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La Rosa Holdings Corp. – IPO: ‘S-1/A’ on 6/14/22 – ‘EX-10.28’

On:  Tuesday, 6/14/22, at 5:31pm ET   ·   Accession #:  1575872-22-540   ·   File #:  333-264372

Previous ‘S-1’:  ‘S-1’ on 4/19/22   ·   Next:  ‘S-1/A’ on 8/3/22   ·   Latest:  ‘S-1’ on 4/24/24   ·   16 References:   By:  La Rosa Holdings Corp. – Latest ‘S-1’ on 4/24/24 By:  La Rosa Holdings Corp. – ‘10-K’ on 4/16/24 for 12/31/23 By:  La Rosa Holdings Corp. – ‘S-8’ on 10/20/23 By:  La Rosa Holdings Corp. – ‘8-K’ on 10/19/23 for 10/13/23 By:  La Rosa Holdings Corp. – ‘S-1/A’ on 9/12/23 By:  La Rosa Holdings Corp. – ‘S-1/A’ on 9/1/23 By:  La Rosa Holdings Corp. – ‘S-1/A’ on 7/14/23 By:  La Rosa Holdings Corp. – ‘S-1/A’ on 6/21/23 By:  La Rosa Holdings Corp. – ‘S-1/A’ on 6/8/23 By:  La Rosa Holdings Corp. – ‘S-1/A’ on 5/19/23 By:  La Rosa Holdings Corp. – ‘S-1/A’ on 4/26/23 By:  La Rosa Holdings Corp. – ‘S-1/A’ on 1/19/23 By:  La Rosa Holdings Corp. – ‘S-1/A’ on 1/6/23 By:  La Rosa Holdings Corp. – ‘S-1/A’ on 12/14/22 By:  La Rosa Holdings Corp. – ‘S-1/A’ on 10/12/22 By:  La Rosa Holdings Corp. – Next ‘S-1/A’ on 8/3/22 

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 6/14/22  La Rosa Holdings Corp.            S-1/A                 84:12M                                    DataTracks Svcs Ltd./FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-1/A       Pre-Effective Amendment to Registration Statement   HTML   1.97M 
                (General Form)                                                   
 2: EX-1.1      Underwriting Agreement or Conflict Minerals Report  HTML    182K 
 3: EX-3.1      Articles of Incorporation/Organization or Bylaws    HTML     25K 
 4: EX-3.2      Articles of Incorporation/Organization or Bylaws    HTML     47K 
 5: EX-3.3      Articles of Incorporation/Organization or Bylaws    HTML    107K 
 6: EX-3.4      Articles of Incorporation/Organization or Bylaws    HTML     19K 
 7: EX-3.5      Articles of Incorporation/Organization or Bylaws    HTML     19K 
 8: EX-4.1      Instrument Defining the Rights of Security Holders  HTML     28K 
 9: EX-4.3      Instrument Defining the Rights of Security Holders  HTML     65K 
10: EX-4.4      Instrument Defining the Rights of Security Holders  HTML    107K 
11: EX-10.1     Material Contract                                   HTML     92K 
20: EX-10.10    Material Contract                                   HTML     87K 
21: EX-10.11    Material Contract                                   HTML     64K 
22: EX-10.12    Material Contract                                   HTML     63K 
23: EX-10.13    Material Contract                                   HTML     63K 
24: EX-10.14    Material Contract                                   HTML     62K 
25: EX-10.15    Material Contract                                   HTML     62K 
26: EX-10.16    Material Contract                                   HTML     63K 
27: EX-10.17    Material Contract                                   HTML     63K 
28: EX-10.18    Material Contract                                   HTML     62K 
29: EX-10.19    Material Contract                                   HTML     63K 
12: EX-10.2     Material Contract                                   HTML     77K 
30: EX-10.20    Material Contract                                   HTML     62K 
31: EX-10.21    Material Contract                                   HTML     63K 
32: EX-10.22    Material Contract                                   HTML     61K 
33: EX-10.23    Exhibit 10.2                                        HTML     32K 
34: EX-10.24    Material Contract                                   HTML     63K 
35: EX-10.25    Material Contract                                   HTML     62K 
36: EX-10.26    Material Contract                                   HTML     63K 
37: EX-10.27    Material Contract                                   HTML     63K 
38: EX-10.28    Material Contract                                   HTML    656K 
39: EX-10.29    Material Contract                                   HTML     50K 
13: EX-10.3     Material Contract                                   HTML     41K 
40: EX-10.30    Material Contract                                   HTML    120K 
41: EX-10.31    Exhibit 10.3                                        HTML    147K 
42: EX-10.32    Material Contract                                   HTML     49K 
43: EX-10.33    Exhibit 10.3                                        HTML     23K 
44: EX-10.34    Material Contract                                   HTML     66K 
45: EX-10.35    Material Contract                                   HTML     64K 
46: EX-10.36    Material Contract                                   HTML     63K 
47: EX-10.37    Exhibit 10.3                                        HTML     62K 
48: EX-10.38    Material Contract                                   HTML     93K 
49: EX-10.39    Material Contract                                   HTML     64K 
14: EX-10.4     Material Contract                                   HTML     54K 
50: EX-10.40    Material Contract                                   HTML     60K 
51: EX-10.41    Exhibit 10.4                                        HTML     64K 
52: EX-10.42    Material Contract                                   HTML     59K 
53: EX-10.43    Exhibit 10.4                                        HTML     59K 
54: EX-10.44    Material Contract                                   HTML     66K 
55: EX-10.45    Material Contract                                   HTML     33K 
56: EX-10.46    Material Contract                                   HTML     40K 
57: EX-10.47    Material Contract                                   HTML     31K 
58: EX-10.48    Material Contract                                   HTML     55K 
59: EX-10.49    Material Contract                                   HTML     26K 
15: EX-10.5     Material Contract                                   HTML     61K 
60: EX-10.50    Material Contract                                   HTML     31K 
61: EX-10.51    Exhibit 10.5                                        HTML     56K 
62: EX-10.52    Material Contract                                   HTML     76K 
63: EX-10.53    Material Contract                                   HTML     26K 
64: EX-10.54    Material Contract                                   HTML     20K 
65: EX-10.55    Material Contract                                   HTML     60K 
66: EX-10.56    Material Contract                                   HTML     23K 
67: EX-10.57    Material Contract                                   HTML     56K 
68: EX-10.58    Material Contract                                   HTML     54K 
69: EX-10.59    Material Contract                                   HTML     53K 
16: EX-10.6     Material Contract                                   HTML    104K 
70: EX-10.60    Material Contract                                   HTML     63K 
71: EX-10.61    Material Contract                                   HTML     24K 
72: EX-10.62    Material Contract                                   HTML     26K 
17: EX-10.7     Material Contract                                   HTML    106K 
18: EX-10.8     Material Contract                                   HTML    103K 
19: EX-10.9     Material Contract                                   HTML    103K 
73: EX-14.1     Code of Ethics                                      HTML     37K 
74: EX-21.1     Subsidiaries List                                   HTML     20K 
75: EX-23.1     Consent of Expert or Counsel                        HTML     20K 
76: EX-23.3     Consent of Expert or Counsel                        HTML     20K 
84: EX-FILING FEES  Ex-Filing Fee                                   HTML     61K 
77: EX-99.1     Miscellaneous Exhibit                               HTML     20K 
78: EX-99.2     Miscellaneous Exhibit                               HTML     20K 
79: EX-99.3     Miscellaneous Exhibit                               HTML     20K 
80: EX-99.4     Miscellaneous Exhibit                               HTML     20K 
81: EX-99.5     Miscellaneous Exhibit                               HTML     47K 
82: EX-99.6     Miscellaneous Exhibit                               HTML     35K 
83: EX-99.7     Miscellaneous Exhibit                               HTML     39K 

Exhibit 10.28

FRANCHISE DISCLOSURE DOCUMENT

La Rosa Franchising, LLC
a Florida limited liability company
1420 Celebration Blvd., Suite 20
Celebration, FL 34747
Phone: 321-939-3748

Fax: 407-566-2017

Info@larosafranchising.com
www.JoinLaRosa.com

La Rosa Franchising, LLC offers franchises for the operation of a business offering real estate brokerage services to both residential and commercial real property purchasers and sellers. The franchisee can elect to operate under either the brand name La Rosa Realty or Better Homes Realty.

The total investment necessary to begin operation of a franchise ranges from $23,700.00 to $278,000.00. This includes an Initial Franchise Fee of $10,000 that must be paid to the Franchisor. If you desire to open one or more Branch Offices within your Territory, your investment for each additional Branch Office you open may be similar, less the Initial Franchise Fee since there is no additional franchise fee for a Branch Office.

This disclosure document summarizes certain provisions of your franchise agreement and other information in plain English. Read this disclosure document and all accompanying agreements carefully. You must receive this disclosure document at least 14 calendar-days before you sign a binding agreement with, or make any payment to, the Franchisor or a Franchisor Affiliate in connection with the proposed franchise sale. Note, however, that no governmental agency has verified the information contained in this document.

You may wish to receive your disclosure document in another format that is more convenient for you. To discuss the availability of disclosures in different formats, contact Mark Gracy at 1420 Celebration Blvd., Suite 200, Celebration, FL 34747, and call 321-939-3748.

The terms of your contract will govern your franchise relationship. Don’t rely on the disclosure document alone to understand your contract. Read all of your contract carefully. Show your contract and this disclosure document to an advisor, like a lawyer or an accountant.

Buying a franchise is a complex investment. The information in this disclosure document can help you make up your mind. More information on franchising, such as “A Consumer’s Guide to Buying a Franchise,” which can help you understand how to use this disclosure document, is available from the Federal Trade Commission. You can contact the FTC at 1-877-FTC-HELP or by writing to the FTC at 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. You can also visit the FTC’s home page at www.ftc.gov for additional information. Call your state agency or visit your public library for other sources of information on franchising.

There may also be laws on franchising in your state. Ask your state agencies about them.

The issuance date: March 2, 2020

How to Use This Franchise Disclosure Document

Here are some questions you may be asking about buying a franchise and tips on how to find more information:

What You Need to Know About Franchising Generally

Continuing responsibility to pay fees. You may have to pay royalties and other fees even if you are losing money.

Business model can change. The franchise agreement may allow the franchisor to change its manuals and business model without your consent. These changes may require you to make additional investments in your franchise business or may harm your franchise business.

Supplier restrictions. You may have to buy or lease items from the franchisor or a limited group of suppliers the franchisor designates. These items may be more expensive than similar items you could buy on your own.

Operating restrictions. The franchise agreement may prohibit you from operating a similar business during the term of the franchise. There are usually other restrictions. Some examples may include controlling your location, your access to customers, what you sell, how you market, and your hours of operation.

Competition from franchisor. Even if the franchise agreement grants you a territory, the franchisor may have the right to compete with you in your territory.

Renewal. Your franchise agreement may not permit you to renew. Even if it does, you may have to sign a new agreement with different terms and conditions in order to continue to operate your franchise business.

When your franchise ends. The franchise agreement may prohibit you from operating a similar business after your franchise ends even if you still have obligations to your landlord or other creditors.

Some States Require Registration

Your state may have a franchise law, or other law, that requires franchisors to register before offering or selling franchises in the state. Registration does not mean that the state recommends the franchise or has verified the information in this document. To find out if your state has a registration requirement, or to contact your state, use the agency information in Exhibit A.

Your state also may have laws that require special disclosures or amendments be made to your franchise agreement. If so, you should check the State Specific Addendum. See the Table of Contents for the location of the State Specific Addendum.

Special Risks to Consider About This Franchise

Certain states require that the following risk(s) be highlighted:

Out-of-State Dispute Resolution. The franchise agreement requires you to resolve disputes with the franchisor by mediation, arbitration and/or litigation only where La Rosa Franchising LLC has its principal business office. Out-of-state mediation, arbitration, or litigation may force you to accept a less favorable settlement for disputes. It may also cost more to mediate, arbitrate, or litigate with the franchisor in California than in your own state.

Certain states may require other risks to be highlighted. Check the “State Specific Addendum” to see whether your state requires other risks to be highlighted.

Short Operating History. The franchisor is at an early stage of development and has limited operating history. This franchise is likely to be a riskier investment than a franchise in a system with a longer operating history.

TABLE OF CONTENTS

ITEM 1: THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES

To simplify the language in this Franchise Disclosure Document the words “we”, “us” “our” and “Franchisor” means La Rosa Franchising, LLC. “You”, “your” or “Franchisee” means the person, corporation, partnership or other business entity that buys the Franchise. If you are a business entity, “you” includes your owners.

The Franchisor, Predecessor and Affiliates

La Rosa Franchising, LLC is a Florida limited liability company formed on November 11, 2017. We do not do business under any other name. Our principal business address is 1420 Celebration Blvd., Suite 200, Celebration, FL34747. We began offering franchises for La Rosa Realty and Better Homes Realty offices in 2019. We have not offered franchises in other lines of business. While we do not operate a La Rosa Realty or Better Homes Realty office, some of our Affiliates (described below) operate La Rosa Realty offices located in the states of California, Florida, Georgia, New York, South Carolina and North Carolina. Currently, twenty-eight (28) Affiliate-owned locations are in operation. We do not have a parent.

Better Homes Realty franchised offices had been offered by Better Homes Realty, Inc., a Nevada corporation. It currently has 28 franchised offices in operation, principally in California but also in Pennsylvania, New Jersey and Texas. As more fully discussed in Item 13 below, in 2019 Better Homes Realty, Inc. licensed us to sell franchises for Better Homes Realty franchises throughout United Stated, Canada and elsewhere. We will also oversee and administer the offices we sell, no matter their brand. While Better Homes Realty, Inc. continues to have the right under our license agreement to continue to sell franchises, it currently does not plan to actively do so and has let its various franchise registrations expire.

We currently have the following affiliates (“Affiliates”).

La Rosa Development Corp. (“Development Corp”) is a Florida corporation formed on July 9, 2004 by Joseph La Rosa and Michael La Rosa (Joseph La Rosa’s brother). Development Corp develops and owns separate properties and does not operate a La Rosa Realty or Better Homes Realty business.

La Rosa Realty, LLC (“Realty LLC”) is a Florida limited liability company formed on August 18, 2004. Realty LLC is a real estate brokerage business operating in the state of Florida similar to the business you will operate.

La Rosa Coaching, LLC (“Coaching LLC”) is a Florida limited liability company formed on January 18, 2017. Coaching LLC provides real estate brokerage training and related services to real estate brokerage businesses, including our franchisees.

Advantage International Title, LLC (“Title LLC”) is a Florida limited liability company formed on February 18, 2014. Title LLC is a title agency. Title LLC provides title, escrow and related services to real estate brokerage businesses, including our franchisees.

La Rosa CRE, LLC (“CRE”) is a Florida limited liability company formed on May 2, 2019.CRE provides commercial real estate brokerage services and related commercial training and management services to real estate brokerage businesses, including our franchisees.

La Rosa Insurance, LLC (“Insurance LLC”) is a Florida limited liability company, formed December 27, 2012. Insurance LLC provides homeowner’s, auto, and health insurance and related services to real estate brokerage businesses, including our franchisees.

La Rosa Property Management LLC (“Property Management LLC”) is a Florida limited liability company, formed September 5, 2014. Property Management LLC provides residential and commercial property management.

Next Generation Advanced Commissions, LLC (“Next Generation”) is a Florida limited liability company formed July 23, 2015. Next Generation provides Agents the opportunity to request an advance on upcoming commissions from future transactions and related services to real estate brokerage businesses, including our franchisees.

La Rosa Realty Network, LLC (“Realty Network”) is a Florida limited liability company formed July 21, 2005. Realty Network holds licensed real estate Sales Associates licenses in Florida to maintain active status in the State of Florida and ancillary services to real estate brokerage businesses, including our franchisees.

La Rosa Realty New York, LLC (“Realty New York”) is a New York limited liability company formed June 1st 2012. Realty New York operates a real estate brokerage business in the State of New York substantially similar to the business you will operate.

La Rosa Realty California, LLC (“Realty California”) is a California limited liability company formed April 10, 2017. Realty California operates a real estate brokerage business in the State of California substantially similar to the business you will operate.

La Rosa Realty South Carolina, LLC (“Realty South Carolina”) is a South Carolina limited liability company formed January 31, 2018. Realty South Carolina operates a real estate brokerage business in the State of South Carolina substantially similar to the business you will operate.

La Rosa Realty Georgia, LLC (“Realty Georgia”) is a Georgia limited liability company formed July 10, 2018. Realty Georgia operates a real estate brokerage business in the State of Georgia substantially similar to the business you will operate.

We share an address with all of our Affiliates.

