading "Choice of Law, Non-Binding Mediation, Binding Arbitration, and Consent to Jurisdiction," shall be amended by the addition of the following statement added to Article 18.G. of the Franchise Agreement:
  - A franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
- 4. Article 18.I. of the Franchise Agreement, under the heading "Limitations of Claims," shall be amended by the addition of the following statement added to Article 18.I. of the Franchise Agreement:

Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within three years after the grant of the franchise.

A general release required as a condition of renewal, sale and/or assignment or transfer of a Franchise Agreement shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law.

- 5. All representations requiring prospective franchisees to assent to a release, estoppel or waiver of liability are not intended to nor shall they act as a release, estoppel or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law.
- 6. Each provision of this amendment shall be effective only to the extent, with respect to such provision, that the jurisdictional requirements of the Maryland Franchise Registration and Disclosure Law are met independently without reference to this amendment.
- 7. No statement, questionnaire or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of: (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 52

In the event of a Casiola franchisee's death or disability, what happens if the franchisee is a Corporate Entity with other owners?

Accepted Answer

| n. | Franchisor's right of first refusal to acquire franchisee's business      | 14.F.             | We have the right to match any offer to purchase your Casiola Business or the Corporate Entity operating your Casiola Business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|----|------------------------------------------------------------------------------|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| o. | Franchisor's option to purchase | Not | Not applicable. |
|  | franchisee's business | applicable |  |
| p. | Death or disability of franchisee | 14.D. | If you are an individual, within 30 days of your death or permanent |
|  |  |  | disability, your executor and/or legal representative must appoint |
|  |  |  | an Operating Manager approved by us and within 60 days of such |
|  |  |  | appointment the Operating Manager must complete, to our |
|  |  |  | satisfaction, our initial training program. Within 12 months of the |
|  |  |  | date of death or disability, the Franchise Agreement must be |
|  |  |  | transferred to a transferee approved by us and otherwise |
|  |  |  | transferred in accordance with the terms of the Franchise |
|  |  |  | Agreement. If the franchisee is a Corporate Entity, within 30 days |
|  |  |  | of the death or permanent disability of your Managing Owner, if |
|  |  |  | there are other Owners, you must appoint a replacement Operating |
|  |  |  | Manager approved by us and within 60 days of such appointment |
|  |  |  | the replacement Operating Manager must complete, to our |
|  |  |  | satisfaction, our initial training program.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 35–39)

Question 53

To what extent will Article 16.A.(2) of the Casiola Franchise Agreement be enforced in Minnesota?

Accepted Answer

Under Article 16 of the Franchise Agreement, under the heading "Defaults and Automatic Termination Upon Written Notice Without Cure Period," the subarticle 16.A.(2) shall be supplemented by the addition of the following:

Article 16.A.(2) will not be enforced to the extent prohibited by applicable law.

![](_page_196_Picture_0.jpeg)

- 6.

Under Article 16 of the Franchise Agreement, under the heading "Defaults and Automatic Termination After 30 Day Cure Period," the subarticle 16.A.(4)(f), shall be supplemented by the addition of the following:

- Subarticle 16.A.(4)(f) will not be enforced to the extent prohibited by applicable law.

- 7.

Under both subarticles 16.A.(2) and 16.A.(4) of the Franchise Agreement, the following is added:

- Minnesota law provides a franchisee with certain termination rights.

Minn.

Stat.

Sect. 80C.14 Subdivisions 3, 4, and 5 require, except in certain specified cases, that franchisee be given 90 daysnotice of termination (with 60 days to cure) of this Agreement.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 54

To what extent is each provision of the Casiola amendment effective?

Accepted Answer

Each provision of this amendment shall be effective only to the extent, with respect to such provision, that the jurisdictional requirements of the Hawaii Franchise Investment Law are met independently without reference to this amendment.
- 4. No statement, questionnaire or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of: (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 55

To what extent will subarticle 16.A.(4)(f) of the Casiola Franchise Agreement be enforced in Minnesota?

Accepted Answer

Under Article 16 of the Franchise Agreement, under the heading "Defaults and Automatic Termination After 30 Day Cure Period," the subarticle 16.A.(4)(f), shall be supplemented by the addition of the following:

- Subarticle 16.A.(4)(f) will not be enforced to the extent prohibited by applicable law.

- 7.

Under both subarticles 16.A.(2) and 16.A.(4) of the Franchise Agreement, the following is added:

- Minnesota law provides a franchisee with certain termination rights.

