Goldfish_Swim_School 2025 Franchise FAQ - FDD Ninja

Question 1

According to the table in Item 17, what topics are covered regarding the renewal, termination, transfer, and dispute resolution of a Goldfish Swim School franchise?

Accepted Answer

| Provision                                                                                               | Section in Franchise or Other Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|---------------------------------------------------------------------------------------------------------|--------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | manager if different from the Designated Manager will complete the initial training program before assuming management of the franchised swim school; the transferee has agreed that its swim instructors, the Designated Manager, and the on-site general manager will have obtained CPR, life guard and first aid certifications; and the franchise location is remodeled to the then-current brand standards. |
| n. Franchisor's right of first refusal to acquire franchisee's franchised swim school | Section 19 | We may match an offer for your franchised swim school or an ownership interest you propose to sell. |
| o. Franchisor's option to purchase franchisee's franchised swim school | Section 17.4 | Except as described in (n) above, we do not have the right to purchase your franchised swim school; however, during the 30-day period after the termination or expiration of the Franchise Agreement, we have the right to purchase any assets of the franchised swim school for fair market value. |
| p. Death or disability of franchisee | Section 18.6 | After the death or incapacity of an owner of the franchise, his or her representative must transfer, subject to the terms of the Franchise Agreement, the individual's interest in the franchise within 180 days of death or incapacity or we may terminate the Franchise Agreement. |
| q. Non-competition covenants during the term of the franchise | Section 7.3 | Subject to any applicable state law, you, your owners (and members of their families and households) and your officers, directors, executives, managers, professional staff and employees are prohibited from: attempting to divert any business or customer of the franchised swim school to a competitive business or causing injury or prejudice to the Marks or the System; owning or working for a competitive business. |
| Provision                                                                                | Section in Franchise or Other Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|------------------------------------------------------------------------------------------|--------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| r. Non-competition covenants after the franchise is terminated or expires | Section 17.2                                     | Subject to any applicable state law, for 2 years after the termination or expiration of the Franchise Agreement, you, your owners (and members of their families and households) and your officers, directors, executives, managers or professional staff are prohibited from: owning or working for a competitive business operating within 25 miles of the franchise location or within the area of primary responsibility (whichever is greater), or within 25 miles of any other Goldfish Swim School; or soliciting or influencing any of our customers or business associates to compete with us or terminate their relationship with us. |
| s. Modification of the agreement                                                   | Sections 9.2, 22.7 and 22.8                | The Franchise Agreement can be modified only by written agreement between you and us. We may modify the Confidential Brand Standards Manual without your consent if the modification does not materially alter your fundamental rights.                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| t. Integration/merger clause                                                       | Section 22.7                                     | Only the terms of the Franchise Agreement are binding (subject to state law). Any representations or promises outside of the disclosure document and franchise agreement may not be enforceable. Notwithstanding the foregoing, nothing in the franchise agreement or any related agreement is intended to disclaim the representations made in the Franchise Disclosure Document.                                                                                                                                                                                                                   |
| u. | Section 23.7 | Except for claims relating to the Marks, confidential |
| Dispute resolution |  | information, trade secrets and covenants not to compete, |
| by arbitration or |  | and subject to state law, all disputes must be arbitrated in |
| mediation |  | Oakland County, Michigan. |
| v. | Section 23.2 | Subject to state law, any litigation must be pursued in |
| Choice of forum |  | courts located in Oakland County, Michigan. |
| w. Choice of law                                                                      | Section 23.1                                     | Subject to state law, Michigan law applies, except that disputes over the Marks will be governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sec. 1051 et seq.) and disputes over copyrights will be governed by federal copyright laws of the United States, except that the Michigan Franchise Investment Law does not apply to you unless you are a resident of the state of Michigan or your designated area is within the state of Michigan.                                                                                                                                                                                                                |
| Provision                                                          | Section in Franchise or Other Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------------------------------------------------------------------|--------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| i. Franchisee's obligations on termination/non renewal | Section 17.1                                     | If the Franchise Agreement is terminated or not renewed, you must: stop operating the franchised swim school; stop using any trade secrets, confidential information, the System and the Marks; if requested, assign your interest in the franchise location to us; cancel or assign to us any assumed names; pay all sums owed to us including damages and costs incurred in enforcing the Franchise Agreement; return the Confidential Brand Standards Manual, trade secrets and all other confidential information; assign your telephone and facsimile numbers to us; comply with the covenants not to compete and any other surviving provisions of the Franchise Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| j. Assignment of contract by franchisor                   | Section 18.1                                     | There are no restrictions on our right to assign our interest in the Franchise Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| k. "Transfer" by franchisee definition                    | Section 18.2                                     | "Transfer" includes transfer of an interest in the franchise, the Franchise Agreement, the franchise location or the franchised swim school's assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| l. Franchisor's approval of transfer by franchisee     | Section 18.2                                     | You may not transfer your interest in any of the items listed in (k) above without our prior written consent.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 54–64)

Question 2

What is the auditor required to do when performing audits in accordance with GAAS for Goldfish Swim School?

Accepted Answer

In performing audits in accordance with GAAS, we:

- Exercise professional judgment and maintain professional skepticism throughout the audits.
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
- Obtain an understanding of internal control relevant to the audits in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

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

Source: Item 22 — CONTRACTS (FDD pages 76–77)

Question 3

As of December 31, 2024, how many Goldfish Swim School franchise agreements have been signed in total, but the outlets have not yet opened?

Accepted Answer

|  |  |  |  |
|---|---|---|---|
|  |  |  |  |
|  |  |  |  |
| State |  | Projected New Franchised Outlet In The Next Fiscal Year | Projected New Company- Owned Outlet in the Next Fiscal Year |
|  |  |  |  |
|  |  |  |  |
|  |  |  |  |
|  |  |  |  |
| Alabama | 0 | 0 | 0 |
| Arizona | 0 | 0 | 0 |
| California | 4 | 2 | 0 |
| Colorado | 1 | 0 | 0 |
| Connecticut | 2 | 1 | 0 |
| Delaware | 1 | 1 | 0 |
| Florida | 1 | 0 | 0 |
| Georgia | 2 | 1 | 0 |
| Idaho | 0 | 0 | 0 |
| Indiana | 0 | 0 | 0 |
| Illinois | 0 | 0 | 0 |
| Kansas | 1 | 0 | 0 |
| Kentucky | 0 | 0 | 0 |
| Louisiana | 0 | 0 | 0 |
| Maine | 0 | 0 | 0 |
| Maryland | 2 | 1 | 0 |
| Massachusetts | 1 | 0 | 0 |
| Michigan | 1 | 0 | 0 |
| Minnesota | 1 | 1 | 0 |
| Nebraska | 0 | 0 | 0 |
| Nevada | 1 | 1 | 0 |
| New Hampshire | 1 | 1 | 0 |
| New Jersey | 1 | 1 | 0 |
| New York | 5 | 3 | 0 |
| North Carolina | 1 | 1 | 0 |
| Ohio | 0 | 0 | 0 |
| Oklahoma | 2 | 1 | 0 |
| Oregon | 2 | 2 | 0 |
| Pennsylvania | 2 | 1 | 0 |
| Rhode Island | 0 | 0 | 0 |
| South Carolina | 1 | 1 | 0 |
| Tennessee | 1 | 0 | 0 |
| Texas | 4 | 2 | 0 |
| PROJECTED OPENINGS AS OF DECEMBER 31, 2024 |  |  |  |
| State | Franchise Agreements Signed But Outlet Not Yet Opened | Projected New Franchised Outlet In The Next Fiscal Year | Projected New Company Owned Outlet in the Next Fiscal Year |
| Utah | 0 | 0 | 0 |
| Virginia | 1 | 1 | 0 |
| Washington | 2 | 2 | 0 |
| Wi

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 68–76)

Question 4

What is the role of the affiliate in administering the Goldfish Swim School Brand Fund?

Accepted Answer

#### Our affiliate will administer the Brand Fund as follows:

- (a) Through our affiliate, we will control the creative concepts and the materials and media to be used, and we will determine the placement and allocation of advertisements. Through our affiliate, we may use print, television, radio, Internet or other media for advertisements and promotions. Neither we nor our affiliate guarantee that any particular franchisee will benefit directly or in proportion to their contribution from the placement of advertising by the Brand Fund.
- (b) Through our affiliate, we may use your contributions to meet or reimburse us for any cost of producing, maintaining, administering and directing consumer advertising (including the cost of preparing and conducting television, radio, Internet, magazine, direct mail and newspaper advertising campaigns and other public relations activities; hosting an Internet web page of similar activities; employing advertising agencies to assist therein; providing promotional brochures; conducting market research; and providing other marketing materials to franchisees). Your contributions to the Brand Fund administered by our affiliate are in a separate account of our affiliate, separate from our funds, and will not be used for any of our general operating expenses, except for our reasonable administrative costs and overhead related to the administration of the Brand Fund. Neither we nor our affiliate will use Brand Fund contributions for the direct solicitation of franchise sales.
- (c) Through our affiliate, we expect to use all contributions in the fiscal year they are made. Through our affiliate, we will use any interest or other earnings of the Brand Fund before we use current contributions. We intend for the Brand Fund to be perpetual, but we have the right to terminate it if necessary. We will not terminate the Brand Fund until all contributions and earnings have been used for advertising and promotional purposes or we have returned your pro rata share.
- (d) All Goldfish Swim Schools owned by us or an affiliate will make contributions to the Brand Fund at the same basis as required of franchisees.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 32–42)

Question 5

What specific actions does the auditor take when performing audits in accordance with GAAS for Goldfish Swim School?

Accepted Answer

In performing audits in accordance with GAAS, we:

- Exercise professional judgment and maintain professional skepticism throughout the audits.
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
- Obtain an understanding of internal control relevant to the audits in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

Source: Item 22 — CONTRACTS (FDD pages 76–77)

Question 6

Are there any projected new company-owned Goldfish Swim School outlets planned for the next fiscal year?

Accepted Answer

2024 | 4 | 1 | 0 | 0 | 0 | 5 |
**Table No. 5**

|  |  |  |  |
|---|---|---|---|
|  |  |  |  |
|  |  |  |  |
| State |  | Projected New Franchised Outlet In The Next Fiscal Year | Projected New Company- Owned Outlet in the Next Fiscal Year |
|  |  |  |  |
|  |  |  |  |
|  |  |  |  |
|  |  |  |  |
| Alabama | 0 | 0 | 0 |
| Arizona | 0 | 0 | 0 |
| California | 4 | 2 | 0 |
| Colorado | 1 | 0 | 0 |
| Connecticut | 2 | 1 | 0 |
| Delaware | 1 | 1 | 0 |
| Florida | 1 | 0 | 0 |
| Georgia | 2 | 1 | 0 |
| Idaho | 0 | 0 | 0 |
| Indiana | 0 | 0 | 0 |
| Illinois | 0 | 0 | 0 |
| Kansas | 1 | 0 | 0 |
| Kentucky | 0 | 0 | 0 |
| Louisiana | 0 | 0 | 0 |
| Maine | 0 | 0 | 0 |
| Maryland | 2 | 1 | 0 |
| Massachusetts | 1 | 0 | 0 |
| Michigan | 1 | 0 | 0 |
| Minnesota | 1 | 1 | 0 |
| Nebraska | 0 | 0 | 0 |
| Nevada | 1 | 1 | 0 |
| New Hampshire | 1 | 1 | 0 |
| New Jersey | 1 | 1 | 0 |
| New York | 5 | 3 | 0 |
| North Carolina | 1 | 1 | 0 |
| Ohio | 0 | 0 | 0 |
| Oklahoma | 2 | 1 | 0 |
| Oregon | 2 | 2 | 0 |
| Pennsylvania | 2 | 1 | 0 |
| Rhode Island | 0 | 0 | 0 |
| South Carolina | 1 | 1 | 0 |
| Tennessee | 1 | 0 | 0 |
| Texas | 4 | 2 | 0 |
| PROJECTED OPENINGS AS OF DECEMBER 31, 2024 |  |  |  |
| State | Franchise Agreements Signed But Outlet Not Yet Opened | Projected New Franchised Outlet In The Next Fiscal Year | Projected New Company Owned Outlet in the Next Fiscal Year |
| Utah | 0 | 0 | 0 |
| Virginia | 1 | 1 | 0 |
| Washington | 2 | 2 | 0 |
| Wisconsin | 2 | 1 | 0 |
| Total* | 43

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 68–76)

Question 7

What is the total estimated initial investment range for opening a Goldfish Swim School?