The Business

We offer franchises for the use of the “La Rosa Realty” and “Better Homes Realty” trademarks, trade names, service marks, logos and other trademarks and service marks from time to time included within the System (“Marks”). When you sign your Franchise Agreement you select the brand under which you will operate. You cannot have an office that uses both brands. The Franchise Agreement that governs your use of one of the brands is virtually the same no matter the brand that you chose, except for the provisions that pertain to the specific brand you are licensed to use.

The franchises we sell operate under a business format, and a unique system, including our valuable know-how, information, Trade Secrets, methods, Operations Manual, standards, designs, methods of trademark usage, copyrights, sources and specifications, confidential electronic and other communications, methods of Internet usage, marketing programs, and research and development connected with the operation and promotion of the our system of real estate brokerage offices (“System”). We reserve the right to change or otherwise modify the System at any time. Each franchised office offers residential and commercial real property purchasers and sellers a variety of services in the real estate industry.

You must operate your franchised office per our standard business operating practices and sign our standard franchise agreement (“Franchise Agreement”). We reserve the right to add, modify, or delete any Services that you must offer or sell at your office at any time. You must also obtain all necessary permits, licenses and approvals to operate your office, including a license to operate as a real estate broker as required by each state in which your office is located.

You will be permitted to open branch offices (“Branch Offices”) in your Territory as part of your franchise. As such, unless stated otherwise, the fees listed below apply to all offices opened under your Franchise Agreement rather than separate fees for each Branch Office.

Regulations

There are specific regulations pertaining to operating in the commercial and residential real estate industry and you must comply with all local codes, regulations and licensing requirements. Local and state authorities may require you to obtain a real estate broker’s license to operate a real estate office. Some states also require franchised real estate brokers to identify themselves as franchised real estate brokers when offering Services to the public. You should consult with local agencies and/or your attorney. You must obtain all required licenses and permits and ensure that your employees, agents, and others providing commercial and residential real estate services to customers on behalf of your business have all required licenses and permits. The failure to maintain the proper licensing is a material breach of the Franchise Agreement. You should familiarize yourself with these laws before deciding to purchase a franchise from us.

Market Competition

The System presently focuses on providing real estate services to the public. You will have to compete with other real estate brokerage businesses including franchised operations, national chains, independent real estate brokers and agents and independently owned real estate companies offering real estate services to residential and commercial customers. You will also face normal business risks that could have an adverse effect on your business.

The success of the System is dependent on key personnel, the loss of whom could have an adverse effect on us. Our ability to fulfill our obligations under our Franchise Agreement depends in part on our present and future financial condition. Litigation risks also exist, which may not be foreseeable.

Existing La Rosa Realty, LLC Business Locations

It is our intention to initially offer franchises to exiting real estate brokers now working for our affiliate, La Rosa Realty, LLC. If you purchase an existing office from our affiliate, you will be required to purchase the furniture, fixtures and equipment then existing at that office. The location will be sold, leased, subleased or otherwise transferred and assigned to you in conjunction with you entering into a Franchise Agreement with us. The form of the purchase agreement with La Rosa Realty, LLC is attached hereto as Exhibit J. Such form is provided as a general guide since each existing business is unique and there are variables that may require divergent terms and conditions.

ITEM 2: BUSINESS EXPERIENCE

President and Founder — Joseph La Rosa

Mr. La Rosa has been our President and Founder since our formation on January 18, 2017. Additionally, he has been President of La Rosa, LLC in Celebration, Florida, since its formation on August 8, 2004. Mr. La Rosa is also the President or Vice President of each of the Affiliates listed in ITEM 1, other than Advantage International Title, LLC, which is independently managed and operated by Graciela La Rosa. Mr. La Rosa is also a manager of both of the Affiliates, Realty New York and Realty California.

Vice President-Operations and Development - Mark Gracy

Mr. Gracy has held his current positions since August, 2019. From June, 2017, until he assumed his current position he was a Team Leader, Education Coordinator and Regional Director for South Florida for La Rosa Realty, LLC. From 2014 until June, 2017, Mr. Gracy was a Partner and Team Leader with KW Real Estate Partners at Keller Williams Realty in Topsfield and Newburyport, Massachusetts.

Director of Marketing - Brian David Kirkwood

Mr. Kirkwood is the current Director of Marketing for Realty LLC since July 2016. Prior to that Mr. Kirkland worked as a Production Assistant and Tour Facilitator for the Disney Institute from August 2012 through February 2015 and as a Guest Correspondence and Billing Associate for Walt Disney World from July 2013 through August 2014. He has also worked as a freelance Social Media and Blog Content Specialist since September of 2010.

Chief Financial Officer - Stacey H. Stuck

Ms. Stuck has been the Controller for Realty LLC since September of 2018; was the Accounting Manager for Magic Development LLC from July 2017 until September 2018; and was the Business Manager of New Castle, PA Community YMCA from September 2015 to April 2017. Prior to that Ms. Stuck was an Accounting Specialist and Accounts Payable/Receivable Supervisor for Contessa Premium Foods from July 2012 through March 2016.

Vice President — Professional Advancement — Veronica Malolos

Ms. Malolos assumed her position with us in October, 2019. Since 2014 she has also been a commercial real estate agent with NAI Realvest in Orlando, Florida. She was the 2014 District Vice President for Florida Realtors, 2018 Chair of the Housing Opportunity Committee is the 2020 Chair of the Smart Growth Advisory Board of the National Association of Realtors.

ITEM 3: LITIGATION

No litigation is required to be disclosed in this Item.

ITEM 4: BANKRUPTCY

No bankruptcy information is required to be disclosed in this Item.

ITEM 5: INITIAL FEES

You must pay us an initial franchise fee (“Initial Franchise Fee”) of $10,000 for your first office, which is payable when you sign a Franchise Agreement and is not refundable under any circumstances. We will negotiate with you before you sign your Franchise Agreement regarding the size of your Territory and the number of Branch Offices you may open in the Territory. During our last fiscal year, no franchised outlets were opened and we collected no Initial Franchise Fees.

ITEM 6: OTHER FEES

† Denotes fees that are imposed and payable to us or our Affiliates, vendors and suppliers. All fees paid to us or our Affiliates are non-refundable under any circumstances once paid except as provided. Fees paid to vendors or other suppliers may or may not be refundable depending on your vendors and suppliers. We reserve the right to require you to pay fees and other amounts due to us via electronic funds transfer or other similar means, as described in the Franchise Agreement. If payments are required in this method, you must comply with our procedures and perform all acts and deliver and sign all documents, including authorization (in the form attached to the Franchise Agreement as Attachment 6 or any other form that we may accept) for direct debits from your business bank operating account, which may be necessary to assist in or accomplish payment by this method. Under this procedure, you will authorize us to initiate debit entries and/or credit correction entries to a designated checking or savings account for payments of fees and other amounts payable to us and any interest that may be owed. You must make the funds available to us for withdrawal by ACH electronic transfer no later than the payment due date. If you have not timely reported your Gross Commission Income to us for any reporting period, then we will be authorized, at our option, to debit your account for (a) the fees transferred from your account for the last reporting period for which a report of your business’s Gross Commission Income was provided to us, or (b) the amount due based on information retrieved from the electronic data polling of your computer systems.

Notes:

(1)       Gross Commission Income. In this Disclosure Document, Gross Commission Income means the total of all commissions, transaction fees, property management fees, and monthly fees collected or receivable by Franchisee and Franchisee’s independent sales associates, agents, representatives, contractors, employees, partners, directors, officers, Owners, or Franchisee’s Affiliates, regardless of whether or not such individuals or Affiliates are entitled to retain all or part of such Gross Commission Income, directly or indirectly, in connection with the franchised business (earned in compliance with all applicable laws) including, but not limited to, transactions and provision of services for which a real estate or auctioneer’s license is required (including appraisal fees [“Broker Price Opinions” or “BPO”], title or escrow services fees), the sale or provision of products or services that we or any of our Affiliates develop or make available to you directly or through a third party, monthly fees or additional transaction fees charged to Agents by the Franchisee (such as, but without limitation, Transaction Fees and Coaching Fees), Property Management Services, and/or any transaction, sale and/or service in which the Marks or the System is used in any manner, without deducting any of your multiple listing fees, advertising costs, commissions, overrides, bonuses, salaries, gifts, or any other costs or expenses and other receipts and fees from its Agents and from all other sources (including but not limited to referral fees and finder’s fees received from brokers or agents in other brokerage companies) which are derived from the sale, lease, transfer or other disposition (including like-kind exchanges, barter exchanges, or other exchanges of property not involving money) of Real Property, including any note, obligation, lien or other consideration given to Franchisee in lieu of a commission and insurance claims for lost profits if a claim is paid by the insurer.

Gross Commission Income does not include: (1) any commissions and referral fees paid to cooperating or referring brokers in other brokerage companies; (2) the amount of any tax imposed by any federal, state, municipal or other governmental authority directly on sales and collected from customers, provided that the amount of any tax is shown separately and in fact paid by the Franchisee to the appropriate governmental authority; and (3) fair market rent paid by Franchisee’s Agents for the lease of office space at Franchisee’s Central Office or Branch Office locations.

Gross Commission Income will be deemed received at the earlier of the closing of any transaction described above or when payment for any Services is received by Franchisee or an Agent. Gross Commission Income consisting of property or services will be valued at the fair market value of the property or services at the time that they are received.

(2)       Royalty Fees. Your payment of the Royalty Fees to us based on Gross Commission Income as, subject to appropriate exclusions and deductions as follows:

For each month from and after the Opening Date, you will pay to us a monthly royalty fee (“Royalty Fee”) equal to the greater of:

(a)       If Franchisee qualifies as a Small Office Franchisee:

(i)            The Small Office Franchisee shall pay a per transaction royalty fee of $120 (capped at an annual contribution of $1,800.00 per individual Agent per calendar year) where the Gross Commission Income from each such transaction is over $1,500.00. Where the Gross Commission Income from a transaction is less than $1,500.00, the transaction royalty fee will be calculated at five percent (5%) of the Gross Commission Income received, subject to the $1,800.00 annual contribution cap; or

(b)       If Franchisee qualifies as a Large Office Franchisee:

(i)            The Large Office Franchisee shall pay a per transaction royalty fee of $75.00 (capped at an annual contribution of $1,800.00 per individual Agent per calendar year) where the Gross Commission Income from each such transaction is over $1,500.00. Where the Gross Commission Income from a transaction is less than $1,500.00, the transaction royalty fee will be calculated at five percent (5%) of the Gross Commission Income received, subject to the $1,800.00 annual contribution cap; or

(3)       Annual Membership Fee. Franchisee shall pay to us an annual membership fee (“Annual Membership Fee”) for each Agent retained by you. We reserve the right to increase the Annual Membership Fee on an annual basis. The Annual Membership Fee will be payable by each of your Agents, although if your Agents do not pay the Annual Membership Fee when due, you will be required to pay this fee on demand from us.

(4)       Technology Fee. Each month you will pay this fee for use of the software and other technology we provide.

(5)       Additional Assistance. The Initial Franchise Fee includes between two (2) and three (3) business days of initial training for you or, if you are a legal or business entity and one additional person such as a Designated Business Manager. You will be responsible for all wages, benefits, and travel expenses for all participants attending the initial training program including airfare, lodging, meals, ground transportation and personal expenses. The training will be at our Florida headquarters or another location designated by us. After completion of the initial training, we will provide additional telephone assistance to you at no cost. If you require or request additional on-site assistance beyond what is provided by us, you can request that we send a representative to provide further assistance to you. If we provide additional assistance at your request, we must agree in advance to the charges you will pay and the length of the visit. The cost of additional assistance will depend on your needs and the amount of assistance you desire. We may also require you to receive additional assistance if you are not meeting our requirements or if we determine pre- opening assistance is required, or if we determine that it is necessary for us to provide additional assistance to you to keep the System competitive. This additional assistance will be at your expense as described above. Our current published rate in our Operations Manual for additional assistance is $500-$1000 per person per day plus the cost of travel and room and board, but we reserve the right to adjust that rate periodically in our Operations Manual.

(6)       Cooperative Fee. Cooperatives will be composed on all franchised and company-owned businesses located in a designated market area using the same Marks. If a Cooperative is established, fees payable to the Cooperative will be determined by a vote of the members of the Cooperative. No Cooperatives have been established as of the date of this Franchise Disclosure Document.

(7)       Training for Administrative Personnel. We provide initial training for two people for between two (2) and three (3) business days with no additional training fee. If you want administrative personnel to attend the initial training program, we will charge a training fee of $500 per person for (3) business days of training or$250 per person for two (2) days or less of training. Training fees can be increased or decreased by us at any time. You will also need to pay for airfare, lodging, ground transportation, meals, salary and benefits, and other personal expenses for each person attending the initial and recurring training program.

(8)       Local Advertising. We will provide guidelines for Local Advertising. Local Advertising expense does not include the costs of advertising homes or commercial property for sale by your business, costs for recruiting agents or other advertising expenses related directly to the sale of residential or commercial property.

(9)       Seminars, Conventions or Programs. This figure is an estimate of the conference fees that you will pay to us (estimated to be between $250-$500 per person) to attend seminars, conventions or programs that we put on. This does not include the travel and living expenses that you and your representatives incur in attending these seminars, conventions or programs.

ITEM 7: ESTIMATED INITIAL INVESTMENT YOUR ESTIMATED INITIAL INVESTMENT

Notes:

(1)       Estimated Expenses. The high and low ranges in the table are based on an average for a one office for the first three months of operations. If you open Branch Offices, your costs for opening each Branch Office will be similar to these costs, less the initial franchise fee. Fees and expenses paid to vendors or other third parties may or may not be refundable depending on the arrangements you make with them.

(2)       Initial Franchise Fee. The Initial Franchisee Fee is $10,000. The Initial Franchise Fee is due when you sign the Franchise Agreement. This fee is non-refundable once paid except as provided in Item 5.

(3)       Travel and Living Expenses While Training. We provide training for two (2) people for between two (2) to three (3) business days at our corporate office located in Celebration, Florida or at another location designated by us. You must pay for airfare, meals, transportation costs, salaries, benefits, lodging and incidental expenses for all initial training program attendees. You will be required to pay a training fee (See Item 5) to us if you request that we provide training to more than two (2) people.

(4)       Computer Hardware and Software. The estimated initial investment includes costs related to the purchase of specified computer Hardware and Software. If we require, you must provide us with electronic access to certain daily information.

(5)       Supplies. Your initial supplies will typically include form contracts, signs, and marketing materials. We have the right to change the supplies at any time.

(6)       Opening Promotional Expenses. These figures represent an estimate of the costs associated with opening and promoting your business and include business cards, stationary, nametags, pre-event kick-off dinner, promotional event, promotional materials, catering, entertainment, etc.

(7)       Office Lease. You must lease space in a commercial office building from which to operate your business. We do not provide you with any site selection assistance in this process. We must approve your proposed Central Office and any Branch Office locations.

(8)       Leasehold Improvements/Construction. Your office space must satisfy appearance and size standards that we have established and meet the requirements necessary to conduct the franchised business. You must open the Central Office within 120 calendar days from the date you sign the Franchise Agreement, unless we otherwise approve additional time in writing. The actual cost of the improvements will depend on the size and condition of the premises, and the type of tenant finish and improvements you choose.

(9)       Furnishings, Fixtures and Equipment. You will have to purchase or lease furnishings, fixtures and equipment for your office location. We do not provide you with any assistance in this process, and we do not have any relationships with vendors that may be of use to you in this process.

(10)     Insurance, Security and Utilities Deposits, Dues, Licenses. These amounts include the cost of insurance, estimated security deposit for your office (equal to one months’ rent) and utility deposits. The actual amount of your insurance and these deposits will vary depending on local landlord practices and other factors. These amounts also include the estimated cost of obtaining a license from a state agency to act as a real estate broker and dues to local, state and national real estate organizations.

(11)      Start-Up Expenses and Working Capital. This amount includes estimated operating expenses you should expect to incur during the first three months of operations, not including any revenue generated by your business. It includes office lease expenses, royalties, advertising, payroll costs, deposits, fees for city, state and local business licenses, business entity organization expenses, other prepaid expenses, accounting and professional fees, and other operational expenses.

(12)      Total Estimated Initial Investment. These figures are estimates only and reflect only the first three months of operations. You should review these figures carefully with a business advisor before making any decision to purchase a franchise. You may incur additional expenses starting your business. Your costs depend on several factors, including how well you follow our methods and procedures; your management skill, experience and business acumen; local economic costs and conditions; the local market for our services; the prevailing wage rate; competition; and sales levels reached by your business during the initial period.

