Dear Potential Franchisee:………………………………………………………………………………………………………………ThankyousomuchforyourinterestinRealDealsonHomeDécor®.Aswehitourdecademarkthisyear,we’resoexcitedabouthowfarwe’vecomein10years,andevenmoreexcitedabouttheincredibledirectioninwhichwe’reheading.

• AnimportantpartofourjobasFranchisoristoconstantlykeepyourbusinessrelevant,andwe’vemadesomebigstepsbyopeningsixdaysaweek,MondaythruSaturday,andalsoRDBoutiquetoourmodel;andevolvingourlookandfeelwithanewwebsiteandsignage.

• Wearecommittedtostayingontopoftrendsbyworkingwithourseasonedpartnerstopredicttrendsandanticipatethem,ensuringthatyourinvestmentcontinuestogainvalueeachyear.

• Asyou’veseenfromourwebsite,ourapproachtoowningyourownShoppesellingdécorandfashionsistotallyunique.Wethinkourimportantuniquenesscomesfromincredibleownerswhouseoursystemtotakecareoftheircustomersandcommunitiesinextraordinaryways.

OurmissionistogivecustomersfabuloushomedécorandfashionsatthefairestpricebygivingourOwnersaprovenbusinessinabox(inthiscase,anenormousoperationsmanual,stateofthearton-lineplatformsforeverythingfromorderingtoadvertisingtomanagingyourbusiness,andeverythinginbetween).We’vedonethethinking,planning,andpreparationforyoubycreatingasystemwiththemostvaluablepeopleandvendorsaspartnersineveryaspectofourretailbusiness:Product,Merchandising,Marketing&Advertisingaswellasthebehind-the-scenesIT,BusinessandFinancial.Wehaveseenoverandoverthatthereismagicinourbusinessmodelandsystemsandwe’reexcitedforyoutoreaptherewards.Sincerely,

Nate KelseyNateKelseyCo-Founder&CEO

A Decade of Décor ………………………………………………………………………………………………………………

Youcanreadourentirehistoryonourwebsiteatwww.realdeals.netandwehopeyouwill.It’sbeenawildridesincewefranchisedin2006.Thisyearwe'recelebratingour10thanniversary.Unbelievably,thefranchisenowhas69locationsin19statesand4provincesinCanada,andislistedintheTop500FranchisesofEntrepreneurMagazine.InJanuaryweteamedupwithWorldMarketCentertobringourfranchiseownerstotheannualconvention,holdingitduringtheSpringLasVegasMarket.

Givingourownerstheirfranchiseawardsduringconventionwashumblingandincredible–in2015wehad3franchisestorestop$800,000inannualsales,in3daysofretailperweek.Ourremarkableownersandloyalfanshavehelpeduscreatesomethingincredible.We'reproudandawedandsogratefultogotoworkeverydaydoingsomethingwe'repassionateabout,forpeoplewelove.

Your Estimated Initial Investment:

ITEM AMOUNT RANGE

METHOD OF PAYMENT

WHEN DUE

TO WHOM IS THE PAYMENT MADE?

1. Initial Franchise Fee $30,000(Note1)($35,000outsideoftheU.S.)

LumpSum AtSigning RealDealsInc.

Travel & living expenses while training

$1,500-$3,000perpersontrained(Note2)

AsIncurred DuringTraining

Airlines,Hotels&Restaurant

Real Estate & Improvements $5,000-$10,000(Note3)

AsIncurred AsIncurred Vendors&Contractors

Equipment, Fixtures, Software & Supplies

$1,500-$10,000(Note4)

AsIncurredorLeased

BeforeOpening

RealDealsInc.andSuppliers

Store Front Signage $1,500-$5,000(Note5)

AsIncurred BeforeOpening

Suppliers

Grand-Opening Advertising $5,000(Note6) AsIncurred BeforeOpening

RealDealsInc.orMediavendors&Suppliers

Misc. Opening Costs $1,500-$2,000(Note7)

AsIncurred AsIncurred Suppliers,Utilities,Etc…

Opening Inventory $60,000-$70,000(Note8)

LumpSum BeforeOpening

RealDealsInc.&Suppliers

Advertising – 3 Months $9,000-$12,000(Note9)

AsIncurred AsIncurred RealDealsInc.orMediavendors&Suppliers

Additional Funds for 3 Months $25,000-$35,000(Note10)

AsIncurred AsIncurred Suppliers,Accountants,Employees,Etc…

*Total $130,000-$161,500(Note11)

*Doesnotincludeongoingroyalties,advertisingfees&leasepayments

Note 1: Initial Franchise FeeTheinitialfranchisefeeis$30,000andispaidatthetimeyousignthefranchiseagreement.Itisnotrefundable.Wedonotfinanceanyportionofthisfee.(SeeItem5)Ifyousignadepositagreementforthisfranchise,thedepositfeeis$1,000andwillbecreditedagainsttheinitialfranchisefeeifyoupurchasethefranchise.Exceptasnotedabove,thesecostsandfeesareuniformforallfranchiseesandarenotrefundable.However,anumberofourfranchisesandaffiliatespaidlessthan$30,000fortheirinitialfee.

