UFOC

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FRANCHISE OFFERING CIRCULAR

FLICKO'S FRANCHISE CORPORATION, INC.

(A Kentucky Corporation)

2209 Heather Lane

Louisville, Kentucky 40218

(877)485-5858

FLICKO'S FRANCHISE CORPORATION, INC. offers franchises for the operation of a business that provides video workshop services including video and audio: editing; conversion; duplication; and montages. Producing prints from other media and rental of video equipment are also services offered. You are granted the right and license to use the designations FLICKO'S® and/or FLICKO'S VIDEO WORKSHOPS & DESIGN (collectively, the "Marks") only as provided for herein.

The estimated initial investment required for the establishment of a Franchised Business will range from $71,790 to $119,150 including a lump sum franchise fee of $13,800. Additionally, as part of the initial fee, you will be required to purchase from Company Video and Audio Equipment with Fixtures in an amount ranging from $37,500 to $63,000, in addition to "Computers and Software" and "Signage" in an aggregate amount ranging from $2,500 to $3,500 (collectively defined as the "Video and Audio Equipment and Fixtures; Computers and Software; and Signage").

Company offers start-up franchises. The initial investment estimate is only an estimate and initial fees are described in more detail in Items 5,6 and 7 of this Offering Circular.

RISK FACTORS:

1. THE FRANCHISE AGREEMENT REQUIRES THAT ALL DISAGREEMENTS BE SETTLED BY ARBITRATION IN KENTUCKY. OUT OF STATE ARBITRATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO ARBITRATE WITH COMPANY IN KENTUCKY THAN IN YOUR HOME STATE.

2. THE FRANCHISE AGREEMENT STATES THAT KENTUCKY LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS. SOME STATE FRANCHISE LAWS PROVIDE THAT CHOICE OF LAW PROVISIONS ARE VOID OR SUPERSEDED. YOU MIGHT WANT TO FNVESTIGATE WHETHER YOU ARE PROTECTED BY A STATE FRANCHISE LAW.

3. EVEN THOUGH THE FRANCHISE AGREEMENT PROVIDES THAT KENTUCKY LAW APPLIES, LOCAL LAW MAY SUPERSEDE IT IN YOUR STATE. PLEASE REFER TO THE STATE-SPECIFIC ADDENDUM THAT MAY BE ATTACHED TO THE OFFERING CIRCULAR FOR DETAILS.

n i u.wi.m «!■»*

THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

Information comparing FLICKO'S FRANCHISE CORPORATION , INC. to other franchisors is available. Call the state administrators listed in Exhibit A or your public library for sources of information.

REGISTRATION OF THIS FRANCHISE WITH THE STATE DOES NOT MEAN THAT THE STATE RECOMMENDS IT OR HAS VERIFIED THE INFORMATION IN THIS OFFERING CIRCULAR. IF YOU LEARN THAT ANYTHING IN THIS OFFERING CIRCULAR IS UNTRUE, CONTACT THE FEDERAL TRADE COMMISSION AND THE STATE ADMINISTRATORS LISTED IN EXHIBIT A.

Effective date of this Offering Circular is: ____________________

TABLE OF CONTENTS ITEM pac.f

ITEM 1. THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES................................................................I

ITEM 2. BUSINESS EXPERIENCE...............................................................................................................................3

ITEM 3 LITIGATION.....................................................................................................................................................5

ITEM 4. BANKRUPTCY.................................................................................................................................................5

ITEM 5. INITIAL FRANCHISE FEE..............................................................................................................................5

ITEM 6. OTHER FEES....................................................................................................................................................6

ITEM 7. INITIAL INVESTMENT................................................................................................................................10

ITEM 8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES.........................................................12

ITEM 9. FRANCHISEE'S OBLIGATIONS.................................................................................................................15

ITEM 10. FINANCING.....................................................................................................................................................16

ITEM 11. FRANCHISOR'S OBLIGATIONS..................................................................................................................17

ITEM 12. TERRITORY....................................................................................................................................................23

ITEM 13. TRADEMARKS...............................................................................................................................................24

ITEM 14. PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION.........................................................25

ITEM 15. OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF..................................................28

THE FRANCHISED BUSINESS.......................................................................................................................................28

ITEM 16. RESTRICTIONS ON WHAT YOU MAY SELL...........................................................................................29

ITEM 17. RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION............................................29

ITEM 18. PUBLIC FIGURES...........................................................................................................................................35

ITEM 19. EARNINGS CLAIM.........................................................................................................................................35

ITEM 20. LIST OF OUTLETS.........................................................................................................................................35

ITEM 21. FINANCIAL STATEMENTS..........................................................................................................................38