ITEM 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

We have standards and specifications for your Office, equipment, dress code, supplies, forms, Services, advertising and marketing materials, signage, and most other services and Products used in, sold or provided through your business. To maintain our standards of consistent, high quality Services, customer recognition, advertising support, value and uniformity, you must purchase or lease all of your required equipment, Software, Hardware, supplies, fixtures, Services and Products used in or sold through your business, per our specifications and standards, only from us or our Approved Suppliers and distributors. With the exception of the arts graphics package that we will provide you, we are not an approved supplier, but we reserve the right to become an approved supplier at any time.

One of our officers owns an economic interest in: (a) CRE, LLC, an approved provided of commercial real estate services and educational offerings; (b) Coaching LLC, an approved supplier of real estate education services; (c) Property Management LLC is an Approved Supplier of residential and commercial property management services; (d) Insurance LLC is an Approved Supplier of Insurance services; (e) Advanced Commissions, LLC, an approved supplier of offering Advanced Real Estate Commissions services; and (f) Title Insurance, LLC, an approved supplier of Title Insurance services.

We may derive revenue from your purchases or leases of computer-related Hardware, Software, goods, services, supplies, fixtures, equipment, inventory and Products from our Approved Suppliers and distributors. You must buy computers, Software, Hardware, computer related services, Products, equipment, supplies, fixtures, inventory, goods and services (“Required Products and Services”) that meet our requirements as detailed in the Operations Manual.

In some instances, you will be required to purchase certain Required Products and Services from us or from specific suppliers previously approved by us. (“Approved Suppliers”) and/or specific providers designated by us, including us and our Affiliates (“Designated Suppliers”). Approved Suppliers and Designated Suppliers will be identified in the Operations Manual. If we have appointed Approved Suppliers or Designated Suppliers with respect to Required Products or Services, you may not purchase such Product or Service from anyone other than an Approved Supplier or Designated Supplier without prior written approval. We will respond to requests for approval to do so within 30 days from the date the request is received. You must submit all information, specifications, and samples that we may request regarding a supplier, service, or Product proposed by you. The general criteria we apply in approving a proposed supplier involve the ability of the supplier to provide sufficient quantity of Product at a competitive price and the proposed supplier’s dependability and general reputation. We may revoke approval of an Approved Supplier if that supplier no longer meets these general criteria.

We estimate that the purchase of these computers, Software, Hardware, computer related services, supplies, equipment, inventory, fixtures, goods, services and Products from us or our designated or approved sources, or those meeting our standards and specifications, will be approximately 5% to 15% of your total cost to establish the franchised business and 5% to 25% of your total cost of operating your business (not including amortization, depreciation, or replacement of worn or obsolete improvements, equipment or fixtures). We did not derive any revenues from sales of goods and services to franchisees during our last fiscal year.

Franchisees must license from us or our Affiliates, Approved Suppliers, or Designated Suppliers certain proprietary computer programs and related materials developed for use in the operation of your business (“Software”). We may require you to pay a separate license fee for the Software, as set forth in Item 11. We also charge you a Technology Fee with respect to the Software and other technology employed at your business.

You may use the Software only on computer equipment and Hardware purchased through our Affiliates, Designated Suppliers, Approved Suppliers, or obtain our written approval to purchase other equipment. We will respond to requests for approval to purchase equipment other than the Computer System within 30 days from the date the request is received.

We do not have any purchasing or distribution co-operatives as of the date of this Franchise Disclosure Document. We may negotiate purchase arrangements with suppliers and distributors of approved Products for the benefit of our franchisees and we reserve the right to receive rebates and other payments or volume discounts based on your purchases from these suppliers and distributors and from our purchase of Products that we may re-sell to you. We do not provide material benefits, such as renewing or granting additional franchises to franchisees, based on their use of our Affiliates, Designated Suppliers, or Approved Suppliers.

Insurance

You must procure and maintain, at your own expense, insurance policies protecting you, us, our designated Affiliates, and the owners, officers, directors and employees of us and our designated Affiliates against any loss, liability, errors and omissions, business interruption, personal injury, death, property damage, or expense resulting from the operation of your business and all services you provide in connection with the operation of your business as we may require for your and our protection in amounts set forth in the Operations Manual and Franchise Agreement (which may be adjusted periodically). You must carry, at all times, no less than $1,000,000 per occurrence/$2,000,000 aggregate in Commercial General Liability (“CGL”) insurance coverage and add Franchisor, its officers, directors, employees, agents, and contractors as additional insureds to those policies. You must also procure and maintain all other insurance required by state or federal law, including workers compensation insurance and unemployment insurance. The policies must also stipulate that we receive a 30-day prior written notice of cancellation or non-renewal and must contain endorsements by the insurance companies waiving all rights of subrogation against us. Original or duplicate copies of all insurance policies, certificates of insurance, or other proof of insurance acceptable to us including original endorsements affecting the coverage required by us will be furnished to us together with proof of payment within 10 days of issuance. You will also furnish us with certificates and endorsements evidencing this insurance coverage within 10 days after each of the following events: at all policy renewal periods, no less often than annually, and at all instances of any change to, addition to, or replacement of any insurance. The certificates and endorsements for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. All certificates and endorsements are subject to approval by us. If you fail to procure and maintain the required insurance coverage, we have the right and authority to procure the insurance coverage on your behalf and charge you, which charges, together with a reasonable fee for our expenses incurred in this procurement, you will pay immediately upon notice.

Brokerage Training

You must use our Affiliate, Coaching LLC, for the purposes of training all new Agents and/or those Agents who have closed less than three (3) transactions within a preceding twelve (12) month period. Coaching LLC charges a fee equal to 20% of the Agent’s Gross Commission Income for the Agent’s first three (3) transactions.

Title Work

You are not required to, but it is recommended that, refer clients to our Affiliate, Title LLC, to act as the title agency for title and closing of transaction in which you are involved. You may not promote any other title company.

Commercial Real Estate

You must contract with our Affiliate, CRE, to oversee and assist in all commercial real estate transaction in which you are involved.

Home Mortgage Lenders

You are not required to, but it is recommended that, you refer clients to our then approved lender for home mortgages to your clients. You may not promote any home mortgage lender not approved by us.

Insurance

You are not required to, but it is recommended that, refer clients to our Affiliate, Insurance LLC, to provide homeowner’s, auto, and health insurance coverages to your clients. You may not promote any other insurance company.

Property Management

You must contract with and use our Affiliate, Property Management LLC, to provide all residential and commercial property management services to your clients.

Advance Commissions

You are not required to use Next Generation, but you may be able to utilize the opportunity to request an advance on upcoming commissions from future transactions and related services to real estate brokerage businesses, including our franchisees. You may not promote any other company that competes with Next Generation.

ITEM 9: FRANCHISEE’S OBLIGATIONS

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 this disclosure document.

ITEM 10: FINANCING

We do not offer direct or indirect financing. We do not guarantee your note, lease, or obligation.

ITEM 11: FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING

Except as listed below, Franchisor is not required to provide you with any assistance.

Pre-opening Obligations

Before you open your business, we (or our designee) will provide the following assistance and services to you.

Designate your Territory. (Section 8.3(a) of the Franchise Agreement and Attachment 1 to the Franchise Agreement).

Furnish you with (or provide you with the ability to acquire from approved vendors or suppliers) specific items for the design and physical appearance of your Office and the supplies required for the operation of the business. (Section 8.3(c) of the Franchise Agreement).

Within 90 days of your signing the Franchise Agreement and your receipt of all required licenses and permits, we will conduct a two (2) to three (3) business days training course for you and one additional person in Celebration, Florida or at your Office. The training program may or may not be conducted on consecutive days. If you are not an individual, we will conduct a two (2) to three (3) day business training course for your Designated Business Manager in Celebration, Florida or at another location designated by us. (Section 8.3(d) of the Franchise Agreement).

Approve the renovations to your Office necessary to comply with our standards and specifications and your compliance with the opening procedures for your Office, as described in the Operations Manual. (Section 9.2(b) of the Franchise Agreement).

Continuing Obligations

During the term of the Franchise Agreement, we (or our designee) will provide the following assistance and services to you:

Make a representative available to speak with you on the telephone during regular business hours to discuss your operational experiences and support needs. Provided, however, that questions regarding technological support will be referred to third parties (including but not limited to our Affiliates) who may charge a fee for providing you with these technological support services (Section 8.4(a) of the Franchise Agreement).

Inform you of mandatory specifications, standards and procedures for the operations of your franchised business. (Section 8.4(d) of the Franchise Agreement).

Research new services and methods of doing business and provide you with information concerning developments of this research. (Section 8.4(e) of the Franchise Agreement).

Maintain the FMF, once established, and use these funds to develop promotional and advertising programs and public relations support for our franchised businesses. (Sections 8.4(f) and 12.1 of the Franchise Agreement).

Provide advertising materials to you in the form of an arts graphics package, which is included in your

Operations Manual. (Section 8.4(g) of the Franchise Agreement).

Our representatives will have the right but not the obligation to provide additional assistance. (Section

8.4(h) of the Franchise Agreement). There may be additional charges for these services. If we provide additional assistance, we must agree in advance on the charges you will pay and the length of the visit.

We may choose to provide you with continuing national, regional or local workshops and seminars. You must pay the conference fee, if any, and all travel and living expenses. We require that you or your Designated Business Manager attend these conferences. These conferences will be held at our Celebration, Florida headquarters, your Office, or at a location chosen by us. (Section 8.4(b) of the Franchise Agreement).

We may provide you with a monthly newsletter. (Section 8.4(i) of the Franchise Agreement).

Operations Manual

You must establish and operate your business in compliance with your Franchise Agreement and the standards and specifications contained in our confidential operations manual (“Operations Manual”) loaned to you by us. The Operations Manual consists of one or more manuals, technical bulletins or other written materials and may be modified by us periodically. The Operations Manual may be in printed or in an electronic format. We reserve the right to require you to use an electronic version of the Operations Manual. We also reserve the right to require you to access the document using the Internet or an intranet created and supported by us. The Operations Manual contains approximately 55 pages. You will have the opportunity to view the Operations Manual at our headquarters before purchasing a franchise, provided you agree in writing to keep its content confidential.

Training

We provide an initial training program lasting between three (3) and five (5) business days. The initial training program is usually conducted at our corporate headquarters located in Celebration, Florida, but the training course may be held elsewhere in the future.

Under the Franchise Agreement, before you begin operating your business, you or, if you are not an individual, a “Designated Business Manager,” must attend and successfully complete to our satisfaction our initial training program. If the Designated Business Manager’s employment with you is terminated, you must designate a new Designated Business Manager who must successfully complete our initial training program within 90 days after the termination of the initial Designated Business Manager. If we do not hold an initial training program during that 90-day period, the replacement Designated Business Manager must attend and successfully complete the first available initial training program held by us. You may be charged a training fee for a replacement Designated Business Manager. You must also pay the costs for airfare, ground transportation, lodging, meals, personal expenses, and the Designated Business Manager’s salary and benefits.

There is no tuition or fee for the initial training program for you and one additional representative such as a Designated Business Manager or business partner, etc. If you desire to have additional people attend the initial training program, there will be a $500 per person training fee. We do not pay any travel expenses, lodging, meals, ground transportation or other personal expenses.

Our training program consists of between two (2) to three (3) business days, which may or may not be consecutive days, of training as follows:

TRAINING PROGRAM

The initial training program and other on-going training will be conducted by training personnel under the direction of our President, Joseph La Rosa who has been with La Rosa LLC from its inception and has been involved in real estate industry since 2002. We may change or substitute training personnel as necessary. We may delegate our duties and share our responsibilities with regard to training. Training classes are generally held every other month or as needed. The hours of classroom training are estimates and may, in certain circumstances, be slightly shorter or slightly longer than the actual classroom training.

Our Operations Manual and workbook serve as the primary instructional materials during the training program. We may present seminars, conventions or continuing development programs for the benefit of Franchisees. Your attendance is mandatory. You must pay for any conference fee and your travel and living expenses incurred in attending any seminar.

ADVERTISING PROGRAMS

Franchise Marketing Fund (“FMF”)

We may establish a Franchise Marketing Fund for either or both brands that we franchise under the Franchise Agreement. If established, all covered businesses will be required to pay to us a Franchise Marketing Fund Contribution (“FMF Contribution”). The FMF Contribution will be 1% of Gross Commission Income provided that the FMF Contribution may be increased up to no greater than 1.5% of Gross Commission Income. If you are approved to use the Better Homes Realty trademark and we establish an FMF for Franchisees using that trademark, you will be required to pay to us a separate FMF Contribution, but will not be required to contribute to a La Rosa Realty FMF and vice versa.

If established, the FMF will be accounted for separately by us but we are not required to maintain the FMF funds in a separate or segregated account at a bank or other financial institution. The FMF would be administered by us. Any unused funds in any fiscal year will be applied to the following fiscal year’s funds. We reserve the right to contribute or loan additional funds to the FMF on any terms we deem reasonable. Each company-owned or Affiliate-owned office will make contributions to the FMF equal to the contributions required of businesses within the System. This fund will be unaudited and we will make available to you once a year, upon request by telephone or written correspondence, an unaudited annual accounting for the FMF that shows how the FMF proceeds have been spent for the previous year within 120 days after our fiscal year end. We will not provide a periodic accounting of how Marketing Fees are spent.

If established, we may use the Marketing Fees we collect from Franchisees to create marketing materials relating to the System and the services sold by our Franchisees; to pay for public relations projects intended to enhance the goodwill and public image of the System; to assist Franchisees in developing local marketing programs; to pay for the cost of placing marketing materials in various print, broadcast and Internet media; to undertake any other marketing efforts we deem necessary or beneficial to the System; and to reimburse us or our Affiliates for salaries and overhead expenses related to the marketing services provided to Franchisees as well as to cover part of the cost of maintaining the Internet website. No advertising expenditures from the FMF will be devoted principally to the sale of new franchises. We will attempt to spend monies contributed to the FMF in such a way as to provide advertising benefits to all participating businesses, but we make no guarantees that you will benefit pro rata or at all from your contributions to the FMF. We reserve the right to allocate Marketing Fees to various permitted uses as we see fit and we do not guarantee that you will receive equal benefits or identical coverage. Neither we nor our Affiliates receive payment for providing goods or services to the FMF, except for reimbursement of expenses as described above.

During our last fiscal year, no FMF was established and no Marketing Fees were collected or expended.

Local Advertising

You must agree to spend money for local advertising and promotions in your Territory (“Local Advertising”) in accordance with local real estate brokerage marketing standards and practices. All Local Advertising by you must be conducted in a dignified manner and will conform to the standards and requirements set forth in the Franchise Agreement and Operations Manual or otherwise for use of the Marks. You must promptly discontinue use of any advertising or promotion plans or materials that do not meet the requirements of the Franchise Agreement or Operations Manual, whether or not previously approved, upon notice from us. You may, at your sole expense, plan and carry out a grand opening promotion relating to the opening of business. Within 30 days after written request from us, you must submit a report showing the amount you spent for Local Advertising during the preceding year and documents substantiating that you incurred and paid particular expenditures during the year. None of the Local Advertising payments made by you will be used by us in the advertising or promotion of individual franchise sales.

Cooperatives

We also may designate any geographic area in which two or more businesses using the same Mark are located as a region for establishing an advertising cooperative (“Cooperative”). The members of a Cooperative will consist of all such businesses, whether franchised or operated by us, or other Affiliates that operate in an area determined by us. We will determine in advance how each Cooperative will be organized and governed, who will administer it, when it must start operation. Each Cooperative will be organized for the sole purposes of administering advertising programs and developing, subject to our approval, promotional materials for use by the members in Local Advertising. If a Cooperative has been established for a geographic area where your business is located when the Franchise Agreement is signed, or if any Cooperative is established during the term of the Franchise Agreement, you must become a member of the Cooperative and abide by the rules of the Cooperative. We reserve the right to form, change, dissolve or merge any Cooperative. If you are approved to use the Better Homes Realty trademark and we establish a Cooperative for Franchisees using such trademark(s), you will be required to pay to us a separate Cooperative contribution, but will not be required to contribute to a La Rosa Realty Cooperative and vice versa.

If we have established a Cooperative for your area, you must contribute to the Cooperative the amounts required by its written governing documents. All contributions to the Cooperative will be maintained and administered in accordance with the written documents governing the Cooperative. If there are Company-owned and Affiliate-owned outlets in your area operating under the same brand as you offering Products and Services similar to your business, they will make contributions to the Cooperative equal to the contributions required of the similarly-branded businesses within that area. The Cooperative will be operated solely as a conduit for collecting and spending Cooperative fees for the purposes outlined above. The Cooperative may not use any advertising or promotional plans or materials without our prior approval.