Accepted Answer

| | #### **Area Development Agreement** | Type of | Amount | Method of | When Due | To Whom Payment Is | |------------------------------------------------------------------------------------------------------------------------------|----------------------------|-------------------------|---------------------------------------------------|-----------------------| | Expenditure | | Payment | | To Be Made | | Development Fee2 | \$70,000 | Cashier's Check | At Signing of Area Development Agreement | Us | | Initial Investment for First Franchised outlet (less initial franchise fee as paid in the Development Fee) | \$1,663,263 – 3,746,733 | As Provided Above | As Provided Above | As Provided Above | | Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 21–27)

Question 8

What was the total number of Goldfish Swim School outlet transfers from franchisees to new owners across all listed states in 2023?

Accepted Answer

| TRANSFERS OF OUTLETS FROM FRANCHISEES TO NEW OWNERS (OTHER THAN THE FRANCHISOR) FOR YEARS 2022 TO 2024 |  |  |
|---|---|---|
| State |  | Number of Transfers |
| Colorado | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| Connecticut | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Florida | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Illinois | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Maine | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 TRANSFERS OF OUTLETS FROM FRANCHISEES TO NEW OWNERS (OTHER THAN THE FRANCHISOR) FOR YEARS 2022 TO 2024 | 0 |
|  |  |  |
| Maryland | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Michigan | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Missouri | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Oklahoma | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Virginia | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| New York | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| New Jersey | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Wisconsin | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Total | 2022 | 5 |
|  | 2023 | 4 |
|  | 2024 | 1 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 68–76)

Question 9

What was the total number of Goldfish Swim School outlet transfers from franchisees to new owners across all listed states in 2024?

Accepted Answer

| TRANSFERS OF OUTLETS FROM FRANCHISEES TO NEW OWNERS (OTHER THAN THE FRANCHISOR) FOR YEARS 2022 TO 2024 |  |  |
|---|---|---|
| State |  | Number of Transfers |
| Colorado | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| Connecticut | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Florida | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Illinois | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Maine | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 TRANSFERS OF OUTLETS FROM FRANCHISEES TO NEW OWNERS (OTHER THAN THE FRANCHISOR) FOR YEARS 2022 TO 2024 | 0 |
|  |  |  |
| Maryland | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Michigan | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Missouri | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Oklahoma | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Virginia | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| New York | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| New Jersey | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Wisconsin | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Total | 2022 | 5 |
|  | 2023 | 4 |
|  | 2024 | 1 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 68–76)

Question 10

What is the total projected number of new Goldfish Swim School franchised outlets expected to open in the next fiscal year across all states listed?

Accepted Answer

|  |  |  |  |
|---|---|---|---|
|  |  |  |  |
|  |  |  |  |
| State |  | Projected New Franchised Outlet In The Next Fiscal Year | Projected New Company- Owned Outlet in the Next Fiscal Year |
|  |  |  |  |
|  |  |  |  |
|  |  |  |  |
|  |  |  |  |
| Alabama | 0 | 0 | 0 |
| Arizona | 0 | 0 | 0 |
| California | 4 | 2 | 0 |
| Colorado | 1 | 0 | 0 |
| Connecticut | 2 | 1 | 0 |
| Delaware | 1 | 1 | 0 |
| Florida | 1 | 0 | 0 |
| Georgia | 2 | 1 | 0 |
| Idaho | 0 | 0 | 0 |
| Indiana | 0 | 0 | 0 |
| Illinois | 0 | 0 | 0 |
| Kansas | 1 | 0 | 0 |
| Kentucky | 0 | 0 | 0 |
| Louisiana | 0 | 0 | 0 |
| Maine | 0 | 0 | 0 |
| Maryland | 2 | 1 | 0 |
| Massachusetts | 1 | 0 | 0 |
| Michigan | 1 | 0 | 0 |
| Minnesota | 1 | 1 | 0 |
| Nebraska | 0 | 0 | 0 |
| Nevada | 1 | 1 | 0 |
| New Hampshire | 1 | 1 | 0 |
| New Jersey | 1 | 1 | 0 |
| New York | 5 | 3 | 0 |
| North Carolina | 1 | 1 | 0 |
| Ohio | 0 | 0 | 0 |
| Oklahoma | 2 | 1 | 0 |
| Oregon | 2 | 2 | 0 |
| Pennsylvania | 2 | 1 | 0 |
| Rhode Island | 0 | 0 | 0 |
| South Carolina | 1 | 1 | 0 |
| Tennessee | 1 | 0 | 0 |
| Texas | 4 | 2 | 0 |
| PROJECTED OPENINGS AS OF DECEMBER 31, 2024 |  |  |  |
| State | Franchise Agreements Signed But Outlet Not Yet Opened | Projected New Franchised Outlet In The Next Fiscal Year | Projected New Company Owned Outlet in the Next Fiscal Year |
| Utah | 0 | 0 | 0 |
| Virginia | 1 | 1 | 0 |
| Washington | 2 | 2 | 0 |
| Wi

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 68–76)

Question 11

What is the total projected number of new Goldfish Swim School franchised outlets expected to open in the next fiscal year?

Accepted Answer

At December 31, 2024, there were 215 signed franchise agreements and 56 signed area development agreements, with 177 swim schools open and operating. At December 31, 2023, there were 197 signed franchise agreements and 52 signed area development agreements, with 159 swim schools open and operating. At December 31, 2022, there were 175 signed franchise agreements and 50 signed area development agreements, with 137 swim schools open and operating.

Source: Item 22 — CONTRACTS (FDD pages 76–77)

Question 12

How does the assistance provided by Goldfish Swim School in Item 11 depend on the franchisee meeting certain obligations outlined in Item 9?

Accepted Answer

CE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING**

**Except as listed below, we are not required to provide you with any assistance**.

- A. Before you open your franchised swim school, we will:
- 1. provide you with our criteria for site selection and evaluate sites you propose for the location of the franchised swim school, which include, without limitation, general population and income levels, population size of children under the age of 9, proximity to competitors, and the like. Our review process is approximately 30 days. (Sections 2.3 and 5.1)
- 2. designate your designated area (area of primary responsibility). (Section 2.5; See also ITEM 12)
- 3. review and accept your lease or purchase agreement for the approved site for the franchised swim school. (Section 5.3)
- 4. provide you with specifications for remodeling and equipping the approved location along with a list of required supplies, equipment and improvements that you must purchase and install. (Section 5.4)

- 5. provide initial training to the Control Person, or 1 or more owners of yours as we determine, the Designated Manager, and at least 1 other required manager (as we designate in our discretion). These parties must be present for the complete training period, successfully complete the training to our satisfaction. This training includes a shallow water attendant certificate, which certifies you in CPR (cardiopulmonary resuscitation), First Aid, AED (automated external defibrillator), and also provides a lifeguarding certification for shallow water pools. Other certifications like CPO (certified pool operations) may be required, but not provided during this training period. This training is described in detail later in this ITEM. (Section 8.1). If the above referenced certifications are not provided during initial training, you must obtain such certifications prior to the opening of your Franchised Swim School.
- 6. provide to you on-site assistance and guidance by 1 of our representatives for no more than 3 days for your first swim school and 1 day for your or your affiliate's second swim school, to assist you with any questions you may have in

Question 13

How does the assistance provided by Goldfish Swim School in Item 11 depend on the franchisee's adherence to the approved supplier requirements in Item 8?

Accepted Answer

UCTS**

#### Standards and Specifications

You must purchase all of your supplies ("Approved Supplies") including without limitation your furniture, fixtures, equipment, including computer equipment, inventory, and signage under specifications in the Goldfish Swim School Confidential Brand Standards Manual ("Confidential Brand Standards Manual") and through suppliers approved by us ("Approved Suppliers"). You will be required to use Approved Suppliers to perform certain services on your behalf in connection with your Franchised Swim School. We communicate our standards and specifications to you when we evaluate your proposed location for the franchised swim school during training, before you conduct your initial advertising expense, during on-site opening assistance, during periodic visits to your franchise location and through the Confidential Brand Standards Manual (including periodic bulletins). We will periodically issue new standards and specifications (if any) through written notices. We have created standards and specifications for the development of your franchised swim school. We have required vendors and suppliers as identified in the Confidential Brand Standards Manual and we reserve the right to designate required additional vendors or suppliers, or revoke the approval of suppliers as we determine in our discretion from time to time in the future, and will provide you notice through the Confidential Brand Standards Manual. At this time, neither we, nor any of our officers or directors or anyone listed in ITEM 2 has any ownership or other interest in any Approved Supplier. At this time, neither we, nor any of our affiliates are the only approved suppliers of any categories of Approved Supplies.

You must purchase the types of insurance and coverage amounts as we determine from time to time as provided in our Brand Standards Manual.

Question 14

How does the assistance provided by Goldfish Swim School in Item 11 depend on the franchisee's initial franchise fee payment in Item 5?

Accepted Answer

Item.

#### **ITEM 5. INITIAL FEES**

You pay us a \$50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a \$20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the \$20,000 you pay as part of your Development Fee. The initial franchise fee is uniform.

We will refund 25% of the franchise fee you paid if we terminate the franchise for your failure to select a site within 180 days, or your failure to successfully complete the initial training program to our satisfaction. We do not give refunds under other circumstances. (For further information about termination of the franchise, see ITEM 17.)

You will pay us a non-refundable Real Estate Fee in the amount of \$2,500 when you sign the first Franchise Agreement related to your leasehold property. If you develop multiple Swim Schools, the Real Estate Fee will not be assessed on any Swim School after your first. The Real Estate Fee will cover our expenses related to your real estate and site selection, including providing certain information and services to you, such as demographic information, site criteria information, our attendance at meetings or calls with you and your real estate broker, our attendance at in person and telephonic conferences with landlords or local real estate brokers, our expenses related to site tours, and our access to certain real estate database information of

Question 15

How does the assistance provided by Goldfish Swim School in Item 11 depend on the franchisee's territory, as outlined in Item 12?

Accepted Answer

t guarantee your note, lease or obligation.

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

**Except as listed below, we are not required to provide you with any assistance**.

- A. Before you open your franchised swim school, we will:
- 1. provide you with our criteria for site selection and evaluate sites you propose for the location of the franchised swim school, which include, without limitation, general population and income levels, population size of children under the age of 9, proximity to competitors, and the like. Our review process is approximately 30 days. (Sections 2.3 and 5.1)
- 2. designate your designated area (area of primary responsibility). (Section 2.5; See also ITEM 12)
- 3. review and accept your lease or purchase agreement for the approved site for the franchised swim school. (Section 5.3)
- 4. provide you with specifications for remodeling and equipping the approved location along with a list of required supplies, equipment and improvements that you must purchase and install. (Section 5.4)

- 5. provide initial training to the Control Person, or 1 or more owners of yours as we determine, the Designated Manager, and at least 1 other required manager (as we designate in our discretion). These parties must be present for the complete training period, successfully complete the training to our satisfaction. This training includes a shallow water attendant certificate, which certifies you in CPR (cardiopulmonary resuscitation), First Aid, AED (automated external defibrillator), and also provides a lifeguarding certification for shallow water pools. Other certifications like CPO (certified pool operations) may be required, but not provided during this training period. This training is described in detail later in this ITEM. (Section 8.1). If the above referenced certifications are not provided during initial training, you must obtain such certifications prior to the opening of your Franchised Swim School.
- 6. provide to you on-site assistance and guidance by 1 of our representatives for no more than 3 days for your first swim school and 1 day for your or your affiliate's second swim school, to assist you with any questions you may have in

Question 16

How does the assistance provided by Goldfish Swim School in Item 11 depend on the franchisee's territory size as outlined in Item 12?

Accepted Answer

t guarantee your note, lease or obligation.