Minn.

Stat.

Sect. 80C.14 Subdivisions 3, 4, and 5 require, except in certain specified cases, that franchisee be given 90 daysnotice of termination (with 60 days to cure) of this Agreement.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 56

Does the Casiola FDD require disclosure of pending civil actions against certain parties, even if they are not related to felonies, franchise law, antitrust law, securities law, fraud, embezzlement, fraudulent conversion, misappropriation of property, or unfair/deceptive practices?

Accepted Answer

Amendments to the Casiola Franchise Disclosure Document

- 1. Item 3 "Litigation," is supplemented by the addition of the following:
  - A. Neither the Franchisor nor any person identified in Items 1 or 2 above has any administrative, criminal or material civil action (or a significant number of civil actions irrespective of materiality) pending against him alleging a violation of any franchise law, fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, business opportunity law, securities law, misappropriation of property or comparable allegations.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 57

Does the fee deferral condition for Casiola apply to all franchisees, or only those in California?

Accepted Answer

- 9. The department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collections of all initial fees from California franchisee util we have completed all of our pre-opening obligations, and you are open for business. For California franchisees who sign a development agreement, the payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 58

What financial obligations must remain the same if a transferee is required to execute the then-current standard form Franchise Agreement for a Casiola business?

Accepted Answer

Such agreements shall supersede this Agreement and its associated agreement in all respects, and the terms of Franchisor's then current agreements may differ from the terms in this Agreement, provided that such agreements shall provide for the same Royalty Fee, Advertising Contributions, and all other financial or monetary obligations established in this Agreement;

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 59

Does the Casiola franchise agreement allow for Ancillary Third Party Service Providers?

Accepted Answer

vice Provider. At all times Franchisor possesses full discretion and authority, in Franchisor's Reasonable Business Judgment, to designate and determine what constitutes and qualifies as Ancillary Third Party Service Fees.
- "**Ancillary Third Party Service Provider**" means a third party provider of Ancillary Third Party Service Provider.
- "**Ancillary Third Party Services**" means, as designated and authorized by Franchisor, ancillary property maintenance services that includes, as an example, cleaning, plumbing, handyman, and similar maintenance services that are coordinated, managed, and/or overseen by Franchisee on behalf of a customer of the Franchised Business and ancillary to the Approved Services and Products as designated and determined by Franchisor. Under no circumstance shall Ancillary Third Party Services refer to or mean rental property promotion services, property management services, rental property insurance, damage waiver fee agreements, management services for short-term rental properties, or any other product or service designated by Franchisor as an Approved Service and Product.
- "**Annual Conference Attendance Fee**" means an annual conference attendance fee to be paid by Franchisee to Franchisor in an amount determined by Franchisor but not exceeding \$1,000 annually.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 60

Does the Casiola franchise agreement allow the franchisor to extend the post-term restricted period if the franchisee engages in prohibited activities?

Accepted Answer

Franchisee agrees that during the Post-Term Restricted Period, Franchisee shall not engage in any Prohibited Activities provided, however, that the Prohibited Activities relating to Franchisee having an interest in a Competitive Business will only apply with respect to a Competitive Business that is located within a Restricted Territory. If Franchisee is engaged in any Prohibited Activities during the Post-Term Restricted Period, Franchisee agrees that Franchisee's Post-Term Restricted Period will be extended by the period of time during which Franchisee was engaging in the Prohibited Activity and, any such extension of time will not be construed as a waiver of Franchisee's breach or otherwise impair any of Franchisor's rights or remedies relating to Franchisee's breach. Franchisee agrees that the foregoing covenants and restrictions shall also apply to Franchisee's Owners and that Franchisee's Owners shall each execute and deliver to

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Franchisor the Franchise Owner Agreement and Guaranty in the form attached to this Agreement as Exhibit 1. Franchisee agrees that the covenants and restrictions set forth in this Article 6.E. and otherwise in this Article 6, are fair and reasonable and that if Franchisee engaged in any Prohibited Activity that such actions would constitute acts of unfair competition, causing irreparable harm to Franchisor and the System.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 61

What must a Casiola franchisee be in compliance with to receive a Service Order?

