Highlights of HoneyBaked Ham’s Item 19 Financial Performance Representations (2012 FDD) – Part 1

The franchisee will operate a retail store and cafe under the name “The HoneyBaked Ham Co. and Cafe” that specializes in the sale of hams, turkeys, and other products, and serves sandwiches, salads, beverages, and other menu items (“HoneyBaked Store”).

The total investment necessary to begin operation of a HoneyBaked Store ranges from $294,000 to $409,900. This includes the initial fees of $48,100 to $52,000 that must be paid to the franchisor or its affiliates.

If you sign an Area Development Agreement to develop multiple HoneyBaked Stores, you will pay a development fee to the franchisor in the amount of $10,000 for each Store that you agree to develop.

The HoneyBaked Stores reflected in this financial performance representation offer inventory and services for sale that are substantially similar to the inventory and services that you will offer for sale in your HoneyBaked Store.

The financial performance representation is based upon sales data collected from the franchised HoneyBaked Stores and expense data collected from the company’s Retail Stores. The data has not been audited.

The actual sales of your HoneyBaked Store depends on many factors, including its location, site criteria, local household income, residential and business population during the day and at night, ease of ingress and egress, seating, parking, the physical condition of your HoneyBaked Store, and the size and visibility of the Store.

Your sales will also be impacted by your own operational ability, your experience with managing a business, your capital and financing (including working capital), training, customer service at your HoneyBaked Store, product quality, and your business plan.

Your sales may also be impacted by the weather and by promotions you run and those run by your competitors.

Part I – Net Sales of 73 Franchised HoneyBaked Stores in Operation for More Than Five Years for 2011 Fiscal Year

This section presents the average net sales for the period from September 26, 2010 to September 25, 2011 of 73 franchised HoneyBaked Stores that have been open for at least five years.

The franchised Store information is based on sales reports from the company’s Customer Management System or POS system and has not been audited.

This section does not include data related to (1) 38 franchised HoneyBaked Stores that have not been open for at least five years; and (2) Retail Stores operated by the franchisor’s affiliates and licensees of Limited Partnership.

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