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

**Except as listed below, we are not required to provide you with any assistance**.

- A. Before you open your franchised swim school, we will:
- 1. provide you with our criteria for site selection and evaluate sites you propose for the location of the franchised swim school, which include, without limitation, general population and income levels, population size of children under the age of 9, proximity to competitors, and the like. Our review process is approximately 30 days. (Sections 2.3 and 5.1)
- 2. designate your designated area (area of primary responsibility). (Section 2.5; See also ITEM 12)
- 3. review and accept your lease or purchase agreement for the approved site for the franchised swim school. (Section 5.3)
- 4. provide you with specifications for remodeling and equipping the approved location along with a list of required supplies, equipment and improvements that you must purchase and install. (Section 5.4)

- 5. provide initial training to the Control Person, or 1 or more owners of yours as we determine, the Designated Manager, and at least 1 other required manager (as we designate in our discretion). These parties must be present for the complete training period, successfully complete the training to our satisfaction. This training includes a shallow water attendant certificate, which certifies you in CPR (cardiopulmonary resuscitation), First Aid, AED (automated external defibrillator), and also provides a lifeguarding certification for shallow water pools. Other certifications like CPO (certified pool operations) may be required, but not provided during this training period. This training is described in detail later in this ITEM. (Section 8.1). If the above referenced certifications are not provided during initial training, you must obtain such certifications prior to the opening of your Franchised Swim School.
- 6. provide to you on-site assistance and guidance by 1 of our representatives for no more than 3 days for your first swim school and 1 day for your or your affiliate's second swim school, to assist you with any questions you may have in opening and operating the franchised swim school. The specific number of days will be determined by us in our discretion, provided, however, that we will provide you with no on-site opening assistance for your third swim school or thereafter. (Section 8.2)
- 7. provide you with an Approved Supplies List and an Approved Suppliers List to provide you the goods and services necessary to operate the franchised swim school. (Section 13.1)
- 8. provide to you, on loan, one copy of the Goldfish Swim School Confidential Brand Standards Manual or provide you with access to an electronic copy of the Confidential Brand Standards Manual. The approximate total number of pages in the Confidential Brand Standards Manual as of the date of this Disclosure Document is 227. The Table of Contents of the Confidential Brand Standards Manual, along with number of pages devoted to each section, is included as Exhibit E to this Disclosure Document. (Section 9.1).
  - 9. Provide for an approved date for opening.
  - B. After the opening of the franchised swim school, we will:
- 1. periodically advise you and offer general guidance to you by telephone, email or other electronic communication, newsletters and other methods. Our guidance is based on our and our Affiliate's knowledge and experience. We offer you advice and guidance on a variety of business matters, including operational methods, accounting procedures, authorized services or products and marketing and sales strategies. (Section 14.1)

- 2. make periodic visits to the franchised swim school to provide you with consultation, assistance and guidance in various aspects of the operation and management of the franchised swim school. We will prepare a written report identifying areas where you are failing to meet the standards of the System and suggesting changes or improvements in the operations of the franchised swim school and detailing deficiencies that become evident as a result of a visit. You will have 14 days to implement the changes required to meet the standards of the System and your failure to do so may cause you to be found in default of your Franchise Agreement. (Section 14.2)
- 3. make available to you operations assistance and ongoing training as we think necessary. (Sections 8.2 and 8.5) Ongoing training programs are described later in this ITEM and in ITEM 6.
- 4. approve forms of advertising materials you will use for local advertising, initial advertising expense and cooperative advertising. (Section 11.2) Our advertising programs are described later in this ITEM.
- 5. provide you with modifications to the Confidential Brand Standards Manual as they are made available to franchisees. (Section 9.2) The Confidential Brand Standards Manual is described in ITEM 14.

#### C. Advertising and Promotion

During the period of time prior to opening your franchised swim school through the first 3 months of operations, you must spend an amount we require (between \$30,000 and \$70,000) on initial advertising expenses for advertising, marketing, and promotion.

Question 17

How does the assistance provided by Goldfish Swim School in Item 11 relate to the estimated initial investment costs detailed in Item 7?

Accepted Answer

[Item 11: FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING] - 6. provide to you on-site assistance and guidance by 1 of our representatives for no more than 3 days for your first swim school and 1 day for your or your affiliate's second swim school, to assist you with any questions you may have in opening and operating the franchised swim school. The specific number of days will be determined by us in our discretion, provided, however, that we will provide you with no on-site opening assistance for your third swim school or thereafter. (Section 8.2) - 7. provide you with an Approved Supplies List and an Approved Suppliers List to provide you the goods and services necessary to operate the franchised swim school. (Section 13.1) - 8. provide to you, on loan, one copy of the Goldfish Swim School Confidential Brand Standards Manual or provide you with access to an electronic copy of the Confidential Brand Standards Manual. The approximate total number of pages in the Confidential Brand Standards Manual as of the date of this Disclosure Document is 227. The Table of Contents of the Confidential Brand Standards Manual, along with number of pages devoted to each section, is included as Exhibit E to this Disclosure Document. (Section 9.1). - 9. Provide for an approved date for opening. - B. After the opening of the franchised swim school, we will: - 1. periodically advise you and offer general guidance to you by telephone, email or other electronic communication, newsletters and other methods. Our guidance is based on our and our Affiliate's knowledge and experience. We offer you advice and guidance on a variety of business matters, including operational methods, accounting procedures, authorized services or products and marketing and sales strategies. (Section 14.1) [Item 7: ESTIMATED INITIAL INVESTMENT] ⁸ Initial Advertising Expense. You must spend an amount we require for your initial advertising expense from the time prior to the opening of your Franchised Swim School through the first 3 months of your operations, which amount includes without limitation, all marketing, advertising, promotion, and the grand opening party. We determine the minimum based on our assessment of your advertising costs in your swim school market. You may choose to spend more. See ITEM 11. Factors that may affect the actual amount you spend include but are not limited to local media costs, site selection of the Franchised Swim School, competition and brand awareness, time of year, customer demographics in the surrounding area, and whether your Franchised Swim School will be the first Goldfish Swim School® in the market. The amounts you spend for initial advertising expense are typically non-refundable. You should inquire about the return and refund policy of the suppliers at or before the time of purchasing. We require that you hire at your cost our Approved Suppliers to provide local marketing services and branding advertising services. [Item 7: ESTIMATED INITIAL INVESTMENT] Furniture, Fixtures, Equipment, Computers, & Decor. You must purchase and/or lease and install furniture, fixtures and equipment and décor necessary to operate your franchised swim school. Equipment installation charges are also included in this range. It is our experience that the amounts you pay for furniture, fixtures or equipment are nonrefundable; however, you should consult with your supplier. Generally, the factors determining whether furniture, fixtures and equipment are refundable typically include the condition of the items, level of use, length of time of possession and other variables. You must purchase general office supplies including stationery, business cards and typical office equipment. It is our experience that the amounts you pay for general office equipment and supplies are nonrefundable; however, you should consult with your supplier. Generally, the factors determining whether office equipment and supplies are refundable typically include the condition of the items at time of return, level of use and length of time of possession. This range includes the cost of all signage used in the franchised swim school. The signage requirements and costs will vary based upon the size and location of the franchised swim school, local zoning requirements, landlord requirements and local wage rates for installation. The amounts you pay for signage are typically non-refundable. You should inquire about the return and refund policy of the suppliers at or before the time of purchase. You must purchase an initial inventory of swim lesson equipment, merchandise, vending items and birthday party supplies, branded apparel, and promotional products for use in the operation of the franchised swim school. Some of these inventory items include goggles, barbells, swim suits and diapers, food and beverage items, balloons, and birthday party centerpieces. It is our experience that the amounts you pay for inventory items are nonrefundable; however, you should consult with your supplier. Generally, the factors determining whether inventory items are refundable typically include the condition of the items at time of return, level of use, and length of time of possession and other factors. You must purchase computer equipment and software described in more detail in ITEM 8 and 11. Amounts you pay for the computer equipment and software are nonrefundable, or if refundable, you may be subject to a "re-stocking" fee. You should inquire about the return and refund policy of the suppliers at or before the time of purchasing.

Question 18

How does the assistance provided by Goldfish Swim School in Item 11 relate to the franchisee's obligations listed in Item 9?

Accepted Answer

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

- 6. provide to you on-site assistance and guidance by 1 of our representatives for no more than 3 days for your first swim school and 1 day for your or your affiliate's second swim school, to assist you with any questions you may have in opening and operating the franchised swim school.

The specific number of days will be determined by us in our discretion, provided, however, that we will provide you with no on-site opening assistance for your third swim school or thereafter. (Section 8.2)

- 7. provide you with an Approved Supplies List and an Approved Suppliers List to provide you the goods and services necessary to operate the franchised swim school. (Section 13.1)

- 8. provide to you, on loan, one copy of the Goldfish Swim School Confidential Brand Standards Manual or provide you with access to an electronic copy of the Confidential Brand Standards Manual.

The approximate total number of pages in the Confidential Brand Standards Manual as of the date of this Disclosure Document is 227.

The Table of Contents of the Confidential Brand Standards Manual, along with number of pages devoted to each section, is included as Exhibit E to this Disclosure Document. (Section 9.1).

- 9.

Provide for an approved date for opening.

- B.

After the opening of the franchised swim school, we will:

- 1. periodically advise you and offer general guidance to you by telephone, email or other electronic communication, newsletters and other methods.

Our guidance is based on our and our Affiliate's knowledge and experience.

We offer you advice and guidance on a variety of business matters, including operational methods, accounting procedures, authorized services or products and marketing and sales strategies. (Section 14.1)

Question 19

How does the assistance provided by Goldfish Swim School in Item 11 relate to the initial franchise fee refund policy in Item 5?

Accepted Answer

or to the opening of your Franchised Swim School.
- 6. provide to you on-site assistance and guidance by 1 of our representatives for no more than 3 days for your first swim school and 1 day for your or your affiliate's second swim school, to assist you with any questions you may have in opening and operating the franchised swim school. The specific number of days will be determined by us in our discretion, provided, however, that we will provide you with no on-site opening assistance for your third swim school or thereafter. (Section 8.2)
- 7. provide you with an Approved Supplies List and an Approved Suppliers List to provide you the goods and services necessary to operate the franchised swim school. (Section 13.1)
- 8. provide to you, on loan, one copy of the Goldfish Swim School Confidential Brand Standards Manual or provide you with access to an electronic copy of the Confidential Brand Standards Manual.

Question 20

How does the assistance provided by Goldfish Swim School in Item 11 relate to the ongoing fees listed in Item 6?

Accepted Answer

B.

After the opening of the franchised swim school, we will:

- 1. periodically advise you and offer general guidance to you by telephone, email or other electronic communication, newsletters and other methods.

Our guidance is based on our and our Affiliate's knowledge and experience.

We offer you advice and guidance on a variety of business matters, including operational methods, accounting procedures, authorized services or products and marketing and sales strategies. (Section 14.1)

Question 21

How does the assistance provided by Goldfish Swim School in Item 11 relate to the territory granted in Item 12?

Accepted Answer

alendar year. (Section 8.5)

#### **ITEM 12. TERRITORY**

If you sign an Area Development Agreement, the Area Development Agreement gives you the right to establish an agreed-upon number of franchised swim schools in a specified geographic area, subject to certain excluded areas described below ("Territory"). We describe your Territory by boundary streets, highways or other recognizable demarcations and delineate it on a map or written description as attached as part of the Area Development Agreement. If you are not in default under the Area Development Agreement, we will not establish or franchise anyone else to establish a swim school in your Territory during the term of the Area Development Agreement. We can terminate or modify your rights in the Territory if you do not comply with the Area Development Agreement or any other agreement you have with us. If we terminate or modify your territorial rights under the Area Development Agreement or your Area Development Agreement expires or terminates, you shall continue to have any approved territory rights you have under any individual Franchise Agreement that you signed for a particular Franchised Swim School. You receive no minimum territory. Continuation of your territorial

exclusivity is not dependent upon achieving certain sales volume, market penetration, or other contingency. You will receive an exclusive territory.

The Franchise Agreement licenses you to operate one Franchised Swim School at a specific site within the designated area. Territorial rights are granted under the Franchise Agreement include a "designated area," which is described below. The designated area that you receive will be described and depicted in a map attached to or included in the Franchise Agreement. You will operate one swim school in your designated area and must receive our permission before relocating. We determine the boundaries of the area based on a variety of factors, including general population, population size of children under the age of 12 years, proximity to competitors, proximity to other franchisees and natural, physical or political boundaries. As long as you are not in default under the Franchise Agreement, we will not establish other franchised or company-owned swim schools using the System with a physical location in your designated area. You receive no minimum territory. Continuation of your territorial exclusivity is not dependent upon achieving certain sales volume, market penetration, or other contingency. The territory may only be altered at the renewal of your franchise agreement. You will receive an exclusive territory.

