We Over Thought Ourselves

• The intent behind having four franchise fee models was to offer a menu for people to choose from to best meet their franchise needs

• As you saw earlier today people are gravitating to two of the franchise fee models

Existing Four Franchise Fee Models

• Flat Fee• Hybrid• GCI• All Inclusive

Existing Four Franchise Fee Models

Fee Model Type How Many

Flat Fee 31

Hybrid 21

GCI 0

All Inclusive 13

Moving to Just TWO Franchise Fee Models

• Flex Model (Formerly Known As Hybrid) – – Includes both GCI and Flat Fee Options

within the plan• All Inclusive Model

Let’s Review Back

• November 2011 we introduced the All Inclusive Franchise Fee Model

• Structure of this fee model has not changed

This Is What We Presented Back in 2011All-Inclusive Model –

• Office Fee = $525/Month for first office and $100/Month for each subsequent office under the same contract (includes franchise, broker management system and a broker website)

• Here’s How the $525 Breaks Down = - $200 to franchise and broker management systems and broker website- $163 to REI - $163 to Region

This Is What We Presented Back in 2011

All Inclusive Model –

• Institutional Marketing = $25/Executive/Month

You may charge an additional regional IM fee

This Is What We Presented Back in 2011

All Inclusive Model – • Royalty =

– (< $99k): $195/Transaction - $75 = $60 to REI, $60 to Region

– ($100k-$499k): $295/Transaction - $75 = $110 to REI, $110 to Region

– ($500k-$999k): $395/Transaction - $75 = $160 to REI, $160 to Region

– ($1mil+): $495/Transaction - $75 = $210 to REI, $210 to Region

Questions?