ITEM 22. CONTRACTS...................................................................................................................................................38

RECEIPT.........................................................................................................................................LAST PAGE

A. LIST OF STATE AGENTS FOR SERVICE OF PROCESS AND STATE ADMINISTRATORS

B. FRANCHISE AGREEMENT

C. ELECTRONIC FUNDS TRANSFER AGREEMENT

D. TABLE OF CONTENTS OF CONFIDENTIAL OPERATIONS MANUAL

E. FINANCIAL STATEMENTS

F. FRANCHISEE DISCLOSURE QUESTIONNAIRE

G. MULTI-STATE ADDENDUM

ITEM 1 THE FRANCHISOR ITS PREDECESSORS ANf) AFFILIATES

Company

To simplify the language in this Offering Circular, "Company", "our" and "we" means FLICKO'S FRANCHISE CORPORATION, INC., the franchisor of this business. "You" means the person who buys the franchise whether you are an individual, sole proprietorship, corporation, partnership, limited liability company or other entity. Company was incorporated in the State of Kentucky on March 26, 2004. Company's principal place of business and business address is 2209 Heather Lane, Louisville, Kentucky 40218. Company does business under the name "FLICKO'S FRANCHISE CORPORATION, INC." and "FLICKO'S," with the franchises offered by this Offering Circular. Company does not have any predecessors. A list of Company's agents for service of process in various states is contained in Exhibit A to this Offering Circular.

Company's Rnsiness Activities

Under the terms of our Franchise Agreement which is attached as Exhibit B, Company grants franchises for the establishment, development and operation of a "Franchised Business" offering video workshop services including video and audio: editing; conversion; duplication; and montages. Producing prints from other media and rental of video equipment are also services offered. These services will be offered to the general public and certain professionals through various methods of advertising, and referral sources.

Company offers a franchise grant for a single Franchised Business. Company provides start-up and continuous operational assistance to you as described in Item 11 of this Offering Circular.

Company does not currently operate a business of the type being franchised. However, Company's business operating experience is derived from its affiliate, AHEAD, Inc., which has been operating such a business since August 4,2003. See this Item 1 below for information on Company's affiliates. Company does not engage in any other business activities.

Company's Affiliates

Company's affiliate, AHEAD, Inc. ("AHEAD"), a Kentucky corporation, was originally incorporated on October 17, 1950 under the name Otterbach Bros. Company. On April 27, 2004, AHEAD changed its name to its present form. As of the date of this Offering Circular, AHEAD owns approximately 28% of Company's outstanding stock. AHEAD is located at 2209 Heather Lane, Louisville, Kentucky 40218. AHEAD operates under the name "AHEAD HUMAN RESOURCES," and "FLICKO'S" and operates 1 business that is similar to the Franchised Business. AHEAD also operates a temporary staffing business; and a human resource outsourcing (PEO) business. AHEAD has never offered franchises in any business.

Company's other affiliate, ASI, Inc. ("ASI"), a Kentucky corporation, was originally incorporated on July 31, 2001 under the name Ahead Staffing, Inc. On November 20, 2002, ASI changed its name to its present form. All of its

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outstanding stock is owned by Company's other affiliate, AHEAD, Inc. ASI is also located at 2209 Heather Lane, Louisville, Kentucky 40218. ASI has never offered franchises in any business.

Another Company's affiliate, AHEAD Human Resources Franchise Corp. ("AHR Franchise"), a Delaware corporation, was incorporated on August 4, 1999. AHR Franchise is located at 2209 Heather Lane, Louisville, Kentucky 40218. As of the date of this Offering Circular, AHR Franchise owns approximately 51% of Company's outstanding stock. AHR Franchise has offered franchises for Staffing and Human Resource Outsourcing (PEO) Businesses since June, 2000, under the trade names AHEAD and AHEAD Human Resources. As of June 30, 2006, AHR Franchise had sold 14 such franchises. AHR Franchise has never offered for sale or operated a video workshop franchise.

The Franchised Business and Businesses to he Offered

The FLICKO'S Franchised Businesses operate under a system ("System"). The distinguishing characteristics of the System include exclusively designed signage and materials; operating procedures and methods; Confidential Operations Manual ("Manual"); sales techniques; other confidential operations procedures; and methods and techniques for cost controls, record keeping and reporting, personnel management, sales promotion, marketing and advertising; all of which Company may change and develop periodically.

The Franchised Business will operate either under the principal Mark "FLICKO'S," plus the design, and associated marks and trademarks that Company designates as part of the System ("Marks"),

The Franchised Video Workshop Business targets services to the general public. It will compete with other local businesses, as well as local, regional or national chains offering video editing; conversion; duplication; montage and photo print services. The Franchised Business will be subject to general federal, state or local laws and regulations.

