Highlights of Yogurt Mountain’s Item 19 Financial Performance Representations (2013 FDD) – Part 2

Explanatory Notes for Part 3 – Certain Expense Information for Company-Owned 2-Year Stores

• The following chart presents data based entirely on the results of the 15 Company-Owned 2-Year Stores. The franchisor has not included the two 2-Year Stores that were owned by unaffiliated franchisees in this chart because it does not have reliable data for those Stores with respect to the information reported.

• As with the Gross Sales data, the data used to prepare the following chart is the franchisor’s own internally prepared data with respect to the company’s 2012 Fiscal Year. The data has not been reviewed or audited by an independent certified public accountant for this purpose.

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  “Cost of Goods Sold” includes revenue spent on food, beverage, paper, and merchandise.

• 8 (53.3%) of the 15 Company-Owned 2-Year Stores experienced results that were at or lower than the reported average Cost of Goods Sold as a percent of Gross Sales during the relevant time period.

• “Labor” includes revenue spent on Store-level wages (salaried and hourly). It does not include bonuses, payroll taxes, payroll fees, benefits (insurance, 401K, vacation, etc.), or other employee-related labor expenses. It also does not include an owner-operator salary.

• 9 (60.0%) of the 15 Company-Owned 2-Year Stores experienced results that were at or lower than the reported average Labor as a percent of Gross Sales during the relevant time period.

• “Rent” includes Store rent and common area maintenance.

• 9 (60.0%) of the 15 Company-Owned 2-Year Stores experienced results that were at or lower than the reported average Rent as a percent of Gross Sales during the relevant time period.

• You should consider that the franchisor is based in Birmingham, Alabama, and the Yogurt Mountain concept began there. The number of Yogurt Mountain Stores in the market, their length of operation, and the greater visibility and local media attention resulting from those factors may impact the results (through, among other things, greater consumer awareness and brand acceptance) compared to what you might achieve in other markets where, for example, consumers might not have already had the opportunity to experience the brand.

• Your experience and results may also be negatively impacted by a myriad of other factors, including, among other things:

• your failure to comply with all of the System Standards;
• less efficient, less adequately trained, or less strictly managed restaurant labor;
• employee turnover;
• your inability to hire and retain employees at similar compensation levels (including due to local available employee pools and minimum wage requirements);
• your inability to achieve the same level of volume-based discounts and savings on the purchase of insurance and similar types of items;
• the location of your Yogurt Mountain Store, and your inability to negotiate as favorable lease terms;
• the competition in the market;
• your management and business skills;
• the amount of money you spend to promote your Yogurt Mountain Store;
• the length of time you operate;
• your inability to achieve the same level of market share;
• and the extent of any existing consumer awareness of the brand.

Part 3 – Certain Expense Information for Company-Owned 2-Year Stores

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