FDD Talk: Average Net Sales of Saladworks Franchised Restaurants (2013 FDD)

Highlights of Saladworks’ Item 19 Financial Performance Representations (2013 FDD) – Part 1

• This Item contains the following historical sales and cost information:

• (1) the average Net Sales of 80 Saladworks franchised restaurants in operation during the entire 2012 calendar year, grouped by their “A,” “B,” and “C” rankings under the franchisor’s internal Restaurant Ranking Program; and

• (2) the average costs of 18 “A” Saladworks restaurants operated by various franchisees in strip center locations, during the entire 2012 calendar year.

• The data used in preparing this financial performance representation was compiled from information submitted to the franchisor by the franchised restaurants in their unaudited sales reports and profit and loss statements.

• While the franchisor believes that these sales reports and profit and loss statements contain accurate information, the franchisor has not independently verified the information.

Explanatory Notes for Part 1 – Average Net Sales of 80 Saladworks Franchised Restaurants in 2012

• Franchisees operated 88 Saladworks restaurants during the entire 2012 calendar year. Of those restaurants, 80 were at standard locations that were open 7 days a week during typical operating hours, and 8 were at downtown or similar locations that typically were open only 5 days a week during limited operating hours (sometimes just 11am to 3pm).

• This Item shows the average Net Sales of the 80 restaurants that were open 7 days a week during typical operating hours.

• The franchisor gives Saladworks franchised restaurants annual “A,” “B,” and “C” rankings under its internal Restaurant Ranking Program.

• The Restaurant Ranking Program uses an ongoing multi-faceted quantitative analysis to score a Saladworks restaurant’s overall performance, using a scale of 0% to 100%, and taking into account the restaurant’s operations, marketing, brand services, and management.

• A restaurant’s Net Sales are not a factor considered in determining a restaurant’s Franchise Ranking Program score.

• A restaurant’s Franchise Ranking Program is determined annually and may improve or decline from year to year based on changes in the restaurant’s operations.

• “A” restaurants have Restaurant Ranking Program scores ranging from 90% to 100%, “B” restaurants have scores ranging from 75% to 89.9%, and “C” restaurants have scores ranging from 70% to 74.9%.

• In 2012, of the 80 Saladworks franchised restaurants whose results are shown in this Item, there were 30 “A” Restaurants, 37 “B” Restaurants, and 13 “C” Restaurants.

• The following table shows, for the period from January 1, 2012 through December 31, 2012, the average Net Sales, and the high and low Net Sales, of:

• (i) the 30 “A” restaurants;

• (ii) the 37 “B” restaurants;

• (iii) the 13 “C” restaurants;

• (iv) all 80 restaurants.

• “Net Sales” includes all revenues generated from all business conducted at or from a restaurant, including amounts received from the sale and delivery of services, products, and merchandise of any nature whatsoever, whether in cash or for credit, and whether collected or uncollected, less all customer and employee discounts given by a restaurant. Net Sales does not include any sales or other taxes required to be collected by franchisees and paid to applicable government authorities.

• Of the 30 “A” restaurants, 17 exceeded the Average Net Sales.

• Of the 37 “B” restaurants, 21 exceeded the Average Net Sales.

• Of the 13 “C” restaurants, 7 exceeded the Average Net Sales.

• Of all 80 restaurants, 41 exceeded the Average Net Sales.

Part 1 – Average Net Sales of 80 Saladworks Franchised Restaurants in 2012