You will be responsible for investigating and complying with all laws related to the operation of the Franchised business. You should examine these laws before purchasing a franchise from Company.

Business. Hi story

Company through its Affiliate AHEAD, Inc. has continuously operated a Video Workshop Business similar to the Franchised Business since August 4, 2003. Company has offered franchises for the Video Workshop Business since April 1, 2004. Company has never offered franchises in any other business. See Item 20 of this Offering Circular for the address of the business location operated by this affiliate.

Company's affiliate AHEAD Human Resources Franchise Corp. ("AHR Franchise"), has offered franchises for Staffing and Human Resource Outsourcing (PEO) Businesses since June, 2000, under the trade names AHEAD and AHEAD Human Resources. As of June 30, 2006, AHR Franchise had sold 14 such franchises. AHR Franchise has never offered for sale or operated a video workshop franchise.

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ITF.M 7

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Director, Vipp-Chairman_r and President: William R. Bellk

Mr. Bellis has served as President, Vice-Chairman, and Director of Company since its inception. He holds the same positions with Affiliate AHR Franchise, having done so since its inception, except for President, which he has been since December, 2002. In addition, Mr. Bellis serves as Chairman of Affiliate AHEAD and has done so since January, 1998. Mr. Bellis was President of the AHR from February, 1995 until January, 1998. Mr. Bellis was President of Bellis, Inc. in Louisville, Kentucky from December, 1974 until February, 1995.

Director, Vice-Chairman anri Sectary: Andrea D. Bellis

Ms. Bellis has served as Secretary, Vice-Chairman and as a Director since Company's inception. She holds the same positions with Affiliate AHR Franchise, having done so since its inception. In addition, Ms. Bellis has been employed by Affiliate AHEAD since its inception and has served as its President since January, 1998. Ms. Bellis was Secretary/Treasurer of Bellis, Inc. in Louisville, Kentucky, from September, 1982 until February, 1995.

Director: Krkti K. Hagan

Ms. Hagan serves as Director of Company and has done so since its inception. In addition, Ms. Hagan serves as Vice President of Operations of Affiliates AHEAD (since February 1996), and AHR Franchise {since its inception). She has also been a Director of AHR Franchise since its inception. Previously, from August, 1995 to December, 1995, Ms. Hagen served as Employee Relations Representative for Paramount Foods, LLC in Louisville, Kentucky. From April, 1989 to August, 1995, Ms. Hagan served as Personnel Administrator for Jaggers Equipment Company, Inc. also located in Louisville, Kentucky.

Director and Treasurer: Karen I,. Jones

Ms. Jones serves as Treasurer and Director of Company and has done so since inception. She has held the same positions with Affiliate AHR Franchise since its inception. In addition, Ms. Jones serves as Chief Financial Officer of Affiliate AHEAD and has done so since February, 1998. From November, 1995 to December, 1998, Ms. Jones served as Director of Finance for Directech Corporation, Louisville, Kentucky. Previously, from July, 1995 until October, 1995, Ms. Jones was a CPA Associate with Arthur J. Wissing CPA, Louisville, Kentucky. Prior to that, from August, 1993 to June, 1995, Ms. Jones was a Staff Accountant with Leslie R. Ellis, CPA.

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Vice President of Franchise Development: Douglas Netherton

Mr. Netherton has served as Vice President of Franchise Development for the Company since 2005, and prior to that was the Director of Franchising for the company dating back to its inception. From November, 2003 to March 26, 2004, Mr. Netherton served in operations at Company's Affiliate AHEAD. Previously, from October, 2002 to October, 2003, Mr. Netherton served in a sales and installation capacity for Dampier Distributing in Louisville, Kentucky. Prior to that, from July, 2001 to October, 2002, Mr. Netherton served in a building maintenance capacity for Drury Inn and Suites in Louisville, Kentucky. Prior to that, from August, 1994 to June, 2001, Mr. Netherton served as Maintenance Engineer for First Lutheran Church and School in Fort Smith, Arkansas.

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ITEM 3 LITIGATION

No litigation is required to be disclosed in this Offering Circular.

ITEM 4. BANKRUPTCY

No person previously identified in Items 1 or 2 of this Offering Circular has been involved as a debtor in proceedings under the U.S. Bankruptcy Code required to be disclosed in this Item.

ITEM 5 INITIAL FRANCHISE FRF.

