Detailed Information on Charleys Philly Steaks’ Initial Franchise Fee, Royalty Fee + 19 Other Fees (Items 5 and 6, 2022 FDD)

1.  Initial Franchise Fee:  $15,000 to $24,500

• You must pay Charleys an initial franchise fee in the amount of $24,500 for your first Restaurant ($15,000 for your second and any subsequent Restaurant) when you sign the Franchise Agreement.

• The initial franchise fee is deemed fully earned upon payment and is non-refundable.

• Generally, the initial franchise fee is uniformly imposed on Charleys franchisees; however, in certain unique circumstances, Charleys may reduce or waive a fee for a particular franchisee.

• Charleys is a member of the International Franchise Association’s VetFran Program. Under Charleys’ VetFran Program, if you (or a holder of at least a 51% ownership interest in your franchisee entity) provide Charleys with a DD Form 214 or other adequate documentation, as determined by Charleys, demonstrating honorable discharge from the United States military and you sign a Franchise Agreement to develop and operate a new Restaurant, then Charleys will reduce your Franchise Fee by $12,250.

2.  Grand Opening Marketing Package:  $7,000 to $10,000

• Prior to the opening of your Restaurant, you must purchase a grand opening marketing package from Charleys and its approved vendors with an estimated cost ranging from $7,000 to $10,000. Of that amount, $2,000 to $4,000 is paid to Charleys as pass-through fees or for marketing items purchased in bulk.

• Charleys’ Marketing Department will present a range of grand opening marketing packages available to you for the opening of your Restaurant. Grand opening marketing packages may include grand opening/starter signage kits, digital advertising, decorations, printed materials, and give away items.

3.  Royalty:  the greater of (a) $300 or (b) 6% of your Gross Sales

• Due Date:  Royalty fees are payable on or before Thursday of each week based on the Gross Sales incurred during the immediately preceding week.

4.  Advertising and Promotion Obligation (“APO”):  currently 3% of Gross Sales (1% to the Marketing Fund and 2% for Local Store Marketing)

• Due Date:  Marketing Fund and advertising cooperative contributions are payable with the royalty fees. Local Store Marketing expenditures are not paid to Charleys but must be reported quarterly.

• The APO will not exceed 5% of Gross Sales. Charleys reserves the right to increase your APO and it may reallocate the APO among the Marketing Fund, Local Store Marketing, and an advertising cooperative.

• Charleys does not currently require you contribute to an advertising cooperative.

5.  Marketing, Advertising, and Promotional Materials:  $500 to $2,000

• Due Date:  Payment due upon order.

• You may purchase marketing, advertising, and promotional materials at cost, plus any related administrative, shipping, handling, and storage charges.

6.  Transfer Fee:  the greater of $10,000 or Charleys’ costs incurred in connection with the transfer

• Due Date:  Upon transferring the franchise.

• Transfers are subject to Charleys’ approval.

7.  Renewal Fee:  currently, $10,000

• Due Date:  Upon signing the new Franchise Agreement.

• You must pay Charleys’ then-current standard renewal fee.

8.  Failed Inspection or Non-Compliance Fees:  $500 to $1,500

• Due Date:  Upon demand.

• If you fail an operations inspection, you must pay Charleys’ then-current quality assurance program fees and reimbursement of its expenses.

9.  Ongoing Training:  currently, $1,500 to $3,500 per program

• Due Date:  As incurred.

• Charleys has the right to charge you a fee to attend ongoing training programs that it offers.

10.  Late Charge and Interest on Late Payments:  the late charge is currently $50; the interest charge is the lesser of 12% per annum or the maximum rate permitted by law

• Due Date:  Immediately.

• You must pay Charleys’ then-current late fee and interest on money you owe Charleys or any of its affiliates after the due date.

11.  Service Payments:  currently, $50

• Due Date:  Immediately.

• You must pay Charleys a reasonable service fee if you fail to maintain sufficient funds in your designated bank account.

12.  Site Selection Extension:  $2,500

• Due Date:  Upon receipt of Charleys’ bill.

• Payable if Charleys agrees, in its sole discretion, to extend your site selection period (180 days after signing the Franchise Agreement).

13.  Special Assistance:  currently, out-of-pocket expenses

• Due Date:  Upon receipt of Charleys’ bill.

• Charleys may impose per diem fees and charges for any special assistance you request.

14.  Fees to Evaluate and Approve Alternative Suppliers:  Charleys’ out-of-pocket expenses (estimated at $1,500 to $2,000)

• Due Date:  Upon receipt of Charleys’ bill.

• Charleys may impose reasonable inspections and supervision fees to cover its costs in evaluating alternative approved brands or suppliers you suggest.

15.  Audit:  cost of audit

• Due Date:  Upon receipt of Charleys’ bill.

• Payable only if you fail to furnish required information or if Charleys finds an understatement of Gross Sales greater than 1%.

16.  Insurance:  will vary under circumstances

• Due Date:  As incurred.

• If you fail to obtain the required insurance coverage for the restaurant, Charleys may obtain such coverage at your expense.

17.  Maintenance Costs:  will vary under circumstances

• Due Date:  As incurred.

• If you fail or refuse to maintain your Restaurant as required, Charleys has the right to do so on your behalf and at your expense.

18.  Attorneys’ Fees and Other Costs; Collection Costs and Expenses:  will vary under circumstances

• Due Date:  As incurred.

• Payable if you fail to comply with the Franchise Agreement (including collecting any monies owed by you to Charleys) or if Charleys is joined in a lawsuit that is based on your operation of a Restaurant.

19.  Marketing, Advertising, Operating, and QA Program:  currently, $500 to $1,000 for a negative review QA program; Charleys does not currently charge a fee for other programs

• Due Date:  As incurred.

• Charleys reserves the right to impose a fee if you fail to participate in these programs.

20.  Indemnification:  will vary under circumstances

• Due Date:  As incurred.

• You must reimburse Charleys for its losses and expenses as a result of third-party claims arising from your failures or breaches under the Franchise Agreement, your operation of the Restaurant, your failure to comply with applicable laws, and any unauthorized acts.

21.  Liquidated Damages:  three times the amount of royalties owed for the one-year period prior to termination

• Due Date:  Within 30 days of Charleys’ termination based upon your default.

• Payable if you default on your obligations and Charleys terminates the Franchise Agreement prior to the expiration of the term of the Franchise Agreement.