Effective Date: October 15, 2026 Version: 1.0 Applies to: All Franchisees, and the Company as franchisor, in respect of the payment of franchise fees, royalties, and other charges.
Article 1: Introduction and Scope
1.1 This Policy states the payment mechanics for franchise fees, royalties, and other charges: the definition of the base on which percentage charges are calculated, the reporting the Franchisee must make, the method and timing of payment, the consequences of late payment, and the audit that verifies the calculation. The amounts themselves: the initial fee, the royalty rate, the marketing fund contribution rate, and each other charge: are stated in the Franchise Disclosure Document and in the Franchise Agreement. This Policy incorporates those amounts by reference and states no second schedule of amounts. If a charge is not stated in the Franchise Disclosure Document and the Franchise Agreement for the Franchisee, the charge is not payable.
1.2 The signed Franchise Agreement controls amounts for each Franchisee. This Policy controls mechanics. On a conflict between this Policy and the Franchise Agreement as to mechanics, the Franchise Agreement controls for that Franchisee; on a conflict as to an amount, the Franchise Disclosure Document and the Franchise Agreement control, as Article 1.1 provides.
1.3 The Franchise Disclosure Document controls the offer and sale of franchises. No policy, portal page, or representative of the Company makes any earnings claim or financial performance representation; a financial performance representation, if made at all, appears only in Item 19 of the Franchise Disclosure Document. Where the franchise law of the state in which the franchised business is located gives the Franchisee rights greater than this Policy, that law prevails to the extent of the conflict.
1.4 If a provision of this Policy conflicts with the Terms of Use, this Policy controls for the subject it governs.
Article 2: Definitions
2.1 Account: the account a person or business establishes with the Company to use the Platform.
2.2 Company: All About Pawz, LLC, a Tennessee limited liability company, acting as franchisor.
2.3 Franchise Agreement: the written franchise agreement between the Company and a Franchisee, signed by both parties after delivery of the Franchise Disclosure Document.
2.4 Franchise Disclosure Document: the disclosure document the Company furnishes to a prospective Franchisee under the Federal Trade Commission Franchise Rule, 16 CFR Part 436.
2.5 Franchisee: a person or business that holds a signed Franchise Agreement.
2.6 Gross Sales: all revenue from the franchised business, excluding only: (a) sales taxes collected and remitted to a taxing authority; (b) refunds and chargebacks actually granted to customers; and (c) employee discounts within the limits the Franchise Agreement states. Gross Sales includes gift card revenue at redemption and not at sale, service revenue, retail revenue, and each delivery fee the Franchisee retains.
2.7 Initial Franchise Fee: the one-time fee payable at signing, in the amount stated in the Franchise Disclosure Document and the Franchise Agreement.
2.8 Marketing Fund Contribution: the amount payable to the Franchise Marketing Fund, calculated on Gross Sales at the rate stated in the Franchise Disclosure Document and the Franchise Agreement, governed by the Franchise Marketing Fund Policy.
2.9 Platform: the websites, applications, and services the Company operates under the name All About Pawz, including aapawz.com.
2.10 Products: goods offered for sale through the Platform.
2.11 Royalty: the ongoing charge for the brand and the system, calculated as a percentage of Gross Sales at the rate stated in the Franchise Disclosure Document and the Franchise Agreement.
2.12 Services: services offered through the Platform, including grooming, veterinary, pharmacy, and fulfillment services, as applicable.
2.13 User: any person who accesses or uses the Platform, whether or not the person holds an Account.
Article 3: Charges Incorporated by Reference
3.1 The charges payable by a Franchisee are each stated in the Franchise Disclosure Document and the Franchise Agreement for that Franchisee, with amount or rate, base, due date, and refundability. The charges include, as the agreement for the Franchisee provides: the Initial Franchise Fee; the Royalty; the Marketing Fund Contribution; the transfer fee under the Franchise Transfer Policy; the renewal fee under the Franchise Renewal Policy; audit-cost reimbursement under the Franchise Audit & Inspection Policy; training fees under the Franchise Training Policy; technology fees for point-of-sale and Platform access, per location; late charges under Article 6; and charges for insufficient funds on a payment.