You are not restricted from selling goods and services using the System to customers residing outside your designated area.

Question 22

How does the assistance provided by Goldfish Swim School in Item 11 relate to the trademark usage described in Item 13?

Accepted Answer

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

- 8. provide to you, on loan, one copy of the Goldfish Swim School Confidential Brand Standards Manual or provide you with access to an electronic copy of the Confidential Brand Standards Manual.

[Item 13: TRADEMARKS]

You receive the right to operate your swim school under the name, Goldfish Swim School®, which is the primary Mark used to identify our System. You may also use any other current or future Marks to operate your franchised swim school that we designate, including the logo on the front of this Disclosure Document and the service mark listed below. By "Mark," we mean any trade name, trademark, service mark or logo used to identify your business.

Question 23

What is the auditor's responsibility regarding the detection of material misstatements in Goldfish Swim School's financial statements due to fraud versus error?

Accepted Answer

inue as a going concern within one year after the date that the consolidated financial statements are issued or available to be issued.

#### *Auditor's Responsibilities for the Audits of the Consolidated Financial Statements*

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and, therefore, is not a guarantee that audits conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

![](_page_298_Picture_15.jpeg)

To the Members Goldfish Swim School Franchising, LLC and Subsidiary

In performing audits in accordance with GAAS, we:

- Exercise professional judgment and maintain professional skepticism throughout the audits.
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
- Obtain an understanding of internal control relevant to the audits in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

Source: Item 22 — CONTRACTS (FDD pages 76–77)

Question 24

How does the initial franchise fee for a Goldfish Swim School in Item 5 compare to the assistance provided by the franchisor in Item 11?

Accepted Answer

Item.

#### **ITEM 5. INITIAL FEES**

You pay us a \$50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a \$20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the \$20,000 you pay as part of your Development Fee. The initial franchise fee is uniform.

We will refund 25% of the franchise fee you paid if we terminate the franchise for your failure to select a site within 180 days, or your failure to successfully complete the initial training program to our satisfaction. We do not give refunds under other circumstances. (For further information about termination of the franchise, see ITEM 17.)

You will pay us a non-refundable Real Estate Fee in the amount of \$2,500 when you sign the first Franchise Agreement related to your leasehold property. If you develop multiple Swim Schools, the Real Estate Fee will not be assessed on any Swim School after your first. The Real Estate Fee will cover our expenses related to your real estate and site selection, including providing certain information and services to you, such as demographic information, site criteria information, our attendance at meetings or calls with you and your real estate broker, our attendance at in person and telephonic conferences with landlords or local real estate brokers, our expenses related to site tours, and our access to certain real estate database information of potentially available properties.

If you sign an Area Development Agreement, you must develop an agreed-upon number of Swim Schools within the Development Territory within a certain period of time (the "Development Schedule") and simultaneously execute the Franchise Agreement for your first Swim School. You must pay an Initial Franchise Fee for the Area Development Agreement based upon the number of Swim Schools that you develop in the Development Territory (the "Development Fee"). The Development Fee is equal to the Initial Franchise Fee for the first Swim School (\$50,000) plus \$20.000 [one-half of the reduced Initial Franchise Fee (\$40,000)] for each additional Swim School developed under the Area Development Agreement. Upon

signing the Area Development Agreement, you pay a lump sum Development Fee based upon this formula, which is non-refundable.

Question 25

How does the initial franchise fee for a Goldfish Swim School in Item 5 compare to the estimated initial investment detailed in Item 7, and what portion of the investment does the franchise fee represent?

Accepted Answer

wim School Franchising, LLC and Subsidiary (the "Company") is engaged in franchising and support of franchisees in the establishment and operations of Goldfish Swim Schools. Franchise schools are located throughout the United States.

The Company executes fra

Question 26

How does the initial franchise fee for Goldfish Swim School in Item 5 compare to the ongoing fees listed in Item 6?

Accepted Answer

[Item 5: INITIAL FEES]

You pay us a $50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a $20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the $20,000 you pay as part of your Development Fee. The initial franchise fee is uniform.

You will pay us a non-refundable Real Estate Fee in the amount of $2,500 when you sign the first Franchise Agreement related to your leasehold property. If you develop multiple Swim Schools, the Real Estate Fee will not be assessed on any Swim School after your first. The Real Estate Fee will cover our expenses related to your real estate and site selection, including providing certain information and services to you, such as demographic information, site criteria information, our attendance at meetings or calls with you and your real estate broker, our attendance at in person and telephonic conferences with landlords or local real estate brokers, our expenses related to site tours, and our access to certain real estate database information of potentially available properties.

If you sign an Area Development Agreement, you must develop an agreed-upon number of Swim Schools within the Development Territory within a certain period of time (the "Development Schedule") and simultaneously execute the Franchise Agreement for your first Swim School. You must pay an Initial Franchise Fee for the Area Development Agreement based upon the number of Swim Schools that you develop in the Development Territory (the "Development Fee"). The Development Fee is equal to the Initial Franchise Fee for the first Swim School ($50,000) plus $20.000 [one-half of the reduced Initial Franchise Fee ($40,000)] for each additional Swim School developed under the Area Development Agreement. Upon

Question 27

How does the initial franchise fee for a Goldfish Swim School in Item 5 compare to the ongoing fees listed in Item 6, and what are the consequences of not paying each on time?

Accepted Answer

[Item 5: INITIAL FEES] You pay us a $50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a $20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the $20,000 you pay as part of your Development Fee. The initial franchise fee is uniform. You will pay us a non-refundable Real Estate Fee in the amount of $2,500 when you sign the first Franchise Agreement related to your leasehold property. If you develop multiple Swim Schools, the Real Estate Fee will not be assessed on any Swim School after your first. The Real Estate Fee will cover our expenses related to your real estate and site selection, including providing certain information and services to you, such as demographic information, site criteria information, our attendance at meetings or calls with you and your real estate broker, our attendance at in person and telephonic conferences with landlords or local real estate brokers, our expenses related to site tours, and our access to certain real estate database information of potentially available properties. If you sign an Area Development Agreement, you must develop an agreed-upon number of Swim Schools within the Development Territory within a certain period of time (the "Development Schedule") and simultaneously execute the Franchise Agreement for your first Swim School. You must pay an Initial Franchise Fee for the Area Development Agreement based upon the number of Swim Schools that you develop in the Development Territory (the "Development Fee"). The Development Fee is equal to the Initial Franchise Fee for the first Swim School ($50,000) plus $20.000 [one-half of the reduced Initial Franchise Fee ($40,000)] for each additional Swim School developed under the Area Development Agreement. Upon [Item 6: OTHER FEES] --- - ³ Late fees begin from the date payment was due, but not received, or date of underpayment. --- [Item 22: CONTRACTS] The Company executes franchise agreements that establish the terms of its arrangement with franchisees. The franchise agreements require the franchisee to pay an initial fee of $50,000, with a reduction in the franchise fee for opening additional franchises. In addition to the initial investment fee, the franchisee pays the Company a monthly royalty fee of 6 percent of gross sales and a brand fund contribution of up to 2 percent of gross sales.

Question 28

How does the initial franchise fee for a Goldfish Swim School in Item 5 compare to the ongoing fees listed in Item 6, and what are the payment terms for each?

Accepted Answer

The Company executes franchise agreements that establish the terms of its arrangement with franchisees. The franchise agreements require the franchisee to pay an initial fee of $50,000, with a reduction in the franchise fee for opening additional franchises. In addition to the initial investment fee, the franchisee pays the Company a monthly royalty fee of 6 percent of gross sales and a brand fund contribution of up to 2 percent of gross sales.

You pay us a $50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a $20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the $20,000 you pay as part of your Development Fee. The initial franchise fee is uniform.

We will refund 25% of the franchise fee you paid if we terminate the franchise for your failure to select a site within 180 days, or your failure to successfully complete the initial training program to our satisfaction. We do not give refunds under other circumstances. (For further information about termination of the franchise, see ITEM 17.)

You will pay us a non-refundable Real Estate Fee in the amount of $2,500 when you sign the first Franchise Agreement related to your leasehold property.

We may require that all fees payable to us be paid through an electronic depository transfer account.

Question 29

How does the initial franchise fee for a Goldfish Swim School in Item 5 compare to the territory granted in Item 12?

Accepted Answer

You pay us a $50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a $20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the $20,000 you pay as part of your Development Fee. The initial franchise fee is uniform.

If you sign an Area Development Agreement, the Area Development Agreement gives you the right to establish an agreed-upon number of franchised swim schools in a specified geographic area, subject to certain excluded areas described below ("Territory"). We describe your Territory by boundary streets, highways or other recognizable demarcations and delineate it on a map or written description as attached as part of the Area Development Agreement. If you are not in default under the Area Development Agreement, we will not establish or franchise anyone else to establish a swim school in your Territory during the term of the Area Development Agreement.

The Franchise Agreement licenses you to operate one Franchised Swim School at a specific site within the designated area. Territorial rights are granted under the Franchise Agreement include a "designated area," which is described below. The designated area that you receive will be described and depicted in a map attached to or included in the Franchise Agreement. You will operate one swim school in your designated area and must receive our permission before relocating. We determine the boundaries of the area based on a variety of factors, including general population, population size of children under the age of 12 years, proximity to competitors, proximity to other franchisees and natural, physical or political boundaries. As long as you are not in default under the Franchise Agreement, we will not establish other franchised or company-owned swim schools using the System with a physical location in your designated area.

Question 30

How does the initial franchise fee for a Goldfish Swim School in Item 5 relate to the estimated initial investment detailed in Item 7?

Accepted Answer

#### NOTES ¹ Franchise Fee. The franchise fee and its refund policy are described in greater detail in ITEM 5.

Question 31

How does the initial franchise fee refund policy for Goldfish Swim School in Item 5 relate to the approved supplier requirements in Item 8?

Accepted Answer

You pay us a $50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a $20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the $20,000 you pay as part of your Development Fee. The initial franchise fee is uniform.

We will refund 25% of the franchise fee you paid if we terminate the franchise for your failure to select a site within 180 days, or your failure to successfully complete the initial training program to our satisfaction. We do not give refunds under other circumstances. (For further information about termination of the franchise, see ITEM 17.)

You will pay us a non-refundable Real Estate Fee in the amount of $2,500 when you sign the first Franchise Agreement related to your leasehold property. If you develop multiple Swim Schools, the Real Estate Fee will not be assessed on any Swim School after your first. The Real Estate Fee will cover our expenses related to your real estate and site selection, including providing certain information and services to you, such as demographic information, site criteria information, our attendance at meetings or calls with you and your real estate broker, our attendance at in person and telephonic conferences with landlords or local real estate brokers, our expenses related to site tours, and our access to certain real estate database information of potentially available properties.

You must purchase all of your supplies ("Approved Supplies") including without limitation your furniture, fixtures, equipment, including computer equipment, inventory, and signage under specifications in the Goldfish Swim School Confidential Brand Standards Manual ("Confidential Brand Standards Manual") and through suppliers approved by us ("Approved Suppliers"). You will be required to use Approved Suppliers to perform certain services on your behalf in connection with your Franchised Swim School. We communicate our standards and specifications to you when we evaluate your proposed location for the franchised swim school during training, before you conduct your initial advertising expense, during on-site opening assistance, during periodic visits to your franchise location and through the Confidential Brand Standards Manual (including periodic bulletins). We will periodically issue new standards and specifications (if any) through written notices. We have created standards and specifications for the development of your franchised swim school.

It is our experience that the amounts you pay for furniture, fixtures or equipment are nonrefundable; however, you should consult with your supplier. Generally, the factors determining whether furniture, fixtures and equipment are refundable typically include the condition of the items, level of use, length of time of possession and other variables. You must purchase general office supplies including stationery, business cards and typical office equipment. It is our experience that the amounts you pay for general office equipment and supplies are nonrefundable; however, you should consult with your supplier. Generally, the factors determining whether office equipment and supplies are refundable typically include the condition of the items at time of return, level of use and length of time of possession. This range includes the cost of all signage used in the franchised swim school. The signage requirements and costs will vary based upon the size and location of the franchised swim school, local zoning requirements, landlord requirements and local wage rates for installation. The amounts you pay for signage are typically non-refundable. You should inquire about the return and refund policy of the suppliers at or before the time of purchase. You must purchase an initial inventory of swim lesson equipment, merchandise, vending items and birthday party supplies, branded apparel, and promotional products for use in the operation of the franchised swim school. Some of these inventory items include goggles, barbells, swim suits and diapers, food and beverage items, balloons, and birthday party centerpieces. It is our experience that the amounts you pay for inventory items are nonrefundable; however, you should consult with your supplier. Generally, the factors determining whether inventory items are refundable typically include the condition of the items at time of return, level of use, and length of time of possession and other factors. You must purchase computer equipment and software described in more detail in ITEM 8 and 11. Amounts you pay for the computer equipment and software are nonrefundable, or if refundable, you may be subject to a "re-stocking" fee. You should inquire about the return and refund policy of the suppliers at or before the time of purchasing.