Note 2: TrainingYouareresponsibletopayalltravel,living,andotherassociatedtrainingexpensesforyourselfandyouremployeesduringtraining,directlytothesupplier(hotels,airlines,restaurants,rentalcarcompanies,etc.).

Note 3: Real EstateYoumustpurchaseorleaseasuitablelocationforyourRealDealsonHomeDécor®store.Costsofcommercialpropertyorleasesandimprovementsvarywidelybasedonlocation,termsofthelease,thetotalareaofyourspaceaswellasconstructionandmaterialcosts.Wehavenotincludedanamountfortheleaseorpurchaseofrealpropertybecauseitisimpossibletoestimateandvarieswidelyperlocation.Youshouldreviewthesecostswithalocalcontractor,commercialrealestateagentandotherprofessionals.Yourspacewillvarydependingonyourneeds,butweestimateyouwillneedbetween2,000and4,000squarefeetwithaminimumof1,500squarefeetofshowroomspace.Yourimprovementsmayincludepainting,signage,counter,shelving,refinishing,fixtures,furniture,wallcoverings,andelectronics,allofwhichmustbeapprovedbyus.Wewillhelpyouwithstandardplansandspecificationsforconstructionofimprovements;andyoumustfollowourdécorspecifications.Constructionofyourpremisesmustbecompletedandyourstoremustbeopenforbusinesswithin15weeksfollowingthedateofyourfranchiseagreement.Failuretomeetthesedeadlinesmayresultinterminationofyourfranchiseagreement.

Note 4: Equipment, Fixtures, Software and SuppliesInaddition,youmustpurchasefromusbetween$500and$2,000inproducts,signs,fixtures,uniformsandmarketingmaterials.Aspartoftheinitialfranchisefeeweprovideyouwithacomputerandpoint-of-salehardwareandsoftwareincludingQuickBooks™Point-of-SaleandQuickBooks™Prothatiscompatiblewithoursystemanddisplayfixtures.Youmustnegotiateallpurchaseagreementsorleaseswithsuppliers.Foranyitemspurchasedfromus,immediatepaymentisrequired.Youmusthavehighspeed,broadbandinternetaccess.Wewillhave

independentaccesstoanyinformationorreportsgeneratedbyyouonthiscomputerandsoftwaresystem.Inanyevent,werequireyoutomaintainthisinformationforus.Fordefectsinthecomputerorsoftwareyoumustworkdirectlywiththemanufacturer.Youmustusethestandardizedprofitandlosstemplateandbalancesheettemplateweprovidetoyou.Anypaymentstousarenonrefundable.

Note 5: SignsWerequirethatallsignagebedesignedandmanufacturedbyourapprovedvendor/s.YourexteriorsignagewillbemockedupbyuspriortoproductionandwillcarrytheRealDealsonHomeDécor®trademark.Uponapprovalanddepositfromyou,yoursignagewillbeproducedandshippedtoyou,tobeinstalledbyalocalsignagecontractor.Allsignsmustconformtoourspecificationsandallsignpurchaseagreementsorleasesmustbenegotiatedwithapprovedsuppliers.

Note 6: Grand-Opening AdvertisingYoumustspendaminimumof$5,000ongrand-openingadvertisingforyourbusiness.Advertisingisessentialtothesuccessfulopeningofyourfranchisebusiness.Yourdollarswillgotowardstheseandotheravenuesofmarketingrequired:advertisingonFacebookandInstagram,fullpageor½pagefull-coloradsinlocalandregionalnewspapers,5,000postcardstobehandedoutpersonallyinyourcommunity,postcardsmailedtofriendsandfamilylistalongwithothersgarneredfromchamberofcommerce,etc.,yourConstantContactemailaccount,giftcardgiveaways,auctionsorotherpromotions,printinganddistributingparadepostcards/flyersanddoorhangers,andsubmittingpressreleasestolocalpapers,DJ’s,TVstationsforlocalcoveragebeforeopening.

Note 7: Miscellaneous CostsThesemiscellaneouscostsincludebutarenotlimitedtoutilitydeposits,businessentityorganizationexpenses,employeetraining,deposits,insuranceandlicenses.Youmustobtaincomprehensivegeneralliabilityinsurance,commercialautomobileliabilityinsurances,workerscompensationinsuranceandotherinsuranceswespecifyinthefranchiseagreementandinthepoliciesandproceduresmanual.