The amount of contribution, and whether other franchisees must contribute the same amount or at the same rate, will be determined by the members of the Cooperative, subject to our approval. We anticipate that each member will have one vote for each Central Office and Branch Office of the business operated by the member within the geographic area subject to the Cooperative. You will be obligated by the Franchise Agreement to pay any increased contributions even if you vote against the increase. Each Cooperative will have to prepare an annual financial statement reporting its expenditures for the previous year to its members. If a Cooperative is established, we will provide you with a copy of the governing documents and its financial statements.

We have not created any Cooperatives as of the date of this Franchise Disclosure Document.

Franchise Owners Advisory Council

We may establish a Franchise Owners Advisory Council (“Council”) in the future. The Council will have up to three (3) representatives who will be appointed by the Franchisor. Once an initial Council is appointed by us, the Council will be tasked with creating a program for electing new Council representatives on a regular basis. The Council will serve in a purely advisory capacity on many matters, including advertising. We will have the power to change or dissolve the Council.

Office Location

You must operate the franchised business from a conventional office located outside of any personal residence. The office must be located within your Territory and must exist solely and exclusively for the operation of the franchised business. These requirements apply to both your Central Office and any Branch Office. If we approve any office location, such approval indicates only that we believe the office falls within the acceptable criteria we have established as of the approval date.

Based on the requirements of the Franchise Agreement, the factors we consider for such approval are: whether the office is located in your Territory; if it is located in a conventional office located outside of any personal residence; if it is used solely and exclusively for the operation of the franchised business; and if it is located sufficiently far enough away from any office of another franchisee as we determine. We do not select your Office Location, assist you in conforming it to local ordinances and building codes, assist you with constructing or decorating it, or provide for any necessary equipment, signs or fixture. It is your obligation to locate a site for your Central Office and any Branch Office(s) and to provide us with all necessary information in accordance with the timing requirements established in the Franchise Agreement so that we may approve such office in time for you to open your business in accordance with the requirements established in the Franchise Agreement. Specifically, if you fail to open your Central Office within 4 months of executing the Franchise Agreement, we may terminate the Franchise Agreement.

You must comply with all applicable ordinances, building codes and permit requirements and with lease requirements and restrictions. You must apply for all required real estate or brokerage licenses and permits within 10 business days after signing the Franchise Agreement. If you do not receive all required licenses and permits within 6 months of executing the Franchise Agreement, we may terminate the Franchise Agreement.

You may not operate out of a virtual, temporary, or short term office location (a “Short Term Location”) (defined as any location where you have secured the location for less than one (1) year) unless you receive prior written permission from the Franchisor. Franchisor may, in its sole discretion, approve or disapprove of such an arrangement provided that, under no circumstances, shall such arrangement be approved for a period of time exceeding six months.

You must secure an Office Location for at least one (1) year in order to establish a Territory (See Item 12). The opening of a Short Term Location will not establish a Territory.

Schedule for Opening and Site Selection Requirements

We estimate that the typical length of time between the signing of the Franchise Agreement and the opening of your business will be 1 to 4 months. However, we may grant you an extension up to a total of 180 days. Some factors which may affect this timing are: your ability to acquire an office location through lease negotiations; your ability to secure any necessary financing; your ability to comply with local zoning and other ordinances; your ability to obtain any necessary permits and certifications; the timing of the delivery of equipment, tools and inventory; and the time to convert, renovate or build your office. You must open your Central Office within 4 months after signing the Franchise Agreement unless we otherwise consent in writing (Section 9.12, Franchise Agreement).

You may not open your Central Office or any Branch Office until: we notify you in writing that all of your pre-opening obligations have been fulfilled; initial training is completed to our satisfaction; all amounts due to us have been paid; we have been furnished with copies of all insurance policies and certificates required by the Franchise Agreement, or other documentation of insurance coverage and payment of premiums that

we request; you notify us that all approvals and conditions set forth in the Franchise Agreement have been met; you have received all required permits and licenses; you have ordered, received and installed your equipment, supplies, inventory and Computer System; and you have provided evidence that your agents are licensed to sell real estate in your state. However, you are not required to immediately associate with or hire licensed real estate agents upon the establishment and opening of your business. You must be prepared to begin operating your business immediately after we state that your business is ready for opening.

For each Branch Office that you desire to open, you will propose a location for the Office, which we must approve.

Software and Computer Equipment

You must purchase and use computer Hardware and Software required by us in conjunction with the operation of your business. Currently, you must purchase at least one desktop computer (or a similar machine with similar specifications) for your administrative computers and at least one additional computer for your general Agent computers (“Hardware”), each of which must run an operating system capable of running the Software we designate and connecting to the Internet. The Hardware and the Software associated with these systems are referred to collectively as the “Computer System.” The estimated total cost of purchasing the Computer System is $5,000 to $30,000. The Computer System will store basic industry-required information including but not limited to housing addresses, transactional details, and other information required by multiple listing services and the state in which you operate your business. Your agents will be responsible for obtaining their own Hardware and Software.

Currently, you must pay a license fee for the use of the Software and other technology that we provide to you (“Technology Fee”) equal to Small Office Franchisees will pay $50.00 per Agent per month; and Large Office Franchisees will pay (a) $35.00 per Agent per month if Franchisee has less than 99 Agents, or (b) $25.00 per Agent per month if Franchisee has 100 or more Agents.

We reserve the right to increase the Technology Fee during each year of the Initial Term, and any Successor Term and Interim Period by any amount determined by us. You may purchase additional Software and support as they become available. We will require you to upgrade your Computer System or incur costs related to the maintenance of your Computer System as prescribed in the Operations Manual and as modified periodically by us. Such upgrades, in some cases, may only be available through our suppliers or Affiliates. We may change the Designated Suppliers or Affiliates periodically on written notice to you.

We provide you with a technological service that incorporates the data generated by your multiple listing service (“MLS”) into your Software. You must also pay to us a fee for this service (“MLS/RETS Fee”), which is currently $250 per calendar quarter for each Central and Branch Office per. You are also responsible for any initial, testing or ongoing connection fees charged by your local MLS for the provisioning of data outside the scope of the purpose of the MLS/RETS Fee.

You must have sufficient computer skills to be able to operate your Computer System and to access e-mail and the Internet. You must have access to the Internet and maintain an email account that allows us to communicate with you on a regular basis. You must check your email account several times every business day. If we determine that you require additional computer training, you must take and pay for, at your own expense, a computer training course at a local computer training school (which may be our Affiliate). You must complete this training within 90 days of the day we advise you of this requirement, and you must present us with a certificate acceptable to us to show that you passed the course.

We have the right to independently access your electronic information and data through our proprietary Software. We also have the right to collect and use your electronic information and data in any manner we choose in order to promote the development of the System and the sale of franchises. There is no contractual limitation on our right to receive or use information through our proprietary data management and intranet system.

You are solely responsible for protecting yourself from viruses, computer hackers, and other communications and computer-related problems, and you may not sue us for any harm caused by these communications and computer-related problems.

ITEM 12: TERRITORY

You will be granted a territory (“Territory”) in which to locate your Central Office(s) and Branch Office Locations. Franchisor agrees not to locate or permit another franchisee to locate an office in the Territory. We will negotiate the size of your Territory and the number of Branch Offices you must open in your Territory, if any, before executing the Franchise Agreement. Your Territory may be based on geographic or political boundaries (including but not limited to city, zip code, county or state boundary lines) and other characteristics including natural boundaries, and the amount and size of urban, suburban and rural areas. We have the exclusive right to determine the boundaries of your Territory.

During the Initial Term of the Franchise Agreement, once you have identified a Central Office for your business and secured that location for no less than one (1) year so long as you comply with all of your obligations under the Franchise Agreement, and subject to our reservation of rights, neither we nor any Affiliate will open or allow any others to open a competing business within your Territory.

For each Branch Office that you desire to open, you will propose a location for the Branch Office to us, and we have the right to approve or deny the location you propose to use. You may relocate a Branch Office within your Territory after we approve the location you propose to use.

We have the right to approve or deny the relocation of that Branch Office based on the following factors: whether the office is located in your Territory; if it is located in a conventional office located outside of any personal residence; if it is used solely and exclusively for the operation of the franchised business; and if it is located sufficiently far enough away from any office of another franchisee as we determine.

The grant of the license to you does not in any way prohibit other franchisees or us and our agents and Affiliates from listing and selling real property in your Territory (at no compensation to you). Also, the grant of the license does not prohibit you from listing or selling real property in a Territory granted to another franchisee or anywhere else outside of your Territory. You may use other channels of distribution to market outside of your Territory, as long as the rights to those channels are not currently reserved by us, as described below. For soliciting or selling Products or Services to customers outside of your Territory via the Internet or ecommerce, you may not independently market on the Internet, or use any domain name, address, locator, link, metatag, or search technique, or otherwise establish any presence on the Internet without our prior written approval. You may also not directly solicit real estate agents employed by us, our Affiliates or other of our franchises. General Agent recruiting programs not directed specifically at such agents are permissible.

You will not receive an exclusive territory other than that for the location of your Central and Branch Offices. You may face competition from other franchisees outside of the Territory, from outlets that we own outside of the Territory, or from other channels of distribution or competitive brands that we control. Customers from your Territory may purchase or obtain Services from other franchisees and from us and our Affiliates or designees over the Internet, or in other reserved channels of distribution, at no compensation to you.

Under your Franchise Agreement, you do not receive any options for additional franchises, any rights of first refusal to acquire additional franchises, or any similar rights to buy additional franchises.

For each Branch Office you want to open, you must propose a location, which is subject to our approval.

We reserve the right, among others: (i) to own, franchise, or operate La Rosa Realty, Better Homes Realty and other businesses at any location outside of the Territory, regardless of the proximity to your offices; (ii) to use the Marks and the System to sell any Products or services, similar to those, which you will sell, through any alternate channels of distribution within or outside of the Territory at no compensation to you. This includes, but is not limited to other channels of distribution such as television, mail order, catalog sales, or over the Internet. We exclusively reserve the Internet as a channel of distribution for us, and you may not independently market on the Internet or conduct e-commerce; (iii) to use and license the use of other proprietary and non-proprietary Marks or methods which are not the same as or confusingly similar to the Marks, whether in alternative channels of distribution or in the operation of a real estate brokerage business, at any location, including within the Territory, which may be the same as, similar to or different from your business; (iv) to purchase or be purchased by, or merge or combine with, any business, including a business that competes directly with your business, wherever located; (v) to acquire and convert to the System operated by us any businesses offering real estate brokerage services including those businesses operated by competitors or otherwise operated independently or as part of, or in association with, any other system or chain, whether franchised or corporately owned and whether located inside or outside of the Territory; and (vi) to implement multi-area marketing programs which may allow us or others solicit or sell to customers anywhere at no compensation to you. We also reserve the right to issue mandatory policies to coordinate these multi-area marketing programs.

ITEM 13: TRADEMARKS

The Franchise Agreement grants you the nonexclusive right to use the service mark “LA ROSA REALTY”, and various designs and logo marks associated with that Mark, or the “BETTER HOMES REALTY” service mark and the various designs and logo marks associated with that Mark, depending on which brand you have selected. If we permit, you may also use our other current or future Marks as we may designate for your business.

Our licensor, La Rosa Realty, LLC, a Florida limited liability company, has the following trademark registered on the Principal Register of the United States Patent and Trademark Office (“USPTO”):

Mark	Filing or Registration Date	Serial No. or Registration No.	Status
	April 2, 2019	5715581	REGISTERED

We also have a non-exclusive limited license to use the following Marks licensed to us by Better Homes Realty Inc., a Nevada corporation:

We may also use a number of unregistered, common law trademarks. You must follow our rules when you use our Marks. You may not use any of the Marks alone or with modifying words, designs or symbols as part of a corporate or business name or in any form on the Internet, including but not limited to URLS, domain names, e-mail addresses, locators, links, metatags or search techniques. You must get our prior written approval of your company name before you file any registration documents. You must indicate, as required in the Franchise Agreement and specified in the Operations Manual, that you are an independent real estate broker. Guidelines regarding proper trademark use and notices are in the Operations Manual and will be updated periodically. You may not use our Marks with an unauthorized product or service, or in a manner not authorized in writing by us.

All applications and application affidavits have been filed with the USPTO.

There are no currently effective material determinations of the USPTO, the Trademark Trial and Appeal Board, the trademark administrator of any state or any court, any pending infringement, opposition or cancellation proceedings or any pending material litigation involving any of our Marks that are relevant to the use of these Marks. No currently effective litigation affects our use or ownership rights in any Mark. No currently effective agreement limits our right to use or license the use of our Marks.

By a Trademark License Agreement dated June 1, 2019, we were licensed to use the La Rosa Realty mark by La Rosa Realty, LLC. That agreement gives us the right to sublicense the mark to our franchisees for the term of the agreement. That agreement expires on June 30, 2030, unless sooner terminated because of an uncured default.

By a Trademark License and Platform Services Agreement dated September 13, 2019, we were given a nonexclusive license by Better Homes Realty, Inc., a Nevada corporation, to perform real estate brokerage and franchising services under the Better Homes Realty name and marks. As discussed in Item 1 above, Better Homes Realty, Inc. has a number of Better Homes Realty offices of which it continues to be the franchisor. The Trademark License and Platform Services Agreement allows it to continue to use and license others to use the Better Homes Realty name and marks during the term of that agreement. That agreement also permits Better Homes Realty, Inc. to use the La Rosa Realty names and marks for various purposes, including to open its own and to franchise La Rosa Realty offices under limited circumstances. The Trademark License and Platform Services Agreement has a term of 12 years with renewal rights for another 12-year term unless it is sooner terminated because of an uncured default.

You must notify us immediately when you learn about an infringement of or challenge to your use of our Marks. We may take the action necessary to protect the unauthorized use of our Marks. We are not obligated to defend you against a claim involving your use of or right to use the Marks, nor to take affirmative action against any infringement. We have the sole right to control any administrative or legal proceedings concerning the Marks.

The Franchise Agreement does not require us to participate in your defense and/or indemnify you for expenses or damages if you are a party to an administrative or judicial proceeding involving a trademark licensed by us to you, or if the proceeding is resolved unfavorably to you.

You must modify or discontinue the use of a trademark if we modify or discontinue the Mark. You must not directly or indirectly contest our right to our Marks, Trade Secrets or business techniques that are part of our business. The Franchise Agreement does not provide you with any specific rights if we require you to modify or discontinue the use of any Marks.

From time to time in the ordinary course of business, we encounter third parties that are using and/or promoting confusingly similar brands. You should understand that there could be businesses using trademarks, trade names, or other commercial symbols similar to our Marks with superior rights to our rights. Before opening your business, you should research this possibility, using telephone directories, trade directories, Internet directories, or otherwise to avoid the possibility of having to change your business name.

ITEM 14: PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION

The information contained in the Operations Manual is proprietary and is protected by copyright and other laws. The Operations Manual and the limitations of the use of it by you and your employees are described in this Disclosure Document and the Franchise Agreement. The designs contained in the Marks, the layout of our advertising materials, the content and format of any other writings or copyright and other laws also protect recordings in print or electronic form. Although we have not filed an application for copyright registration for the Operations Manual, the advertising materials, the content and format of any other writings and recordings, we claim common law and federal copyrights in these items. We grant you the right to use this proprietary and copyrighted information (“Copyrighted Works”) in connection with your operation of your business, but these copyrights remain our sole property and, as appropriate, of Better Homes Realty, Inc.

There are currently no effective determinations of the United States Copyright Office or any court regarding any Copyrighted Works of ours, nor are any proceedings pending, nor are there any currently effective agreements between us and third parties pertaining to the Copyrighted Works that will or may significantly limit your use of our Copyrighted Works.

Our Operations Manual, electronic information and communications, sales and promotional materials, certain Software, the development and use of our System, standards, specifications, policies, procedures, information, concepts and systems on, knowledge of and experience in the development, operation and franchising of your business and the Services provided by your franchised businesses, information concerning Service sales, operating results, financial performance and other financial data and other related materials are proprietary and confidential (“Confidential Information”) and are considered to be our property to be used by you only as described in the Franchise Agreement or the Operations Manual. Where appropriate, certain information has also been identified as trade secrets (“Trade Secrets”). You must maintain the confidentiality of our Confidential Information and Trade Secrets and adopt reasonable procedures to prevent unauthorized disclosure of our Trade Secrets and Confidential Information.

We will disclose parts of the Confidential Information and Trade Secrets to you as we deem necessary or advisable for the development of your business during training and in guidance and assistance furnished to you under the Franchise Agreement, and you may learn or obtain from us additional Confidential Information and Trade Secrets during the term of the Franchise Agreement. The Confidential Information and Trade Secrets are valuable assets of ours and are disclosed to you on the condition that you, and your owners, if you are a business entity, and employees agree to maintain the information in confidence by entering into a confidentiality agreement that we can enforce. Nothing contained in the Franchise Agreement will be construed to prohibit you from using the Confidential Information or Trade Secrets in the operation of your business during the term of the Franchise Agreement.

