Craters_Freighters 2025 Franchise FAQ - FDD Ninja

Question 1

What aspects of the Craters & Freighters franchise agreement are subject to state law in Washington?

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.

Item 17(d) of the Franchise Agreement table and Item 17(d) of the Area Development Agreement in the Franchise Disclosure Document are amended to state that the franchisee may terminate under any grounds permitted by law.

Item 17(v) of the Area Development Agreement table in the Franchise Disclosure Document is amended to disclose that the franchise agreement's provisions regarding termination by the franchisee are subject to state law.

Within the context of RCW 19.100.180(1), Section 14 of the Franchise Agreement is amended to state: "Franchisee has no obligation to indemnify or hold harmless an indemnified party for losses to the

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extent that they are determined to have been caused solely and directly by the indemnified party's negligence, willful misconduct, strict liability, or fraud."

Section 15.4 of the Franchise Agreement will not apply in the State of Washington.

No statement, questionnaire, or acknowledgement signed or agreed to by you 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 us, any franchise seller, or any other person acting on behalf of us. This provision supersedes any other term of any document executed in connection with the franchise.

Any general release which you must sign will not apply with respect to claims arising under the Washington Franchise Investment Protection Act, RCW 19.100, and the rules adopted thereunder.

Sections 25.5(d)(i) through 25.5(d)(v) of the Franchise Agreement will not apply in the State of Washington.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 2

What is the effect of the Washington Franchise Investment Protection Act on the termination and renewal of a Craters & Freighters franchise?

Accepted Answer

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CRATERS & FREIGHTERS FRANCHISE COMPANY
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### WASHINGTON ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT, FRANCHISE AGREEMENT, AND RELATED AGREEMENTS

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.

In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.

A release or waiver of rights executed by a franchisee may not include rights under the Washington Franchise Investment Protection Act or any rule or order thereunder except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel. Provisions such as those which unreasonably restrict or limit the statute of limitations period for claims under the Act such as a right to a jury trial, may not be enforceable.

Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.

Pursuant to RCW 49.62.020, a noncompetition covenant is void and unenforceable against an employee, including an employee of a franchisee, unless the employee's earnings from the party seeking enforcement, when annualized, exceed \$100,000 per year (an amount that will be adjusted annually for inflation).

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 3

What are the main provisions of the FASB ASU No. 2016-01 standard that Craters & Freighters adopted?

Accepted Answer

FASB ASU No. 2016-01, Financial Instruments – Overall (Topic 825-10), addresses enhanced accounting for and reporting of financial instruments. The ASU addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The main provisions include: eliminating the requirement of classifying equity securities into different categories, measuring equity investments at fair value with unrealized gain and losses recognized in net income, simplifying the impairment assessment of equity investments within readily determinable fair values, and eliminating certain disclosures related to fair value. The Company adopted this standard effective January 1, 2019.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)

Question 4

What restrictions does Washington law place on a Craters & Freighters franchisor regarding hiring practices of franchisees and the franchisor's own employees?

Accepted Answer

RCW 49.62.060 prohibits a franchisor from restricting, restraining, or prohibiting a franchisee from (i) soliciting or hiring any employee of a franchisee of the same franchisor or (ii) soliciting or hiring any employee of the franchisor. As a result, any such provisions contained in the franchise agreement or elsewhere are void and unenforceable in Washington.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 5

What is the total number of classroom training hours provided by Craters & Freighters?

Accepted Answer

|  |  |  |  |
|---|---|---|---| 
|  | Hours of Classroom | Hours of On-The-Job |  |
| Subject | Training* | Training | Location |
|  |  |  |  |
|  |  |  |  |
| Crating & Packaging | 10 | 32 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| Transportation | 4 | 2 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| Business Management Review | 6 | 3 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| Cargo Insurance | 4 | 1 | Golden, CO |
| Marketing | 2 | 0 | Golden, CO |
| Pricing | 4 | 2 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| Pickup & Delivery | 2 | 1 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| System Standards | 2 | 2 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| Operating System | 6 | 1 | Golden, CO |
| TOTAL | 40 | 44 |  |

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 22–29)

Question 6

What is the total number of on-the-job training hours provided by Craters & Freighters?

Accepted Answer

|  |  |  |  |
|---|---|---|---|
|  | Hours of Classroom | Hours of On-The-Job |  |
| Subject | Training* | Training | Location |
|  |  |  |  |
|  |  |  |  |
| Crating & Packaging | 10 | 32 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| Transportation | 4 | 2 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| Business Management Review | 6 | 3 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| Cargo Insurance | 4 | 1 | Golden, CO |
| Marketing | 2 | 0 | Golden, CO |
| Pricing | 4 | 2 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| Pickup & Delivery | 2 | 1 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| System Standards | 2 | 2 | Golden, Colorado, and/or one (1) or more franchised locations in Colorado. |
| Operating System | 6 | 1 | Golden, CO |
| TOTAL | 40 | 44 |  |

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 22–29)

Question 7

How does Washington law affect non-compete agreements for employees of Craters & Freighters franchisees?

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.

In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.

A release or waiver of rights executed by a franchisee may not include rights under the Washington Franchise Investment Protection Act or any rule or order thereunder except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by i

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 8

How does Washington law affect non-compete agreements for independent contractors of Craters & Freighters franchisees?

Accepted Answer

jury trial, may not be enforceable.

Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.

Pursuant to RCW 49.62.020, a noncompetition covenant is void and unenforceable against an employee, including an employee of a franchisee, unless the employee's earnings from the party seeking enforcement, when annualized, exceed \$100,000 per year (an amount that will be adjusted annually for inflation). In addition, a noncompetition covenant is void and unenforceable against an independent contractor of a franchisee under RCW 49.62.030 unless the independent contractor's earnings from the party seeking enforcement, when annualized, exceed \$250,000 per year (an amount that will be adjusted ann

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 9

How did Craters & Freighters' advertising costs change between the two years presented?

Accepted Answer

ther factors. The Company's policy is to recognize the costs of compensated absences when actually paid to employees.

### **Advertising**

The Company maintains and administers a national marketing fund for such marketing, advertising, and promotional programs as deemed necessary. The Company expenses advertising costs

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)

Question 10

Is Craters & Freighters allowed to operate a competing business under a different trademark?

Accepted Answer

- 1.5 Non-Exclusivity; Franchisor's Reservation of Rights.

Franchisee acknowledges that the franchise granted hereunder is non-exclusive and that Franchisor and its Affiliates retain the exclusive right, among others to:

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- 1.5.1 Own, franchise, or operate Craters & Freighters outlets at any location outside of the Territory, regardless of the proximity to the boundaries of the Territory; provided, however, Franchisor will not establish within the Territory another franchisee or company-owned outlet which may also use the Marks;

- 1.5.2 Use the Marks and System to sell any products or services similar to those which Franchisee will sell, through any alternate channels of distribution within or outside of the Territory, including to National Accounts (as defined below).

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 11

How does the assistance provided by Craters & Freighters in Item 11 relate to the estimated initial investment in Item 7?

Accepted Answer

Before you open your business, we (or our designee) will provide the following assistance and services to you:

- (1) Designate your Territory (See Section 1.2 of the Franchise Agreement).
- (2) We will use reasonable efforts to assist you with locating a suitable site ("Premises") for your Franchised Business. (See Section 4.1 of the Franchise Agreement). We do not generally own and lease the premises of any Craters & Freighters Franchised Business to any franchisee.
- (3) We will provide you mandatory or suggested specifications for the premises of a Craters & Freighters Franchised Business including but not limited to those involving dimensions, design, image, interior layout, décor, fixtures, equipment, computer hardware and software, signs, and color scheme which we have approved based on our standards for quality, design, appearance, function, and performance. (See Section 4.3 of the Franchise Agreement).
- (4) We will review your construction plans and specifications for your Franchised Business. (See Section 4.3 of the Franchise Agreement). You are solely responsible, at your own expense, for all of the following relating to developing and furnishing the Premises: (i) securing all required financing; (ii) obtaining all required permits and licenses; (iii) complying with all required permits and licenses; (iv) complying with all applicable laws and the Lease; (v) constructing all required improvements and decorating the Premises in compliance with the approved construction plans and our then-current specifications relating to approved brands, types, or models; (vi) purchasing and installing all required fixtures, equipment, and signs required for the Premises; (vii) placing or displaying at the Premises (interior and exterior) only such signs, emblems, lettering, logos, and display materials that Franchisor approves from time to time; and (viii) purchasing an opening inventory of materials and supplies, including the equipment.
- (5) We will provide you with initial training. (See Section 5.1 of the Franchise Agreement). Other than the initial training any of your employees receives from us in connection with the initial training program described below, you are solely responsible for hiring, firing, training, setting hours for, and supervising all of your employees.
- (6) We will provide you with access to the Operations Manuals. (See Section 5.2 of the Franchise Agreement and Table of Contents for Operations Manuals).
- (7) We will provide you with promotional support for the opening of your Franchised Business. (See Section 5.3 of the Franchise Agreement).
- (8) We will grant you the right to use our proprietary operating software ("Proprietary Software"). The Proprietary Software will be the central platform your Franchised Business uses to process customer jobs from start to finish with consistency, efficiency, and accuracy. Additionally, all royalty reports submitted by your Franchised Business will be managed exclusively through the Proprietary Software, which

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is also designed to assist you in streamlining operations and complying with our standards. (See Section 5.4 of the Franchise Agreement).