You must spend an amount we require for your initial advertising expense from the time prior to the opening of your Franchised Swim School through the first 3 months of your operations, which amount includes without limitation, all marketing, advertising, promotion, and the grand opening party. We determine the minimum based on our assessment of your advertising costs in your swim school market. You may choose to spend more. See ITEM 11. Factors that may affect the actual amount you spend include but are not limited to local media costs, site selection of the Franchised Swim School, competition and brand awareness, time of year, customer demographics in the surrounding area, and whether your

Franchised Swim School will be the first Goldfish Swim School® in the market. The amounts you spend for initial advertising expense are typically non-refundable. You should inquire about the return and refund policy of the suppliers at or before the time of purchasing. We require that you hire at your cost our Approved Suppliers to provide local marketing services and branding advertising services.

Question 32

How does the initial franchise fee refund policy for Goldfish Swim School in Item 5 relate to the assistance provided by the franchisor in Item 11?

Accepted Answer

Item.

#### **ITEM 5. INITIAL FEES**

You pay us a \$50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a \$20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the \$20,000 you pay as part of your Development Fee. The initial franchise fee is uniform.

We will refund 25% of the franchise fee you paid if we terminate the franchise for your failure to select a site within 180 days, or your failure to successfully complete the initial training program to our satisfaction. We do not give refunds under other circumstances. (For further information about terminati

Question 33

How does the initial franchise fee refund policy for Goldfish Swim School in Item 5 relate to the franchisee's obligations in Item 9?

Accepted Answer

Item.

#### **ITEM 5. INITIAL FEES**

You pay us a \$50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a \$20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the \$20,000 you pay as part of your Development Fee. The initial franchise fee is uniform.

We will refund 25% of the franchise fee you paid if we terminate the franchise for your failure to select a site within 180 days, or your failure to successfully complete the initial training program to our satisfaction. We do not give refunds under other circumstances. (For further information about termination of the franchise, see ITEM 17.)

You will pay us a non-refundable Real Estate Fee in the amount of \$2,500 when you sign the first Franchise Agreement related to your leasehold property. If you develop multiple Swim Schools, the Real Estate Fee will not be assessed on any Swim School after your first. The Real Estate Fee will cover our expenses related to your real estate and site selection, including providing certain information and services to you, such as demographic information, site criteria information, our attendance at meetings or calls with you and your real estate broker, our attendance at in person and telephonic conferences with landlords or local real estate brokers, our expenses related to site tours, and our access to certain real estate database information of potentially available properties.

If you sign an Area Development Agreement, you must develop an agreed-upon number of Swim Schools within the Development Territory within a certain period of time (the "Development Schedule") and simultaneously execute the Franchise Agreement for your first Swim School. You must pay an Initial Franchise Fee for the Area Development Agreement based upon the number of Swim Schools that you develop in the Development Territory (the "Development Fee"). The Development Fee is equal to the Initial Franchise Fee for the first Swim School (\$50,000) plus \$20.000 [one-half of the reduced Initial Franchise Fee (\$40,000)] for each additional Swim School developed under th

Question 34

How does the initial franchise fee refund policy for Goldfish Swim School in Item 5 relate to the ongoing fees listed in Item 6?

Accepted Answer

Item.

#### **ITEM 5. INITIAL FEES**

You pay us a \$50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a \$20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the \$20,000 you pay as part of your Development Fee. The initial franchise fee is uniform.

We will refund 25% of the franchise fee you paid if we terminate the franchise for your failure to select a site within 180 days, or your failure to successfully complete the initial training program to our satisfaction. We do not give refunds under other circumstances. (For further information about termination of the franchise, see ITEM 17.)

You will pay us a non-refundable Real Estate Fee in the amount of \$2,500 when you sign the first Franchise Agreement related to your leasehold property. If you develop multiple Swim Schools, the Real Estate Fee will not be assessed on any Swim School after your first. The Real Estate Fee will cover our expenses related to your real estate and site selection, including providing certain information and services to you, such as demographic information, site criteria information, our attendance at meetings or calls with you and your real estate broker, our attendance at in person and telephonic conferences with landlords or local real estate brokers, our expenses related to site tours, and our access to certain real estate database information of

Question 35

How does the initial franchise fee refund policy for Goldfish Swim School in Item 5 relate to the territory granted in Item 12?

Accepted Answer

Item.

#### **ITEM 5. INITIAL FEES**

You pay us a \$50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a \$20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the \$20,000 you pay as part of your Development Fee. The initial franchise fee is uniform.

We will refund 25% of the franchise fee you paid if we terminate the franchise for your failure to select a site within 180 days, or your failure to successfully complete the initial training program to our satisfaction. We do not give refunds under other circumstances. (For further information about terminati

Question 36

How does the initial franchise fee refund policy for Goldfish Swim School in Item 5 relate to the trademark usage described in Item 13?

Accepted Answer

* You are authorized to use the word "Bubbles" in connection with live performances of our mascot. You are also authorized to distribute approved course and educational materials in the fields of swimming, swimming instruction, and water safety in connection with those live mascot performances. You are prohibited from using the word "Bubbles" in connection with your swimming instruction services.

We do not have federal registrations for some of our principal trademarks, including those identified in the table by the ™ symbol and the word "Sloan," which is registered on the USPTO's Supplemental Register. Therefore, the trademarks that are not registered do not have as many legal benefits and rights as a federally-registered trademark. If our right to use those trademarks is challenged, you may have to change to an alternative trademark, which may increase your expenses.

Currently, we know of no effective material determinations of the USPTO, trademark trial and appeal board, the trademark administrator of the State of Michigan or any court; pending infringement, opposition or cancellation; or pending material litigation involving the Marks. We have filed or intend to file all required affidavits and renewal declarations.

On August 16, 2016, we entered into a trademark co-existence agreement with Pepperidge Farm, Incorporated that limits your ability to use the trademarks "Goldfish" and

"Goldfish Swim School" in association with food or beverage products. More particularly, you cannot use or sell "Goldfish" or "Goldfish Swim School" branded food or beverage products. However, you may use and sell "Goldfish Swim School" branded bottled water so long as such use and sales take place at your franchise location. The duration of the co-existence agreement is perpetual unless either party legally abandons and no longer uses their respective trademark for a period of three (3) years. Other than the above, there are no agreements currently in effect that significantly limit our rights to use or license the use of the Marks in any manner material to the franchise.

We know of no infringing or prior superior uses that could materially affect the use of the Marks in any state in which the franchised swim school is to be located.

Question 37

How do the obligations of the franchisee, as listed in Item 9, relate to the standards and specifications for approved supplies outlined in Item 8 for a Goldfish Swim School franchise?

Accepted Answer

UCTS**

#### Standards and Specifications

You must purchase all of your supplies ("Approved Supplies") including without limitation your furniture, fixtures, equipment, including computer equipment, inventory, and signage under specifications in the Goldfish Swim School Confidential Brand Standards Manual ("Confidential Brand Standards Manual") and through suppliers approved by us ("Approved Suppliers"). You will be required to use Approved Suppliers to perform certain services on your behalf in connection with your Franchised Swim School. We communicate our standards and specifications to you when we evaluate your proposed location for the franchised swim school during training, before you conduct your initial advertising expense, during on-site opening assistance, during periodic visits to your franchise location and through the Confidential Brand Standards Manual (including periodic bulletins). We will periodically issue new standards and specifications (if any) through written notices. We have created standards and specifications for the development of your franchised swim school. We have required vendors and suppliers as identified in the Confidential Brand Standards Manual and we reserve the right to designate required additional vendors or suppliers, or revoke the approval of suppliers as we determine in our discretion from time to time in the future, and will provide you notice through the Confidential Brand Standards Manual. At this time, neither we, nor any of our officers or directors or anyone listed in ITEM 2 has any ownership or other interest in any Approved Supplier. At this time, neither we, nor any of our affiliates are the only approved suppliers of any categories of Approved Supplies.

You must purchase the types of insurance and coverage amounts as we determine from time to time as provided in our Brand Standards Manual. At this time, we require that you purchase the following types of insurance coverage at the following limits of liability, but we reserve the change the types of insurance coverage and/or the levels of coverage in the future through our Brand Standards Manual: special form property coverage on all assets at 100% replacement cost basis without coinsurance; workers compensation at the statutory requirements; employer liability coverage in the minimum coverage of \$500,000; comprehensive general liability insurance in the amounts of \$1,000,000 per occurrence and \$2,000,000 in the aggregate;

business interruption insurance in amounts acceptable to us including loss of income and extra expense on a 12 month actual loss sustained basis without coinsurance; automobile liability insurance for owned or hired and non-owned auto with a combined single limit of at least \$1,000,000; umbrella liability insurance with a minimum limit of \$2,000,000; insurance as necessary to provide coverage under the indemnity provisions; registered participant accident coverage with a minimum limit of \$25,000 per person occurrence; and cyber security coverage in amounts we determine from time to time.

You must purchase and maintain a computer system with hardware and software programs we designate. Presently, you must purchase hardware and software for your computer system that must meet our requirements from an Approved Supplier. The Technology Fee you pay to us gives you access to a custom email domain, Customer Relationship Management software, and Customer Scheduling/Billing/Payment software that is specific to our business. As part of the Technology Fee, you receive up to 20 software licenses. You will also be required to purchase networking equipment and security software from an Approved Supplier. You must purchase and install business class internet that meets our Standards and Specifications outlined in our Brand Standards Manual. You must also install and run an approved malware software and firewall solution as outlined in our Brand Standards Manual. Your wifi access must meet our Standards and Specifications as outlined in our Brand Standards Manual.

We have a Designated Supplier for branded apparel and promotional products. We or our affiliate are a Designated Supplier for real estate services for which the Real Estate Fee is paid to us. We have the right to change Designated Suppliers or add new Designated Suppliers to our System in our discretion and you must comply with such standards at your sole cost and expense.

From time to time, we negotiate arrangements with suppliers for your benefit. For example, we expect to negotiate better prices with suppliers based upon larger volumes, and these price discounts would inure to your benefit.

Question 38

How do the ongoing fees for a Goldfish Swim School franchise, as listed in Item 6, relate to the approved supplier requirements in Item 8?

Accepted Answer

UCTS**

#### Standards and Specifications

You must purchase all of your supplies ("Approved Supplies") including without limitation your furniture, fixtures, equipment, including computer equipment, inventory, and signage under specifications in the Goldfish Swim School Confidential Brand Standards Manual ("Confidential Brand Standards Manual") and through suppliers approved by us ("Approved Suppliers"). You will be required to use Approved Suppliers to perform certain services on your behalf in connection with your Franchised Swim School. We communicate our standards and specifications to you when we evaluate your proposed location for the franchised swim school during training, before you conduct your initial advertising expense, during on-site opening assistance, during periodic visits to your franchise location and through the Confidential Brand Standards Manual (including periodic bulletins). We will periodically issue new standards and specifications (if any) through written notices. We have created standards and specifications for the development of your franchised swim school. We have required vendors and suppliers as identified in the Confidential Brand Standards Manual and we reserve the right to designate required additional vendors or suppliers, or revoke the approval of suppliers as we determine in our discretion from time to time in the future, and will provide you notice through the Confidential Brand Standards Manual. At this time, neither we, nor any of our officers or directors or anyone listed in ITEM 2 has any ownership or other interest in any Approved Supplier. At this time, neither we, nor any of our affiliates are the only approved suppliers of any categories of Approved Supplies.

You must purchase the types of insurance and coverage amounts as we determine from time to time as provided in our Brand Standards Manual. At this time, we require that you purchase the following types of insurance coverage at the following limits of liability, but we reserve the change the types of insurance coverage and/or the levels of coverage in the future through our Brand Standards Manual: special form property coverage on all assets at 100% replacement cost basis without coinsurance; workers compensation at the statutory requirements; employer liability coverage in the minimum coverage of \$500,000; comprehensive general liability insurance in the amounts of \$1,000,000 per occ

Question 39

How do the ongoing fees for a Goldfish Swim School franchise, as listed in Item 6, relate to the assistance provided by the franchisor 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, we are not required to provide you with any assistance**.

