Investment Required To Be An RNR Tire Franchisee

1. Initial Franchise Fee. The initial franchise fee is discussed in Item 5.

2. Rent. If you do not own adequate or appropriate space, you must build or lease the space for your ЯNR Tire Express Store. The figures in the chart assume that you will lease the space for your Store and are based on our estimate of the cost of your lease or sublease for the leasehold premises. The typical space for an ЯNR Tire Express Store contains between 4,000 and 6,000 square feet. Rents will vary depending upon factors including size, conditions, location of the leased premises, the local real estate market conditions and competition for the leasable space. The figures in the chart include the first three months of rent at an estimated cost of $12 to $18 per square foot. In addition, some landlords may require additional security deposits or rental payments when you sign a lease. You should carefully investigate and evaluate all of the potential costs associated with a particular franchise location. The estimates provided in the chart do not include construction costs. An ЯNR Tire Express Store is typically located in a free standing building or a shopping center.Landlords may vary the base rental rate and charge rent based on a percentage of gross revenues. In addition to base rent, the lease may require you to pay common area maintenance charges (“CAM Charges”), your pro rata share of the real estate taxes and insurance, and your pro rata share of other charges. The actual amount you pay under the lease will vary depending on the size of the Store, the types of charges that are allocated to tenants under the lease, your ability to negotiate with landlords and the prevailing rental rates in the geographic region.

If you choose to purchase real property on which to build your Store, your initial investment will probably be higher than what we estimate above. If you purchase real property, we cannot estimate how this purchase will affect your total initial investment.

3. Security Deposits. We expect that you will need to pay deposits for your local utilities, such as telephone, electricity and gas, and your landlord may require you to pay a security deposit. The amount of your deposits will depend, in part, on your credit rating and the policies of the individual utility companies.

4. Leasehold Improvements. The cost of leasehold improvements will vary depending on numerous factors, including: (i) the size and configuration of the premises; (ii) pre-construction costs (such as demolition of existing walls and removal of existing improvements and fixtures); and (iii) cost of materials and labor, which may vary based on geography and location. These amounts are based on the cost of adapting our prototypical architectural and design plans to remodel and finish-out the Store and the cost of leasehold improvements. These amounts may vary substantially based on local conditions, including the availability and prices of labor and materials. These costs may also vary depending on whether certain of these costs will be incurred by the landlord.

5. Shop Equipment. Our estimate includes a tire balancer, tire changer, lifts, tools, compressor, flange kit and nitrogen inflation system. The low end of our estimate assumes that you will lease the equipment and represents your first three months of lease payments, and the high end of our estimate assumes that you will purchase the equipment.

6. Furniture, Fixtures and Décor. This estimate includes the cost of purchasing the basic furnishings necessary to operate the ЯNR Tire Express Store. Furnishings include desks, chairs, display racks and décor items. The low end of our estimate assumes that you will lease the furniture, fixtures and décor and represents your first three months of lease payments, and the high end of our estimate assumes that you will purchase the furniture, fixtures and décor.

7. Vehicle. You must have the vehicle we specify or approve for your Store. We reserve the right to designate the make and model of the vehicle you must purchase. Our estimate assumes that you will lease the vehicle.

8. Computer Hardware and Software. You must purchase or lease the required computer system. The low end of our estimate assumes that you will lease the computer system and represents your first three months of lease payments, and the high end of our estimate assumes that you will purchase the computer system.

9. Initial Inventory. Before your Store opens, you must stock the Store with an initial inventory of products, accessories, equipment, inventory and supplies designated by us in the Confidential Operations Manual or otherwise in writing.

10. Blue Prints, Permits and Licenses. You must hire an architect to adapt our template plans to suite the size and dimensions of your Store. We must approve of your plans before you may begin construction. Our review is only meant to determine that the plans comply with our specifications regarding trade dress and presentation of the Proprietary Marks. Our review is not intended to verify that the plans comply with any applicable law or building code.

Our estimate includes the cost of obtaining local business licenses which typically remain in effect for one year. The cost of these permits and licenses may vary substantially depending on the location of the Store. We strongly recommend that you verify the cost for all licenses and permits required in your jurisdiction before signing the Franchise Agreement.

11. Signage. These figures are the estimated cost of the interior and exterior signage that you will need. You must have signs in prominent locations at the ЯNR Tire Express Store in accordance with our specifications or as otherwise approved in writing by us, if applicable laws or regulations or the terms of your lease prohibit our approved signage. Signage may have to comply with the terms of your lease, local and state ordinances and zoning requirements. You must use your best efforts to obtain all permits or variances required to allow installation and maintenance of signs meeting our specifications. The cost of signage may vary depending on the size and location of your ЯNR Tire Express Store.

12. Insurance. Our estimates reflect the full year of premium costs for the insurance you must have for your Store.

13. Grand Opening Advertising. You must conduct a grand opening advertising campaign to promote the opening of your Store, and you must use the supplier we designate to assist you in preparing and conducting the grand opening advertising campaign. We must approve of your proposed grand opening advertising program before it is conducted. We expect that your grand opening advertising campaign will be conducted through your first six months of operation.

14. Change Fund. This represents the money for your cash drawer.

15. Professional Fees. We strongly recommend that you hire an attorney and an accountant to advise you on your purchase of an ЯNR Tire Express franchise. You may also need to hire an attorney to negotiate the terms of your lease or to establish a corporate entity to purchase the franchise.

16. Travel for Training; Salaries. The figures in the chart estimate the costs for moderately priced lodging accommodations, food costs, and automobile mileage expense for the minimum required four initial trainees to attend our standard initial training program. Your actual costs may vary depending on the number of people attending our initial training program, how far you must travel, and the type of accommodations you choose. Our estimates also include the salaries you will pay for your initial staff to attend our training program and before your Store opens for business.

17. Additional Funds. This estimates the additional funds you may need for an initial three month period. These expenses include payroll costs, additional inventory and other typical operating costs during your first three months of operation and do not include any sales during this period that your Store may make. These figures are estimates and we cannot guaranty that you will not have additional expenses starting your ЯNR Tire Express Store. Your costs will depend on factors including your success implementing our methods and procedures; your management skill, experience and business acumen; local economic conditions; the local market for products and services provided; the prevailing wage rate; competition; and the sales level reached during the initial three month period. These are only estimates and your costs may vary based on actual rental prices in your area, and other site-specific requirements or regulations. The costs outlined in this Item 7 are not intended to be a forecast of the actual cost to you or to any particular franchisee.

18. Total. We have estimated these expenses based upon our experience in franchising ЯNR Tire Express Stores since 2002. You should review these carefully with your business advisors before making any decision to purchase the ЯNR Tire Express Store franchise. Neither we nor any of our affiliates provide financing arrangements for you. If you obtain financing from others to pay for some of the expenditures necessary to establish and operate the ЯNR Tire Express Store, the cost of financing will depend on many factors, including your creditworthiness, collateral, lending policies, financial condition of the lender and regulatory environment.