You must notify us within five (5) days after you learn about another’s use of language, a visual image, or a recording of any kind, that you perceive to be identical or substantially similar to one of our Copyrighted Works or use of our Confidential Information or Trade Secrets or if someone challenges your use of our Copyrighted Works, Confidential Information or Trade Secrets. We will take whatever action we deem appropriate to protect our rights in and to the Copyrighted Works, Confidential Information or Trade Secrets, which may include payment of reasonable costs associated with the action. However, the Franchise Agreement does not require us to take affirmative action in response to any apparent infringement of or challenge to your use of any Copyrighted Works, Confidential Information or Trade Secrets or claim by any person of any rights in any Copyrighted Works, Confidential Information or Trade Secrets. You must not directly or indirectly contest our rights to any of our Copyrighted Works, Confidential Information, or Trade Secrets. You may not communicate with anyone except us and our counsel with respect to any infringement, challenge, or claim. We will have the right to take action as we deem appropriate regarding any infringement, challenge or claim, and the sole right to control exclusively any litigation or other proceeding arising out of any infringement, challenge or claim under any Copyrighted Works, Confidential Information or Trade Secrets. You must sign all instruments and documents, give the assistance, and do acts and things that may, in the opinion of our counsel, be necessary to protect and maintain our interests in any litigation or proceeding or to protect and maintain our interests in the Copyrighted Works, Confidential Information, or Trade Secrets.

No patents are material to us at this time.

We have the right to inspect, copy and use all records with respect to the customers, suppliers, and other services providers of, and related in any way to, your business. This includes all databases (whether in print, electronic, or other form), including all names, addresses, phone numbers, e-mail addresses, and customer purchase records. We may use or transfer the records in any way we wish, both before and after any termination, expiration, repurchase, transfer or otherwise. We may contact any or all of your customers, suppliers, and other service providers for quality control, market research, and any other purposes, as we deem appropriate.

You must disclose to us all ideas, techniques and products concerning the development and operation of your business you or your employees conceive or develop during the term of the Franchise Agreement. You must grant to us and agree to obtain from your owners or employees a perpetual, non-exclusive and worldwide right to use these ideas, techniques and products concerning the development and operation of your business that you or your employees conceive or develop during the term of the Franchise Agreement in all real estate sales-related product and service businesses that you operate. We will have no obligation to make any lump sum or ongoing payments to you with respect to any idea, concept, method, technique or product. You must agree that you will not use nor will you allow any other person or entity to use any of these ideas, techniques or products without obtaining our prior written approval.

ITEM 15: OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS

If you are an individual, you must directly supervise the franchised business at your initial and primary franchised location (“Central Office”). If you are a business entity, the direct, on-site supervision of your Central Office must be done by a Designated Business Manager. Each Branch Office must also be managed by a Designated Business Manager.

If we believe you lack sufficient business experience, you must designate a Designated Business Manager to act as the operating manager for your business. We must approve the selection of the Designated Business Manager before signing the Franchise Agreement. The Designated Business Manager must attend and successfully complete the initial training program, and must abide by the obligations in the Franchise Agreement and the Operations Manual. The Designated Business Manager must agree to assume and guarantee performance of all of your obligations, including, among others, confidentiality and non-competition.

If you are a legal or business entity, each individual who owns, directly or indirectly, a 5% or greater interest in you (and, if you are an individual, your immediate family defined as your spouse and adult children) must sign the Guaranty and Assumption of Franchisee’s Obligations assuming and agreeing to discharge all of your obligations and comply with all restrictions under the Franchise Agreement and our Nondisclosure and Noncompetition Agreement attached to this Franchise Disclosure Document as Exhibit F.

Your spouse must sign a Guaranty Agreement and Consent of Spouse Agreement making your spouse individually liable for your financial obligations under the agreement. The guaranty and consent will place your spouse’s marital and personal assets at risk if your franchise fails.

ITEM 16: RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL

You must provide specified services. The services include offering residential and commercial real estate brokerage services to real property purchasers and sellers (“Services”). We reserve the right to require that you provide additional Services in your business on 30 days’ prior written notice to you. You must provide the Services per our specifications and standards. We reserve the right to change standards and specifications on 30 days’ prior written notice to you.

You must refrain from using or permitting the use of your business facilities for any other purpose or activity at any time without first obtaining our written consent.

You must sell or offer for sale only those Services which are authorized by us and which meet our standards and specifications. You must follow our policies, procedures, methods of doing business, and techniques. We may change or add to our required Services with prior notice to you. You must discontinue selling and offering for sale any Services, which we may disapprove in writing at any time.

ITEM 17: RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION

This table lists certain important provisions of the franchise and related agreements. You should read these provisions in the agreements attached to this disclosure document.

THE FRANCHISE RELATIONSHIP

ITEM 18: PUBLIC FIGURES

We do not currently use any public figure to promote our franchise.

ITEM 19: FINANCIAL PERFORMANCE REPRESENTATIONS

The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in ITEM 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this ITEM 19, for example, by providing information about possible performance at a particular location or under particular circumstances.

We do not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor’s management by contacting Mark Gracy, La Rosa Franchise, LLC, at 1420 Celebration Blvd., Suite 200, Celebration, FL 34747, and 321-939-3748, the Federal Trade Commission, and the appropriate state regulatory agencies.

ITEM 20: OUTLETS AND FRANCHISEE INFORMATION

All of the following are offices using the La Rosa Realty brand.

Table No. 1

Systemwide Outlet Summary
For years 2017, 2018 and 2019

Table No. 2

Transfers of Outlets from Franchisees to New Owners (other than the Franchisor)
For years 2017, 2018 and 2019

Table No. 3
Status of Franchised Outlets
For years 2017, 2018 and 2019

Table 4
Status of Company-Owned Outlets
For years 2017, 2018 and 2019

Table No. 5

Projected Openings As Of December 31, 2019

There are no franchisees who have not communicated with us in the last 10 weeks.

If you buy this franchise, your contact information may be disclosed to other buyers when you leave the franchise system.

There are no franchisees that left the system during our last fiscal year.

During the last three fiscal years no current or former franchisees have signed confidentiality clauses that restrict them from discussing with you their experiences as franchisees in our system.

We have no trademark-specific franchisee associations.

ITEM 21: FINANCIAL STATEMENTS

Attached to this Franchise Disclosure Document as Exhibit A is our audited ‘financial statement’ for the year ending December 31, 2019, along with our interim unaudited financial statements from the end of our last fiscal year until February 29, 2020. We have not been in business for three years or more and cannot include all the financial statements required by the Federal Trade Commission Rule for our last three fiscal years.

ITEM 22: CONTRACTS

Attached are the following agreements proposed for use in connection with our offering of franchises:

Exhibits:

ITEM 23: RECEIPTS

The last two pages of the Franchise Disclosure Document (following the exhibits and attachments) are receipt pages acknowledging your receipt of the Franchise Disclosure Document. One copy is for your records, and one copy must be signed and dated by you and returned to us.

Exhibit A to Franchise Disclosure Document

LA ROSA FRANCHISING, LLC FINANCIAL STATEMENTS

The interim financial statements included in this Exhibit have been prepared without audit. Prospective franchisees are advised that no independent Certified Public Accountant has audited these figures or expressed an opinion with regard to their content or form.

LA ROSA FRANCHISING LLC

AUDITED FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 2019

LA ROSA FRANCHISING LLC
TABLE OF CONTENTS

Manuel Naya Jr., CPA LLC

Certified Public Accountant

225 South Swoope Ave. Suite 106
Maitland, FL 32751

407-434-1320

Independent Auditor’s Report

To the Member of

La Rosa Franchising, LLC.

Celebration, Florida

We have audited the accompanying financial statements of La Rosa Franchising, LLC (an S corporation), which comprise the balance sheet as of December 31, 2019 and the related statements of income, member’s equity, and cash flows for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of La Rosa Franchising, LLC. as of December 31,2019, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

LA ROSA FRANCHISING, LLC
BALANCE SHEET
DECEMBER 31, 2019

See Notes to Financial Statements

LA ROSA FRANCHISING, LLC
STATEMENT OF INCOME AND MEMBER’S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2019

See Notes to Financial Statements

LA ROSA FRANCHISING, LLC
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED DECEMBER 31, 2019

See Notes to Financial Statements

LA ROSA FRANCHISING, LLC

NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2019

Note 1. Nature of Business

La Rosa Franchising, LLC. (the "Company") was organized in 2017, as a Limited Liability Corporation and is headquartered in Celebration, Florida. The Company sells franchises authorizing its franchisees to operate businesses of brokering real estate sales and leasing transactions under the name La Rosa. As of December 31, 2019, there are 16 franchises in the state of Florida.

Note 2. Summary of Significant Accounting Policies

Basis of Accounting

The financial statements of the Company are prepared on the accrual basis of accounting.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Cash and cash equivalents

For purposes of the statement of cash flows, the Company considers all liquid investments purchased with a maturity of three months of less to be cash equivalents.

Financial instruments which potentially expose the Company to concentrations of credit risk, as defined by accounting principles generally accepted in the United States of America, consist primarily of bank accounts with balances, at times, in excess of amounts insured by the Federal Deposit Insurance Corporation. Management of the Company evaluates the financial stability of its balances and considers the risk of loss to be remote.

Accounts receivable

Accounts receivable are carried at original invoiced amounts, less an estimated made for doubtful accounts based on a review of outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using the historical experience applied to an aging of accounts. Accounts receivables are written off when deemed uncollectible. There is no provision for doubtful accounts, based on management’s evaluation of the collection of accounts receivable at December 31, 2019.

LA ROSA FRANCHISING, LLC
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2019

Note 2. Summary of Significant Accounting Policies (Continued)

Revenue recognition

Income from the sale of a franchise is recorded in the year of the sale. The Company collects royalty fees from its franchisees based on a percent of sales or a flat fee. Royalty fees are recognized as revenue in the month the fee is earned. The Company also provides a technology fee to its franchises based on number of agents at a per agent rate. Technology fees are recognized as revenue in the month the service is provided.

Income Taxes

The Company has elected S corporation status. Earnings and losses are included in the federal income tax return of the member. Therefore, no provision or liability for federal income taxes has been included in the financial statements.

The Company has analyzed its various federal and state income tax filing position and believed that no accruals for tax liabilities related to uncertain income tax positions have been recorded. The years that remain open to examination under federal statute are 2019.

Advertising and marketing

Costs for advertising are expensed as incurred.

Subsequent Events

The Company has evaluated subsequent events through February 24, 2020, the date which the financial statements were available to be issued.

Note 3. Related Party Transactions

The member of the Company owns 100% of the stock of La Rosa Realty, LLC. The Company’s franchise sales proceeds of approximately $169,000 were held by La Rosa Realty, LLC. Several of the company’s expenses of approximately $157,000 were paid by La Rosa Realty, LLC. At December 31,2019, $12,352 is due on these advances to the related party and is included on the accompanying balance sheet as of December 31, 2019.

Note 4. Geographic Concentrations and Market Risk

The Company earned all of its revenue from franchisees in the State of Florida. As a result of this concentration economic fluctuations of the State could materially affect the Company.

LA ROSA FRANCHISING, LLC
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2019

Note 5. Commitments and Contingencies

The Company’s operating lease commitments are for various types of software used on a daily to monthly basis. The total operating lease expensed in 2019 were $6,450. Future minimum maturities of operating leases are $67,800 for 2020 and $4,550 for 2021.

Exhibit B to Franchise Disclosure Document
LA ROSA FRANCHISING, LLC FRANCHISE AGREEMENT

FRANCHISEE AGREEMENT

Please print and sign two copies and return both full, original copies to LA ROSA FRANCHISING, LLC. Signature required on the following pages:

FRANCHISEE INFORMATION SHEET

LA ROSA FRANCHISING

FRANCHISE AGREEMENT

TABLE OF CONTENTS

ATTACHMENTS TO FRANCHISE AGREEMENT

FRANCHISE AGREEMENT

This Franchise Agreement (“this Agreement”) is made on                    , 20        , by and between LA ROSA FRANCHISING, LLC a Florida limited liability company, whose address is1420 Celebration Blvd., Suite 200, Celebration, Florida (“Franchisor”) and ______________, a(n) _______________, whose address is _____________________________ (“Franchisee”).

RECITALS

1.            Franchisor has developed a comprehensive system for the operation of a business offering both residential and commercial real estate brokerage services.

2.            The real estate brokerage businesses are operated under a business format with a unique system of high standards of service, including valuable know-how, information, Trade Secrets, Confidential Information, methods, confidential Operations Manual, standards, designs, methods of trademark usage, copyrights, sources and specifications, confidential electronic and other communications, methods of Internet usage, marketing programs, and research and development.

3.            The distinguishing characteristics of the System include the trademark LA ROSA REALTY, BETTER HOMES REALTY and other trademarks and trade names, confidential operating procedures, confidential Operations Manual, standards and specifications for equipment, services and products, method of Internet usage, methods of service, management and marketing programs and sales techniques and strategies. All of these distinguishing characteristics may be changed, improved, and further developed by Franchisor from periodically. They are Franchisor’s Confidential Information and Trade Secrets and are designated by and identified with the Marks described in this Agreement.

4.            Franchisor continues to use, develop and control the use of the Marks to identify for the public the source of services and products marketed under the System, and which represent the System’s high standards of quality, service and customer satisfaction.

5.            Franchisee acknowledges the benefits to be derived from being identified with the System, and also recognizes the value of the Marks and the continued uniformity of image to Franchisee, Franchisor, and other franchisees of Franchisor.

6.            Franchisee acknowledges the importance to the System of Franchisor’s high and uniform standards of quality, service and customer satisfaction, and further recognizes the necessity of opening and operating a real estate brokerage business in conformity with the System.

7.            Franchisee recognizes that to enhance the value of the System and goodwill associated with it, this Agreement places detailed obligations on Franchisee, including strict adherence to Franchisor’s reasonable present and future requirements regarding the types of services offered, advertising used, operational techniques, marketing and sales strategies and related matters.

8.            Franchisee is aware of the foregoing and desires to obtain the right to use the System and in association with the System, the right to use the Marks, and wishes to be assisted, trained, and franchised to operate a real estate brokerage business within the Territory specified in this Agreement and subject to the terms and conditions contained in this Agreement.

The parties therefore agree as follows:

For the purposes of this Agreement, the following terms have the following meanings:

1.1       “Affiliate” means any person or entity that controls, is controlled by, or is in common control with, Franchisor or Franchisee.

1.2       “Agent” means a person or group of persons licensed to sell real estate within the Territory who are affiliated with the Real estate brokerage business and uses services provided by Franchisee pursuant to this Agreement. An Agent may be Franchisee’s independent sales associates, agents, representatives, independent contractors, employees, partners, directors, officers, Owners, or Franchisee’s Affiliates.

1.3       “Agreement” means this agreement, and all exhibits, schedules, attachments, instruments and amendment.

1.4       “Branch Office(s)” means any additional Office at an approved location or locations where Franchisee operates the Real estate brokerage business that is opened by Franchisee after its initial Office.

1.5       “Business” or “real estate brokerage business” means the business operations conducted or to be conducted by Franchisee pursuant to this Agreement and consisting of a business offering commercial and residential real estate brokerage services.

1.6       “Confidential Information” means all knowledge, know-how, standards, methods and procedures related to the establishment and operation of the System and includes all records pertaining to customers, suppliers, and other service providers of, and/or related in any way to, Franchisee’s Business including, without limitation, all databases (whether in print, electronic or other form), all names, addresses, phone numbers, e-mail addresses, customer purchase records, manuals, promotional and marketing materials, marketing strategies and any other data which Franchisor designates as confidential or Franchisee reasonably should know Franchisor would consider confidential.

1.7       “Franchise” means the business operations, including the real estate brokerage business, conducted or to be conducted by Franchisee using Franchisor’s System and in association with the Marks.

La Rosa Realty          _________

Better Homes Realty _________

1.8       “Franchisor’s System” or “System” means the standards, systems, concepts, identifications, methods, and procedures developed or used by Franchisor, or which may hereafter be developed or used by Franchisor, including the trademark approved for Franchisee’s use and other trademarks and trade names, confidential operating procedures, confidential Operations Manual, standards and specifications for equipment, services and products, method of Internet usage, training methods, methods of service, management and marketing programs and sales techniques and strategies for the sale and marketing of Franchisor’s Services.