3.2 The Initial Franchise Fee is non-refundable once onboarding under the Franchise Onboarding Policy begins. The fee purchases the grant, the provisioning, and the training placement, each of which is performed whether or not the Franchisee opens.
3.3 A minimum royalty applies only where the Franchise Agreement states a minimum royalty and states the amount. Where a minimum applies, the minimum is payable for the period regardless of reported Gross Sales.
3.4 The fee schedule recorded in the Company's franchise agreement record is the administrative mirror of the schedule in the signed agreement, in system-readable form, so that billing and reporting read the record. The record is populated from the fee provisions of the signed agreement. On a discrepancy between the record and the signed agreement, the signed agreement controls and the Company shall correct the record, as the Franchise Agreement Policy provides.
3.5 No charge is added to an existing Franchisee's obligations during the term except by a signed amendment to the Franchise Agreement. The schedule the Franchisee signed is the schedule until both parties sign otherwise. The Company shall not impose a new fee category by notice during the term.
Article 4: Calculation
4.1 The Royalty for a reporting period is Gross Sales for the period multiplied by the royalty rate in the Franchise Agreement. The Marketing Fund Contribution for a period is Gross Sales for the period multiplied by the contribution rate in the Franchise Agreement. The calculation is mechanical and admits no discretionary adjustment by either party. Each other percentage charge is calculated on the base the Franchise Agreement states.
4.2 The exclusions from Gross Sales are the exclusions in Article 2.6 and no others. Revenue not within an exclusion counts toward Gross Sales whether or not the Franchisee recorded the revenue in the category the Company prescribes, subject to correction on audit under Article 7.
Article 5: Reporting and Payment
5.1 Reporting. The Franchisee shall report Gross Sales weekly, or for the reporting period the Franchise Agreement states, through the Platform's reporting facilities for the franchised business. Each report states Gross Sales for the period, each exclusion taken under Article 2.6 with its amount, and the Royalty and Marketing Fund Contribution computed on the reported figure. The Company may compare a report against transaction data where the Platform processes the Franchisee's payments; the report is not the sole record of Gross Sales.
5.2 Payment method and timing. Royalties and Marketing Fund Contributions are collected by automated clearing house debit or by deduction from amounts payable to the Franchisee through the Platform, on the schedule the Franchise Agreement states. Each other charge is payable by the method and on the due date the Franchise Agreement states. The Franchisee shall maintain a valid payment method on file and sufficient collected funds for each scheduled debit.
5.3 Failed payment. On a failed debit, the Company shall give notice at three (3) business days after the failure and shall make a second attempt at seven (7) business days after the failure. Late charges under Article 6 accrue from the original due date, regardless of the second attempt.
5.4 No deferral or netting of royalties. A Royalty is not deferrable by notice and is not netted against an amount the Franchisee asserts the Company owes. A dispute about an amount proceeds under the Franchise Dispute Resolution Policy and Article 12; the Royalty and the Marketing Fund Contribution continue to be reported and paid while the dispute is resolved.
5.5 Setoff. The Company may set off an undisputed amount the Franchisee owes against an amount payable to the Franchisee, including a rebate or a marketing fund disbursement for local spending. The Company shall not set off a Royalty obligation against a Marketing Fund Contribution obligation or the reverse; each is accounted separately. The Company shall not set off against an amount the Franchisee is disputing in good faith under the Franchise Dispute Resolution Policy until the dispute is resolved.
Article 6: Late Payment
6.1 A late payment bears interest from the due date at the rate stated in the Franchise Agreement, or at the maximum rate permitted by law, whichever is lower.
6.2 A late charge applies to each late payment in the amount stated in the Franchise Disclosure Document and the Franchise Agreement. The late charge is a fixed charge per late payment and is not a second rate of interest.
6.3 Repeated late payment, at the frequency the Franchise Agreement states as a default threshold, is a default under the Franchise Agreement and proceeds under the cure and termination procedure of the Franchise Termination Policy. A single late payment is addressed under Articles 6.1 and 6.2; termination is addressed to the pattern of repeated lateness the threshold defines, not to an isolated late payment cured with its charges.