When you sign the Franchise Agreement, you must pay Company an initial lump sum franchise fee as stated below: (Paragraph I.C.)

a. The initial lump sum franchise fee for a Franchised Video Workshop Business is .Tin,800 Additionally, as part of the Franchise Fee, you will be required to purchase from Company "Video and Audio Equipment and Fixtures" in an amount ranging from $37,500 to $63,000, plus "Computers and Software" and "Signage" in an aggregate amount ranging from $2,500 to $3,500.

b. Company participates in the Veterans Transition Franchise Initiative, "VetFran," and allows qualified veterans to pay the reduced franchise fee of $12,300.

The initial lump sum franchise fee is fully earned and non-refundable under any circumstances, except as provided below:

a. If no acceptable site is found and approved by the parties within 60 days from the date you sign the Franchise Agreement, either Company or you may terminate the Franchise Agreement and the franchise fee you paid to Company will be returned to you, less expenses Company incurred in providing assistance to you; however, Company's expenses will not exceed $ 1,000. (Paragraph III.D.)

b. If Company determines that you are unable to satisfactorily complete the initial training program, Company may require you to attend additional training, or Company may terminate the Franchise Agreement. If the Franchise Agreement is terminated, Company will return to you the franchise fee you paid to Company, less expenses Company incurred in providing training, however, Company's expenses will not exceed $5,000. (Paragraph IV.C.)

Except as stated above, the franchise fee is uniform to all franchisees under this offering.

'All citations of Paragraph numbers throughout this Offering Circular are referenced to the Franchise Agreement, attached to this Offering Circular as Exhibit B, unless designated otherwise.

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ITRM fV

OTHFR FEES

Name of Fee

Royalty Fees

Amount

5.5 % of Gross Revenues. ($25 minimum after six months). This fee is reduced to 5.0% for the initial 12 months if you are VetFran eligible.

Due Dale

Payable weekly.

Remarks

Paid on Gross Revenues for preceding week ending on Sunday. See definition of Gross Revenues and method of Royalty payment' (Paragraph X.)

Marketing Fund

,2ofl% of Gross Revenues.

Payable at the same time and in the same manner as Royalty Fees

See method of Royalty and Marketing Fund payment¹ (Paragraph X.)

Insurance Policies²

Amount of unpaid premiums

Must have the policies within 30 days after signing the Franchise Agreement, or before you acquire an interest in the real property on which you will operate the Franchised Business

Payable only if you fail to maintain required insurance coverage and Company elects to obtain coverage for you. (Paragraph XIV.)

Additional Manager Training

$300, or the then-current rate as published in the Manual, plus expenses your manager incurs in attending the training

Time of training

You pay for additional manager training if you request it. (Paragraph IV.D.)

Additional Assistance

$300 per day, plus expenses or the

then-current rates as published in the Manual

Time of assistance

Company provides assistance to you during the first quarter of the Franchised Business. Additional assistance is at your cost. (Paragraph IV.B.)

Continuing Education

You must pay your expenses as well as your employees' expenses in attending these programs

Time of program

Attendance is voluntary. (Paragraph 1V.E.)

Additional Investment

Up to $3,000

Audit

Cost of audit plus interest on underpayment

During the term of the franchise

When discrepancy is discovered

This additional investment will not be required during the first year of the term; if it has to be made within the last year of

the term, you may avoid making the investment by giving notice of nonrenewal. This may be required for

system modifications including adoption of new marks, computer programs and systems, new techniques and other system modifications. (Paragraph VIII.)

Payable only if Company's audit shows

that you understated any revenue related

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Name of Fee

Amount

Due Date

Remarks

amount. (Paragraph XI.E.)

Operation of the Franchisee! Business in Case of Your Default

$300 per day, or the then-current rate as published in the Manual, plus expenses

Weekly after time of service and at the same time as

Royalty Fees

Company may operate your Franchised Business if you fail to cure a default within 30 days of receipt of written notice to cure. (Paragraph XVI.F.)

Regional Advisory

Council

Council assessments

When levied

Company has the right to enforce payments. Amounts may vary. (Paragraph Xll.N.)

Operation of the Franchised Business In Case of Your Absence, Incapacity or Death

$300 per day, plus expenses or the then-current rate as published in the Manual

Time of operation

If you are unable to, Company may operate your Franchised Business to prevent harm to the Franchised Business. (Paragraph XXI.)

Incapacity

Alternate Site Approval Fee

Actual cost in making determination

Not to exceed $1,000.

Time of determination

After site approved.

Payable by party against whom made, Payable to physicians or as reimbursement to Company, Determination made by the majority decision of 3 licensed medical physicians. (Paragraph XIX.C.) Payable only if you relocate from your initial location.

Transfer Fee

50% of the then-current initial franchise fee

After Company's approval of transferee and before transfer

This transfer fee does not apply to an assignment of interest to a corporation or limited liability company under Paragraph XVIII.B.2.a. (Paragraph XVIII.B.3.)