1.9       “Gross Commission Income” means the total of all commissions, transaction fees, property management fees, and monthly fees collected or receivable by Franchisee and Franchisee’s independent sales associates, agents, representatives, contractors, employees, partners, directors, officers, Owners, or Franchisee’s Affiliates, regardless of whether or not such individuals or Affiliates are entitled to retain all or part of such Gross Commission Income, directly or indirectly, in connection with the Business (earned in compliance with all applicable laws) including, but not limited to, transactions and provision of services for which a real estate or auctioneer’s license is required (including appraisal fees [“Broker Price Opinions” or “BPO”], title or escrow services fees), the sale or provision of products or services that Franchisor or any of Franchisor’s Affiliates develop or make available to Franchisee directly or through a third party, monthly fees or additional transaction fees charged to Agents by the Franchisee (such as, but without limitation, Transaction Fees and Coaching Fees), Property Management Services, and/or any transaction, sale and/or service in which the Marks or the System is used in any manner, without deducting any of Franchisee’s multiple listing fees, advertising costs, commissions, overrides, bonuses, salaries, gifts, or any other costs or expenses and other receipts and fees from its Agents and from all other sources (including but not limited to referral fees and finder’s fees received from brokers or agents in other brokerage companies) which are derived from the sale, lease, transfer or other disposition (including like-kind exchanges, barter exchanges, or other exchanges of property not involving money) of Real Property, including any note, obligation, lien or other consideration given to Franchisee in lieu of a commission and insurance claims for lost profits if a claim is paid by the insurer.

1.10       “Large Office Franchisee” means a Franchisee which has more than twenty (20) Agents associated with Franchisee’s Central Office and/or Branch Office(s) or a Franchisee which advises Franchisor that it plans to have more than twenty (20) Agents during the initial twelve (12) month period from the Opening Date of this Agreement. Franchisor reserves the right to evaluate if Franchisee has been able to have and maintain a roster of more than twenty (20) Agents during such initial period and then every calendar year thereafter. If it is determined that Franchisee does not have and maintain a roster of more than twenty (20) Agents during such initial period or any calendar year thereafter, Franchisor reserves the right to reclassify Franchisee as a Small Office Franchisee and the Royalty and Technology Fees shall be adjusted accordingly.

1.11       “Lease” means any agreement (whether oral or written) under which the right to occupy an Office has been obtained, and any amendment made to the lease periodically, including, any offer to lease, license or lease agreement.

1.12       “Marks” means the trademarks ‘“La Rosa Realty”, or Better Homes Realty” if Franchisee has been approved to use such alternative trademark as provided at Section 11.7 hereof, to the extent of Franchisor’s rights to the same, together with those other trade names, trademarks, symbols, logos, distinctive names, service marks, certification marks, logo designs, insignia or otherwise which may be designated by Franchisor periodically as part of the System for use by Franchisees, and not withdrawn.

1.13       “Office(s)” means the approved location or locations where Franchisee operates the real estate brokerage business under the approved Marks.

1.14       “Opening Date” means the first of the following to occur on or after the Effective Date: Franchisee begins conducts business using the Marks, offers any Services to the public, Franchisee collects any Gross Commission Income, Franchisee uses any Mark, Franchisee opens any Office, one hundred twenty (120) days after the Effective Date; or, Franchisee otherwise engages in a real estate brokerage business.

1.15       “Operations Manual” means, but is not limited to, collectively, all directives, books, pamphlets, bulletins, memoranda, order forms, invoices, letters, e-mail, Internet or intranet data, or other publications, documents, Software programs, video tapes, transmittances or communications, in whatever form (including electronic form) prepared by or on behalf of Franchisor for use by the franchisee generally or for Franchisee in particular, setting forth information, advice and standards, requirements, marketing information and procedures, operating procedures, instructions or policies relating to the operation of the Business or the operation of Franchises, as same may be added to, deleted or otherwise amended by Franchisor periodically.

1.16       “Products” means all supplies and other materials used by Franchisee or provide to Franchisee’s customers in connection with the Business and associated with the Marks.

1.17       “Real Property” means single and multiple unit residential housing, commercial property, farm houses, vacant land to be used for residential, agricultural, recreation or commercial purposes; condominiums, cooperatives, townhouses, vacation houses, interests in interval-ownership and time share residential units, and mobile home when affixed to the ground.

1.18       “Small Office Franchisee” means a Franchisee which has twenty (20) or fewer Agents associated with the Franchisee during the initial twelve (12) month period from the Opening Date of this Agreement and in any calendar year thereafter.

1.19       “Services” means any and all assistance, guidance, recommendations, marketing and other services for the sale, transfer or other disposition of Real Property conducted or otherwise provided by Franchisee and the Agents in connection with the Business or associated with the Marks.

1.20       “Trade Secret(s)” means information, including a formula, pattern, compilation, program, device, method, technique or process related to the System that both derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Franchisee covenants, represents and warrants as follows and acknowledges that Franchisor is relying upon these covenants, representations and warranties in making its decision to enter into this Agreement.

2.1       Franchisee acknowledges that it has received, has had ample time to read, and has read this Agreement, the Disclosure Document, and all related agreements with Franchisor. Franchisee acknowledges that Franchisor has advised it to obtain independent legal and accounting advice with respect to this Agreement and the transactions arising out of this Agreement. Franchisee further acknowledges that it has had an adequate opportunity to be advised by legal, accounting and other professional advisors of its own choosing regarding all pertinent aspects of the Business, Franchisor and this Agreement.

2.2       Franchisee has, or has made firm arrangements to acquire, funds to commence, open and operate the Business. Franchisee is financially and otherwise able to accept the risks attendant upon entering into this Agreement.

2.3       All statements made by Franchisee in writing in connection with its application for the Franchise were true when made and continue to be true as of the date of this Agreement.

2.4       There are no material financial obligations of Franchisee whether actual or contingent, which are outstanding as of the date of this Agreement other than those, disclosed to Franchisor by Franchisee in writing.

2.5       Franchisee is not a party to or subject to any court or administrative order or action of any governmental authority that would limit or interfere in any way with the performance by Franchisee of its obligation hereunder.

2.6       Franchisee is not a party to any litigation or legal proceedings other than those that have been disclosed to Franchisor by Franchisee in writing.

2.7       Franchisee represents that it is not a party to or subject to agreements or arrangements that might conflict with the terms of this Agreement and agrees not to enter into any conflicting agreements or arrangements during the Initial Term or any Interim Period.

2.8       Franchisee agrees and acknowledges that it has not been induced to enter into this Agreement in reliance upon, nor as a result of, any statements, representations, warranties, conditions, covenants, promises or inducements, whatsoever, whether oral or written, and whether directly related to the contents of this Agreement or collateral thereto, made by Franchisor, its officers, directors, agents, employees or contractors except as provided herein. Franchisee acknowledges that the Franchise has been granted in reliance upon the information supplied to Franchisor in Franchisee’s application for a Franchise.

2.9       Franchisee represents that it, its owners, or one of its employees, is a licensed real estate broker under the laws of the state or states where each Office is located; is familiar with the real estate laws and regulations of the state or states; has previous experience in Real Property transactions; and, the Franchise is being acquired to use the System and the Marks in the operation of a real estate brokerage business and not for speculative or investment purposes.

2.10      Franchisee and its owners agree to comply with and/or to assist Franchisor to the fullest extent possible in Franchisor’s efforts to comply with Anti-Terrorism Laws (as defined below). In connection with this compliance, Franchisee and its owners certify, represent, and warrant that none of their property or interests is subject to being “blocked” under any of the Anti-Terrorism Laws and that Franchisee and its owners are not otherwise in violation of any of the Anti-Terrorism Laws.

3.1       Subject to all the terms and conditions of this Agreement, Franchisor hereby grants to Franchisee, and Franchisee accepts, for the Initial Term of this Agreement and any Interim Period, the right and license (“License”) to:

3.2       Franchisee recognizes that variations and additions to the System may be required periodically to preserve and/or enhance the System. Therefore, Franchisor expressly reserves the right to add to, subtract from, revise, modify or change periodically the System or any part thereof, and Franchisee agrees to promptly accept and comply with any addition, subtraction, revision, modification or change and to make those reasonable expenditures as may be necessary to comply pursuant to Section 9.

3.3       Franchisee recognizes that the rights granted to Franchisee hereunder are for the specific Territory defined in Section 5.1 below and Attachment 1 and no other, and cannot be transferred to an alternate Territory without the prior written approval of Franchisor, which approval may be granted or withheld by Franchisor.

4.1       This Agreement and the License granted hereunder will continue for a period of five (5) years (“Initial Term”). This Initial Term begins on the date this Agreement is signed by Franchisor, subject, however, to termination in accordance with the provisions of this Agreement. When the Initial Term and any Interim Period expires, Franchisee will have the option, as determined by Franchisor, to extend its rights to operate the Business for one additional term (“Successor Term”) of five (5) years. If Franchisee’s rights to operate the Business are extended, Franchisee must pay Franchisor the Successor Franchise Fee set forth in Section 4.4(b).

4.2       The Franchisor may refuse to extend Franchisee’s rights to operate the Business if Franchisee has:

4.3       If Franchisor agrees to extend Franchisee’s rights to operate the Business at the end of the Initial Term or any Successor Term, Franchisee will sign a successor franchise agreement (“Successor Franchise Agreement”) and all other agreements in the form then being used by Franchisor in granting new franchises and pay the Successor Franchise Fee set forth in Section 4.4(b). The Franchisor reserves the right to change any term(s) of the Successor Franchise Agreement form to be signed by Franchisee upon the extension of Franchisee’s rights to operate the Business (except as specified below). There will not, however, be another Initial Franchise Fee charged in connection with the extension of Franchisee’s rights to operate the Business. IN FRANCHISOR’S SOLE DETERMINATION, THE FRANCHISEE MAY BE DEEMED TO HAVE IRREVOCABLY DECLINED TO RENEW THE FRANCHISE (AND ITS OPTION WILL THEREUPON TERMINATE) IF IT FAILS TO SIGN AND RETURN TO THE FRANCHISOR THE SUCCESSOR FRANCHISE AGREEMENT AND OTHER DOCUMENTS REQUIRED BY THE FRANCHISOR WITHIN THIRTY (30) DAYS AFTER THEIR DELIVERY TO THE FRANCHISEE, OR FAILS TO COMPLY IN ANY OTHER WAY WITH THE PROVISIONS OF THIS SECTION 4.

4.4       As additional conditions to the extension of Franchisee’s rights to operate the Business, Franchisor reserves the right to require Franchisee to:

4.5       Franchisee shall have the continuing right to open additional Branch Offices during the Successor Term.

4.6       If Franchisee does not sign a Successor Franchise Agreement before the expiration of this Agreement and continues to accept the benefits of this Agreement and the License after the expiration of this Agreement and the License, then at the option of Franchisor, this Agreement and the License may be treated either as (i) expired as of the date of expiration with Franchisee then operating without a franchise to do so and in violation of Franchisor’s rights; or (ii) continued on a month-to-month basis (“Interim Period”) until one party provides the other with written notice of the party’s intent to terminate the Interim Period, in which case the Interim Period will terminate thirty (30) days after receipt of the notice to terminate the Interim Period. In the latter case, all obligations of Franchisee will remain in full force and effect during the Interim Period as if this Agreement and the License had not expired, and all obligations and restrictions imposed on Franchisee upon expiration of this Agreement and the License will be deemed to take effect upon termination of the Interim Period.

5.1       During the Initial Term and for so long as Franchisee is in compliance with all of its obligations hereunder, except as otherwise provided in this Agreement, and subject to Franchisor’s reservation of rights as set forth in Section 5.2 and as provided in Section 5.4 below, neither Franchisor nor any Affiliate of Franchisor will open or license another person or entity to open or allow any others to open a competing real estate brokerage businesses using the Marks licensed to Franchisee within the Territory encompassed by the boundaries set forth in Attachment 1, attached and incorporated by reference. The rights granted to Franchisee in this Section do not prohibit other franchisees and agents of Franchisor from listing and selling Real Property in Franchisee’s Territory nor is Franchisee prohibited from listing or selling Real Property in a territory granted to another Franchisee, provided that Franchisee is licensed to sell Real Property in that area. Except as otherwise specifically provided in this Agreement, this Agreement does not restrict Franchisor or its Affiliates and does not grant rights to Franchisee to pursue any of Franchisor’s or its Affiliates other business concepts other than the real estate brokerage business.

5.2       Franchisee acknowledges that the Franchise granted hereunder is non-exclusive and that Franchisor and its Affiliates retain the exclusive right to, among others:

Franchisee may not independently market on the Internet, or use any domain name, address, locator, link, metatag, or search technique, with words or symbols similar to the Marks or otherwise establish any presence on the Internet without Franchisor’s prior written approval. The Franchisor intends that any Franchisee website be accessed only through Franchisor’s home page. Franchisee will provide Franchisor with content for Franchisor’s Internet marketing, and will sign Internet and intranet usage agreements, if any. The Franchisor retains the right to approve any linking or other use of its website; and

5.3       In determining the Territory, as set forth in Attachment 1, Franchisor will use geographic or political boundaries (including but not limited to city, county, or state boundary lines) and other characteristics including natural boundaries, and the amount and size of urban, suburban and rural areas. In addition, Franchisor will consider the most recent data available from the National Association of Realtors to determine the number of licensed Agents within the proposed Territory. Franchisee acknowledges and agrees that once the Territory has been established, it will not be changed regardless of any increase or decrease of the number of licensed Agents within in the Territory.

5.4       To maintain the Territory, Franchisee must:

6.1       Franchisee will pay a non-recurring initial franchise fee of $10,000 (“Initial Franchise Fee”) to Franchisor upon the execution of this Agreement, plus, if due and payable, all applicable federal, state or municipal taxes. The Initial Franchise Fee will be paid by means of cashier’s check, money order or wire transfer. The Initial Franchise Fee is deemed fully earned by Franchisor when paid. The Initial Franchise Fee is non-refundable once paid except as provided for in Section 6.1. Any fee paid by Franchisee to Franchisor in connection with Franchisee’s application to Franchisor for approval to become a franchisee will be credited, in full, towards the Initial Franchise Fee. The Initial Franchise Fee will be non-refundable unless Franchisor elects to refund all or a portion of the Initial Franchise Fee to Franchisee.

6.2       Franchisee shall not be required to pay a fee for each Branch Office that Franchisee opens.

6.3       For each month from and after the Opening Date, Franchisee will pay to Franchisor a monthly royalty fee (“Royalty Fee”) equal to the greater of:

(a)       The Small Office Franchisee shall pay a per transaction royalty fee of $120 (capped at an annual contribution of $1,800.00 per individual Agent per calendar year) where the Gross Commission Income from each such transaction is over $1,500.00. Where the Gross Commission Income from a transaction is less than $1,500.00, the transaction royalty fee will be calculated at five percent (5%) of the Gross Commission Income received, subject to the $1,800.00 annual contribution cap; or

(b)       $500.00 per month.

(2)           If Franchisee qualifies as a Large Office Franchisee:

(a)    The Large Office Franchisee shall pay a per transaction royalty fee of $75.00 (capped at an annual contribution of $1,800.00 per individual Agent per calendar year) where the Gross Commission Income from each such transaction is over $1,500.00. Where the Gross Commission Income from a transaction is less than $1,500.00, the transaction royalty fee will be calculated at five percent (5%) of the Gross Commission Income received, subject to the $1,800.00 annual contribution cap; or

(b)       $1,000.00 per month.

6.4       For each month from and after the Opening Date, Franchisee will pay to Franchisor a license fee for the use of all Software and other technology provided by Franchisor (“Technology Fee”) equal to $50.00 per Agent per month for Small Office Franchisees, $35.00 per Agent per month for Large Office Franchisees with less than 100 Agents, and $25.00 per Agent per month for Large Office Franchisees with 100 or more Agents. Franchisor reserves the right to increase the Technology Fee during each year of the Initial Term, and any Successor Term and Interim Period.

6.5       For each month, Franchisee shall also pay to Franchisor a fee for the integration of MLS generated data by Franchisor into Franchisee’s company and Agent websites (the “MLS/RETS Fee”). The current MLS/RETS fee is $100.00 per month per MLS integrated into the Franchisee’s company and Agent websites. Franchisor reserves the right to increase the MLS/RETS Fee by any amount determined by Franchisor to be reasonable based on third party charges for such services.

6.6       Franchisee shall pay to Franchisor an annual membership fee (“Annual Membership Fee”) for the right of Franchisee’s Agents to participate in Franchisor’s System currently in the amount of $50.00 per year per Agent (prorated for any partial years). The Annual Membership Fee is payable to Franchisor on or before January 10th of each year (or within ten (10) days after each Agent commences his or her association with Franchisee if after January 10th) and annually, thereafter. Franchisor reserves the right to increase the Annual Membership Fee annually.