- (9) We will establish one or more email addresses for you to use exclusively in connection with your Franchised Business. (See Section 5.5 of the Franchise Agreement).
- (10) We will establish and maintain a stand-alone website for you ("Franchisee Geosite"), which is separate and apart from our website. The Geosite will include the contact information for your Franchised Business and various customer-oriented functions relating to products and services offered by your Franchised Business.

Question 12

How does the assistance provided by Craters & Freighters in Item 11 relate to the obligations listed in Item 9?

Accepted Answer

Except as listed below, Craters & Freighters is not required to provide you with any assistance.

### Pre-Opening Obligations

Before you open your business, we (or our designee) will provide the following assistance and services to you:

- (1) Designate your Territory (See Section 1.2 of the Franchise Agreement).
- (2) We will use reasonable efforts to assist you with locating a suitable site ("Premises") for your Franchised Business. (See Section 4.1 of the Franchise Agreement). We do not generally own and lease the premises of any Craters & Freighters Franchised Business to any franchisee.
- (3) We will provide you mandatory or suggested specifications for the premises of a Craters & Freighters Franchised Business including but not limited to those involving dimensions, design, image, interior layout, décor, fixtures, equipment, computer hardware and software, signs, and color scheme which we have approved based on our standards for quality, design, appearance, function, and performance. (See Section 4.3 of the Franchise Agreement).
- (4) We will review your construction plans and specifications for your Franchised Business. (See Section 4.3 of the Franchise Agreement). You are solely responsible, at your own expense, for all of the following relating to developing and furnishing the Premises: (i) securing all required financing; (ii) obtaining all required permits and licenses; (iii) complying with all required permits and licenses; (iv) complying with all applicable laws and the Lease; (v) constructing all required improvements and decorating the Premises in compliance with the approved construction plans and our then-current specifications relating to approved brands, types, or models; (vi) purchasing and installing all required fixtures, equipment, and signs required for the Premises; (vii) placing or displaying at the Premises (interior and exterior) only such signs, emblems, lettering, logos, and display materials that Franchisor approves from time to time; and (viii) purchasing an opening inventory of materials and supplies, including the equipment.
- (5) We will provide you with initial training. (See Section 5.1 of the Franchise Agreement). Other than the initial training any of your employees receives from us in connection with the initial training program described below, you are solely responsible for hiring, firing, training, setting hours for, and supervising all of your employees.
- (6) We will provide you with access to the Operations Manuals. (See Section 5.2 of the Franchise Agreement and Table of Contents for Operations Manuals).
- (7) We will provide you with promotional support for the opening of your Franchised Business. (See Section 5.3 of the Franchise Agreement).
- (8) We will grant you the right to use our proprietary operating software ("Proprietary Software"). The Proprietary Software will be the central platform your Franchised Business uses to process customer jobs from start to finish with consistency, efficiency, and accuracy. Additionally, all royalty reports submitted by your Franchised Business will be managed exclusively through the Proprietary Software, which

![](_page_22_Picture_0.jpeg)

is also designed to assist you in streamlining operations and complying with our standards. (See Section 5.4 of the Franchise Agreement).

- (9) We will establish one or more email addresses for you to use exclusively in connection with your Franchised Business. (See Section 5.5 of the Franchise Agreement).
- (10) We will establish and maintain a stand-alone website for you ("Franchisee Geosite"), which is separate and apart from our website. The Geosite will include the contact information for your Franchised Business and various customer-oriented functions relating to products and services offered by your Franchised Business. (See Section 5.6 of the Franchise Agreement).
- (11) After the initial training, upon your request, we will spend three (3) business days with you at your Franchised Business within ninety (90) days of the Franchised Business's initial opening. (See Section 5.7 of the Franchise Agreement).

Question 13

How does the Cooperative Advertising fee for Craters & Freighters in Item 6 relate to the assistance provided in Item 11?

Accepted Answer

| Type of Fee (1)            | Amount                                                                                      | Due Date     | Remarks                                                                                                                                                                                                                                               |
|----------------------------|---------------------------------------------------------------------------------------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Cooperative Advertising | Proportional share to be determined, but not to exceed 1% of Adjusted Gross Sales. | As incurred. | Payable only if a local advertising cooperative ("Cooperative") is formed in your Territory. Any contributions you make to the Cooperative will be credited to your Individual Advertising Expense (as described in Item 11). |

Question 14

How does the Cooperative Advertising fee for Craters & Freighters in Item 6 relate to the estimated initial investment in Item 7?

Accepted Answer

| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Cooperative Advertising | Proportional share to be determined, but not to exceed 1% of Adjusted Gross Sales. | As incurred. | Payable only if a local advertising cooperative (“Cooperative”) is formed in your Territory. Any contributions you make to the Cooperative will be credited to your Individual Advertising Expense (as described in Item 11). |

Question 15

How does the Cooperative Advertising fee for Craters & Freighters in Item 6 relate to the obligations listed in Item 9?

Accepted Answer

We may designate any geographic area in which two or more Craters & Freighters outlets are located as a region for establishing a Cooperative. The members of the Cooperative for any area will consist of all Craters & Freighters outlets, whether franchised or operated by

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us or our Affiliates. We will determine in advance how each Cooperative will be organized and governed and when it must commence operations. Accordingly, we do not currently have any governing documents available for review. Each Cooperative will be organized for the sole purposes of administering advertising programs and developing, subject to our approval, promotional materials for use by the members in local advertising. If a Cooperative has been established for a geographic area where your Craters & Freighters Franchised Business is located when the Franchise Agreement is signed, or if any Cooperative is established during the term of the Franchise Agreement, you must become a member of the Cooperative and abide by the rules of the Cooperative. Cooperatives will set their own fees, which cannot exceed one percent (1%) of Adjusted Gross Sales. Franchisor-owned outlets must contribute to the fund on the same basis as franchisees. Each Cooperative established must prepare annual statements which will be available for review by its members. We reserve the right to form, change, dissolve or merge any Cooperative at any time.

Question 16

How does the Cooperative Advertising fee for Craters & Freighters in Item 6 relate to the territory described in Item 12?

Accepted Answer

| Type of Fee (1)            | Amount                                                                                      | Due Date     | Remarks                                                                                                                                                                                                                                               |
|----------------------------|---------------------------------------------------------------------------------------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Cooperative Advertising | Proportional share to be determined, but not to exceed 1% of Adjusted Gross Sales. | As incurred. | Payable only if a local advertising cooperative ("Cooperative") is formed in your Territory. Any contributions you make to the Cooperative will be credited to your Individual Advertising Expense (as described in Item 11). |

Question 17

How does the Cooperative Advertising fee for Craters & Freighters in Item 6 relate to the use of trademarks in Item 13?

Accepted Answer

Each Cooperative will be organized for the sole purposes of administering advertising programs and developing, subject to our approval, promotional materials for use by the members in local advertising. If a Cooperative has been established for a geographic area where your Craters & Freighters Franchised Business is located when the Franchise Agreement is signed, or if any Cooperative is established during the term of the Franchise Agreement, you must become a member of the Cooperative and abide by the rules of the Cooperative. Cooperatives will set their own fees, which cannot exceed one percent (1%) of Adjusted Gross Sales. Franchisor-owned outlets must contribute to the fund on the same basis as franchisees. Each Cooperative established must prepare annual statements which will be available for review by its members. We reserve the right to form, change, dissolve or merge any Cooperative at any time.

You may develop advertising media for your own use, at your own cost providing all media is in compliance with current branding and System Standards. We must approve the advertising materials in advance and in writing. We do not have an advertising council composed of franchisees.

We have the sole right to market on the Internet and use our trademarks on the Internet, including all use of websites, domain names, URLs, directory addresses, email addresses, metatags, linking, advertising, cobranding and other arrangements, and in all other forms of electronic media. You may not separately register any domain name or any portion of a domain name containing our trademarks or participate or market on any website or other form of electronic media (including social technology, social media and social networking platforms) using our trademarks unless you first obtain written approval from us. Your general conduct on the Internet or other forms of electronic media, including your use of our trademarks or any advertising, is subject to the terms and conditions of the Franchise Agreement and any other rules, requirements or policies that we may identify from time to time.

### Computer Systems and Software

We will grant you access to the Proprietary Software and select software.

Question 18

What is the difference in the initial franchise fee for Craters & Freighters (Item 5) based on whether the territory has under or over 1,000,000 people (Item 12)?