- A. Before you open your franchised swim school, we will:
- 1. provide you with our criteria for site selection and evaluate sites you propose for the location of the franchised swim school, which include, without limitation, general population and income levels, population size of children under the age of 9, proximity to competitors, and the like. Our review process is approximately 30 days. (Sections 2.3 and 5.1)
- 2. designate your designated area (area of primary responsibility). (Section 2.5; See also ITEM 12)
- 3. review and accept your lease or purchase agreement for the approved site for the franchised swim school. (Section 5.3)
- 4. provide you with specifications for remodeling and equipping the approved location along with a list of required supplies, equipment and improvements that you must purchase and install. (Section 5.4)

- 5. provide initial training to the Control Person, or 1 or more owners of yours as we determine, the Designated Manager, and at least 1 other required manager (as we designate in our discretion).

These parties must be present for the complete training period, successfully complete the training to our satisfaction.

This training includes a shallow water attendant certificate, which certifies you in CPR (cardiopulmonary resuscitation), First Aid, AED (automated external defibrillator), and also provides a lifeguarding certification for shallow water pools.

Other certifications like CPO (certified pool operations) may be required, but not provided during this training period.

This training is described in detail later in this ITEM. (Section 8.1).

If the above referenced certifications are not provided during initial training, you must obtain such certifications prior to the opening of your Franchised Swim School.

- 6. provide to you on-site assistance and guidance by 1 of our representatives for no more than 3 days for your first swim school and 1 day for your or your affiliate's second swim school, to assist you with any questions you may have in opening and operating the franchised swim school.

The specific number of days will be determined by us in our discretion, provided, however, that we will provide you with no on-site opening assistance for your third swim school or thereafter. (Section 8.2)

- 7. provide you with an Approved Supplies List and an Approved Suppliers List to provide you the goods and services necessary to operate the franchised swim school. (Section 13.1)

- 8. provide to you, on loan, one copy of the Goldfish Swim School Confidential Brand Standards Manual or provide you with access to an electronic copy of the Confidential Brand Standards Manual.

The approximate total number of pages in the Confidential Brand Standards Manual as of the date of this Disclosure Document is 227.

The Table of Contents of the Confidential Brand Standards Manual, along with number of pages devoted to each section, is included as Exhibit E to this Disclosure Document. (Section 9.1).

- 9.

Provide for an approved date for opening.

- B.

After the opening of the franchised swim school, we will:

- 1. periodically advise you and offer general guidance to you by telephone, email or other electronic communication, newsletters and other methods.

Our guidance is based on our and our Affiliate's knowledge and experience.

We offer you advice and guidance on a variety of business matters, including operational methods, accounting procedures, authorized services or products and marketing and sales strategies. (Section 14.1)

Our guidance is based on our and our Affiliate's knowledge and experience.

We offer you advice and guidance on a variety of business matters, including operational methods, accounting procedures, authorized services or products and marketing and sales strategies. (Section 14.1)

- 2. make periodic visits to the franchised swim school to provide you with consultation, assistance and guidance in various aspects of the operation and management of the franchised swim school. We will prepare a written report identifying areas where you are failing to meet the standards of the System and suggesting changes or improvements in the operations of the franchised swim school and detailing deficiencies that become evident as a result of a visit. You will have 14 days to implement the changes required to meet the standards of the System and your failure to do so may cause you to be found in default of your Franchise Agreement. (Section 14.2)
- 3. make available to you operations assistance and ongoing training as we think necessary. (Sections 8.2 and 8.5) Ongoing training programs are described later in this ITEM and in ITEM 6.
- 4. approve forms of advertising materials you will use for local advertising, initial advertising expense and cooperative advertising. (Section 11.2) Our advertising programs are described later in this ITEM.
- 5. provide you with modifications to the Confidential Brand Standards Manual as they are made available to franchisees. (Section 9.2) The Confidential Brand Standards Manual is described in ITEM 14.

#### C. Advertising and Promotion

During the period of time prior to opening your franchised swim school through the first 3 months of operations, you must spend an amount we require (between $30,000 and $70,000) on initial advertising expenses for advertising, marketing, and promotion. Your initial advertising expenses must include, but is not limited to digital, social, public relations, and print advertising; local marketing costs for events, partnerships, or other promotional efforts, and initial advertising expense. We will provide you with support, consulting, and guidance for conducting initial advertising expense, and we will help plan, review and approve the marketing programs and suppliers you use in your initial advertising expense. (Section 11.1; See also ITEM 9.f. and 9.o.) We may require you to hire an Approved Supplier to perform certain local marketing services.

Question 40

How do the ongoing fees for a Goldfish Swim School franchise, as listed in Item 6, relate to the estimated initial investment detailed in Item 7?

Accepted Answer

wim School Franchising, LLC and Subsidiary (the "Company") is engaged in franchising and support of franchisees in the establishment and operations of Goldfish Swim Schools. Franchise schools are located throughout the United States.

The Company executes franchise agreements that establish the terms of its arrangement with franchisees. The franchise agreements require the franchisee to pay an initial fee of \$50,000, with a reduction in the fran

Question 41

How do the ongoing fees for a Goldfish Swim School franchise, as listed in Item 6, relate to the initial franchise fee in Item 5?

Accepted Answer

wim School Franchising, LLC and Subsidiary (the "Company") is engaged in franchising and support of franchisees in the establishment and operations of Goldfish Swim Schools. Franchise schools are located throughout the United States.

The Company executes franchise agreements that establish the terms of its arrangement with franchisees. The franchise agreements require the franchisee to pay an initial fee of \$50,000, with a reduction in the fran

Question 42

How do the ongoing fees for a Goldfish Swim School franchise, as listed in Item 6, relate to the trademark usage described in Item 13?

Accepted Answer

[Item 13: TRADEMARKS]

You receive the right to operate your swim school under the name, Goldfish Swim School®, which is the primary Mark used to identify our System. You may also use any other current or future Marks to operate your franchised swim school that we designate, including the logo on the front of this Disclosure Document and the service mark listed below. By "Mark," we mean any trade name, trademark, service mark or logo used to identify your business. We have the following registered Marks and pending applications on the U.S. Patent and Trademark Office ("USPTO") Principal and Supplemental Registers:

[Item 1: THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS AND AFFILIATES]

We franchise the right to operate a swim school that provides specialized quality swim instruction and superior customer service to its clients. The franchise aims to service local markets by offering group and private swim lessons as well as birthday parties, open swim times, swim clinics and many other aquatic activities to children aged 4 months to 12 years of age in a fun and colorful environment. The franchise will also service its clients by offering a snack bar and retail area. The franchise or franchised swim school does business under the trade name, Goldfish Swim School®, and also uses our other related service marks, trademarks or logos (our "Marks").

[Item 23: RECEIPTS]

- 17.1.2 cease to use the Trade Secrets, Confidential Information, the System and the Marks including, without limitation, all signs, slogans, symbols, logos, advertising materials, stationery, forms and any other items which display or are associated with the Marks;
- 17.1.3 take such action as may be necessary to cancel or assign to Franchisor, at Franchisor's option, any assumed name or equivalent registration filed with state, city or county authorities which contains the name "Goldfish Swim School®" or any other Mark, and Franchisee shall furnish Franchisor with evidence satisfactory to Franchisor of compliance with this obligation within thirty (30) days after termination or expiration of this Agreement;

[Item 13: TRADEMARKS]

You must immediately notify us when you learn about an infringement of, or challenge to your use of, any Mark, or any claim by any person of any rights in any Marks, and you must not communicate with any person other than us and our counsel regarding any infringements, challenges or claims unless you are legally required to do so, however, you may communicate with your own counsel at your own expense. We will take the action we think appropriate in these situations; we have exclusive control over any settlement or proceeding concerning any Mark. You must take any actions that, in the opinion of our counsel, may be advisable to protect and maintain our interests in any proceeding or to otherwise protect and maintain our interests in the Marks.

While we are not required to defend you against a claim arising from your use of our Marks, we will reimburse you for all of your expenses reasonably incurred in any legal proceeding disputing your authorized use of any Mark, but only if you notify us of the proceeding in a timely manner and you have complied with our directions with regard to the proceeding. We have the right to control the defense and settlement of any proceeding. We will not reimburse you for your expenses and legal fees for separate, independent legal counsel and for expenses in removing signage or discontinuing your use of any Mark. We will not reimburse you for disputes where we challenge your use of a Mark.

If we require, you must modify or discontinue the use of any Mark and use other trademarks or service marks we designate. We do not have to reimburse you for modifying or discontinuing the use of a Mark or for substituting another trademark or service mark for a discontinued Mark. If we adopt and use new or modified Marks, you must add or replace equipment, signs, supplies and fixtures, and you must make other modifications we designate as necessary to adapt your franchised swim school for the new or modified Marks. We do not reimburse you for any loss of goodwill associated with a modified or discontinued Mark.

Question 43

How does the refund policy for the initial franchise fee for Goldfish Swim School in Item 5 relate to the termination conditions outlined in Item 9?

Accepted Answer

Item.

#### **ITEM 5. INITIAL FEES**

You pay us a \$50,000 lump sum franchise fee when you sign the Franchise Agreement. You pay us a \$20,000 lump sum franchise fee when you sign the Franchise Agreement in our then-current form for a second and subsequent franchise based on your Development Schedule under your Area Development Agreement in addition to the \$20,000 you pay as part of your Development Fee. The initial franchise fee is uniform.

We will refund 25% of the franchise fee you paid if we terminate the franchise for your failure to select a site within 180 days, or your failure to successfully complete the initial training program to our satisfaction. We do not give refunds under other circumstances. (For further information about terminati

Question 44

How does Goldfish Swim School's site selection assistance described in Item 11 relate to the territory restrictions outlined in Item 12?

Accepted Answer

lly own the premises and lease it to franchisees. If you have a potential site for the franchised swim school, you may propose the location for our consideration. We may consent to the site after we have evaluated it. If you do not have a proposed site, we will designate a geographic area in which you must locate the franchised swim school and we will furnish you with our general site selection criteria. We may provide sites in your designated area to review. You are solely responsible for locating and obtaining a site that meets our standards and criteria and that is acceptable to us. (Sections 2.3 and 5.1) You must use a real estate broker that we approve. We reserve the right to designate a Designated Supplier for real estate acquisition services.

The general site selection and evaluation criteria or factors that we consider in approving your site includes the condition of the premises, demographics of the surrounding area including population size of children under the age of 12, proximity to other Goldfish Swim Schools, proximity to competitive businesses, lease requirements, traffic patterns, visibility, vehicular and pedestrian access, proximity to major roads, available parking and overall suitability. We will provide you with written notice of our approval or disapproval of any proposed site within a reasonable time (usually 30 days) after receiving all requested information. If we cannot agree with you on a suitable site for the franchised swim school within 180 days after you sign the Franchise Agreement, we may terminate the Franchise Agreement. (Sections 5.1 and 5.2).

#### F. Typical Length of Time Before Operation

We estimate that the typical length of time between the signing of the Franchise Agreement and the opening of the franchise is 600 days. Factors that may affect your beginning operations include ability to secure permits, zoning and local ordinances, weather conditions and delays in installation of equipment and fixtures, satisfactory completion of our training programs

and your Designated Manager's or on-site general manager's (if different from the Designated Manager) successful completion of his/her CPR, first aid and lifeguard certifications. You must execute a lease or a binding purchase agreement for a site location within 180 days after signing the Area Development Agreement and/or Franchise Agreement, begin construction of your approved location within 330 days after signing the Area Development Agreement and/or Franchise Agreement, and open your franchised swim school and be operational within 600 days after signing the Franchise Agreement. (Sections 5.3, 5.4, 5.5, and 5.6). If you execute an Area Development Agreement, you are required to open additional franchised swim schools pursuant to the Development Schedule.

#### G. Training

1. Initial Training. We provide you an initial training program that covers material aspects of the operation of the Franchised Swim School and is provided to protect Franchisor's brand and the Trademarks and not to control the day-to-day operations of the Franchised Swim School business. The topics covered are listed in the chart below. This required training is offered by us on an as needed basis in part by a virtual platform and in part in person at our headquarters in Troy, Michigan, or other locations we designate at a mutually convenient time for you and us.