Article 7: Audit and Understatement
7.1 The Company may audit the Franchisee's Gross Sales reporting under the Franchise Audit & Inspection Policy, which states the financial audit procedure, the records the Franchisee must produce, and the allocation of audit cost.
7.2 An understatement established on audit is payable immediately, with interest from the original due date at the rate Article 6.1 provides. A consequence for deliberate understatement, including a multiplier on the underpaid amount, applies only where the Franchise Agreement states the consequence and states the amount or multiplier; this Policy states no separate multiplier. The audit distinguishes a deliberate understatement from an arithmetic error, and a consequence stated for deliberate understatement does not apply to an arithmetic error corrected on notice.
Article 8: Liability
8.1 Exclusion of certain damages. To the fullest extent permitted by law, neither party is liable to the other for indirect, incidental, special, punitive, or consequential damages, or for lost profits, lost revenue, or loss of goodwill, arising out of or relating to this Policy, even if the party has been advised of the possibility of those damages.
8.2 Cap. To the fullest extent permitted by law, the Company's total liability arising out of or relating to this Policy shall not exceed the greater of (a) the amounts the Franchisee paid to the Company under the Franchise Agreement in the twelve months before the event giving rise to the claim, or (b) one hundred dollars ($100).
8.3 Carve-outs. This Article does not limit (a) a party's indemnification obligations under this Policy; (b) liability for fraud or willful misconduct; (c) amounts the Franchisee owes for Royalties, Marketing Fund Contributions, fees, late charges, interest, or audit understatements under the Franchise Agreement and this Policy; or (d) liability that cannot be limited under applicable law.
8.4 Essential purpose. The parties agree that this Article allocates risk between them, that it is an essential part of the basis of their bargain, and that it applies even if a limited remedy fails of its essential purpose.
Article 9: Indemnification
9.1 Duty. The Franchisee shall indemnify, defend, and hold harmless the Company and its members, managers, employees, and agents from and against every claim, demand, action, loss, liability, judgment, settlement, cost, and expense (including reasonable attorneys' fees) arising out of or relating to: (a) the Franchisee's breach of this Policy or of the Franchise Agreement, including a failure to report Gross Sales accurately; (b) the Franchisee's operation of the franchised business, Products, Services, listings, or content; (c) the Franchisee's violation of any law or of the rights of any person; and (d) taxes for which the Franchisee is responsible under the Company's documents or the Franchise Agreement, including sales taxes the Franchisee collects and remits.
9.2 Procedure. The Company shall give prompt written notice of a claim under this Article. The Franchisee shall control the defense with counsel reasonably acceptable to the Company. The Company may participate in the defense at its own expense. The Franchisee shall not settle a claim in a manner that imposes any obligation or restriction on the Company, or that does not release the Company fully, without the Company's prior written consent.
9.3 Survival. This Article survives the termination of this Policy.
Article 10: Enforcement and Appeals
10.1 Investigation. The Company may investigate any suspected violation of this Policy, including the accuracy of a Gross Sales report. The Franchisee shall cooperate with an investigation and shall produce the records this Policy and the Franchise Audit & Inspection Policy require the Franchisee to keep.
10.2 Notice. If the Company determines that the Franchisee has violated this Policy, the Company shall give written notice stating the provision violated and the facts relied on, except where notice would compromise an investigation of fraud or a legal obligation.
10.3 Opportunity to cure. Where a violation is capable of cure, the Franchisee has ten (10) business days from notice to cure it and to confirm the cure in writing, except that a cure period stated in the Franchise Agreement or in the Franchise Termination Policy for the same ground, including repeated late payment, controls. No cure period applies to fraud, deliberate understatement of Gross Sales, unlawful conduct, or a violation that by its nature cannot be cured.
10.4 Measures. If a violation is established and is not cured within the period allowed, the Company may, proportionate to the violation and subject to the Franchise Agreement and the Franchise Termination Policy: (a) issue a written warning; (b) suspend the Account or program participation, in whole or in part; (c) terminate the Franchise Agreement as Article 11 provides; and (d) exercise any other right or remedy available under the Company's documents or at law.