6.7       Franchisor may require Franchisee to utilize a La Rosa Realty or a Better Homes Realty specific domain name and to pay an annual (or other fiscal period required by the domain registrar) fee to Franchisor in exchange for the right to use such specific domain name (the “Domain Name Fee”) with its Business. The Domain Name Fee will be equal Franchisor’s expense in securing and maintaining the domain name associated with Franchisee’s Business. The domain name will, at all times, be Franchisor’s property but Franchisor will allow Franchisee, as long as Franchisee complies with the Franchise Agreement, to utilize the domain name in the operation of the Business.

6.8       The Royalty Fee, Annual Membership Fee, Marketing Fees (as defined in Section 12.1) , Domain Name Fee, MLS/RETS Fee and Technology Fee (collectively “Fees”) are payable to Franchisor on or before the 10th day of each month for the preceding calendar month and are payable through the entire Initial Term of this Agreement and any Interim Period. Franchisee will pay the Fees monthly or in any other frequency as Franchisor may require upon written notice to Franchisee by Franchisor. Franchisee will not subordinate to any other obligation its obligation to pay the Fees, or any other fee or charge hereunder. Each payment of Fees will be accompanied by a report, in a form and substance prescribed by Franchisor. Each failure to include a fully completed statement of the previous month’s Gross Commission Income with Franchisee’s payment of Fees payable to Franchisor when due constitutes a material breach of this Agreement.

6.9       The Franchisor requires Franchisee to remit all fees and other amounts due to Franchisor hereunder via electronic funds transfer (“ACH”) or other similar means utilizing a Franchisor approved computer system or otherwise. The ACH authorization is attached to this Agreement as Attachment 6. If Franchisor directs Franchisee to use this payment method, Franchisee agrees to comply with procedures specified by Franchisor and/or perform those acts and deliver and sign those documents, including authorization for direct debits from Franchisee’s business bank operating account, as may be necessary to accomplish payment by this method. Under this procedure Franchisee will authorize Franchisor to initiate debit entries and/or credit correction entries to a designated checking or savings account for payments of fees and other amounts payable to Franchisor, including any interest charged thereon. Franchisee will make funds available to Franchisor for withdrawal by electronic transfer no later than the due date for payment therefore. If Franchisee has not timely reported the Gross Commission Income to Franchisor for any reporting period, then Franchisor is authorized, at Franchisor’s option, to debit Franchisee’s account in an amount equal to (a) the Fees transferred from Franchisee’s account for the last reporting period for which a report of the Gross Commission Income was provided to Franchisor as required hereunder; (b) the minimum Royalty Fee and potential FMA funds (as defined in section 12.1(a)), or (c) the amount due based on information retrieved from Franchisor approved computer system.

7.1       Franchisee will keep those complete records of its Business as a prudent and careful businessperson would normally keep. Franchisee must use the accounting system and the pre-formatted template required by Franchisor, if any. Franchisee will keep its financial books and records as Franchisor may periodically direct in the Operations Manual or otherwise, including retention of all invoices, order forms, payroll records, check records, bank deposit receipts, sales tax records, commission reports, settlement statements, refunds, cash disbursements, journals, and general ledgers. Franchisee will advise Franchisor of the location of all original documents and will not destroy any records without the written consent of Franchisor.

7.2       Franchisee will prepare, on a current basis, complete and accurate records concerning all financial, marketing and other operating aspects of the Business conducted under this Agreement, as Franchisor will prescribe periodically. Franchisee will maintain an accounting system which accurately reflects all operational aspects of the Business including uniform reports as may be required by Franchisor. Franchisee’s records will include tax returns, daily reports, statements of Gross Commission Income (to be prepared each month for the preceding month), profit and loss statements (to be prepared at least quarterly by a reputable accountant), and balance sheets (to be prepared at least annually by a reputable accountant).

7.3       Franchisee will also submit to Franchisor, Franchisee’s current financial statements and other reports as Franchisor may reasonably request to evaluate or compile research and performance data on any operational aspect of the Business. Franchisee will provide Franchisor with a copy of its federal tax return for the previous tax year (fiscal or calendar) within forty-five (45) days of submitting its federal tax return. In the event that Franchisee files an extension with the Federal Government to file its federal taxes for the previous year, Franchise must notify Franchisor within ten (10) days of filing such extension in writing.

7.4       The records required under this Section 7 pertain only to Franchisee’s operation of the Business. The Franchisor has no right to inspect, audit or copy the records of any of Franchisee’s unrelated business or personal activities. Franchisee will keep the books and records of the Business separate from the records of any unrelated business or personal activity.

7.5       From the date Franchisee and Franchisor sign this Agreement until three (3) years after the end of the expiration or termination of this Agreement, Franchisor or Franchisor’s authorized agent will have the right to request, receive, inspect and audit any of the records referred to above wherever they may be located. The Franchisor agrees to conduct its inspections and audits at reasonable times. Franchisee agrees to keep all records and reports for six (6) years from the date these records are created. Should any inspection or audit disclose a deficiency in the payment of any Royalty Fee, potential FMF funds or other amounts required to be paid under this Agreement, Franchisee will immediately pay the deficiency to Franchisor, without the need for further action or notice on the part of Franchisor and without prejudice to any other remedy of Franchisor under this Agreement or otherwise. In addition, if the deficiency for any audit period discloses a deficiency in the amount of any Royalty Fee, potential FMF funds or other amounts due by $1,000.00 or more, Franchisee will also immediately pay to Franchisor the entire cost of the inspection or audit including travel, lodging, meals, salaries, and other expenses of the inspecting or auditing personnel. For the purposes of this Section 7.5, an audit period will be each fiscal year. Should the audit disclose an overpayment of any Royalty Fees, potential FMF funds, or other amounts due, Franchisor will credit the amount of the overpayment to Franchisee’s payments of Royalty Fees and potential FMF funds next falling due.

7.6       If Franchisee’s records and procedures are insufficient to permit a proper determination of Gross Commission Income, Franchisor will have the right to either require Franchisee to pay the Minimum Royalty or deliver to Franchisee an estimate, prepared by Franchisor, of Gross Commission Income for the period under consideration and Franchisee will immediately pay to Franchisor any amount shown thereby to be owing on account of the Royalty Fee, FMF funds and other sums due on account of any understatement. Any estimate is final and binding upon Franchisee.

7.7       To encourage prompt payment and to cover the costs and expenses involved in handling and processing late payments, Franchisee will also pay, upon demand, a late charge equal to 5% of the amount of the late payment plus interest of 1.5% per month on the late amount on all payments due to Franchisor during the period of time said payments are due and unpaid. Each failure to pay Royalty Fees, Annual Membership Fees, FMF funds, and other amounts payable to Franchisor when due constitutes a material breach of this Agreement. Franchisee acknowledges that this Section 7.7 will not constitute Franchisor’s agreement to accept these payments after the same are due or a commitment by Franchisor to extend credit to or otherwise finance Franchisee’s operation of the real estate brokerage business. Further, Franchisee acknowledges that failure to pay all such amounts when due will, notwithstanding the provisions of this Section 7.7, constitute grounds for termination of this Agreement.

7.8       Any report of Franchisor’s auditor rendered periodically pursuant to this Section 7.7 is final and binding upon all of the parties.

7.9       Franchisee hereby authorizes Franchisor to make reasonable inquiries of Franchisee’s bank, suppliers and trade creditors concerning the Business and hereby directs those persons and companies to provide to Franchisor this information and copies of documents pertaining to the Business as Franchisor may request.

7.10      Franchisee acknowledges and agrees that Franchisor owns all business records (“Business Records”) with respect to customers and other service professionals of, and/or related to, the Real estate brokerage business including, without limitation, all databases (whether in print, electronic or other form), including all names, addresses, telephone numbers, e-mail addresses, customer purchase records, and all other records contained in the database, and all other Business Records created and maintained by Franchisee. Franchisee further acknowledges and agrees that, at all times during and after the termination, expiration or cancellation of this Agreement, Franchisor may access these Business Records, and may utilize, transfer, or analyze these Business Records as Franchisor determines to be in the best interest of the System.

7.11     To encourage prompt delivery of all Business Records, Certificates of Insurance, Gross Commission Income statements and any other documentation or record that may be requested by Franchisor under this Agreement, Franchisee will pay, upon demand, a late report fee in the amount of the greater of $100 or 5% of the required amount per record or document requested if Franchisee fails to deliver this record or document when due.

7.12     If Franchisee pays the Royalty Fee or any other sums due to Franchisor under this Agreement with a check returned for non-sufficient funds more than one time in any calendar year, in addition to all other remedies which may be available, Franchisor will have the right to require that Royalty Fee payments and any other sums due to Franchisor under this Agreement be made by certified or cashier’s checks. If Franchisee fails to pay the Royalty Fee or any other sums due to Franchisor under this Agreement by the due date two (2) times during the Initial Term or any Interim Period, in addition to all other remedies which may be available, Franchisor reserves the right to require that Franchisee pay the Royalty Fee or any other sums due to Franchisor under this Agreement on a weekly basis.

7.13     Franchisee agrees that, during the Initial Term and for the three (3) years after the expiration or termination of this Agreement, Franchisee will supply to Franchisor Franchisee’s home (or Business location, if other than Franchisee’s home) address and telephone number.

8.1       The Initial Franchise Fee, Royalty Fee, and any Annual Membership Fee are paid for the License, which includes the use of the Marks, the System and the use of Franchisor’s Trade Secrets and Confidential Information provided pursuant to this Agreement and for certain services rendered by Franchisor.

8.2       The Franchisor will offer Franchisee initial and continuing services, as Franchisor deems necessary or advisable in furthering Franchisee’s Business and the business of the System as a whole and in connection with protecting the Marks and goodwill of Franchisor. Failure by Franchisor to provide any particular service, either initial or continuing, will not excuse Franchisee from any of its obligations under this Agreement.

8.3       Currently, prior to Franchisee’s opening of the Business, Franchisor will:

8.5       If Franchisee believes Franchisor has failed to adequately provide pre-opening services to Franchisee as provided in Section 8.3, Franchisee will notify Franchisor in writing within thirty (30) days following the opening of the Business. Absent the timely delivery of this notice to Franchisor, Franchisee is deemed to conclusively acknowledge that all pre-opening and opening services required to be provided by Franchisor were sufficient, timely, and satisfactory to Franchisee.

8.6       Franchisor is not obligated to perform services set forth in this Agreement to Franchisee’s particular level of satisfaction, but as a function of Franchisor’s experience, knowledge and judgment. Franchisor does not represent or warrant that any other services will be provided to Franchisee, other than as set forth in this Agreement. If any other services, or any specific level or quality of service is expected, Franchisee must obtain a commitment to provide this service or level of service in writing signed by an authorized officer of Franchisor, otherwise Franchisor will not be obligated to provide any other services or specific level or quality of services.

9.1       Franchisee will, consistent with the terms of this Agreement, diligently develop and operate the Business and use its best efforts to market and promote the Services and Products.

9.2       Subject to the terms of this Agreement, including Section 8.3(e), during the Initial Term and any Interim Period, Franchisee will strictly comply with all present and future standards, specifications, processes, procedures, requirements, and instructions of Franchisor regarding the operation of the Business and must comply with the following requirements:

9.3       In prescribing standards, specifications, processes, procedures, requirements or instructions under Section 9.2 or any other provision of this Agreement, Franchisor will provide guidance to Franchisee, as required in Franchisor’s sole determination, including but not limited to, determining the fees to be charged by Franchisee for Services. Franchisor will not have control over the day-to-day managerial operations of the Business, and Franchisee is free to establish its own fees and other charges for Services. Notwithstanding Franchisor’s right to require Franchisee to conduct its business in accordance with the System, Franchisee and Franchisor recognize that the sale and brokerage of real estate is a profession requiring independent judgment, skill and training and is governed in many particulars by state and federal authorities. Any inconsistency between the System or Franchisor’s advice and the dictates of good real estate practice, or any legal requirement of that practice, is inadvertent and not an effort to cause Franchisee to deviate from proper practices. Therefore, Franchisee and Franchisor understand and agree that (i) in all cases, lawful, regulatory requirements take precedence over both any inconsistent advice, counsel or other guidance, whether written or oral, given by Franchisor on any topic and anything inconsistent in the System; (ii) no business advice given by Franchisor nor any part of the System is taken as advice in respect of the practice of the profession of real estate sales and brokerage, as defined by law; (iii) Franchisee’s judgment, or the judgment of Franchisee’s Designated Business Managers, governs in all matters pertaining to each and every aspect of the professional practice of real estate sales and brokerage; (iv) in any case in which Franchisee believes Franchisor’s advice or the System contravene the practice of the profession of real estate sales and brokerage or any legal requirements of that practice, Franchisee will notify Franchisor, orally and in writing, immediately; and (v) Franchisee and Franchisee’s Designated Business Managers are solely responsible for the operation of the Business and the results of that operation.

9.4       Franchisor and Franchisor’s representatives shall have the right during business hours to inspect the Business and all Offices. Franchisor and Franchisor’s representatives will have the right to observe the manner in which Franchisee is rendering its Services and conducting its operations of the Business. Franchisor and Franchisor’s representatives will have the right to discuss with Franchisee, or other personnel Franchisee may designate, all matters that may pertain to compliance with this Agreement and with Franchisor’s standards, specifications, requirements, instructions and procedures and Franchisor may take photographs of Franchisee’s completed work as it relates to the Business. Franchisor and Franchisor’s representatives will have the right to have any of Franchisor’s required Services rendered by any employee at the Business. Franchisee will fully cooperate with Franchisor’s rights under this Section 9.4; provided, however, that Franchisor’s exercise of these rights will not unreasonably interfere with Franchisee’s conduct of the Business.

9.5       Franchisor may require Franchisee’s compliance with the provisions of this Section 9 even if it does not require this compliance by all franchisees.

9.6       If Franchisee is an individual, Franchisee must directly supervise the Business. If Franchisee is a corporation or other business entity, or if Franchisee has, in Franchisor’s sole judgment, insufficient experience in a business similar to the franchise or experience in business management in general, then Franchisee will nominate a Designated Business Manager having required experience who will have direct responsibility for all operations of an Office. Any change in a Designated Business Manager will be subject to Franchisor’s approval.

9.7       Franchisee and its Agents are required to become a member of local, state and national real estate boards, associations or organizations which in the reasonable opinion of Franchisor are useful in the operation of the Business. Franchisee will have the option to become a member of all benefit programs which are offered periodically by Franchisor to all of its Franchisees. The costs of participating in these boards, associations and benefit programs is borne by Franchisee and its employees (if applicable to the employees). Nothing in this Section 9.7       limits Franchisee’s freedom to join any franchise or franchisee’s association of its choosing.

9.8       Franchisee will at all times have sufficient computer skills to operate Franchisee’s computer, understand how to utilize any Software Franchisor requires to be used in the Business, and to access email and the Internet. If Franchisor determines that Franchisee requires additional computer training, Franchisor will notify Franchisee in writing regarding the nature of the additional training required, and Franchisee will have ninety (90) days to complete this training at a local computer training school at Franchisee’s sole cost and expense. Franchisor reserves the right to designate the computer training school at which Franchisee must attend (which may be an Affiliate). At the end of the training program, Franchisee will present a certificate reasonably acceptable to Franchisor establishing that Franchisee passed the training course. Franchisee’s failure to seek additional training or to pass the course constitutes a default of this Agreement.

9.9       Franchisee acknowledges and understands that computer systems are vulnerable to computer viruses, bugs, power disruptions, communication line disruptions, Internet access failures, Internet content failures, date-related problems, and attacks by hackers and other unauthorized intruders. Franchisor does not guarantee that information or communication systems supplied by Franchisor or its suppliers will not be vulnerable to these problems. Franchisee acknowledges and agrees that Franchisee is solely responsible for protecting itself from these problems. Franchisee must also take reasonable steps to verify that Franchisee’s suppliers, lenders, landlords, customers, and governmental agencies on which Franchisee relies, are reasonably protected. This may include taking reasonable steps to secure Franchisee’s systems, including, firewalls, access code protection, anti-virus systems, and use of backup systems.

9.10       Franchisee will acquire, maintain, and upgrade Hardware, Software, information processing and communication systems, and Internet and other network access providers, as prescribed in the Operations Manual and as modified periodically by Franchisor. Franchisee will comply with any license agreements that Franchisor or its designees use or require in connection with the System. Franchisee will utilize Franchisor’s required Software, proprietary database management, equipment, and intranet system as the exclusive means for tracking and maintaining customer, vendor, and lead information, and for other uses as prescribed by Franchisor periodically in the Operations Manual. Monthly sales and Royalty Fee reporting may occur through mandatory Software including the automatic draft via electronic transfer of Royalty Fees, Required Software License and Support Fees and FMF funds.

9.11       Franchisee will at all times maintain an active email account and will check the account several times per day. If available, Franchisee will maintain an email account on Franchisor’s proprietary database management and intranet system.