Question 45

How does the territory granted to a Goldfish Swim School franchisee in Item 12 relate to the assistance provided by the franchisor in Item 11?

Accepted Answer

You are not restricted from selling goods and services using the System to customers residing outside your designated area. There are no restrictions on your ability to advertise outside your territory, including engaging in mail order solicitations, direct mail programs, telemarketing, internet or television solicitation programs or use any other advertising media.

We reserve all rights not expressly granted in the Franchise Agreement or Area Development Agreement. For example, we or our affiliates may own, operate or authorize others to own or operate a Goldfish Swim School® outside your designated area and may operate other kinds of businesses under other marks within your designated area. We and our affiliates may conduct or authorize others to conduct any form of business at any location selling any type of product or service not offered under the Trademarks. We reserve the right to establish other channels of distribution for the sale of services and products including, without limitation, Internet sales or other direct marketing sales using our principal trademark or any trademarks other than our principal trademark. These activities may compete with your franchised swim school. We will not compensate you for any sales made in your area through an alternate channel of distribution. Unless you are advertising cooperatively with another franchisee, you may not advertise in any media primarily circulated within another franchisee's area of primary responsibility. With these reservations, you may face competition from other franchisees, from outlets that we own or from other channels of distribution or competitive brands that

Question 46

How does the territory granted to a Goldfish Swim School franchisee in Item 12 relate to the initial franchise fee in Item 5?

Accepted Answer

potentially available properties.

If you sign an Area Development Agreement, you must develop an agreed-upon number of Swim Schools within the Development Territory within a certain period of time (the "Development Schedule") and simultaneously execute the Franchise Agreement for your first Swim School. You must pay an Initial Franchise Fee for the Area Development Agreement based upon the number of Swim Schools that you develop in the Development Territory (the "Development Fee"). The Development Fee is equal to the Initial Franchise Fee for the first Swim School (\$50,000) plus \$20.000 [one-half of the reduced Initial Franchise Fee (\$40,000)] for each additional Swim School developed under th

Question 47

How does the territory granted to a Goldfish Swim School franchisee in Item 12 relate to the initial franchise fee refund policy in Item 5?

Accepted Answer

We will refund 25% of the franchise fee you paid if we terminate the franchise for your failure to select a site within 180 days, or your failure to successfully complete the initial training program to our satisfaction. We do not give refunds under other circumstances. (For further information about termination of the franchise, see ITEM 17.)

Question 48

How does the territory granted to a Goldfish Swim School franchisee in Item 12 relate to the ongoing fees listed in Item 6?

Accepted Answer

alendar year. (Section 8.5)

#### **ITEM 12. TERRITORY**

If you sign an Area Development Agreement, the Area Development Agreement gives you the right to establish an agreed-upon number of franchised swim schools in a specified geographic area, subject to certain excluded areas described below ("Territory"). We describe your Territory by boundary streets, highways or other recognizable demarcations and delineate it on a map or written description as attached as part of the Area Development Agreement. If you are not in default under the Area Development Agreement, we will not establish or franchise anyone else to establish a swim school in your Territory during the term of the Area Development Agreement. We can terminate or modify your rights in the Territory if you do not comply with the Area Development Agreement or any other agreement you have with us. If we terminate or modify your territorial rights under the Area Development Agreement or your Area Development Agreement expires or terminates, you shall continue to have any approved territory rights you have under any individual Franchise Agreement that you signed for a particular Franchised Swim School. You receive no minimum territory. Continuation of your territorial

exclusivity is not dependent upon achieving certain sales volume, market penetration, or other contingency. You will receive an exclusive territory.

Question 49

How does the territory granted to a Goldfish Swim School franchisee in Item 12 relate to the site selection criteria provided by the franchisor in Item 11?

Accepted Answer

ept or not accept a proposed location based on such factors as it deems appropriate, including, without limitation, the condition of the premises, demographics of the surrounding area including population size of adolescents, proximity to other Goldfish Swim Schools, proximity to Competitive Businesses, lease requirements, traffic patterns, visibility, vehicular and pedestrian access, proximity to major roads, available parking and overall suitability. Franchisee shall not locate the Franchised Swim School on a selected site without the prior written acceptance of Franchisor. While Franchisee's proposed location must be within the Designated Territory, in no event does this mean that Franchisor will approve any proposed location that is within the Designated Territory. Franchisor's right to accept or reject a proposed location is based on its then existing site criteria as outlined in this Franchise Agreement and/or Franchisor's Brand Standards Manual, which may include, but not be limited to, proximity to a designated location within the Designated Territory and the ability of Franchisor or other franchisees of Franchisor to develop locations outside the Designated Territory. Franchisor does not represent that it, or any of its Affiliate, owners, employees or agents, have special expertise in selecting sites. Neither Franchisor's assistance nor acceptance is intended to indicate or indicates that the Franchised Swim School will be profitable or successful at the Approved Location. Franchisee is solely responsible for identifying the Approved Location.

Question 50

How does the territory granted to a Goldfish Swim School franchisee in Item 12 relate to the trademark usage described in Item 13?

Accepted Answer

The Franchise Agreement licenses you to operate one Franchised Swim School at a specific site within the designated area. Territorial rights are granted under the Franchise Agreement include a "designated area," which is described below. The designated area that you receive will be described and depicted in a map attached to or included in the Franchise Agreement. You will operate one swim school in your designated area and must receive our permission before relocating. We determine the boundaries of the area based on a variety of factors, including general population, population size of children under the age of 12 years, proximity to competitors, proximity to other franchisees and natural, physical or political boundaries. As long as you are not in default under the Franchise Agreement, we will not establish other franchised or company-owned swim schools using the System with a physical location in your designated area. You receive no minimum territory. Continuation of your territorial exclusivity is not dependent upon achieving certain sales volume, market penetration, or other contingency. The territory may only be altered at the renewal of your franchise agreement. You will receive an exclusive territory.

You are not restricted from selling goods and services using the System to customers residing outside your designated area. There are no restrictions on your ability to advertise outside your territory, including engaging in mail order solicitations, direct mail programs, telemarketing, internet or television solicitation programs or use any other advertising media.

We reserve all rights not expressly granted in the Franchise Agreement or Area Development Agreement. For example, we or our affiliates may own, operate or authorize others to own or operate a Goldfish Swim School® outside your designated area and may operate other kinds of businesses under other marks within your designated area. We and our affiliates may conduct or authorize others to conduct any form of business at any location selling any type of product or service not offered under the Trademarks. We reserve the right to establish other channels of distribution for the sale of services and products including, without limitation, Internet sales or other direct marketing sales using our principal trademark or any trademarks other than our principal trademark. These activities may compete with your franchised swim school. We will not compensate you for any sales made in your area through an alternate channel of distribution. Unless you are advertising cooperatively with another franchisee, you may not advertise in any media primarily circulated within another franchisee's area of primary responsibility. With these reservations, you may face competition from other franchisees, from outlets that we own or from other channels of distribution or competitive brands that we control.

Question 51

How does the Goldfish Swim School's trademark usage, as described in Item 13, relate to the assistance provided by the franchisor in Item 11?

Accepted Answer

- 7. provide you with an Approved Supplies List and an Approved Suppliers List to provide you the goods and services necessary to operate the franchised swim school. (Section 13.1)

- 8. provide to you, on loan, one copy of the Goldfish Swim School Confidential Brand Standards Manual or provide you with access to an electronic copy of the Confidential Brand Standards Manual.

We retain the sole right to market on the Internet, including the use of websites, domain names, uniform resource locators, keywords, linking, search engines (and search engine optimization techniques), banner ads, meta-tags, marketing, auction sites, e-commerce and co-branding arrangements. You may be requested to provide content for our Internet marketing and you must follow our intranet and Internet usage rules, policies and requirements. We retain the sole right to use the Marks on the Internet, including on websites, as domain names, directory addresses, search terms and meta-tags, and in connection with linking, marketing, co-branding and other arrangements. We retain the sole right to approve any linking to, or other use of, the Goldfish Swim School website. (Section 11.5; See also ITEM 9.o.)

Question 52

How does the Goldfish Swim School's trademark usage, as described in Item 13, relate to the estimated initial investment detailed in Item 7?

Accepted Answer

⁸ Initial Advertising Expense. You must spend an amount we require for your initial advertising expense from the time prior to the opening of your Franchised Swim School through the first 3 months of your operations, which amount includes without limitation, all marketing, advertising, promotion, and the grand opening party. We determine the minimum based on our assessment of your advertising costs in your swim school market. You may choose to spend more. See ITEM 11. Factors that may affect the actual amount you spend include but are not limited to local media costs, site selection of the Franchised Swim School, competition and brand awareness, time of year, customer demographics in the surrounding area, and whether your Franchised Swim School will be the first Goldfish Swim School® in the market. The amounts you spend for initial advertising expense are typically non-refundable. You should inquire about the return and refund policy of the suppliers at or before the time of purchasing. We require that you hire at your cost our Approved Suppliers to provide local marketing services and branding advertising services. [Item 13: TRADEMARKS] You receive the right to operate your swim school under the name, Goldfish Swim School®, which is the primary Mark used to identify our System. You may also use any other current or future Marks to operate your franchised swim school that we designate, including the logo on the front of this Disclosure Document and the service mark listed below. By "Mark," we mean any trade name, trademark, service mark or logo used to identify your business. We have the following registered Marks and pending applications on the U.S. Patent and Trademark Office ("USPTO") Principal and Supplemental Registers: We do not have federal registrations for some of our principal trademarks, including those identified in the table by the ™ symbol and the word "Sloan," which is registered on the USPTO's Supplemental Register. Therefore, the trademarks that are not registered do not have as many legal benefits and rights as a federally-registered trademark. If our right to use those trademarks is challenged, you may have to change to an alternative trademark, which may increase your expenses. On August 16, 2016, we entered into a trademark co-existence agreement with Pepperidge Farm, Incorporated that limits your ability to use the trademarks "Goldfish" and "Goldfish Swim School" in association with food or beverage products. More particularly, you cannot use or sell "Goldfish" or "Goldfish Swim School" branded food or beverage products. However, you may use and sell "Goldfish Swim School" branded bottled water so long as such use and sales take place at your franchise location. The duration of the co-existence agreement is perpetual unless either party legally abandons and no longer uses their respective trademark for a period of three (3) years. Other than the above, there are no agreements currently in effect that significantly limit our rights to use or license the use of the Marks in any manner material to the franchise. This range includes the cost of all signage used in the franchised swim school. The signage requirements and costs will vary based upon the size and location of the franchised swim school, local zoning requirements, landlord requirements and local wage rates for installation. The amounts you pay for signage are typically non-refundable. You should inquire about the return and refund policy of the suppliers at or before the time of purchase.

Question 53

How does the Goldfish Swim School's trademark usage, as described in Item 13, relate to the franchisee's obligations listed in Item 9?

Accepted Answer

You receive the right to operate your swim school under the name, Goldfish Swim School®, which is the primary Mark used to identify our System. You may also use any other current or future Marks to operate your franchised swim school that we designate, including the logo on the front of this Disclosure Document and the service mark listed below. By "Mark," we mean any trade name, trademark, service mark or logo used to identify your business. We have the following registered Marks and pending applications on the U.S. Patent and Trademark Office ("USPTO") Principal and Supplemental Registers:

Question 54

How does the Goldfish Swim School's trademark usage, as described in Item 13, relate to the initial franchise fee in Item 5?

Accepted Answer

are no minimum sales quotas.

### **ITEM 13. TRADEMARKS**

You receive the right to operate your swim school under the name, Goldfish Swim School®, which is the primary Mark used to identify our System. You may also use any other current or future Marks to operate your franchised swim school that we designate, including the logo on the front of this Disclosure Document and the service mark listed below. By "Mark," we mean any trade name, trademark, service mark or logo used to identify your business. We have the following registered Marks and pending applications on the U.S. Patent and Trademark Office ("USPTO") Principal and Supplemental Registers:

| Mark                                                                 | Principal Or | Serial Number | Registration Number | Application Date | Registration Date |
|----------------------------------------------------------------------|-----------------|------------------|------------------------|---------------------|----------------------|
|                                                                      | Supplemental    |                  |                        |                     |                      |
| ® | Principal |  | 3318156 |  | 10/23/2007 |
| (design plus words, |  |  |  |  |  |
| letters, and/or numbers) |  |  |  |  |  |
| GOLDFISH SWIM | Principal |  | 3605933 |  | 4/14/2009 |
| SCHOOL® |  |  |  |  |  |
| (standard character mark) |  |  |  |  |  |
| WHERE THE | Principal |  | 4613628 |  | 9/30/2014 |
| EXPERIENCE IS |  |  |  |  |  |
| GOLDEN!