Accepted Answer

You must pay us an initial franchise fee ("Initial Franchise Fee") of \$35,000 for a Territory with a population under 1,000,000 people, or an Initial Franchise Fee of \$45,000 for a Territory with 1,000,000 or more people (See ITEM 12). If you request, and we approve, a Territory with a population of more than 1,000,000 people, then you will be required to pay us a supplemental territory fee ("Supplemental Territory Fee") of \$0.015 per additional person in the Territory in addition to the Initial Franchise Fee. The Initial Franchise Fee and the Supplemental Territory Fee, if applicable, are due to us in a lump sum at the time you sign the Franchise Agreement and are non-refundable for any reason once paid. We collected an Initial Franchise Fee of \$88,255 in connection with our sale of one Franchised Business during 2024.

We participate in the VetFran program. Under this program, qualified veterans of the United States armed forces receive a \$5,000 discount on the Initial Franchise Fee. To qualify, you must show evidence of an honorable discharge.

Question 19

What is the estimated cost range for equipment required to operate a Craters & Freighters franchise, and what accounts for the difference?

Accepted Answer

| Type of Expenditure (1) | Low Amount | High Amount | Method of Payment | When Due | To Whom Payment is to be Made |
|---|---|---|---|---|---|
| Initial Franchise Fee (2) | $35,000 | $45,000 | Cash | Upon Execution of Franchise Agreement | Us |
| Travel | $2,500 | $5,000 | Cash | As Incurred | Vendors |
| Leasehold Improvements (3) | $5,000 | $15,000 | Varies | Prior to Opening of the Franchise Business | Contractors & Suppliers |
| Warehouse Tools & | $40,000 | $75,000 | Varies | Prior to | Vendors |
| Equipment (manual & |  |  |  | Opening of the |  |
| powered tools, material |  |  |  | Franchised |  |
| handling equipment) (4) |  |  |  | Business |  |
| Warehouse Materials (lumber, plywood, hardware, foam, packing supplies) (5) | $15,000 | $25,000 |  | Prior to Opening of the Franchised Business | Vendors |
| Office Furniture, Fixtures & Equipment | $5,000 | $10,000 | Varies | Prior to Opening of the Franchised Business | Vendors |### Notes:

- (1) All fees imposed by us are non-refundable unless otherwise noted. Fees and expenses paid to vendors or other third parties may or may not be refundable depending on the arrangements you make with them.
- (2) You must pay us an Initial Franchise Fee of \$35,000 or \$45,000 (See ITEM 12).

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 16–18)

Question 20

How does the exclusive territory granted to a Craters & Freighters franchisee in Item 12 relate to the assistance provided in Item 11?

Accepted Answer

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

### ITEM 11 FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING

Except as listed below, Craters & Freighters is not required to provide you with any assistance.

### Pre-Opening Obligations

Before you open your business, we (or our designee) will provide the following assistance and services to you:

- (1) Designate your Territory (See Section 1.2 of the Franchise Agreement).

[Item 12: TERRITORY]

You may only solicit business in the Territory for the purpose of obtaining customers who reside or operate within the Territory, and you cannot knowingly solicit business outside of the Territory. However, you are not required to verify that your customers reside or conduct business within the Territory. Accordingly, it is possible that you may provide services to customers who reside or conduct business outside of the Territory. At the same time, it is also possible that another Craters and Freighters Franchised Business may provide services to customers who reside or conduct business within the Territory.

Franchisee acknowledges that the franchise granted hereunder is non-exclusive and that Franchisor and its Affiliates retain the exclusive right, among others to:

![](_page_115_Picture_0.jpeg)

- 1.5.1 Own, franchise, or operate Craters & Freighters outlets at any location outside of the Territory, regardless of the proximity to the boundaries of the Territory; provided, however, Franchisor will not establish within the Territory another franchisee or company-owned outlet which may also use the Marks;

- 1.5.2 Use the Marks and System to sell any products or services similar to those which Franchisee will sell, through any alternate channels of distribution within or outside of the Territory, including to National Accounts (as defined below).

At the end of year 3, we will determine the Minimum Performance Standards and Minimum Monthly Royalty Fees for years 4-15 of the Franchise Agreement and you will be provided with an amendment to your Franchise Agreement. We will base our decision on population, demographic factors, economic factors, competition, market penetration, the growth rate of other Craters & Freighters Franchised Businesses, and other relevant factors. If you are entering into a Successor Franchise Agreement, we will determine the Minimum Performance Standards and Minimum Monthly Royalty for your successor term.

Your failure or refusal to satisfy your Minimum Performance Standards may result in the reduction or modification of your Territory.

Question 21

How does the exclusive territory granted to a Craters & Freighters franchisee in Item 12 relate to the estimated initial investment in Item 7?

Accepted Answer

[Item 12: TERRITORY]

At the end of year 3, we will determine the Minimum Performance Standards and Minimum Monthly Royalty Fees for years 4-15 of the Franchise Agreement and you will be provided with an amendment to your Franchise Agreement. We will base our decision on population, demographic factors, economic factors, competition, market penetration, the growth rate of other Craters & Freighters Franchised Businesses, and other relevant factors. If you are entering into a Successor Franchise Agreement, we will determine the Minimum Performance Standards and Minimum Monthly Royalty for your successor term.

Your failure or refusal to satisfy your Minimum Performance Standards may result in the reduction or modification of your Territory. These Minimum Performance Standards are not, and should not be considered, financial performance representations for your Franchised Business.

Question 22

How does the exclusive territory granted to a Craters & Freighters franchisee in Item 12 relate to the obligations listed in Item 9?

Accepted Answer

e determination, to promote and advertise the Franchised Business to customers, or to service customers, in an unsold territory adjacent to the Territory ("Adjacent Territory"). Franchisee acknowledges and agrees that it is obligated to pay Royalty Fees to Franchisor, in accordance with Section 3.2 of this Agreement, on all Adjusted Gross Sales (as hereafter defined) from customers residing or operating within the Territory and any Adjacent Territory. Franchisee acknowledges and agrees that neither the ability to service nor the grant of Franchisor's permission to service customers residing or operating in any Adjacent Territory affords Franchisee any right, title, or interest in or to such Adjacent Territory whatsoever, including the ability to do further business in the Adjacent Territory after it is granted to a third party (including any right to acquire such Adjacent Territory or any right of first refusal as to such Adjacent Territory). If the right to operate in the Adjacent Territory is subsequently granted by Franchisor to another Craters & Freighters franchisee through the sale of a franchise, Franchisee agrees to, upon receipt of written notice from Franchisor, cease all promotional and advertising efforts within the Adjacent Territory, return to Franchisor all customer data and prospect information related to the Adjacent Territory, and cease providing products and services to customers in the Adjacent Territory. Franchisee will use its best efforts to comply with Franchisor's requirements set forth herein, but Franchisor and Franchisee acknowledge and agree that customers residing or operating within the Adjacent Territory are entitled the freedom to choose any Craters & Freighters outlet which they believe will best serve them and their needs, and that they may seek service from Franchisee.
- 1.5 Non-Exclusivity; Franchisor's Reservation of Rights. Franchisee acknowledges that the franchise granted hereunder is non-exclusive and that Franchisor and its Affiliates retain the exclusive right, among others to:

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- 1.5.1 Own, franchise, or operate Craters & Freighters outlets at any location outside of the Territory, regardless of the proximity to the boundaries of the Territory; provided, however, Franchisor will not establish within the Territory another franchisee or company-owned outlet which may also use the Marks;
- 1.5.2 Use the Marks and System to sell any products or services similar to those which Franchisee will sell, through any alternate channels of distribution within or outside of the Territory, including to National Accounts (as defined below). This includes, but is not limited to, other channels of distribution such as television, mail order, catalog sales, wholesale to unrelated retail outlets, or over the Internet. Franchisor exclusively reserves alternative channels of distribution such as the Internet, catalog sales, telemarketing or other direct marketing, as channels of distribution for Franchisor. Franchisee may not independently use alternative channels of distribution to make sales within or outside the Territory without Franchisor's prior written approval;
- 1.5.3 Use and license the use of other proprietary and non-proprietary marks or methods which are not the same as or are confusingly similar to the Marks, whether in alternative channels of distribution or in the operation of a business offering shipping, packaging, crating, receiving and delivery, storage, transportation, moving, logistics, blanket wrap, and freight forwarding services and products, at any location, including within the Territory, which may be similar to or different from Franchisee's Franchised Business;
- 1.5.4 Purchase or be purchased by, or merge or combine with, any business, including a business that competes directly with Franchisee's Franchised Business, wherever located, so long as such business does not operate under the same or similar trademarks or service mark;
- 1.5.5 Acquire and convert to the system operated by Franchisor any businesses offering shipping, packaging, crating, receiving and delivery, storage, transportation, moving, logistics, blanket wrap, and freight forwarding services and products, including such businesses operated by competitors or otherwise operated independently or as part of, or in association with, any other system or chain, whether franchised or corporately owned and whether located inside or outside of the Territory; and
- 1.5.6 Implement multi-area marketing programs, including but not limited to a National Accounts program.
- 1.6 Best Efforts. Franchisee agrees to at all times faithfully, honestly, and diligently perform Franchisee's obligations hereunder and to exert Franchisee's best efforts to promote, develop, and expand the business of the Franchised Business.