Indemnification

All costs, including attorneys' fees

Upon settlement or conclusion of claim or action

You must defend suits at your own cost and hold Company harmless against suits involving damages resulting from your operation of the Franchised Business. (Paragraph XXII.F.)

Cost of Enforcement or Defense

All costs, including attorneys' fees

Upon settlement or conclusion of claim or action

You must reimburse Company for all costs in enforcing Company's obligations under the Franchise Agreement if Company prevails. (Paragraph XXV.A.)

Guarantee

Varies

Upon breach of the Franchise Agreement

You must personally guarantee and comply with all terms of the Franchise Agreement and will be liable for any breach of the Franchise Agreement. (Exhibit A to the Franchise Agreement)

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Name of Fee Amount Due Date Remarks

Late Fee $25; Plus Interest Upon Demand You must pay a $25 late fee on each

Royalty or Marketing Fund payment that is more than 5 days late. In addition, any such late payment will begin to accrue interest at 12% per annum after 30 days from the due date. (Paragraph X.)

All fees are imposed by and are payable to Company, unless otherwise noted.

No other fees or payments are to be paid to Company, nor does Company impose or collect any other fees or payments for any third party. Any fees paid to Company are nonrefundable unless otherwise noted. Fees payable to third parties are refundable based on your arrangements with those third parties.

¹ Gross Revenues and Method of Royalty and Marketing Fund Payment "Gross Revenues" is all income,

whether cash or credit, less any sales or like taxes. All Royalties and Marketing Fund Payments shall be paid to Franchisor from Franchisee's bank account via electronic funds transfer initiated by Franchisor on Wednesday of each week, and shall be based on the Gross Revenues of the preceding week, ending on Sunday. (Paragraph X.)

² Insurance Policies. The following is a list of the required coverage with their respective minimum limits of coverage: (Paragraph XIV.B.)

1. All "Risks" personal property coverage insurance on the Franchised Business and all fixtures, equipment, supplies and other property used in the operation of the Franchised Business (which coverage may include flood and/or earthquake coverage, where there are known exposures to either peril, and theft insurance) for full repair as well as replacement value coverage;

2. Workers' Compensation and Employer's Liability insurance for your staff, as well as any other insurance as may be required by statute or rule of the state or county in which the Franchised Business is located and operated;

3. Commercial General Liability insurance and product liability insurance including a per premises aggregate, if more than one premises, with the following coverages: broad form contractual liability; personal and advertising injury; products/completed operations; medical payments and fire damage liability; insuring Company and you against all claims, suits, obligations, liabilities and damages, including attorneys' fees, based upon or arising out of actual or alleged personal injuries or property damage resulting from, or occurring in the course of, or on or about or otherwise regarding your property, your actions and the actions of your agents, employees or representatives including General Aggregate coverage in the following limits:

Minimum Limits

Recommended Coverage of Coverage

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General Aggregate....................................................................................................................$1,000,000

Products/Completed Operations Aggregate.............................................................................$1,000,000

Personal and Advertising Injury...............................................................................................$1,000,000

Each Occurrence.......................................................................................................................$1,000,000

Fire Damage (any one fire).............................................................................................................$50,000

Medical Expense (any one person)..................................................................................................$5,000

Company may periodically modify the amounts required to reflect inflation or future experience with claims.

4. Automobile liability insurance, including owned, hired and non-owned vehicle coverage, with a combined single limit of at least $1,000,000; and

5. The insurance and types of coverage as may be required by the terms of any lease for the Franchised Business, or as Company may require periodically.

If you fail to procure and maintain the insurance coverage, Company has the right and authority to procure the insurance coverage and to charge you, which charges, together with a reasonable fee for Company's expenses incurred in this procurement, you will pay immediately upon notice. (Paragraph XIV.D.)

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ITF.M 7

INITIAL INVESTMENT

Names of Expenditures	Your Actual or Estimated Amounts	Method OfPaympnt	When Due	To Whom Payment Is Made
Initial Franchise Fee¹	$13,800	Lump Sum	Upon Signing Franchise Agreement	Company
Real Estate Rent Deposit²	1440 -2800	As Arranged	Upon Signing Lease	Landlord
Utility Deposits³	0 -500	As Arranged	As Arranged	Utility Companies
Furniture, Fixtures And Equipment⁴	300 -1500	As Arranged	As Arranged	Landlord, Approved Suppliers
Insurance	900 -3600	As Arranged	As Arranged	Insurance Carrier
Training⁶	2,250 -3,750	As Incurred	As Incurred	Transportation Lines, Hotels and Restaurants
Grand Opening Advertising	3,000 -6,000	As Arranged	Initial Month of Operation	Approved Suppliers
Video and Audio Equipment and Fixtures; Computers and Software; & Signage⁸	40,000 66,500	As Arranged	As Arranged	Company
Leasehold Improvements¹¹	0 -2,500	As Arranged	As Arranged	Landlord, Approved Suppliers
Permits¹²	100 -200	As Incurred	As Incurred	Local and/or State Government Agency
Additional Funds Total	10,000 -18 000 $71,790 -$119,150	As Arranged	As Arranged	Employees, Suppliers, Utilities, Etc.