10.5 Appeal. The Franchisee may appeal a measure under this Article by written notice to legal@aapawz.com within thirty (30) days of the measure, stating the grounds and attaching the records relied on. The appeal is decided by a person who did not make the original decision. The Company's decision on appeal is final. A measure remains in effect during an appeal unless the Company directs otherwise in writing. An appeal under this Article does not replace a right the Franchisee holds under the Franchise Agreement or under applicable franchise law, and does not suspend a payment duty under Article 5.4.
10.6 No waiver by delay. The Company's delay in acting on a violation is not a waiver of the violation or of any later violation of the same kind.
Article 11: Term and Termination
11.1 The term of the franchise, the grounds for termination, the cure periods by ground, and the post-termination duties are stated in the Franchise Agreement and in the Franchise Termination Policy, which are incorporated into this Policy by reference and govern in place of a general termination article. Amounts accrued before termination, including Royalties and Marketing Fund Contributions for periods before the termination date, remain payable as the Franchise Termination Policy provides.
11.2 This Policy takes effect for a Franchisee on execution of the Franchise Agreement and continues while the Franchise Agreement remains in effect. The Definitions, Liability, Indemnification, Enforcement and Appeals (for measures taken before termination), Dispute Resolution, and General Provisions Articles survive the end of the franchise, together with each payment duty accrued before termination.
Article 12: Dispute Resolution
12.1 Any dispute arising out of or relating to this Policy, or to the relationship it governs, is governed by the Dispute Resolution Policy, which is incorporated into this Policy by reference. The Franchise Dispute Resolution Policy states the program procedure that applies in addition to the Dispute Resolution Policy.
Article 13: General Provisions
13.1 Amendments. The Company may amend this Policy by posting the amended Policy in the Document Center and giving notice to the Franchisee at the email address in the Account. An amendment that materially increases the Franchisee's obligations takes effect thirty (30) days after notice; other amendments take effect on posting. Continued participation in the Program after the effective date of an amendment is acceptance of it. An amendment to this Policy does not change an amount in a signed Franchise Agreement; Article 3.5 governs additions to charges.
13.2 Notices. Legal notices under this Policy shall be sent to legal@aapawz.com. Operational notices and all other communications, including a payment dispute notice, shall be sent to support@aapawz.com. A notice to the Company is effective when the Company acknowledges receipt or, for email, one business day after sending, whichever is earlier. Notices to the Franchisee are effective when sent to the email address in the Account or posted to the Account's notice facility in the portal, whichever occurs first. The Franchisee shall keep the email address in the Account current.
13.3 Governing law. This Policy is governed by the laws of the State of Tennessee, without regard to its conflict-of-laws rules. Subject to the Dispute Resolution Policy, any proceeding arising out of this Policy shall be brought in the state or federal courts located in Shelby County, Tennessee, and the parties consent to personal jurisdiction there. Where the franchise law of the state in which the franchised business is located gives the Franchisee rights greater than this Policy, that law prevails to the extent of the conflict.
13.4 Severability. If any provision of this Policy is held unenforceable, the provision shall be enforced to the fullest extent permitted, and the remaining provisions continue in full effect.
13.5 Entire agreement. The signed Franchise Agreement, together with the documents the agreement incorporates by reference, is the entire agreement between the Company and the Franchisee for fees and royalties and supersedes every prior or contemporaneous statement, communication, or agreement on that subject, whether written or oral.
13.6 Assignment. The Franchisee shall not assign this Policy, the Franchise Agreement, or any right or obligation under either document without the Company's prior written consent, as the Franchise Transfer Policy further provides, and an assignment without consent is void. The Company may assign this Policy to an affiliate or in connection with a sale of all or part of its business, on notice to the Franchisee.
13.7 Waiver. A waiver of any provision of this Policy is effective only in writing and only for the instance stated. No waiver is a waiver of any other provision or instance.
13.8 Interpretation. Headings are for convenience only. "Including" means "including without limitation." This Policy shall not be construed against a party as its drafter, except as the Franchise Agreement Policy provides for a Franchise Agreement. The English-language text controls over any translation.
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