Accepted Answer

Provided Franchisee and each Owner, respectively, are in substantial compliance with this Agreement and the Ancillary Agreements, and Franchisor does not elect to exercise Franchisor's right of first refusal as set forth in Article 14.F. below, Franchisor shall not unreasonably withhold its approval of a Transfer by Franchisee or an Owner. The proposed transferee, including such assignee's owners, if the proposed transferee is a Corporate Entity, must be of good moral character, have sufficient business experience, aptitude and financial resources to own and operate a Casiola Business, and otherwise meet Franchisor's then applicable standards for franchisees as determined by Franchisor in its sole, but reasonable discretion. Furthermore, the proposed transferee and the proposed transferee's owners may not own or operate, or intend to own or operate, a Competitive Business. Franchisee agrees that Franchisor may condition approval of a Transfer upon Franchisee's satisfaction (either before, or contemporaneously with, the effective date of the Transfer) of the following:

- (1) Franchisee must provide written notice to Franchisor of the proposed Transfer of this Agreement at least 30 days prior to the Transfer, and Franchisee must have also satisfied the obligations set forth in Article 14.F. below;
- (2) All accrued monetary obligations of Franchisee and all other outstanding obligations to Franchisor and/or Franchisor's affiliates under this Agreement and the Ancillary Agreements must be satisfied in a timely manner, and Franchisee must satisfy all trade, supplier, and vendor accounts and other debts, of whatever nature or kind, in a timely manner;

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- (3) Franchisee and each Owner must not be in default or material breach of this Agreement or the Ancillary Agreements;

- (4) The transferee shall be bound by all terms and conditions of this Agreement, and each owner of the transferee shall personally execute the Franchise Owner Agreement and Guaranty in the form attached to this Agreement as Exhibit 1;

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 62

What must a Casiola franchisee do to ensure they are indemnified against trademark infringement claims?

Accepted Answer

We will protect your right to use the Licensed Marks and other related rights and protect you against claims of infringement and unfair competition related to the Licensed Marks, provided that you use the Licensed Marks in accordance with the terms of your Franchise Agreement, as designated by us in the Manuals, and otherwise, as we instruct you. We will indemnify you against direct damages for trademark infringement in a proceeding arising out of your use of the Licensed Marks, provided your use of the Licensed Marks comply with the terms of your Franchise Agreement, the Manuals, our written instructions, and that you have timely notified us of the claim, have given us sole control of the defense and settlement of the claim, and you are in compliance with your Franchise Agreement. If we defend the claim, we have no obligation to indemnify or reimburse you with respect to any fees or disbursements of any attorney that you retain.

Source: Item 13 — TRADEMARKS (FDD pages 32–34)

Question 63

What is the Casiola franchisee's obligation if the monthly Royalty Fees paid are less than the Monthly Minimum Royalty Fee Requirements?

Accepted Answer

y Fee") in an amount equal to 4.9% (the "Royalty Rate") of Gross Rental Revenues+, except that the Royalty Rate shall be 8% of Gross Rental Revenues+ for Out of Territory Customers. Royalty Fees shall be paid instantly in each and every instance that Gross Rental Revenues+, Gross Sales, and/or any other fees are received and/or paid in connection with the Franchised Business.

Supplemental Royalty Fee: In addition to Franchisee's Royalty Fee obligations, on a calendar year quarterly basis throughout the Term of this Agreement, if the aggregate amount of the monthly Royalty Fees paid by Franchisee during the respective calendar year quarter do not, in aggregate, equal or exceed the aggregate amount of Franchisee's Monthly Minimum Royalty Fee Requirements (defined below) applicable to the months comprising the respective calendar year quarter (calculated by combining the Monthly Minimum Royalty Fee Requirement for each month within the applicable calendar year quarter), then Franchisee must pay to Franchisor the difference as a supplemental royalty fee (the "Supplemental Royalty Fee").

Source: Item 23 — RECEIPTS (FDD pages 47–209)

Question 64

What must the Franchisor approve regarding the transfer of a Casiola franchise?

Accepted Answer

of this Agreement including, but not limited to this Article 14.B. shall constitute a breach of this Agreement and shall convey to the transferee no rights or interests in this Agreement; and
- (5) In the event of a Transfer of this Agreement that is approved by Franchisor, Franchisee shall not be relieved of Franchisee's obligations under this Agreement whether said obligations accrued and/or arose prior to and/or after the date of Transfer.