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### 2. TERM OF AGREEMENT.

- 2.1 Initial Term. This Agreement will begin on the Effective Date and will expire fifteen (15) years from such Effective Date (collectively, the "Initial Term"), unless sooner terminated or extended as hereinafter provided.
- 2.2 Successor Term. Franchisee will have the right to renew the Franchise for an additional term of fifteen (15) years ("Successor Term") by entering into Franchisor's then current form of Franchise Agreement ("Successor Franchise Agreement"), which may include terms and conditions materially different from those in this Agreement, so long as all of the following conditions have been met:
  - 2.2.1 Franchisee has adhered to all the terms and conditions of this Agreement and any other requirements or standards established in the Operations Manuals (as such term is defined below), including but not limited to complying with all System Standards (as such term is defined below).
  - 2.2.2 Franchisee has given notice of renewal to Franchisor in accordance with Section 2.3 of this Agreement.
  - 2.2.3 Franchisee has satisfied all monetary obligations owed by Franchisee to Franchisor and any Affiliate of Franchisor and has timely met these obligations throughout the Initial Term of this Agreement.
  - 2.2.4 Franchisee has presented evidence satisfactory to Franchisor that it has the right to remain in possession of the Premises (as such term is defined below) for the duration of any Successor Term; or, in the event Franchisee is unable to maintain possession of the Premises, or if, in the judgment of Franchisor, the Premises should be relocated, Franchisee secures substitute premises approved by Franchisor and has developed and furnished such premises to bring the Franchised Business at its substituted premises into full compliance with the then-current specifications and standards before the expiration of the Initial Term.
  - 2.2.5 Franchisee meets all of Franchisor's then-current standards and criteria for a franchisee entering the System.
  - 2.2.6 Franchisee's Franchised Business meets or exceeds Franchisor's thencurrent financial performance targets for renewing franchisees, including but not limited to, those relating to Adjusted Gross Sales per capita within the Territory, year-to-year growth in Adjusted Gross Sales, and servicing metrics throughout the Territory.

Question 23

How did Craters & Freighters' franchise support costs change between the two years presented?

Accepted Answer

Recognition (Continued)

Franchise revenues relating to technology and insurance programs are recognized over time on a monthly basis as the franchisee utilizes the program features. These revenues are presented within "franchise revenues" and expenses incurred to provide these services are included within "technology support" and "insurance program."

Costs to obtain or fulfill a contract that are incremental and recoverable are capitalized and amortized ratably over the term of the franchise agreement. The Company classifies these contract assets as "deferred franchising costs." The Company did not have any notable deferred costs related to obtaining or fulfilling contracts as of December 31, 2024 and 2023.

Franchisees are eligible to participate in various royalty rebate programs. The rebate programs operate on an annual basis and each rebate is distributed to franchisee within 45 days following the year-end if the franchisee has met all eligibility requirements, as defined.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)

Question 24

How does the initial franchise fee for Craters & Freighters in Item 5 relate to the assistance provided in Item 11?

Accepted Answer

Before you open your business, we (or our designee) will provide the following assistance and services to you:

- (1) Designate your Territory (See Section 1.2 of the Franchise Agreement).

- (2) We will use reasonable efforts to assist you with locating a suitable site ("Premises") for your Franchised Business. (See Section 4.1 of the Franchise Agreement).

We do not generally own and lease the premises of any Craters & Freighters Franchised Business to any franchisee.

- (3) We will provide you mandatory or suggested specifications for the premises of a Craters & Freighters Franchised Business including but not limited to those involving dimensions, design, image, interior layout, décor, fixtures, equipment, computer hardware and software, signs, and color scheme which we have approved based on our standards for quality, design, appearance, function, and performance. (See Section 4.3 of the Franchise Agreement).

- (4) We will review your construction plans and specifications for your Franchised Business. (See Section 4.3 of the Franchise Agreement).

You are solely responsible, at your own expense, for all of the following relating to developing and furnishing the Premises: (i) securing all required financing; (ii) obtaining all required permits and licenses; (iii) complying with all required permits and licenses; (iv) complying with all applicable laws and the Lease; (v) constructing all required improvements and decorating the Premises in compliance with the approved construction plans and our then-current specifications relating to approved brands, types, or models; (vi) purchasing and installing all required fixtures, equipment, and signs required for the Premises; (vii) placing or displaying at the Premises (interior and exterior) only such signs, emblems, lettering, logos, and display materials that Franchisor approves from time to time; and (viii) purchasing an opening inventory of materials and supplies, including the equipment.

- (5) We will provide you with initial training. (See Section 5.1 of the Franchise Agreement).

Question 25

How does the initial franchise fee for Craters & Freighters in Item 5 relate to the estimated initial investment in Item 7?

Accepted Answer

| Type of Expenditure (1) | Low Amount | High Amount | Method of Payment | When Due | To Whom Payment is to be Made |
|---|---|---|---|---|---|
| Initial Franchise Fee (2) | $35,000 | $45,000 | Cash | Upon Execution of Franchise Agreement | Us |

Question 26

How does the initial franchise fee for Craters & Freighters in Item 5 relate to the obligations listed in Item 9?

Accepted Answer

|    | Obligation                                             | Section in Agreement                    | Disclosure Document Item |
|----|--------------------------------------------------------|-----------------------------------------|-----------------------------|
| a. | Site selection and acquisition/lease | Section 4.1 of Franchise Agreement | Items 9, 11 |
| b.

Question 27

How does the initial franchise fee for Craters & Freighters in Item 5 relate to the territory described in Item 12?

Accepted Answer

You must pay us an initial franchise fee ("Initial Franchise Fee") of \$35,000 for a Territory with a population under 1,000,000 people, or an Initial Franchise Fee of \$45,000 for a Territory with 1,000,000 or more people (See ITEM 12). If you request, and we approve, a Territory with a population of more than 1,000,000 people, then you will be required to pay us a supplemental territory fee ("Supplemental Territory Fee") of \$0.015 per additional person in the Territory in addition to the Initial Franchise Fee. The Initial Franchise Fee and the Supplemental Territory Fee, if applicable, are due to us in a lump sum at the time you sign the Franchise Agreement and are non-refundable for any reason once paid. We collected an Initial Franchise Fee of \$88,255 in connection with our sale of one Franchised Business during 2024.

Question 28

How does the initial franchise fee for Craters & Freighters in Item 5 relate to the use of trademarks in Item 13?

Accepted Answer

As described in this Disclosure Document, we will offer and sell to qualified persons a single-unit franchise to operate a Craters & Freighters Franchised Business located at the franchisee's business premises in accordance with the standards for the System specified in the Operations Manuals ("System Standards") and utilizing our trademarks pursuant to the terms and conditions of the Craters & Freighters Franchise Company Franchise Agreement, a copy which is a part of this Disclosure Document (see ITEM 22). This Disclosure Document describes relevant information about the Franchise.

We offer two types of territories (each a "Territory"): one which will have a population under 1,000,000 people, and another which will have a population of 1,000,000 or more people. If you request, and we approve, a Territory with a population of more than 1,000,000 people, then you will be required to pay us a Supplemental Territory Fee equal to \$0.015 per additional person in the Territory. All population determinations will be based upon the latest United States Census information available for the various territories.

Question 29

How does the initial franchise fee for Craters & Freighters in Item 5 vary based on the territory population described in Item 12?

Accepted Answer

You must pay us an initial franchise fee ("Initial Franchise Fee") of \$35,000 for a Territory with a population under 1,000,000 people, or an Initial Franchise Fee of \$45,000 for a Territory with 1,000,000 or more people (See ITEM 12). If you request, and we approve, a Territory with a population of more than 1,000,000 people, then you will be required to pay us a supplemental territory fee ("Supplemental Territory Fee") of \$0.015 per additional person in the Territory in addition to the Initial Franchise Fee. The Initial Franchise Fee and the Supplemental Territory Fee, if applicable, are due to us in a lump sum at the time you sign the Franchise Agreement and are non-refundable for any reason once paid. We collected an Initial Franchise Fee of \$88,255 in connection with our sale of one Franchised Business during 2024.

We participate in the VetFran program. Under this program, qualified veterans of the United States armed forces receive a \$5,000 discount on the Initial Franchise Fee. To qualify, you must show evidence of an honorable discharge.

Question 30

How does the lack of financing offered by Craters & Freighters in Item 10 relate to the assistance provided in Item 11?

Accepted Answer

Before you open your business, we (or our designee) will provide the following assistance and services to you:

- (1) Designate your Territory (See Section 1.2 of the Franchise Agreement).

- (2) We will use reasonable efforts to assist you with locating a suitable site ("Premises") for your Franchised Business. (See Section 4.1 of the Franchise Agreement).

We do not generally own and lease the premises of any Craters & Freighters Franchised Business to any franchisee.

