Highlights of Firehouse Subs’ Item 19 Financial Performance Representations (2012 FDD) – Part 1

• The franchise is for the establishment and operation of a restaurant which offers and serves large-portion hot submarine style sandwiches in a unique fire-fighting atmosphere and decorum at an economical price under the Firehouse Subs trade name and business system (a “Firehouse Subs Restaurant” or “Restaurant”).

• The total investment necessary to begin operation of a single Firehouse Subs Restaurant ranges from $178,376 to $625,801. These totals include the following amounts that must be paid to the franchisor or its affiliates:  an initial franchise fee of $20,000; the fee for a mural, which ranges from $2,800 to $5,000; and the MIS System Fee, which ranges from $100 to $1,200.

• If you sign an Area Development Agreement (the “Development Agreement”), you will also pay a Development Fee equal to $10,000 times the number of Restaurants to be developed. The portion of the Development Fee allocable to each Restaurant (which is $10,000 for each Restaurant) will be credited against the initial franchise fee for that Restaurant.

Section 1 – Firehouse Subs Historical Average Unit Volume of Company-Owned and Franchised Locations (2009-2011)

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  The following section shows historical sales information regarding both franchised and affiliated Firehouse Subs Restaurants that were open for a full 12 month period during the company’s fiscal years 2011, 2010, and 2009.

• The historical sales information was compiled using the reports provided to the franchisor by these Restaurants. The reports are provided on a cash accounting basis and are used to form the basis of royalty payments.

• The sales summary below does not reflect any expenses of Firehouse Subs Restaurants. Some of the expenses that are not reflected in this summary, but that you will incur and should take into consideration, are the following:  franchise payments, including royalties; salaries, payroll taxes, and other employee benefits; licenses; rent and utilities; cost of equipment; cost of food and other product costs; financing costs (in addition to occupancy expense); accounting and legal expenses; debt repayment. These expenses will affect the net income and cash flow of a Firehouse Subs Restaurant. You should consider them and evaluate their impact on your operations.

2011 Weekly Average Unit Volume

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