9.12       Franchisee may not open an Office until: (1) Franchisor notifies Franchisee in writing that all of Franchisee’s obligations have been fulfilled; (2) the initial training program has been completed to Franchisor’s satisfaction; (3) the Office has been renovated in accordance with Franchisor’s standards and specifications; (4) all amounts due to Franchisor has been paid; (5) Franchisor has been furnished with copies of all insurance policies and certificates required by this Agreement, or other documentation of insurance coverage and payment of premiums that Franchisor may request; (6) Franchisee notifies Franchisor that all approvals and conditions set forth in this Agreement have been met; (7) Franchisee has obtained all necessary real estate brokerage licenses and permits and other applicable permits and licenses; (8) Franchisee has provided Franchisor with a fully signed copy of the Lease for the Office; (9) Franchisee has provided satisfactory evidence to Franchisor that all of Franchisee’s Agents are licensed to sell Real Property in the Territory; and (10) Franchisee has ordered, received and installed all equipment, supplies, inventory, tools, products, uniforms and computer Hardware and Software required by Franchisor. Franchisee will begin operating the Business immediately after Franchisor determines that the Business is ready for opening. Franchisee must open the Central Office within six (6) months after signing the Franchise Agreement unless Franchisor otherwise consents in writing.

9.13       Franchisee shall, prior to the opening of its Central Office and continuing throughout the Initial Term and any Interim Period, provide Franchisor with administrative login credentials for each MLS that Franchisee or its principals are a member of or for which they are paying Franchisor a MLS/RETS FEED Fee. Franchisee is responsible for the costs and fees associated with securing additional administrative log-in credentials on behalf of Franchisor.

9.14       Franchisee shall:

10.       PURCHASE OF EQUIPMENT, INVENTORY AND SUPPLIES

10.1       Franchisee must purchase all services, equipment, supplies and Hardware and Software from only those suppliers, manufacturers and distributors who have been designated or approved in advance by Franchisor. The standards and specifications for equipment, computer Hardware and Software, tools, vehicles, signage, supplies, and services required by Franchisor is maintained in the Operations Manual. The Franchisor has the right to require Franchisee to discontinue purchasing any services, equipment, supplies, Hardware or Software from an approved or Designated Supplier, manufacturer or distributor and may designate new suppliers, manufacturers or distributors at any time.

10.2       Franchisee acknowledges and agrees that Franchisor may receive from approved and Designated Suppliers of Franchisee’s Services, equipment, tools, supplies and Hardware and Software, periodic volume rebates or other revenue as a result of Franchisee’s purchases. Franchisee further acknowledges and agrees that Franchisor is entitled to keep for its own use and account these rebates and this revenue.

10.3       The names and addresses of Franchisor’s approved and Designated Suppliers, manufacturers and distributors is maintained in the Operations Manual. Franchisor reserves the right to approve all of the supplies, Services, equipment, Hardware and Software used in connection with Franchisee’s Business.

10.4       Franchisee acknowledges and agrees that certain approved or Designated Suppliers, distributors, and service providers may be Affiliates.

10.5       Franchisee must use Franchisor’s Affiliate, La Rosa Coaching LLC, for the purposes of training all new Agents and/or those Agents who have closed less than three (3) transactions within a preceding twelve (12) month period.

10.6       Franchisee is not required to, but it is recommended that, Franchisee refer clients to Franchisor’s Affiliate, La Rosa Title LLC, to act as the title agency for title and closing of transaction in which Franchisee is involved.

10.7       Franchisee must use Franchisor’s Affiliate, La Rosa CRE, LLC to oversee and assist in all commercial real estate transaction in which Franchisee is involved.

10.8       Franchisee is not required to, but it is recommended that, Franchisee refer clients to Franchisor’s Affiliate, La Rosa Insurance LLC, to provide homeowner’s, auto, and health insurance and related services, subject to client approval.

10.9       Franchisee must use Franchisor’s Affiliate, La Rosa Property Management LLC, to provide all residential and commercial property management services to Franchisee’s clients.

11.       MARKS, COPYRIGHTED WORKS AND OWNERSHIP OF IMPROVEMENTS.

11.1       Franchisee acknowledges and agrees that:

11.2       Franchisee acknowledges and agrees that:

11.3       Franchisee acknowledges and agrees that:

11.4       All provisions of this Agreement applicable to the Marks and Copyrighted Materials apply to any and all additional trademarks, service marks, commercial symbols and copyrighted materials authorized for use by and licensed to Franchisee by Franchisor after the date of this Agreement.

11.5       If Franchisee during the Initial Term of the franchise relationship or any Interim Period or any Successor Term conceives or develops any improvements or additions to the System, Copyrighted Materials, website or any other documents or information pertaining to or relating to the System or the Business, or any new trade names, trade and service marks, logos, or commercial symbols related to the Business or any advertising and promotional ideas or inventions related to the Business (collectively, the “Improvements”) Franchisee will fully disclose the Improvements to Franchisor, without disclosure of the Improvements to others, and will obtain Franchisor’s written approval before using these Improvements. Any of these Improvements may be used by Franchisor and all other franchisees without any obligation to Franchisee for royalties or other fees. Franchisee will assign and does hereby assign to Franchisor, all right, title and interest in and to the Improvements, including the right to grant sublicenses to any of these Improvements. Franchisor reserves the right to make application for and own copyrights, patents, trade names, trademarks and service marks relating to any of these Improvements and Franchisee will cooperate with Franchisor in securing these rights. Franchisor may also consider these Improvements as the property and Trade Secrets of Franchisor. In return, Franchisor may authorize Franchisee to utilize any Improvement that may be developed by other franchisees and is authorized generally for use by other franchisees.

11.6       Neither Franchisee nor its Designated Business Managers or Agents will attempt to register a top-level or second level domain name that contains any portion of the Marks without the prior written approval of Franchisor and subject to any conditions Franchisor may request.

11.7       Only if approved in advance by Franchisor, Franchisee may elect to use the Mark Better Homes Realty” rather than the Mark “La Rosa Realty” in the franchised Territory.

Franchisee may only use such Mark and Copyrighted Materials related thereto in its operation of the Business and only in compliance with this Agreement and all applicable standards, specifications, and operating procedures prescribed by Franchisor in the Operations Manual and elsewhere periodically during the Initial Term and any Interim Period.

12.       ADVERTISING AND PROMOTION

12.1       Marketing Fees and Materials.

12.2       Local Advertising.

12.3       Area Cooperatives.

12.4       Internet Website.

12.5       Use of Better Homes Realty Trademark.

In the event that Franchisee has been approved to use the “Better Homes Realty” Mark for the operation of its Business, the foregoing provisions of this Section 12 shall only apply if Franchisor has established separate Marketing Funds, Area Cooperatives, system-wide promotions and advertising campaigns, and/or websites, as applicable, utilizing the “Better Homes Realty” Mark.

13.       INSURANCE AND INDEMNITY

13.1       Franchisee and, with respect to automobile coverage, Franchisee’s Agents, will upon commencement of the Initial Term, purchase and at all times maintain in full force and effect:

a.             Insurance policies, in the amounts and on the terms prescribed by the Operations Manual, issued by an insurance company acceptable to Franchisor at all times during the Initial Term of this Agreement and any Interim Period. Insurance coverage must include, but is not limited to, comprehensive general liability, combined single limit, automobile (including automobile coverage for Franchisee and Franchisee’s Agents and other sales and marketing personnel who may have customers riding in the automobiles of these persons), bodily injury and all-risk property damage insurance, errors and omissions, business interruption and all other occurrences against claims of any person, employee, customer, agent or otherwise in an amount per occurrence of not less than the amount set forth in the Operations Manual and adjusted by Franchisor periodically, unemployment and workers compensation insurance and any other additional insurance required by the terms of any Lease or lender for the Business. Insurance policies must insure Franchisee, Franchisor, Franchisor’s Affiliates, and Franchisor’s and Franchisor Affiliates’ respective officers, directors, shareholders, members and all other parties designated by Franchisor, as additional named insureds against any liability which may accrue against them because of the ownership, maintenance or operation by Franchisee of the Business. The policies must also stipulate that Franchisor will receive thirty (30) day prior written notice of cancellation and must contain endorsements by the insurance companies waiving all rights of subrogation against Franchisor. Original or duplicate copies of all insurance policies, certificates of insurance, or other proof of insurance acceptable to Franchisor, including original endorsements effecting the coverage required by this Section, is furnished to Franchisor together with proof of payment within ten (10) days of issuance thereof. Franchisee will also furnish Franchisor with certificates and endorsements evidencing this insurance coverage within 10-days after each of the following events: (i) at all policy renewal periods, no less often than annually, and (ii) at all instances of any change to, addition to, or replacement of any insurance. The certificates and endorsements for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. All certificates and endorsements are subject to approval by Franchisor. Franchisor reserves the right to require complete, certified copies of all required insurance policies at any time. In the event Franchisee fails to obtain the required insurance and to keep the same in full force and effect, Franchisor may, but is not obligated to, purchase insurance on Franchisee’s behalf from an insurance carrier of Franchisor’s choice, and Franchisee will reimburse Franchisor for the full cost of this insurance, along with a reasonable service charge to compensate Franchisor for the time and effort expended to secure this insurance, within five (5) days of the date Franchisor delivers an invoice detailing these costs and expenses to Franchisee. Notwithstanding the foregoing, failure of Franchisee to obtain insurance constitutes a material breach of this Agreement entitling Franchisor to terminate this Agreement or exercise any or a combination of the other default remedies set forth in Section 18 of this Agreement. Franchisee will also procure and pay for all other insurance required by state or federal law. Franchisor reserves the right to modify minimum insurance requirements at any time by updating the Operations Manual.

13.2       Franchisee will, during the Initial Term and any Interim Period and after the termination or expiration of the Franchise Agreement, indemnify Franchisor, its Affiliates and their respective officers, owners, directors and employees, and hold them harmless against all claims, demands, losses, damages (including punitive damages), costs, suits, judgments, penalties, expenses (including reasonable attorneys’ fees and amounts paid in settlement or compromise) and liabilities of any kind, whether or not ultimately determined to be meritorious (and including damages suffered by Franchisee or any of its property) (collectively, “Damages”) for which they are held liable, or which they incur (including travel, investigation and living expenses of employees and witness fees) in any litigation or proceeding as a result of or arising out of:

14.       RELATIONSHIP

14.1       Franchisee acknowledges that it is an independent contractor and is not an agent, partner, joint venturer or employee of Franchisor and no training or supervision given by, or assistance from, Franchisor is deemed to negate this independence. Neither party is liable or responsible for the other’s debts or obligations, nor will either party be obligated for any damages to any person or property directly or indirectly arising out of the operation of the other party’s business authorized by or conducted pursuant to this Agreement. The Franchisor and Franchisee agree that no partnership, fiduciary relationship, joint venture or employment relationship exists between them. Franchisee will conspicuously identify itself in all dealings with the public as a sole operator that is an entity separate from Franchisor and state that Franchisor has no liability for the Business being conducted from the Business location. It is expressly agreed that the parties intend by this Agreement to establish between Franchisor and Franchisee the relationship of franchisor and franchisee. It is further agreed that Franchisee has no authority to create or assume in Franchisor’s name or on behalf of Franchisor, any obligation, express or implied, or to act or purport to act as agent or representative on behalf of Franchisor for any purpose whatsoever. Franchisee agrees that it will not hold itself out as the agent, employee, partner or co-venturer of Franchisor. All Agents and employees hired by or working for Franchisee is the Agent or employees of Franchisee and will not, for any purpose, be deemed Agents or employees of Franchisor or subject to Franchisor control. Each of the parties agrees to file its own tax, regulatory and payroll reports with respect to its respective employees and operations, saving and indemnifying the other party of and from any liability of any nature whatsoever by virtue thereof.

14.2       Neither party will make any agreements, representations or warranties (except by Franchisor in advertising as provided herein) in the name of, or an behalf of, the other party; neither party is obligated by, nor have any liability for, any agreements, representations or warranties made by the other (except by Franchisor in advertising as provided herein) nor will Franchisor be liable for any damages to any person or property, directly or indirectly, arising out of the operation of Franchisee’s Business, whether caused by Franchisee’s or its Agents’ negligent or willful action or failure to act.

14.3       The Franchisor will have no liability for Franchisee’s obligations to pay any third parties, including without limitation, any product vendors, or any value added, sales, use, service, occupation, excise, gross revenue, Gross Commission Income, income, property or other tax levied upon Franchisee, Franchisee’s property, the Business or upon Franchisor in connection with the sales made or business conducted by Franchisee (except any taxes Franchisor is required by law to collect from Franchisee with respect to purchases from Franchisor).

15.       RESTRICTIVE COVENANTS

15.1       Franchisee acknowledges and agrees that:

15.2       Franchisee covenants and agrees that during the Initial Term of this Agreement and any Interim Period thereof, Franchisee, its owners and Designated Business Managers will not, without the prior written consent of Franchisor, either individually or in a partnership, corporation, limited liability company, joint venture or other business entity or jointly or in conjunction with any person, firm, association, syndicate or corporation, as principal, agent, shareholder, member, partner or in any manner whatsoever, carry on or be engaged in or be concerned with or interested in or advise, lend money to, guarantee the debts or obligations of or permit its name or any part thereof to be used or employed in any business operating in competition with a residential or commercial real estate brokerage business or any business similar to the Business (“Competitive Business”) as carried on periodically during the Initial Term of this Agreement, including any Interim Period thereof.

15.3       During the Initial Term of this Agreement and for a period of twelve (12) months following the Initial Term, Franchisee, Franchisee owners, and the Designated Business Manager will not attempt to attain an unfair advantage over other franchisees or Franchisor or any Affiliates thereof by soliciting for employment or as an agent, independent contractor, or business partner, any person who is, at the time of the solicitation, employed by or otherwise in a business relationship with Franchisor, other franchisees of Franchisor or any Affiliates, nor will Franchisee make any effort to directly or indirectly induce or attempt to induce any person to leave his or her employment, agency, or business relationship with Franchisor, other franchisees of Franchisor or any Affiliates.

15.4       If any person restricted by this Section 15 refuses to voluntarily comply with the foregoing obligations, the twelve (12) month period stated in Section 15.3 and Section15.1(c) will commence with the entry of any order of a court or arbitrator enforcing this Section 15.

15.5       The parties have attempted in Section 15.2 above to limit Franchisee’s right to compete only as necessary to protect Franchisor from unfair competition. The parties hereby expressly agree that if the scope of enforceability of the provision of Section 15.2 is disputed at any time by Franchisee, a court or arbitrator, as the case may be, may modify Section 15.2 if it deems necessary to make the provision enforceable under applicable law. In addition, Franchisor reserves the right to reduce the scope of said provision without Franchisee’s consent, at any time or times, effective immediately upon notice to Franchisee. Franchisee expressly acknowledges that it possesses skills and abilities of a general nature and has other opportunities to exploit these skills. Consequently, enforcement of the covenants set forth above will not deprive Franchisee of the ability to earn a living.

15.6       Nothing in this Section 15 will prevent any active officer of Franchisee or member of Franchisee’s family, either individually or collectively, from owning not more than a total of 5% of the stock of any company which is subject to the reporting requirements of the U.S. Securities and Exchange Act of 1934, provided that Franchisee is otherwise not actively involved in the management or operation of that business and does not serve that business in any capacity other than as a shareholder.

15.7       Franchisor must be protected against the potential for unfair competition by Franchisee’s use of Franchisor’s training, assistance, Confidential Information and Trade Secrets in direct competition with Franchisor. Franchisee further acknowledges that Franchisor would not have entered into this Agreement or shared the Confidential Information, Trade Secrets and other information with Franchisee absent Franchisee’s agreement to strictly comply with the provisions of this Section 15. Franchisee acknowledges that as a franchisee of Franchisor, it will have access to Franchisor’s Trade Secrets and Confidential Information and therefore be in a unique position to use the special knowledge gained as a franchisee. Franchisee acknowledges that a breach of the covenants contained in this Section 15 will be deemed to threaten immediate and substantial irreparable injury to Franchisor. Accordingly, Franchisee agrees that Franchisor will have the right, without prior notice to Franchisee, to obtain immediate injunctive relief for breach of this Section 15 without limiting any other rights or remedies and without posting a bond.

15.8       In the event that Franchisee is not an individual, this Section 15 will also apply to the officers, directors, stockholders, partners, owners, members, trustees, beneficiaries and/or principals of Franchisee, Franchisee, and any persons controlled by, controlling or under common control with Franchisee.

16.       ASSIGNMENT

16.1 Franchisee acknowledges that Franchisor’s obligations under this Agreement are not personal. Franchisor will have the absolute right to unconditionally transfer or assign this Agreement or any of its rights or obligation under this Agreement to any person, corporation or other party.