- (3) We will provide you mandatory or suggested specifications for the premises of a Craters & Freighters Franchised Business including but not limited to those involving dimensions, design, image, interior layout, décor, fixtures, equipment, computer hardware and software, signs, and color scheme which we have approved based on our standards for quality, design, appearance, function, and performance. (See Section 4.3 of the Franchise Agreement).

- (4) We will review your construction plans and specifications for your Franchised Business. (See Section 4.3 of the Franchise Agreement).

You are solely responsible, at your own expense, for all of the following relating to developing and furnishing the Premises: (i) securing all required financing; (ii) obtaining all required permits and licenses; (iii) complying with all required permits and licenses; (iv) complying with all applicable laws and the Lease; (v) constructing all required improvements and decorating the Premises in compliance with the approved construction plans and our then-current specifications relating to approved brands, types, or models; (vi) purchasing and installing all required fixtures, equipment, and signs required for the Premises; (vii) placing or displaying at the Premises (interior and exterior) only such signs, emblems, lettering, logos, and display materials that Franchisor approves from time to time; and (viii) purchasing an opening inventory of materials and supplies, including the equipment.

Question 31

How does the lack of financing offered by Craters & Freighters in Item 10 relate to the estimated initial investment in Item 7?

Accepted Answer

- (11) We do not currently offer, either directly or indirectly, any financing to you for the above items. The availability and terms of financing from independent third parties will depend on factors such as the availability of financing generally, the credit worthiness of you, other security and collateral you may have, and policies of lenders.
- (12) These figures are estimates only. We relied on our experience to compile these estimates. This is only an estimate of your initial investment and is based on our estimate of nationwide costs and market conditions prevailing as of the date of this Franchise Disclosure Document. You should review these figures carefully with a business advisor before making any decision to purchase a Franchise.

Question 32

How does the lack of financing offered by Craters & Freighters in Item 10 relate to the obligations listed in Item 9?

Accepted Answer

ITEM 10 FINANCING

We do not offer direct or indirect financing. We do not guarantee your note, lease or obligation.

Question 33

How does the lack of financing offered by Craters & Freighters in Item 10 relate to the territory described in Item 12?

Accepted Answer

At the end of year 3, we will determine the Minimum Performance Standards and Minimum Monthly Royalty Fees for years 4-15 of the Franchise Agreement and you will be provided with an amendment to your Franchise Agreement. We will base our decision on population, demographic factors, economic factors, competition, market penetration, the growth rate of other Craters & Freighters Franchised Businesses, and other relevant factors. If you are entering into a Successor Franchise Agreement, we will determine the Minimum Performance Standards and Minimum Monthly Royalty for your successor term.

Your failure or refusal to satisfy your Minimum Performance Standards may result in the reduction or modification of your Territory. These Minimum Performance Standards are not, and should not be considered, financial performance representations for your Franchised Business.

You may only solicit business in the Territory for the purpose of obtaining customers who reside or operate within the Territory, and you cannot knowingly solicit business outside of the Territory. However, you are not required to verify that your customers reside or conduct business within the Territory. Accordingly, it is possible that you may provide services to customers who reside or conduct business outside of the Territory. At the same time, it is also possible that another Craters and Freighters Franchised Business may provide services to customers who reside or conduct business within the Territory.

Question 34

How does the lack of financing offered by Craters & Freighters in Item 10 relate to the use of trademarks in Item 13?

Accepted Answer

Other than as described above, we do not know of any infringing uses that could materially affect your use of the Marks. You should understand that there could be other businesses using trademarks, trade names, or other commercial symbols similar to the trademarks with superior rights to our rights. Before opening your Franchised Business, you should research this possibility, using telephone directories, trade directories, and Internet directories to avoid the possibility of having to change your business name.

Question 35

How does the obligation to purchase insurance from a designated supplier for Craters & Freighters in Item 8 relate to the assistance provided in Item 11?

Accepted Answer

### ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

You must establish and operate your Franchised Business in compliance with your Franchise Agreement and the standards and specifications contained in our Operations Manuals.

We have standards and specifications for your insurance policies, and you must purchase certain insurance policies from our designated insurance supplier. You are required to have insurance covering the operations of your Franchised Business, in such amounts and on such terms, as prescribed by the Operations Manuals. As of the date of this Franchise Disclosure Document, this insurance will be a combination of, and not limited to:

- Commercial general liability coverage which includes bodily injury, property damage, personal injury, and broad form contractual liability, with the following limits:
  - o General aggregate: \$2,000,000 o Each occurrence: \$1,000,000
  - o Products-completed operations aggregate: \$2,000,000

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o Personal and advertising injury: \$1,000,000

o Fire legal liability: \$100,000

o Blanket contractual liability: \$1,000,000

- Umbrella coverage with a minimum limit of \$1,000,000 per occurrence, at least as broad as the required underlying coverage.
- Automobile liability with a minimum limit of \$1,000,000 comprehensive per occurrence on all hired, owned, and non-owned vehicles.
- Workers compensation coverage which complies with state law and with the following limits:

o Each accident: \$1,000,000

o Disease – each employee: \$1,000,000 o Disease – policy limit: \$1,000,000

Question 36

How does the obligation to purchase insurance from a designated supplier for Craters & Freighters in Item 8 relate to the estimated initial investment in Item 7?

Accepted Answer

You are required to have insurance covering your Franchised Business's operations, in such amounts and on such terms, as prescribed by the Operations Manuals. Our current insurance requirements are included in ITEM 8.

ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

You must establish and operate your Franchised Business in compliance with your Franchise Agreement and the standards and specifications contained in our Operations Manuals.

We have standards and specifications for your insurance policies, and you must purchase certain insurance policies from our designated insurance supplier. You are required to have insurance covering the operations of your Franchised Business, in such amounts and on such terms, as prescribed by the Operations Manuals. As of the date of this Franchise Disclosure Document, this insurance will be a combination of, and not limited to:

- Commercial general liability coverage which includes bodily injury, property damage, personal injury, and broad form contractual liability, with the following limits:
  - o General aggregate: $2,000,000 o Each occurrence: $1,000,000
  - o Products-completed operations aggregate: $2,000,000

o Personal and advertising injury: $1,000,000

o Fire legal liability: $100,000

o Blanket contractual liability: $1,000,000

- Umbrella coverage with a minimum limit of $1,000,000 per occurrence, at least as broad as the required underlying coverage.
- Automobile liability with a minimum limit of $1,000,000 comprehensive per occurrence on all hired, owned, and non-owned vehicles.
- Workers compensation coverage which complies with state law and with the following limits:

o Each accident: $1,000,000

o Disease – each employee: $1,000,000 o Disease – policy limit: $1,000,000

Question 37

How does the obligation to purchase insurance from a designated supplier for Craters & Freighters in Item 8 relate to the obligations listed in Item 9?

Accepted Answer

You must establish and operate your Franchised Business in compliance with your Franchise Agreement and the standards and specifications contained in our Operations Manuals.

We have standards and specifications for your insurance policies, and you must purchase certain insurance policies from our designated insurance supplier. You are required to have insurance covering the operations of your Franchised Business, in such amounts and on such terms, as prescribed by the Operations Manuals. As of the date of this Franchise Disclosure Document, this insurance will be a combination of, and not limited to:

- Commercial general liability coverage which includes bodily injury, property damage, personal injury, and broad form contractual liability, with the following limits:
  - o General aggregate: \$2,000,000 o Each occurrence: \$1,000,000
  - o Products-completed operations aggregate: \$2,000,000

![](_page_18_Picture_0.jpeg)

o Personal and advertising injury: \$1,000,000

o Fire legal liability: \$100,000

o Blanket contractual liability: \$1,000,000

- Umbrella coverage with a minimum limit of \$1,000,000 per occurrence, at least as broad as the required underlying coverage.
- Automobile liability with a minimum limit of \$1,000,000 comprehensive per occurrence on all hired, owned, and non-owned vehicles.
- Workers compensation coverage which complies with state law and with the following limits:

o Each accident: \$1,000,000

o Disease – each employee: \$1,000,000 o Disease – policy limit: \$1,000,000

The policies and amounts provided above are our minimum insurance requirements. We strongly recommend that you work with a licensed insurance agent or broker to identify and obtain additional insurance coverage for your Franchised Business including, but not limited to, warehouse storage and cyber insurance coverage.

Question 38

How does the obligation to purchase insurance from a designated supplier for Craters & Freighters in Item 8 relate to the territory described in Item 12?

Accepted Answer

The policies and amounts provided above are our minimum insurance requirements. We strongly recommend that you work with a licensed insurance agent or broker to identify and obtain additional insurance coverage for your Franchised Business including, but not limited to, warehouse storage and cyber insurance coverage.

