What is a 'Franchised Business' for Spray Net?

As previously disclosed, this Disclosure Document is for the right to own and operate a franchised Business utilizing our then-current Proprietary Marks and System (each, a "Franchised Business") under our form of franchise agreement included in this offering in Exhibit A (the "Franchise Agreement").

Each Franchised Business is authorized and required to actively promote, offer and provide our then-current spray painting /coating and the other initial Approved Services our new System franchisees may and must provide utilizing: (i) a mobile trailer cart that is outfitted and equipped with the equipment we specify as part of our then-current System standards, which we previously referred "Mobile Service Unit"; (ii) the paint, stain, coating and/or other inventory we specify or approve for use to complete a Client project (collectively, the "Approved Products"), some of which may be proprietary and/or branded with our Proprietary Marks (the "Proprietary Products"); and (iii) the System methodologies, directives, standards and specifications that are (a) found in our proprietary operations and other manuals (the "Manuals") or otherwise in writing, and/or (b) associated with the initial training you must attend and complete prior to commencing operation of your Franchised Business and any subsequent training.

We may update, supplement or otherwise modify the Approved Services that your Franchised Business may or must provide, including any "Ancillary Services" that you become eligible to provide once you have (a) been operating your Franchised Business in compliance with your Franchise Agreement for a period of at least six (6) months, and (b) otherwise demonstrated to us that you are capable of providing the initial Approved Services without a Client complaint or other issue.

Our standard franchise offering assumes and expects that you will initially launch and commence operations of your Franchised Business from a home office (the "Home Office"). We typically require that your Home Office (home office or otherwise) be located within your Territory, but we may waive that requirement on a case-by-case basis. Regardless, you must be permitted to park and/or store your Mobile Service Unit and the vehicle we approve to tow that unit and equipment (the "Approved Vehicle") at your Home Office.

Under your Franchise Agreement, you will be awarded a geographical area where you will be authorized and required to (a) actively promote, market and advertise your Franchised Business, and (b) offer and provide the Approved Services and Approved Products (your "Designated Territory").

We also offer, to qualified franchisees, the opportunity to develop multiple Designated Territories under the same Franchised Agreement. You will not sign a Multi-Unit Development Agreement or Area Development Agreement for the operation of a Spray-Net Franchised Business because you will only be operating a Spray-Net Franchised Business across multiple territories. To be eligible to develop multiple Designated Territories, you must agree to open between a minimum of 2 Designated Territories and a maximum of 3 Designated Territories.

Please note that any individual that you intend or expect to provide any of the Approved Services and Approved Products (each, a "SN Specialist") involving any of our trade secrets, patented intellectual property and/or other proprietary/confidential information (collectively, the "Confidential Information") must first (i) attend and complete the relevant components of our initial training program that we designate as necessary to provide the services or products at issue, (ii) provide you with a signed copy of confidentiality and non-disclosure agreement (prior to attending such training), and (iii) receive a written notice from us acknowledging successful completion of the training and detailing the specific Approved Services and/or Approved Products the individual is able to provide.

Our Parents, Predecessors and any Affiliates

Our parent company, Spray-Net International, Inc., ("SN International") is a Canadian corporation incorporated on February 3, 2016. SN International was originally incorporated under the name Spray-Net USA, Inc. but changed its name on August 16, 2016.

Our affiliate, Spray-Net Franchises Inc./Les Franchises Spray-Net Inc. ("SN Franchisor Canada") was incorporated on November 19, 2013 under the laws of Quebec and has a principal business address at 1490 De Coulomb Street, Boucherville, Quebec, Canada J4B 7M2. SN Franchisor Canada offers franchises in certain provinces in Canada similar to the Franchised Business. As of December 31, 2023, SN Franchisor Canada had 26 franchises (the "Existing CN Businesses") open and actively operating.

Our affiliate, Entretien Esthétique Extérieur: Spray-Net Inc. ("SN Quebec") was incorporated on March 15, 2010 under the laws of Quebec and has a principal business address at 1490 De Coulomb Street, Boucherville, Quebec, Canada J4B 7M2. SN Quebec operates a business similar to the Franchised Business in the Province of Quebec, Canada.

Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES (FDD pages 9–11)