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Startup cost notes

1

The typical size of a Batteries Plus Bulbs® Store ranges from 1,200 to 1,800 square feet. Historically, certain franchisees have developed Batteries Plus Bulbs® Stores of up to 1,800 square feet or more. For several items discussed below, your cost will increase as the number of square feet increases. The size of your Store is principally determined by requirements or restrictions that your landlord and appropriate municipality or zoning boards may impose, and availability and cost of leasable space. This Table reflects your estimated initial investment for a single Store operated under a Franchise Agreement that offers batteries, light bulbs, and related products as well as designated services. This information assumes that you will lease the premises for your Store.

2

Except where otherwise noted, all fees that you pay to us are non-refundable. Third party lessors, contractors and suppliers will decide if payments to them are refundable.

3

The Initial Franchise Fee paid is paid to us and is more fully described in Item 5. We also offer a discounted Initial Franchise Fee for franchisees committing to open two or three Stores, to certain existing franchisees and to qualified veterans, as more fully described in Item 5.

4

Although most franchisees lease the premises for their Store, a small number of franchisees will purchase the land and construct the building for their Store. The cost of purchasing unimproved land will vary depending on location, availability of utilities and other factors and cannot be estimated by us. The construction costs for the building also will vary significantly depending on many of the same factors mentioned above as well as the size of the building and the availability of financing. Due to these many factors and a lack of historical information on which to base an estimate, we cannot estimate the cost of the building.

5

Typical locations for your Store are smaller free-standing, multiple use and strip center locations. Assuming that you will lease the premises for your Store, you will need to make certain leasehold improvements to the leased premises to comply with our approved plans and specifications. Leasehold improvements include lighting, flooring and partition walls. We anticipate that you will negotiate the cost of leasehold improvements as part of your rental expense. The exact cost or impact on your rental expense will depend on several factors, including the condition of the premises, whether you elect to do more than the minimum required renovations, the landlord’s agreement to reimburse you for certain improvements, the size and location of the premises for your Store and other economic factors. Although we do not recommend that you purchase the land and building for your Store, you will incur significantly greater costs in developing your Store if you choose to do so. All construction materials and fixtures must comply with our specifications. Although we estimate that you will need to lease premises of approximately 1,200 to 1,800 square feet for a Store, you may need larger premises in some situations. We estimate that you may pay from $20 to $45 per square foot in the rental expense (including common area maintenance (CAM) and taxes) for your Store premises. The exact amount of rental expense will vary greatly, depending on the location of the Store premises, the portion of rent representing the value of leasehold improvements at the Store premises, local market conditions and other factors. You will incur greater start-up costs if you cannot negotiate the cost of leasehold improvements as part of your rental expense. You are responsible for any architectural plans that you may be required to submit.

6

This amount includes estimated expenses for test equipment, fixtures, and charging equipment. The cost of purchasing equipment may vary as a result of the characteristics of the Store site and the shipping distances from suppliers. You may purchase or lease approved brands and models of equipment and fixtures from any approved supplier.

7

This amount includes estimated expenses for interior and exterior Store signs. The cost of purchasing signs may vary as a result of the characteristics of the Store site, the number and size of the signs, and the shipping distances from suppliers. You may purchase or lease signage from any approved supplier.

8

You will need to purchase opening inventory that complies with our specifications and is purchased from approved suppliers. Our affiliate, Ascent, currently is an approved supplier (see Item 8). This amount does not reflect amounts needed to replenish inventory during the initial stage of operation or growth in inventory as Store Net Revenues grow.

9

You will need to purchase supplies and materials that comply with our specifications and are purchased from approved suppliers. We or our affiliate may be an approved supplier (see Item 8).

10

Prepaid insurance, the lease deposit and utility deposits may vary considerably, depending on the size and location of your Store. Deposits are generally refundable, but prepaid insurance payments are not.

11

The estimated range reflects the amount you pay for the Retail Management System software and hardware which we have selected for use in your Store and includes the computer access and Retail Management System development fees. (See Item 11.) The low end of this range excludes optional System peripherals (touch screen monitors, additional POS registers, etc.) and incremental System peripherals that will be required as Store Net Revenues increase. (See Item 11.)

12

You must pay us an Omni-Channel Program access fee at or around the time you open your Store for access to our Omni-Channel Program.

13

Training expenses include the cost of lodging, meals and travel expenses for one person attending the initial training program. As further described in Item 11, if you are a new franchisee opening your first Store, 2 individuals must participate in the device repair session of the initial training program. The estimated training expenses include the cost of lodging, meals and travel expenses for a second individual to attend this component of the initial training program.

14

Miscellaneous expenses include local permit and license fees, legal and accounting fees and opening advertising.

15

You must own or lease one delivery vehicle in each market area (as defined in Item 12) to deliver product to customers in operating your commercial accounts business. The lower amount assumes that you will lease a new or used vehicle, or will use a vehicle that you already own to make deliveries, while the higher estimate assumes that you will purchase a vehicle to make these deliveries. We currently recommend a late model, used Ford Transit or similar model van as a delivery vehicle.

16

This amount estimates the expenses you will incur during the first three months of Store
operations, including initial wages and fringe benefits, lease payments, occupancy costs and utilities. In providing this estimate, we have assumed no sales of product inventory during the first three-month period. As a result, the estimated amount does not reflect any revenue from the sale of product or corresponding (variable) costs associated with product sales (such as the cost of replenishing inventory). It does not include inventory costs beyond the opening inventory costs identified in the Table and does not include your compensation during this three month period. These amounts are estimates, and we cannot guarantee that you will not incur additional expenses in starting the business. Your costs will depend on factors such as local economic conditions, the prevailing wage rate, how much you follow our systems and procedures, and assumes that there is no external financing.

17

This total is an estimate of your pre-opening initial investment and the expenses you will incur during the first three months of Store operations. This total is based on our estimate of nationwide average costs and prevailing market conditions and our (including our predecessor’s) over 25 years of experience in the business. You should review this amount carefully with a business advisor before deciding to purchase the franchise. Your initial investment must include a minimum of $100,000 of personal cash or other liquid assets in the operation of each Store. These figures are estimates only and we cannot guarantee that you will not have additional expenses in starting or operating your Batteries Plus Bulbs® Store.

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