ACC Franchise FAQ's

1. What are the critical keys to success in this business?
Obviously, the self discipline, motivation, and drive to own your own business is critical. Affiliates should also have good communication and presentation skills, an ability to analyze and discuss issues at the senior management level (President, COO, CFO, VP), and a knowledge of spreadsheets (Excel) and MS Office.

2. Is it possible to speak with other Affiliates before signing an agreement?
Yes. However, we strongly encourage a due diligence visit and a review of our UFOC to be conducted in conjunction with this, and that the time of our existing Affiliates is respected.

3. How many Affiliates that have started in this business have failed?
All of our Affiliates are at different stages of development. There have been a small number of Affiliates who have either terminated or are less active than other full-time Affiliates.

4. How many Affiliates are using the Alliance Cost Containment Process as a supplement to another business as opposed to a stand-alone business?
Nearly all of our Affiliates are developing their Alliance Cost Containment business on a full-time basis without offering any other consulting services. A small number of Affiliates initially provided other consulting services during start-up, but began divesting themselves of those ventures once their Cost Containment business began developing. Our new focused national branding strategy strongly encourages our business to be conducted full time to achieve maximum results.

5. How is the Affiliate paid?
Each client pays the Affiliate a contingency fee of 50% of the realized cost savings identified, facilitated, and implemented over 12 months of full implementation of each initiative. Maintenance fees and "sales development fees" can also be enjoyed after contingency engagements are completed.

6. What is the typical customer profile?
We target small to mid-sized for-profit and not-for-profit organizations (with annual revenues typcially between $10 million to $500 million) across nearly all industries and sectors. Our average client has annual revenues between $40 million and $400 million, and has between 100 and 1,000 employees. Many of our larger clients are multi-location companies, where joint projects across our Alliance are common. The average ACC client in 2005 yielded annual cost savings of nearly $150,000, and our largest client to date has savings of about $2.5 million. Of our client engagements delivered In 2005, 62% were in the manufacturing sector.

7. What additional costs do you advise an Affiliate should anticipate beyond the Franchising investment?
The Affiliate must secure a notebook computer and peripheral office equipment (fax machine, personal copier, scanner, etc.) for their business, and should plan for working capital of a few months living expenses.

8. What are the minimum specifications for the notebook computer?
Hardware: 512 MB RAM, 20 GB Hard Drive, and Scanner. Software: MS Office, ACT! or Outlook, Adobe, and Quicken.

9. Are fees negotiable?
The initial franchise fee of $29,900 and quarterly royalty are not negotiable. Based upon the success and track record of our methodology, the earnings power of our client business and our Affiliates' businesses, and the numerous branding, marketing, strategic alliances, national supplier contracts, and technology tools we provide, we believe our business is very attractively priced when compared to other business to business franchises.

10. Do you assist the Affiliates in setting up their business? Yes.

11. How do we address the exclusivity of a territory?
We grant no exclusive territories, but define "Marketing Areas", in which we limit the number of Affiliates within a given Marketing Area. Affiliates may travel, market, and deliver engagements to clients anywhere (within or outside any Marketing Area), since referrals and prior client relationships potentially take an Affiliate across Marketing Areas. There is a set maximum number of Affiliates in a given Marketing Area, based on the number of potential clients meeting our profile. Multiple units may also be purchased in a given State or in multiple States.

12. Do you see any issues with Affiliates residing several states away as opposed to residing in the Midwest? Will this make a difference in support/response an Affiliate might expect?
All of our Affiliates receive the same ongoing support, regardless of where they reside. This support includes on-going telephone and e-mail correspondence, monthly conferencing calls, access to our proprietary "Knowledge Base", newsletters, website, training videos, and our annual conference. On occasion, at the request of the Affiliate (or another Affiliate or us), a joint venture engagement may be conducted, whereby fees are shared between us and the Affiliate, or between Affiliates. This is common for larger, multi-location clients.

13. Are suppliers in the Alliance regional or national in scope?
Some supplier relationships and contracts are local, some are regional, and some are national. Depending on the expense category, some expenses are more prone to using local sourcing. We train the Affiliate on how to qualify, research, and negotiate with suppliers, as well as how to facilitate the negotiation process as it pertains to our methodology with national agreements. We are negotiating national supplier contracts on an on-going basis.

14. Does the franchising investment include an associate or partner? Yes.

15. If an Affiliate were to build their business to a level in which additional staffing was brought on, would additional fees be required?
The investment applies to the training of the Franchisee and/or a partner or associate. If additional staff is added later to an existing Affiliate in an existing office that require training, an additional training fee would be required. If an additional office is desired, an additional licensing fee would be required.

16. How much of the Affiliates's fees are for new clients as opposed to recurring clients?
Because of the contingency nature of the engagement process, most fees for a given client engagement are earned during the first 12-24 months of the engagement. While maintenance services are available to clients in subsequent years, much more fee revenue is earned on new contingency engagements as opposed to maintenance services. In addition, a new revenue stream has been developed using "SDFs" (sales development fees) from contract suppliers, that are shared with Franchisees.

17. Who are your largest competitors?
From the research we have conducted over the past few years, we have found very few organizations which we consider major competitors which provide the identical methodology, and have the substantial long-term track record in the U.S. that we do. Some organizations, which specialize in one expense area, or specialized buying groups, are not considered serious competitors, and the fee revenue model is not the same or as compelling as ours. The relationships we have with our clients is very strong, and our relatively high individual client fees reflect the significant value we bring to them.

18. Is there an avenue for new services to be made available to the Affiliates?
New areas, branding, national supplier contracts and improvements are on-going, particularly as we are executing our new branding strategy nationally. On-going interaction with our Affiliates is encouraged, and our annual conference agenda keep us focused on new needed services and initiatives.

19. Can the methodology be used to address other business areas besides the core expense items noted?
Yes. The methodology forms the core structure for conducting the analysis, regardless of which or how many expense areas may be reviewed.

20. Are there currently any lawsuits or arbitration pending against Alliance Cost Containment? No.

21. Is there an Affiliate advisory council that provides a channel for communications between Alliance Cost Containment and its Affiliates?
Because the number of Affiliates is manageable, we directly support and communicate with each Affiliate on a very personal level. There is a core group of senior Affiliates and other strategic partners who we collaborate with on various new initiatives. Monthly conference calls, email, newsletters, and our annual conference also provide significant opportunities for growth, development, and collaboration. Because we recently joined forces with a major demand aggregation firm, communication with Affiliates on emerging and developing strategic issues has been more frequent.

22. Can I get more information before I make a final decision?
Yes. We invite all prospective Affiliates to talk personally with us, and to make a due diligence visit to Kentucky to see and study our business first hand.