Question 55

How does the Goldfish Swim School's trademark usage, as described in Item 13, relate to the ongoing fees listed in Item 6?

Accepted Answer

[Item 13: TRADEMARKS]

You receive the right to operate your swim school under the name, Goldfish Swim School®, which is the primary Mark used to identify our System. You may also use any other current or future Marks to operate your franchised swim school that we designate, including the logo on the front of this Disclosure Document and the service mark listed below. By "Mark," we mean any trade name, trademark, service mark or logo used to identify your business. We have the following registered Marks and pending applications on the U.S. Patent and Trademark Office ("USPTO") Principal and Supplemental Registers:

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[Item 23: RECEIPTS]

#### **17.1 Actions to be Taken**

Except as otherwise provided herein, upon termination or expiration, this Agreement and all rights granted hereunder to Franchisee shall terminate and Franchisee shall:

- 17.1.1 immediately cease to operate the Franchised Swim School and shall not thereafter, directly or indirectly, represent to the public or hold itself out as a present or former franchisee of Franchisor;
- 17.1.2 cease to use the Trade Secrets, Confidential Information, the System and the Marks including, without limitation, all signs, slogans, symbols, logos, advertising materials, stationery, forms and any other items which display or are associated with the Marks;
- 17.1.3 take such action as may be necessary to cancel or assign to Franchisor, at Franchisor's option, any assumed name or equivalent registration filed with state, city or county authorities which contains the name "Goldfish Swim School®" or any other Mark, and Franchisee shall furnish Franchisor with evidence satisfactory to Franchisor of compliance with this obligation within thirty (30) days after termination or expiration of this Agreement;

---

On August 16, 2016, we entered into a trademark co-existence agreement with Pepperidge Farm, Incorporated that limits your ability to use the trademarks "Goldfish" and

"Goldfish Swim School" in association with food or beverage products. More particularly, you cannot use or sell "Goldfish" or "Goldfish Swim School" branded food or beverage products. However, you may use and sell "Goldfish Swim School" branded bottled water so long as such use and sales take place at your franchise location. The duration of the co-existence agreement is perpetual unless either party legally abandons and no longer uses their respective trademark for a period of three (3) years. Other than the above, there are no agreements currently in effect that significantly limit our rights to use or license the use of the Marks in any manner material to the franchise.

Question 56

How does the Goldfish Swim School's trademark usage, as described in Item 13, relate to the restrictions on suppliers outlined in Item 8?

Accepted Answer

You receive the right to operate your swim school under the name, Goldfish Swim School®, which is the primary Mark used to identify our System. You may also use any other current or future Marks to operate your franchised swim school that we designate, including the logo on the front of this Disclosure Document and the service mark listed below. By "Mark," we mean any trade name, trademark, service mark or logo used to identify your business. We have the following registered Marks and pending applications on the U.S. Patent and Trademark Office ("USPTO") Principal and Supplemental Registers:

You must purchase all of your supplies ("Approved Supplies") including without limitation your furniture, fixtures, equipment, including computer equipment, inventory, and signage under specifications in the Goldfish Swim School Confidential Brand Standards Manual ("Confidential Brand Standards Manual") and through suppliers approved by us ("Approved Suppliers"). You will be required to use Approved Suppliers to perform certain services on your behalf in connection with your Franchised Swim School. We communicate our standards and specifications to you when we evaluate your proposed location for the franchised swim school during training, before you conduct your initial advertising expense, during on-site opening assistance, during periodic visits to your franchise location and through the Confidential Brand Standards Manual (including periodic bulletins). We will periodically issue new standards and specifications (if any) through written notices. We have created standards and specifications for the development of your franchised swim school. We have required vendors and suppliers as identified in the Confidential Brand Standards Manual and we reserve the right to designate required additional vendors or suppliers, or revoke the approval of suppliers as we determine in our discretion from time to time in the future, and will provide you notice through the Confidential Brand Standards Manual.

On August 16, 2016, we entered into a trademark co-existence agreement with Pepperidge Farm, Incorporated that limits your ability to use the trademarks "Goldfish" and

"Goldfish Swim School" in association with food or beverage products. More particularly, you cannot use or sell "Goldfish" or "Goldfish Swim School" branded food or beverage products. However, you may use and sell "Goldfish Swim School" branded bottled water so long as such use and sales take place at your franchise location.

Tenant is permitted to display those certain trademarks and service marks used in connection with the Goldfish Swim School franchise system (the "Goldfish Marks") on signage and throughout the interior and exterior of the Leased Premises, without Landlord's consent.

All such trademarks and service marks must be displayed in accordance with the standards, specifications, and quality control measures required by Franchisor.

Landlord shall in no manner whatsoever restrict Tenant's rights to use the Goldfish Marks.

Question 57

How does the use of trademarks for Goldfish Swim School, as described in Item 13, relate to the approved supplier requirements in Item 8?

Accepted Answer

UCTS**

#### Standards and Specifications

You must purchase all of your supplies ("Approved Supplies") including without limitation your furniture, fixtures, equipment, including computer equipment, inventory, and signage under specifications in the Goldfish Swim School Confidential Brand Standards Manual ("Confidential Brand Standards Manual") and through suppliers approved by us ("Approved Suppliers"). You will be required to use Approved Suppliers to perform certain services on your behalf in connection with your Franchised Swim School. We communicate our standards and specifications to you when we evaluate your proposed location for the franchised swim school during training, before you conduct your initial advertising expense, during on-site opening assistance, during periodic visits to your franchise location and through the Confidential Brand Standards Manual (including periodic bulletins). We will periodically issue new standards and specifications (if any) through written notices. We have created standards and specifications for the development of your franchised swim school. We have required vendors and suppliers as identified in the Confidential Brand Standards Manual and we reserve the right to designate required additional vendors or suppliers, or revoke the approval of suppliers as we determine in our discretion from time to time in the future, and will provide you notice through the Confidential Brand Standards Manual. At this time, neither we, nor any of our officers or directors or anyone listed in ITEM 2 has any ownership or other interest in any Approved Supplier. At this time, neither we, nor any of our affiliates are the only approved suppliers of any categories of Approved Supplies.

You must purchase the types of insurance and coverage amounts as we determine from time to time as provided in our Brand Standards Manual. At this time, we require that you purchase the following types of insurance coverage at the following limits of liability, but we reserve the change the types of insurance coverage and/or the levels of coverage in the future through our Brand Standards Manual: special form property coverage on all assets at 100% replacement cost basis without coinsurance; workers compensation at the statutory requirements; employer liability coverage in the minimum coverage of \$500,000; comprehensive general liability insurance in the amounts of \$1,000,000 per occurrence and \$2,000,000 in the aggregate;

Question 58

For the year ended December 31, 2024, what was the total amount of brand fund fees collected from Goldfish Swim School franchisees, and what was the total amount of brand fund expenses?

Accepted Answer

following year. The Company accrues all brand fund fees collected in excess of advertising expended. As of December 31, 2024, 2023, and 2022, cumulative advertising expended exceeded brand fund fees collected, and no liability was recognized.

Brand fund fees from the franchisees of \$7,107,549, \$6,322,770, and \$5,238,689 for 2024, 2023, and 2022, respectively, are included in net revenue in the accom

Source: Item 22 — CONTRACTS (FDD pages 76–77)

Question 59

Where must arbitration involving a Goldfish Swim School franchise purchased in North Dakota be held?

Accepted Answer

- Section 23.7 is amended to state that arbitration involving a Franchise purchased in North Dakota must be held either in a location mutually agreed upon prior to the arbitration, or if the parties cannot agree on a location, the arbitrator will determine the location.

Source: Item 23 — RECEIPTS (FDD pages 77–389)

Question 60

When must the Developer provide a certified copy of the list of Principals to Goldfish Swim School?

Accepted Answer

- (4) Developer shall maintain a current list of all Principals and deliver a certified copy thereof to us upon (i) any Transfer; or (ii) request.

Source: Item 22 — CONTRACTS (FDD pages 76–77)

Question 61

According to the Hawaii Franchise Investment Law, what happens if a provision in the Goldfish Swim School Franchise Agreement (specifically Sections 4.2, 16, and 18) is inconsistent with the law?

Accepted Answer

- 1. In recognition of the requirements of the Hawaii Franchise Investment Law, Hawaii Revised Statutes, Title 26, Chapter 482E *et. seq*, the Area Development Agreement for Goldfish Swim School Franchising, LLC is amended as follows:
  - The Hawaii Franchise Investment Law provides you rights concerning nonrenewal, termination and transfer of the Franchise Agreement. If the Agreement, and more specifically Sections 10 and 19 contain a provision that is inconsistent with the Hawaii Franchise Investment Law, the Hawaii Franchise Investment Law will control.

Source: Item 22 — CONTRACTS (FDD pages 76–77)

Question 62

According to the Illinois Attorney General's Office requirements, what happens if a provision in the Goldfish Swim School franchise agreement is inconsistent with the Illinois Franchise Disclosure Act paragraphs 705/19 and 705/20 regarding non-renewal and termination?

Accepted Answer

#### **ILLINOIS LAW MODIFICATIONS**

- 1. The Illinois Attorney General's Office requires that certain provisions contained in franchise documents be amended to be consistent with Illinois law, including the Franchise Disclosure Act of 1987, Ill. Rev. Stat. ch. 815 para. 705/1 - 705/44 (1994). To the extent that this Agreement contains provisions that are inconsistent with the following, such provisions are hereby amended:
- a. Illinois Franchise Disclosure Act paragraphs 705/19 and 705/20 provide rights to You concerning non-renewal and termination of this Agreement. If this Agreement contains a provision that is inconsistent with the Act, the Act will control.
- b. If this Agreement requires litigation to be conducted in a forum other than the State of Illinois, the requirement is void with respect to claims under the Illinois Franchise Disclosure Act. Any provision in the Franchise Agreement that designates jurisdiction or venue in a forum outside the State is void, provided that a Franchise Agreement may provide for arbitration in a forum outside of Illinois.
  - c. The law of the state of Illinois will control.
- d. If the Agreement requires a person to waive compliance with any provision Illinois law, that provision shall be deemed void.

Source: Item 22 — CONTRACTS (FDD pages 76–77)

Question 63

According to Indiana law modifications for Goldfish Swim School, what happens if the Area Development Agreement requires that it be governed by a state's law other than Indiana, and that law conflicts with the Indiana Deceptive Franchise Practices Act and the Indiana Franchises Act?

Accepted Answer

- f. If the Agreement requires that it be governed by a state's law, other than the State of Indiana, to the extent that such law conflicts with the Indiana Deceptive Franchise Practices Act and the Indiana Franchises Act, the Acts will control.

Source: Item 22 — CONTRACTS (FDD pages 76–77)

Question 64

According to Indiana law, under what conditions can Goldfish Swim School unilaterally terminate a franchise agreement?

Accepted Answer

# **ADDENDUM TO AREA DEVELOPMENT AGREEMENT FOR GOLDFISH SWIM SCHOOL FRANCHISING, LLC FOR THE STATE OF INDIANA**

- 2. No statement, questionnaire or acknowledgement signed or agreed to by a franchisee is connection with the commencement of the franchise relationship shall have the effect of: (i) waiving any claims under applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on behalf of the Franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
- 3. Each provision of this Amendment shall be effective only to the extent that the jurisdictional requirements of the Illinois Franchise Disclosure Act, with respect to each such provision, are met independent of this Amendment. This Amendment shall have no force or effect if such jurisdictional requirements are not met.

Amendment and be bound thereby. Amendment to the Agreement on, 20 IN WITNESS WHEREOF, the Developer on behalf of itself and its Principals acknowledges that it has read and understands the contents of this Amendment, that it has had the opportunity to obtain the advice of counsel, and that it intends to comply with this The parties have duly executed and delivered this GOLDFISH SWIM SCHOOL YOU FRANCHISING, LLC

Source: Item 22 — CONTRACTS (FDD pages 76–77)

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