Highlights of Wild Birds Unlimited’s Item 19 Financial Performance Representations (2012 FDD) – Part 3

First Year Advertising Expense

Advertising expense is defined as the out-of-pocket expense that franchisees spend to market their store, including the cost of printing and mailing customer flyers; television, radio, newspaper, and direct-mail advertising. You may decide to place other related expenses into this expense category.

Based on 2007, 2008, 2009, and 2010 first calendar year financial statements from 17 franchised stores who completed their first full calendar year of operation as of 12/31/07, 12/31/08, 12/31/09, or 12/31/10:

Average Advertising Expense: 10.04%

Range: 4.11% to 15.92%

Median: 11.14%

Number/Percentage of Stores Exceeding Average Advertising Expense: 9 (52.94%)

The advertising expense as a percentage of total Gross Sales will vary from market to market depending on the cost of media advertising and the personal decisions of individual franchisees.

First Year Wage Expense

Wage expense is defined as the out-of-pocket expense that franchisees spend to hire non-owners. You may decide to place other related expenses into this expense category.

Not included in this category are payroll taxes, workers’ compensation, insurance, employee training, employee benefits, or any other employee associated costs.

Based on 2007, 2008, 2009, and 2010 first calendar year financial statements from 17 franchised stores who completed their first full calendar year of operation as of 12/31/07, 12/31/08, 12/31/09, or 12/31/10:

Average Wage Expense: 8.99%

Range: 0.00% to 16.66%

Median: 8.93%

Number/Percentage of Stores Exceeding Average Wage Expense: 9 (52.94%)

The wage expense as a percentage of total Gross Sales will vary from market to market depending on the cost of hiring employees and the personal decisions of individual franchisees.

Schedule 7 – Adjusted Net Operating Income

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