# **14.C. CONDITIONS FOR APPROVAL OF TRANSFER**

Provided Franchisee and each Owner, respectively, are in substantial compliance with this Agreement and the Ancillary Agreements, and Franchisor does not elect to exercise Franchisor's right of first refusal as set forth in Article 14.F. below, Franchisor shall not unreasonably withhold its approval of a Transfer by Franchisee or an Owner. The proposed transferee, including such assignee's owners, if the proposed transferee is a Corporate Entity, must be of good moral character, have sufficient business experience, aptitude and financial resources to own and operate a Casiola Business, and otherwise meet Franchisor's then applicable standards for franchisees as determined by Franchisor in its sole, but reasonable discretion. Furthermore, the proposed transferee and the proposed transferee's owners may not own or operate, or intend to own or operate, a Competitive Business. Franchisee agrees that Franchisor may condition approval of a Transfer upon Franchisee's satisfaction (either before, or contemporaneously with, the effective date of the Transfer) of the following:

- (1) Franchisee must provide written notice to Franchisor of the proposed Transfer of this Agreement at least 30 days prior to the Transfer, and Franchisee must have also satisfied the obligations set forth in Article 14.F. below;
- (2) All accrued monetary obligations of Franchisee and all other outstanding obligations to Franchisor and/or Franchisor's affiliates under this Agreement and the Ancillary Agreements must be satisfied in a timely manner, and Franchisee must satisfy all trade, supplier, and vendor accounts and other debts, of whatever nature or kind, in a timely manner;

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- (3) Franchisee and each Owner must not be in default or material breach of this Agreement or the Ancillary Agreements;
- (4) The transferee shall be bound by all terms and conditions of this Agreement, and each owner of the transferee shall personally execute the Franchise Owner Agreement and Guaranty in the form attached to this Agreement as Exhibit 1;
- (5) All obligations of Franchisee under this Agreement, the Ancillary Agreements, and all applicable Rental Agreements shall be assumed by the transferee and each individual owner of transferee in a manner satisfactory to Franchisor;
- (6) Franchisee and each Owner must execute the General Release attached to this Agreement as Exhibit 5 releasing Franchisor, Franchisor's affiliates and Franchisor's past and present officers, directors, shareholders, members, partners, agents, representatives, independent contractors, servants and employees, of any and all claims against Franchisor for matters arising on, or before, the effective date of the Transfer;
- (7) If the proposed Transfer includes or entails the Transfer of this Agreement, substantially all of the assets of the Franchised Business, a controlling interest in Franchisee, or is one of a series of Transfers which in the aggregate Transfers substantially all of the assets of the Franchised Business or a controlling interest in Franchisee, then, at the election of Franchisor and upon notice from Franchisor to Franchisee, the transferee may be required to execute (and/or, upon Franchisee's request, shall cause all interested parties to execute) for a term ending on the expiration date of the original Term of this Agreement, the then current standard form Franchise Agreement offered to new franchisees of Casiola Businesses and any other agreements as Franchisor requires. Such agreements shall supersede this Agreement and its associated agreement in all respects, and the terms of Franchisor's then current agreements may differ from the terms in this Agreement, provided that such agreements shall provide for the same Royalty Fee, Advertising Contributions, and all other financial or monetary obligations established in this Agreement;
- (8) The transferee, at its expense, must improve, modify, refurbish, renovate, remodel, and/or otherwise upgrade Franchisee's non-residential Administrative Office to conform to the then current standards and specifications of Franchisor, and the transferee must complete such improvements, modifications, refurbishments, renovations, remodeling, and/or upgrading within the time period Franchisor reasonably specifies;
- (9) Franchisee and each Owner shall remain liable for all obligations to Franchisor set forth in this Agreement;
- (10) At the transferee's expense, the transferee, and the transferee's Managing Owner, managers and/or any other applicable employees of transferee's Casiola Business must complete any training programs then in effect for franchisees of Casiola Businesses upon terms and conditions set forth in this Agreement or as Franchisor otherwise reasonably requires;
- (11) Franchisee must pay a fixed sum of \$10,000 to Franchisor (the "Transfer Fee");
- (12) Franchisor's approval of the material terms and conditions of the Transfer, and Franchisor determines in Franchisor's Reasonable Business Judgment that the price and terms of payment are not so burdensome as to be detrimental to the future operations of the Franchised Business by the transferee;
- (13) Transferee's employees, directors, officers, independent contractors, and agents who will have

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access to Confidential Information shall execute the Confidentiality Agreement attached hereto as Exhibit 2;

Source: Item 23 — RECEIPTS (FDD pages 47–209)

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