To maintain the high standards of our system and to fulfill the quality packing and shipping of products, you must purchase various equipment, products, and other items or services that meet or exceed minimum requirements and specifications that we establish. Such requirements and specifications may appear in our Operations Manuals and include the following: warehouse tools and equipment (e.g., power tools such as saws, nail guns, and drills); warehouse equipment (e.g., packing systems, forklift, and a scale); hardware and fasteners (e.g., nails, staples, screws, gloves, and utility knives); packing material (e.g., lumber, corrugated, and foams); hardware and software, Internet connection and service, dedicated telephone and power lines, and other computer related accessories, peripherals, and equipment to operate the computer, Proprietary Software, and select software we provide you (See ITEM 12), as well as fax machine and telephone; office furniture; office and miscellaneous supplies; and a 16' to 26' box truck.

Question 39

How does the obligation to purchase insurance from a designated supplier for Craters & Freighters in Item 8 relate to the use of trademarks in Item 13?

Accepted Answer

If you desire to use suppliers other than those which have been approved by us, you must submit your request to us in writing. We will then review the request and notify you of our approval or disapproval within 30 days. We apply the following general criteria in approving a proposed supplier: ability to provide sufficient quantity of product; quality of products and/or services at competitive prices; production and delivery capability; and dependability and general reputation of the supplier. If we develop additional criteria for supplier approval, those criteria will be made available to you. We may revoke our approval of an alternative supplier in the event that we receive complaints from franchisees, customers or other sources.

We estimate that the purchase of products and services from us or our designated or approved sources, or those meeting our standards and specifications, will be approximately 0% of your total cost to establish a Craters & Freighters Franchised Business, and 2% to 3% of your total cost of operating a Craters & Freighters Franchised Business.

Question 40

How does the use of trademarks by Craters & Freighters in Item 13 relate to the assistance provided in Item 11?

Accepted Answer

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

Except as listed below, Craters & Freighters is not required to provide you with any assistance.

### Pre-Opening Obligations

Before you open your business, we (or our designee) will provide the following assistance and services to you:

- (3) We will provide you mandatory or suggested specifications for the premises of a Craters & Freighters Franchised Business including but not limited to those involving dimensions, design, image, interior layout, décor, fixtures, equipment, computer hardware and software, signs, and color scheme which we have approved based on our standards for quality, design, appearance, function, and performance. (See Section 4.3 of the Franchise Agreement).

You are solely responsible, at your own expense, for all of the following relating to developing and furnishing the Premises: (i) securing all required financing; (ii) obtaining all required permits and licenses; (iii) complying with all required permits and licenses; (iv) complying with all applicable laws and the Lease; (v) constructing all required improvements and decorating the Premises in compliance with the approved construction plans and our then-current specifications relating to approved brands, types, or models; (vi) purchasing and installing all required fixtures, equipment, and signs required for the Premises; (vii) placing or displaying at the Premises (interior and exterior) only such signs, emblems, lettering, logos, and display materials that Franchisor approves from time to time; and (viii) purchasing an opening inventory of materials and supplies, including the equipment.

We have the sole right to market on the Internet and use our trademarks on the Internet, including all use of websites, domain names, URLs, directory addresses, email addresses, metatags, linking, advertising, cobranding and other arrangements, and in all other forms of electronic media. You may not separately register any domain name or any portion of a domain name containing our trademarks or participate or market on any website or other form of electronic media (including social technology, social media and social networking platforms) using our trademarks unless you first obtain written approval from us.

[Item 13: TRADEMARKS]

In 2010, we initiated litigation against Daisychain Enterprises (dba Freight & Crate), Cathy Benz and Fred Benz ("Defendants") for trademark infringement. The Defendants were using the name "Freight & Crate" in the operation of a business in California similar to a Craters & Freighters Franchised Business. On May 5, 2010, the United States District Court for the Northern District of California issued a permanent injunction against the Defendants. The court permanently restrained and enjoined them from (a) using the infringing mark "Freight & Crate" in conjunction with any shipping or packaging services; (b) using the infringing mark "Freight & Crate" in conjunction with any web-based advertisement or print advertisement; (c) using the infringing mark "Freight & Crate" at any call center to suggest that Freight & Crate is affiliated with Craters & Freighters; (d) identifying themselves anywhere or any time, by their initiative or in response to questions by others, as "Craters & Freighters" or as affiliated with Craters & Freighters; (e) using Craters & Freighters' copyrighted materials in advertisements and promotions; and (f) using the registered trademark "Craters & Freighters" for any purpose whatsoever.

Question 41

How does the use of trademarks by Craters & Freighters in Item 13 relate to the estimated initial investment in Item 7?

Accepted Answer

ITEM 7 ESTIMATED INITIAL INVESTMENT

### YOUR ESTIMATED INITIAL INVESTMENT

|

Question 42

How does the use of trademarks by Craters & Freighters in Item 13 relate to the obligations listed in Item 9?

Accepted Answer

Other than as described above, we do not know of any infringing uses that could materially affect your use of the Marks. You should understand that there could be other businesses using trademarks, trade names, or other commercial symbols similar to the trademarks with superior rights to our rights. Before opening your Franchised Business, you should research this possibility, using telephone directories, trade directories, and Internet directories to avoid the possibility of having to change your business name.

Question 43

How does the use of trademarks by Craters & Freighters in Item 13 relate to the territory described in Item 12?

Accepted Answer

[Item 12: TERRITORY]

You will not receive options, rights of first refusal, or similar rights to acquire additional franchises. You may relocate your Franchised Business to another location within your Territory upon our prior written approval.

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We reserve the right, among others:

- (1) to own, franchise, or operate Craters & Freighters Franchised Businesses at any location outside of your Territory, regardless of the proximity to the boundaries of your Territory.

We will not establish within your Territory another franchisee or company-owned outlet which may also use our trademarks;

- (2) to use our trademarks and system to sell any products or services similar to those which you will sell, through any alternate channels of distribution within or outside of your Territory, including to national accounts.

This includes, but is not limited to, other channels of distribution such as television, mail order, catalog sales, wholesale to unrelated retail outlets, or over the Internet.

We exclusively reserve alternative channels of distribution such as the Internet, catalog sales, telemarketing or other direct marketing, as channels of distribution for us.

We are not required to compensate you if we solicit or accept orders from your Territory.

You may not independently use alternative channels of distribution to make sales within or outside your Territory without our prior written approval;

- (3) to use and license the use of other proprietary and non-proprietary marks or methods which are not the same as or confusingly similar to our trademarks, whether in alternative channels of distribution or in the operation of a business offering shipping, packaging, crating, receiving and delivery, storage, transportation, moving, logistics, blanket wrap, and freight forwarding services and products, at any location, including within the Territory, which may be similar to or different from the business operated by you;

- (4) to purchase or be purchased by, or merge or combine with, any business, including a business that competes directly with your Franchised Business, wherever located, so long as that business does not operate under the same or similar trademarks or service marks as the Marks (as such term is defined below);

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[Item 13: TRADEMARKS]

In 2010, we initiated litigation against Daisychain Enterprises (dba Freight & Crate), Cathy Benz and Fred Benz ("Defendants") for trademark infringement. The Defendants were using the name "Freight & Crate" in the operation of a business in California similar to a Craters & Freighters Franchised Business. On May 5, 2010, the United States District Court for the Northern District of California issued a permanent injunction against the Defendants. The court permanently restrained and enjoined them from (a) using the infringing mark "Freight & Crate" in conjunction with any shipping or packaging services; (b) using the infringing mark "Freight & Crate" in conjunction with any web-based advertisement or print advertisement; (c) using the infringing mark "Freight & Crate" at any call center to suggest that Freight & Crate is affiliated with Craters & Freighters; (d) identifying themselves anywhere or any time, by their initiative or in response to questions by others, as "Craters & Freighters" or as affiliated with Craters & Freighters; (e) using Craters & Freighters' copyrighted materials in advertisements and promotions; and (f) using the registered trademark "Craters & Freighters" for any purpose whatsoever.

In early 2014, it came to our attention that the Defendants were violating the permanent injunction and using our name to advertise products online. In February 2014, we sent the Defendants a letter to demand that they cease from using the words "Crate & Freight" and that they comply with the permanent injunction. In March 2014, we sought for the Defendants to be held in civil and criminal contempt for violating the permanent injunction. The Defendants were ordered to appear in court in May 2015 to show cause why they should not be held in contempt for failure to comply with the permanent injunction. In August 2015, the Defendants, proceeding pro se, filed an appeal relating the multiple judgments we have obtained against them thus far, which currently total more than $100,000 and are collecting interest at the maximum amount allowed under California law. We submitted our Answering Brief in September 2015, and the United States Court of Appeals for the Ninth Circuit in D.C. No. 14-17497 rendered a decision that the lower District Court's Orders Stand – i.e., we (Craters & Freighters Franchise Company) are the prevailing party.

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[Item 12: TERRITORY]

At the end of year 3, we will determine the Minimum Performance Standards and Minimum Monthly Royalty Fees for years 4-15 of the Franchise Agreement and you will be provided with an amendment to your Franchise Agreement. We will base our decision on population, demographic factors, economic factors, competition, market penetration, the growth rate of other Craters & Freighters Franchised Businesses, and other relevant factors. If you are entering into a Successor Franchise Agreement, we will determine the Minimum Performance Standards and Minimum Monthly Royalty for your successor term.