Note 8: Opening InventoryThisamountmaynotcoverfreight.Openinginventoryitemsinclude:homedécor,furniture,clothingandaccessoryitems.Youshouldexpecttospendabout$35,000foreach1,000squarefeetofshowroomspace.TheamountinItem7reflectsthecostneededtohaveacompleteopeninginventory,depositsonsubstantialdirectimportinventoryforfuturedeliveryandenoughmoneytopayforthefuturedeliverieswhentheyoccur.

Note 9: AdvertisingInadditiontotheGrandOpeningAdvertisingdescribedinNote6,youwillberequiredtopayustheadvertisingfeeof1.5%forthenationaladvertisingfundandyouwillalsoberequiredtospendaminimumof$500permonthonyourlocaladvertising.Advertisingisessentialtothesuccessfuloperationofyourfranchisebusinessandthisamountestimatestheadditionaladvertisingamountabovetherequiredamountthatshouldbespentduringyourfirstyearinbusiness.Thisestimatesthecostsofpromotionalmaterialsusedformediaadvertisements,directmail,flyersandin-storeadvertisingsuchasplacards,posters,brochures,etcafteropening.Youcannotestablishawebsiteorsocialnetworkingsite,oradvertiseontheInternetwithoutourpriorwrittenapproval.

Note 10: Additional ExpensesThisestimatesyourinitialstartupexpensesexcludingrealestateacquisitionexpensesorshippingandinstallationofequipment,andincludespayrollcosts,butnottaxes.Employeecompensationisbetweenyouandyouremployeeandmayvarywidely.Therefore,thiscompensationcannotbeaccuratelyestimated.Inaddition,youneedtoincludeanamountpayabletoyou.

Note 11: TotalThesefiguresareestimatesandwecannotguaranteethatyouwillnothaveadditionalexpensesstartingyourbusiness.Yourcostswilldependonfactorssuchas:howwellyoufollowourmethodandprocedures;yourmanagementskill,experienceandbusinessacumen;localeconomicconditions;theprevailingwagerate;andcompetition.Youshouldreviewthesefigurescarefullywithabusinessadvisorbeforemakinganydecisiontopurchasethefranchise.Wedonotofferdirectorindirectfinancingforanyitem.Werecommendyoudevelopabusinessplanforyourstore.Wereliedontheexperienceofourprincipalstocompiletheseestimates.

Frequently asked questions:How much is the Franchise Fee? Currently $30,000 ($35,000 outside the U.S.) What does the Franchise Fee pay for? RealDealsUniversityTraining,lap-topcomputer,

QuickBooksPoint-of-Salesoftwareandhardware,QuickBookssoftware

What is the minimum investment for a Real Deal on Home Décor Franchise?

$125,000isanaverageminimumamountthatseemstobeadequatetogetastoreopen.Thisamountincludesthefranchisefee,inventory,initialadvertising,remodel,signage,shelving,propsandothermiscellaneousitems.Thisamountmayvary.

What is the royalty structure? Currentlyitis5%ofgrosssalesAre there any advertising fees? Yes,1.5%nationaladvertisingroyaltyispaidpermonthHow is the royalty fee paid? AsoutlinedintheRealDealsonHomeDécor®,Inc.FDD,it

iscurrentlypaidweeklybyautomaticbanksweeps.

How long does it take to open a Real Deal on Home Décor store?

MinimumofthreemonthsDuringwhichyouwillbeattendingtraininginTwinFalls.Thetimeframevariesbasedoncircumstances&location.

Financing WeareSmallBusinessAssociation(SBA)approved.

When I open a Real Deals on Home Décor® franchise, do I have rights to a certain area?

YourterritorywillbelefttothediscretionoftheFranchisor.

When can I expect to be profitable? Itvariesbylocationandmarketaswellasfranchisemanagement.Asinanybusinesswecannotpredictearningsorprofitability.

How do I select my store location? Thestorelocationisnotatypicalsiteselection.PleaseseetheFDDforcompletedetails.

What are the minimum square footage requirements for opening a Real Deals store?

2,500squarefeet

What are payment terms with each manufacturer?

Typicallythereare30-days-net.Thisdependsonyourcreditandeachmanufacturer.

What is the point of sale and account systems we will be using?

POSIMhardwareandsoftwareandQuickBookssoftware

What is the ordering timeframe for ordering product?

Ifitisinstock,theproductusuallyarrivesinacoupleofweeks.

So how do you get started?

Therearethreewaystogetstarted:1.Filloutanonlineapplicationbyvisitingwww.realdeals.net/franchise.Thisapplicationwillbesubmittedtousandamemberofourteamwillcontactyoushortly.2. Emailusatdevelopment@realdeals.net3. Callorcontactus:

a. NateKelseyCEO208-731-7076nate@realdeals.net

b. BrentChristensenUSFranchiseDevelopment970-556-1644brent@realdeals.net

c. TomSimekDirector,CanadianDevelopment&Operations250-919-9084tom.simek@realdeals.net