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NOTES

Initial Franchise Fee See Item 5 for additional information on the franchise fee including reductions and for the conditions when this fee is partially refundable.

² Initial Rent Deposit. You will typically be required to pay 2 months' rent as a security deposit. The high end of the initial investment represents the lease rate of $14.00 per square foot for 1,200 square feet of space. The low end represents a lease rate of $9.60 per square foot for a 900 square foot space.

Utility Deposits A utility deposit will only be required if you are a new customer of the utility company.

Fnrninire, Fixtures <fr. Equipment The range of costs covers the expense associated with acquiring chairs, and office equipment.

Insurance A 25% down payment of the annual premium for general liability insurance, workers' compensation and property insurance costs is included in the low-end estimate, and the expense of the full annual premium is included in the high estimate. The insurance requirements are specified in Item 6 of this Offering Circular.

⁶ Training. The low estimate represents you're approximate expenses in attending the initial training program at Company's headquarters and complete the training program in 2 weeks. The high estimate represents your approximate expenses, including air travel and a rental car. Food and lodging are included in both estimates.

Grand Opening. Franchisees will be required to spend a minimum of $3,000 on grand opening advertising/promotion during the first month of operation.

⁸ VjHpo and AnHin Equipment, Fixhires and Suppliers. There is a range of expenses that you will incur when purchasing or leasing video and audio equipment fixtures and related supplies. Both the low-end and the high-end numbers represent a straight purchase of all supplies and equipment.

⁹ Signage The range of costs represents the expenses of acquiring all signage on the franchised locations.

¹⁰ Computer and Software. You are required to purchase certain computer hardware and software. Specifications for the equipment are set forth in the Manual and in Item 11.

¹¹ I .easflhold Improvements. The low end of the range in the initial outlay assumes that the landlord provides a partial build-out allowance. The high end of the range reflects a cash outlay without the build-out allowance.

¹² Permits You may be required to secure a local license to operate this business. Company estimates the low figure and high figure based on its Affiliate's experience in operating a business similar to the Franchised Business.

¹³ Additional Funds The low number given represents estimated expenses to maintain minimal operations with minimal sales for 3 months. These figures are estimates and Company cannot guarantee that you will not have

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additional expenses starting the business. Your costs will depend on factors such as: how much you follow Company's methods and procedures; your management skill, experience and business acumen; local economic conditions; the local market for our services; and competition.

Company has relied on its Affiliate's business operation experience to compile these estimates. You should review these figures carefully with a business advisor before making any decision to purchase the franchise.

1TF.M 8, RESTRICTIONS ON SOI 1RCFS OF PRODI ICTS AND SERVICES

Purchase'; from Company and Approved Suppliers

You must purchase from Company, the initial required Audio and Video Equipment and Fixtures; Computers and Software; and Signage to operate the Franchised Business. Company will derive revenue from such purchase and/or lease. Subsequent purchases and/or leases of such approved Audio and Video Equipment and Fixtures; Computers and Software; and Signage, if any, must be from "Approved Suppliers", including Company. All such purchases of specialized Audio and Video Equipment and Fixtures; Computers and Software; and Signage shall be at market competitive pricing. Company shall derive revenue from financing any such leases and/or purchases with respect to the Audio and Video Equipment and Fixtures; Computers and Software.

Company will give you a list of the Audio and Video Equipment and Fixtures; Computers and Software; and Signage that must be initially purchased from the Company for use in the Franchised Business plus, in addition, and a list of approved other equipment, products, fixtures, furniture, signs, stationery, supplies and other items or services necessary to operate the Franchised Business (collectively, the "Approved Supplies List") that may be purchased from the Company and/or from other third parties (collectively, the "Approved Suppliers List"). You are not required to purchase any such items from Approved Suppliers; however, Company recommends that you do so (it being clearly understood, again, that you must purchase the specialized Audio and Video Equipment and Fixtures; Computers and Software; and Signage from the Company). Company, or an Affiliate, shall derive revenue from the purchase and/or lease of these items. If you do not purchase these items from an Approved Supplier, Company must approve the quality of said items prior to your purchase. If you would like to sell or use any product, material or supply or purchase any products from a supplier not on either of these lists, you must notify Company and may need to submit samples and other information to Company so that Company can make an informed decision as to whether the product or supplier meets Company's standards. You may be charged an amount not to exceed $50 or the current rate as published in the Manual for the costs of Company's decision. The Company's approval process is typically completed in 30 days.