Your failure or refusal to satisfy your Minimum Performance Standards may result in the reduction or modification of your Territory. These Minimum Performance Standards are not, and should not be considered, financial performance representations for your Franchised Business.

You may only solicit business in the Territory for the purpose of obtaining customers who reside or operate within the Territory, and you cannot knowingly solicit business outside of the Territory. However, you are not required to verify that your customers reside or conduct business within the Territory. Accordingly, it is possible that you may provide services to customers who reside or conduct business outside of the Territory. At the same time, it is also possible that another Craters and Freighters Franchised Business may provide services to customers who reside or conduct business within the Territory.

Question 44

What is the duration of the post-term competition restriction for Craters & Freighters if the Franchise Agreement expires?

Accepted Answer

For a period of two (2) years after the expiration, transfer, or termination of this Agreement, Franchisee and its owner(s) may not, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership, or corporation:

- 15.3.1 Perform any services for, consult for, engage in, acquire, lend money to, extend credit to, have any interest in, or be employed as an officer, director, executive, or principal of any Competitive Business at or within the following areas: (i) at the Premises of the Franchised Business; (ii) within the Territory granted to Franchisee under this Agreement; or (iii) within a radius of ten (10) miles of (a) the Premises of the Franchised Business, or (b) the premises of any other Craters & Freighters Franchised Business or any Craters & Freighters company-owned or Affiliate-owned outlet then-existing as of the date of the expiration, transfer, or termination of this Agreement.

- 15.3.2 Divert, attempt to divert, or solicit business or customers of the Franchised Business, any Craters & Freighters Franchised Business, or any Craters & Freighters company-owned or Affiliate-owned business, to any Competitive Business by direct or indirect inducement or otherwise.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 45

What is the duration of the post-term competition restriction for Craters & Freighters if the Franchise Agreement is terminated?

Accepted Answer

[Item 22: CONTRACTS]

For a period of two (2) years after the expiration, transfer, or termination of this Agreement, Franchisee and its owner(s) may not, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership, or corporation:

- 15.3.1 Perform any services for, consult for, engage in, acquire, lend money to, extend credit to, have any interest in, or be employed as an officer, director, executive, or principal of any Competitive Business at or within the following areas: (i) at the Premises of the Franchised Business; (ii) within the Territory granted to Franchisee under this Agreement; or (iii) within a radius of ten (10) miles of (a) the Premises of the Franchised Business, or (b) the premises of any other Craters & Freighters Franchised Business or any Craters & Freighters company-owned or Affiliate-owned outlet then-existing as of the date of the expiration, transfer, or termination of this Agreement.

- 15.3.2 Divert, attempt to divert, or solicit business or customers of the Franchised Business, any Craters & Freighters Franchised Business, or any Craters & Freighters company-owned or Affiliate-owned business, to any Competitive Business by direct or indirect inducement or otherwise.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 46

What must a Restricted Person obtain from Craters & Freighters to perform services for a Competitive Business while the Franchise Agreement is in effect?

Accepted Answer

- 15.2 In-Term Restrictive Covenants.

During the term of this Agreement, Franchisee and Franchisee's owner(s) may not, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership, or corporation:

- 15.2.1 Perform any services for, consult for, engage in, acquire, lend money to, extend credit to, have any interest in, or be employed as an officer, director, executive, or principal of any business that offers shipping, packaging, crating, receiving and delivery, storage, transportation, moving, logistics, blanket wrap, or freight forwarding services, or products or services similar to the Franchised Business ("Competitive Business") without the prior written consent of Franchisor.

Notwithstanding the foregoing, Franchisee will not be prohibited from owning securities in a Competitive Business if such securities are listed on a stock exchange or traded on the over-the-counter market and represent five percent (5%) or less of that class of securities.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 47

Under what condition is a Restricted Person prohibited from performing services for a Competitive Business while the Craters & Freighters Franchise Agreement is in effect?

Accepted Answer

- 4.

In-Term Competition Restriction.

While the Franchise Agreement is in effect and Restricted Person continues in Restricted Person's role with Franchisee, Restricted Person will not, without Franchisor's consent, directly or indirectly (such as through an affiliate or a family member), perform any services for, consult for, engage in, acquire, lend money to, extend credit to, have any interest in, or be employed as an officer, director, executive, or principal of any Competitive Business, as such term is defined in the Franchise Ag

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 48

Under what conditions are franchisees prohibited from opening their Craters & Freighters Franchised Business?

Accepted Answer

After the execution of the lease for the Franchised Business and prior to the opening of the Franchised Business, we will provide an initial training program regarding the operations of a Craters & Freighters Franchised Business ("Initial Training Program"). We conduct the Initial Training Program based on the schedules of incoming franchisees and our team members who conduct the program. Approximately nine (9) days of training will be furnished at our corporate headquarters in Golden, Colorado, and/or one (1) or more of our franchise locations in Colorado. There is no limit to the number of individuals who are entitled to participate in the Initial Training Program as long as you (or a principal owner of the franchisee entity) complete the Initial Training Program to our satisfaction and participate in all other activities required by us to open your Franchised Business. You will be responsible for all travel and living expenses incurred in connection with the Initial Training Program. Upon your request, we will provide approximately three (3) days of additional training at

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your Franchised Business during normal business hours after the opening of your Franchised Business. If you fail to complete the Initial Training Program to our satisfaction, we may terminate the Franchise Agreement.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 22–29)

Question 49

According to the Craters & Freighters franchise agreement, what action can the franchisor take if a franchisee fails to meet the minimum performance standards?

Accepted Answer

- 3.3 Minimum Performance Standards. Franchisee must meet the minimum performance standards ("Minimum Performance Standards") set forth in Attachment B to this Agreement. The Minimum Performance Standards are based on population (which determination should be made based upon the latest United States Census information available for the Territory), demographic factors, economic factors, competition, market penetration, the growth rate of other Craters & Freighters franchised businesses and other relevant factors solely determined by Franchisor. Franchisee understands that meeting the annual Minimum Performance Standards does not suggest that Franchisee is sufficiently penetrating the market in its Territory or that its Franchised Business will be successful. Rather, the Minimum Performance Standards are threshold minimum amounts. In the event Franchisee does not meet the Minimum Performance Standards, Franchisor will have the right to reduce the size of, or otherwise modify, Franchisee's Territory upon providing 30 days' written notice to Franchisee.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 50

According to the Craters & Freighters franchise agreement, what is the condition under which a Craters & Freighters franchisee is obligated to pay Royalty Fees on Adjusted Gross Sales from customers residing or operating within the Adjacent Territory?

Accepted Answer

Franchisor may grant Franchisee the right, in Franchisor's sole determination, to promote and advertise the Franchised Business to customers, or to service customers, in an unsold territory adjacent to the Territory ("Adjacent Territory").

Franchisee acknowledges and agrees that it is obligated to pay Royalty Fees to Franchisor, in accordance with Section 3.2 of this Agreement, on all Adjusted Gross Sales (as hereafter defined) from customers residing or operating within the Territory and any Adjacent Territory.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 51

According to Craters & Freighters, what happens if the landlord does not consent to the assignment or sublease of the premises to the transferee?

Accepted Answer

- 16.3.10 Landlord Consent. If required, the lessor of the Premises has consented to the assignment or sublease of the Premises to the transferee.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 52

Is the choice of Colorado law in the Craters & Freighters Franchise Agreement absolute?

Accepted Answer

| Item | Provision     | Section in Franchise Agreement | Summary                                                                                                                                                                                                         |
|------|---------------|--------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| w. | Choice of law | Section 23.1 | Except to the extent governed by the United |
|  |  |  | States Trademark Act of 1946 (Lanham Act, |
|  |  |  | 15 U.S.C. Sections 1051 et seq.) or other |
|  |  |  | federal law, Colorado law applies, subject to |
|  |  |  | applicable state law. |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTIONS (FDD pages 36–44)

Question 53

What is the condition that requires a Craters & Freighters franchisee to pay a Supplemental Territory Fee?

Accepted Answer

You must pay us an Initial Franchise Fee of \$35,000 or \$45,000 (See ITEM 12). If you request, and we approve, a Territory with a population of more than 1,000,000 people, then you will be required to pay us a Supplemental Territory Fee of \$0.015 per additional person in the Territory in addition to an Initial Franchise Fee of \$45,000.

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 16–18)

Question 54

What condition triggers the audit fee for a Craters & Freighters franchise?