Company applies the following general criteria in approving a proposed supplier: 1. Quality;

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2. Service;

3. Availability; and

4. Pricing.

Company will revoke approval of suppliers based upon the lack of the above items.

Company's specifications and standards for purchasing are in the Manual, and are modified periodically. The Company formulates said specifications and standards through its operating experience derived from its Affiliate, AHEAD.

For the most recent fiscal year ending June 30, 2006, Company received $26,144 in revenue from the lease and/or purchase of Audio and Video Equipment and Fixtures; Computers and Software; and Signage by its franchisees. Company's Affiliate, AHEAD, received $7,100 from the lease and/or purchase of Audio and Video Equipment and Fixtures; Computers and Software; and Signage by Company's franchisees. Company has not negotiated any purchase arrangements with suppliers to benefit franchisees. Company does not withhold or provide material benefits based upon your purchase of goods or services from approved or designated suppliers.

Company estimates that approximately 90% of your expenditures for leases and purchases in establishing your franchised business and 50% on an ongoing basis wilt be for goods and services which are subject to sourcing restrictions (that is, for which supplier Company approves, or which must meet Company's standards and specifications).

You will pay to Company (or any Related Entity) promptly and when due the amount of all sales taxes, use taxes, personal property taxes and similar taxes imposed upon, required to be collected, or paid by Company on the account of services or goods furnished by Company to you through sale, lease or otherwise, or on account of collection by Company of the initial franchise fee, all Royalty Fees, Marketing Fund contributions, amounts due for your purchases from Company, and other amounts which you owe to Company as called for by the Franchise Agreement. (Paragraph X.C.)

There are no purchasing or distribution cooperatives in existence. Company does not negotiate purchase arrangements with suppliers for the benefit of franchisees.

Insurance

You must procure, at your expense, and maintain in full force and effect during the term of the Franchise Agreement, an insurance policy or policies protecting you, Company and their respective officers, directors, members,

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partners and employees against any loss, liability, personal injury, death or property damage or expense stemming from or occurring upon or concerning the Franchised Business as Company may reasonably require for its own and your protection. Company must be named an Additional Named Insured in each policy or policies. (Paragraph XIV.A.)

Within 30 days of signing the Franchise Agreement, or no later than the date on which you acquire an interest in the real property from which you will operate the Franchised Business, you must furnish Company with a Certificate of Insurance showing compliance with its insurance requirements for approval. The certificate must state that the policy or policies will not be cancelled or materially altered without at least 30 days advance written notice to Company. The certificate must reflect proof of payment of premiums. Maintenance of the insurance and your performance of the obligations under the insurance provisions of the Franchise Agreement will not relieve you of liability under the Franchise Agreement's indemnity provisions. Company may modify the minimum insurance requirements and notify you of the changes in writing. (Paragraph X1V.C.)

Computers and Software

You must use the Computers and Software meeting the specifications Company sets forth in the Manual. You must purchase your Computers and Software from the Company, which meets the specifications as set forth in the Manual. You will be responsible for paying the annual Computer and Software costs directly to the Company and/or to an approved third party supplier. You will be responsible for the costs of all reasonable upgrades to the Computers and Software. (Paragraph XII.Q.)

Company may in the future introduce software, hardware, and equipment into the System, requiring you to lease or purchase such software, as well as compatible hardware and network peripherals, the specifications of which will be set forth in the Manual. The amount of any such additional investment in software or computer equipment required of you is limited, as provided in Paragraph VIII. of the Franchise Agreement.

Signage

You must use Signage meeting the specifications Company sets forth in the Manual. You must purchase your Signage from the Company, which meets the specifications as set forth in the Manual. You will be responsible for the costs of all reasonable upgrades and repairs to the Signage. (Paragraph XII.H.).

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THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE FRANCHISE AND OTHER AGREEMENTS. IT WILL HELP YOU FIND MORE DETAILED INFORMATION ABOUT YOUR OBLIGATIONS IN THESE AGREEMENTS AND IN OTHER ITEMS OF THE OFFERING CIRCULAR. UNLESS SPECIFIED OTHERWISE, THE FOLLOWING APPLIES TO THE FRANCHISE AGREEMENT.

Obligation

Paragraph In The Franchise Agreement

Item In The Offering Circular

a. Site selection and acquisition/ lease

b. Pre-opening purchases/leases

Paragraph HI.