Accepted Answer

| Type of Fee (1)              | Amount                                                                                                                                                                                                                                                                                                   | Due Date                                                        | Remarks                                                                                                                                                                                                                                                                                                |
|------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Transfer | \$15,000 | Prior to consummation of transfer. | Payable to us when you sell your Franchised Business, but no charge if the Franchised Business is transferred by you to a corporation or other legal entity which you control. |
| Relocation | Reimbursement of the costs and expenses we incur in connection with evaluating any relocation request, not to exceed \$2,500. | As incurred. | Payable to us if you relocate the premises of your Franchised Business. You must obtain our prior written consent to any such relocation. |
| Audit | Cost of audit plus expenses. | On billing. | Payable to us only if audit shows an understatement of at least 5% of Adjusted Gross Sales for any reporting period. |
| Successor Fee | \$5,000. | Payable at time of signing successor franchise agreement. | Payable to us. |
| Attorney Fees | Actual cost. | On billing. | If we are forced to seek action to collect fees owed, you will be charged attorney fees. |
| Interest | 1.5% per month. | As due. | Interest will be charged on past due royalty fees. |
| Convention Attendance Fee | \$150 per person. | As incurred. | Franchisee owners or their designees are required to attend our annual convention. This fee is payable to us. We reserve the right to change this fee at any time. |
| Additional Training | Will vary under circumstances. Our current daily rate is \$500 per day plus reimbursement for out-of pocket expenses we incur in providing such training, including but not limited to all travel and living expenses. We reserve the right to increase this amount. | As incurred. | Payable to us if we provide you with additional on-site visits at your reasonable request or if such assistance is determined to be necessary in our discretion, including the training of any Designated Manager you may engage after opening your Franchised Business. |

Source: Item 6 — OTHER FEES (FDD pages 12–16)

Question 55

What are the conditions that a Craters & Freighters franchisee must meet to gain franchisor approval for a transfer?

Accepted Answer

| Item | Provision                                                               | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|------|-------------------------------------------------------------------------|--------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| m. | Conditions for franchisor's approval of transfer | Section 16.3 | You and your owner(s) have performed all obligations and duties under the Franchise Agreement; you have paid all amounts due and owing to us, any Affiliate of ours, and any third-party creditors relating to the Franchised Business; the transfer is conducted in compliance with applicable laws and regulations; the transferee and its owner(s) are individual(s) of good moral character, have sufficient business experience, aptitude, and financial resources to operate the Franchised Business, and have otherwise met our then applicable standards for franchisees and franchisee owners; the transferee and/or its management personnel have completed our initial training program to our satisfaction; payment of the Transfer Fee; you have executed a general release, in a form satisfactory to us, of any and all claims against us, our subsidiaries, and Affiliates, and their respective shareholders, directors, officers, employees, agents, successors, and assignees; we have approved the material terms and conditions of such transfer; any financing is subordinate to the transferee's obligations to pay Royalty Fees and other amounts due under the Franchise Agreement; if required, the landlord of the Premises has consented to the assignment or sublease; we have not exercised our its right of first refusal; and the transferee and its owner(s) have executed our then current form of franchise agreement. |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTIONS (FDD pages 36–44)

Question 56

What is the consequence if a Craters & Freighters franchisee does not adopt reasonable procedures to prevent unauthorized use of proprietary information?

Accepted Answer

Franchisee and Franchisee's owner(s) agree they: (i) will keep confidential any of Franchisor's Confidential Information or Trade Secrets, (ii) will not use such for its or their own purpose or supply or divulge same to any person, firm, association, or corporation except as reasonably necessary to operate the Franchised Business, (iii) will adopt and implement all reasonable procedures, including those that Franchisor prescribes to prevent unauthorized use or disclosure of any Confidential Information or Trade Secrets.

The confidentiality obligations set forth in this section will remain in full force and effect during the term of this Agreement and in perpetuity after its termination or expiration and non-renewal.

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

Question 57

What are the consequences of not curing a non-payment default for a Craters & Freighters franchise?

Accepted Answer

| Item | Provision                          | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|------|------------------------------------|--------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| g. | "Cause" defined – curable defaults | Section 19.2 | Curable Defaults: You have 30 days to cure |
|  |  |  | any of the following defaults: non-payment of |
|  |  |  | any amount due and owing to us or any |
|  |  |  | Affiliate of ours as required by us pursuant to |
|  |  |  | the Franchise Agreement, Operations Manuals, |
|  |  |  | or otherwise; failure or refusal to submit, when |
| i. | Franchisee's obligations on termination/non-renewal | Sections 15.3, 20.1, and 20.2 | Pay all amounts due, discontinue use of Marks, discontinue use of Confidential Information and Trade Secrets, discontinue use of telephone numbers associated with the Franchised Business, and comply with post-term non competition and non-solicitation covenants. Upon the termination or expiration of the Franchise Agreement, we will have the option, but not the obligation, to purchase any and all of the assets used by you to operate the Franchised Business at a purchase price equal to net depreciated book value. |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTIONS (FDD pages 36–44)

Question 58

What are the consequences if a Craters & Freighters franchisee fails to open the Franchised Business by the specified deadline?

Accepted Answer

- 19.1 Non-curable Breaches. Franchisor will have the right to terminate this Agreement without prior notice to Franchisee upon the occurrence of any of the following events at any time during this Agreement, each of which will be deemed an incurable breach of this Agreement:
  - 19.1.1 Failure or Refusal to Open. Franchisee fails or refuses to open the Franchised Business to the public within ninety (90) days after execution of this Agreement.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 59

As of the date of this Craters & Freighters Franchise Disclosure Document, in which states is the document effective and available for use, pending filing, registration, or exemption?

Accepted Answer

The following states have franchise laws that require that the Disclosure Document be registered or filed with the state or be exempt from registration:

California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin.

This Franchise Disclosure Document is effective and may be used in the following states, where the document is filed, registered or exempt from registration, as of the Effective Date stated below:

Source: Item 23 — RECEIPTS (FDD pages 50–193)

Question 60

What is the deadline for a Craters & Freighters franchisee to submit the Adjusted Gross Sales report if the Royalty Fee is paid weekly?

Accepted Answer

- 11.1.1 On or before the tenth (10th) day of each calendar month, Franchisee must submit, and Franchisor must have received, a report on the Franchised Business's Adjusted Gross Sales for the preceding calendar month in the form then required by Franchisor. In the event Franchisor requires Franchisee to pay the Royalty Fee on a weekly basis, Franchisee must submit, and Franchisor must receive, such report by the deadline then established by Franchisor.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 61

What is the deadline for a Craters & Freighters franchisee to submit the insurance activity report if the Insurance Payment is paid weekly?

Accepted Answer

WHEREAS, Franchisor has developed a multitude of programs specific to the operation of a Craters & Freighters® franchised business ("Franchised Business") including but not limited to specialized crating and packaging techniques, shipping and logistics solutions, a national accounts program, national cargo insurance plan, proprietary software, advertising programs, brand identity system, and a comprehensive website.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 62

What is the dependency for Craters & Freighters' indemnification of the franchisee in an infringement claim?

Accepted Answer

ent table in the Franchise Disclosure Document is amended to disclose that the franchise agreement's provisions regarding termination by the franchisee are subject to state law.

Within the context of RCW 19.100.180(1), Section 14 of the Franchise Agreement is amended to state: "Franchisee has no obligation to indemnify or hold harmless an indemnified party for losses to the

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Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 63

What is the dependency between the Craters & Freighters initial franchise fee and the population of the territory?

Accepted Answer

| 1. | TERRITORY                                                                   |                                                                                                                                                                                                                                                     |
|----|-----------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | Pursuant to Section 1.2 of this Agreement, the Territory is defined as follows: |
|  |  |  |
|  |  |  |
|  |  |  |
|  |  | The population in the Territory as of the Effective Date of this Agreement is: |
| 2. | INITIAL FRANCHISE FEE                                                       |                                                                                                                                                                                                                                                     |
|    | Pursuant to Section 3.1 of this Agreement, the Initial Franchise Fee is:    |                                                                                                                                                                                                                                                     |
|    | 1,000,000 people.                                                           | Thirty-Five Thousand Dollars (\$35,000) for a Territory with a population of fewer than                                                                                                                                                             |
|  |  | Forty-Five Thousand Dollars (\$45,000) for a Territory with a population

Source: Item 22 — CONTRACTS (FDD pages 49–50)

Question 64

What is the dependency between meeting Minimum Performance Standards and market penetration for a Craters & Freighters franchise?

Accepted Answer

Franchisee must meet the minimum performance standards ("Minimum Performance Standards") set forth in Attachment B to this Agreement. The Minimum Performance Standards are based on population (which determination should be made based upon the latest United States Census information available for the Territory), demographic factors, economic factors, competition, market penetration, the growth rate of other Craters & Freighters franchised businesses and other relevant factors solely determined by Franchisor. Franchisee understands that meeting the annual Minimum Performance Standards does not suggest that Franchisee is sufficiently penetrating the market in its Territory or that its Franchised Business will be successful. Rather, the Minimum Performance Standards are threshold minimum amounts. In the event Franchisee does not meet the Minimum Performance Standards, Franchisor will have the right to reduce the size of, or otherwise modify, Franchisee's Territory upon providing 30 days' written notice to Franchisee.

Source: Item 22 — CONTRACTS (FDD pages 49–50)

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