Paragraphs III., IV., XII.

Items 11, 12 Items 6, 7, 8

c. Site development and other pre-opening requirements

Paragraphs III., IV.

Items 8, 11

d. Initial and ongoing training

e. Opening

f. Fees

Paragraph IV.

Paragraphs IV., IX., XII.B.

Paragraphs I., III., IV., VIII., IX., X. XI., XII., XVI., XVIII., XXI., XXV.

Items 6, 7, 11

Item 11 Items 5, 6, 7

g. Compliance with standards and policies/Operating Manual

Paragraphs IV., V., VI., VII., XII., XXII.

Items 8, 11, 13, 14, 16, 17

h. Trademarks and proprietary information

Paragraphs V., VI., VII.

Items 13, 14

i. Restrictions on products/services offered

Paragraph XII.

Items 8, 16

j. Warranty and client service requirements

Paragraph XII.F.

Items 6, 8

k. Territory

1. Ongoing product/service purchases

m. Maintenance, appearance and

Paragraph I.

Paragraphs XII., XIII.

Paragraphs III., VIII., XII., XVI.

Item 12

Item 8

Items 6, 8

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Obligation

remodeling requirements

n. Insurance

o. Advertising

p. Indemnification

q. Owner's participation/ management/staffing

r. Records and reports

s. Inspections and audits

t. Transfer

u. Renewal

v. Post-termination obligations

w. Non-competition covenants

x. Dispute resolution

Paragraph In The Franchise Agreement

Item In The Offering Circular

Paragraph XIV. Paragraph IX. Paragraph XXII. Paragraphs XII., XV., XXII.

Paragraphs X., XI. Paragraphs V., XI. Paragraphs XVIII., XIX, XX. Paragraph II. Paragraph XVII. Paragraph XV. Paragraphs XVIII., XXIX.

Items 6, 8

Items 6, 11

Item 6

Item 15

Items 8, 11

Items 6, 11, 13

Items 6, 17

Item 17

ITRM 10

FINANCING

Company's Affiliate, AHEAD, offers financing in the form of a lease and/or purchase to franchisees who qualify and desire to obtain the initial required Audio and Video Equipment and Fixtures; Computers and Software; and Signage through a lease and/or purchase as disclosed in the Offering Circular. Such financing covers only the cost of such equipment, and financing is not available for any other purposes. A summary of the terms of such lease and/or purchase is set forth below:

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Item Financed (Source)

Amount Financed Down Payment

Term (Yrs) APR %

Weekly Payment

Initial Equipment 100% of cost, (Lease and/or up to $66,500

Purchase through AHEAD)

Affiliate, AHEAD, will maintain a security interest in the Audio and Video Equipment and Fixtures; Computers and Software; and Signage until the lease and/or purchase is paid in full. Affiliate, AHEAD, also requires the joint and several personal guarantees of the lease and/or purchase by you and your spouse (if applicable), plus the personal guarantees of all other equity owners in your entity (and their respective spouses, if applicable). A copy of the equipment lease and/or purchase for the Audio and Video Equipment and Fixtures; Computers and Software; and Signage is attached as Exhibit H, and is also an attachment to Exhibit B.

The lease and/or purchase may be prepaid without penalty. The weekly lease and/or purchase payment will be paid in the same manner as the Royalty payments, as described in Item 6. If you default, Affiliate, AHEAD, can sue you for all past due and future payments due under the lease and/or purchase, and/or repossess the Audio and Video Equipment and Fixtures; Computers and Software; and Signage. You must pay AHEAD's legal and other reasonable collection costs if a collection action is necessary. The Company also has the right to terminate your franchise if you default on the lease and/or purchase. If any payment is not received on time, AHEAD may charge you a late fee of $25, or 15% of the amount that is late, whichever is greater. You waive your rights to notice of demand and default before a collection action may be started against you.

Except as disclosed above, neither Company, or its Affiliate, AHEAD, offer financing that requires you to confess judgment or waive a defense. Company does not arrange financing from any other source or receive direct or indirect payments to place financing. Commercial paper from franchisees has not been sold and is not sold or assigned to anyone, and neither Company, or its Affiliate AHEAD, have plans to do so. Company does not guarantee your obligations to third parties.

ITF.M 1 1 FR ANCHISOR 'S ORI IP ATIONS

Except as listed below, Company need not provide any assistance to you. A. Company's Obligations Refnre the Franchised Business Opens:

I. Company will use reasonable efforts to help analyze your market area, to help determine site

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4.75% of amount Up to 5 11.4% Variable based on

financed amount financed

The original documents were scanned as an image. The original file can be downloaded at the link above.

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