UFOC

Sample UFOC

FRANCHISE OFFERING CIRCULAR

bella via coffee, inc.

You will operate a drive-through gourmet coffee shop ("Bella Via Location") offering a variety of gourmet coffee beverages and other food, beverages and related products. The initial franchise fee is $35,000 for your first Bella Via Location, plus an option fee of $13,750 for each additional Bella Via Location you commit to open (the option fee is applied toward the initial franchise fee of $27,500 for each additional Bella Via Location). These fees are payable when we have completed our pre-opening obligations to you. The estimated initial investment required, including the initial franchise fee, will range from $281,600 to $413,500.

Risk Factors:

1. THE FRANCHISE AGREEMENT REQUIRES THAT ALL DISPUTES BE SUBMITTED TO ARBITRATION IN LOS ANGELES COUNTY, CALIFORNIA. IT MAY COST YOU MORE TO ARBITRATE WITH US IN LOS ANGELES COUNTY THAN IN YOUR HOME COUNTY.

2. YOU WILL BE SIGNING A COLLATERAL ASSIGNMENT OF STORE STRUCTURE WHICH WOULD ALLOW BVC TO TAKE OVER FROM YOU THE STORE STRUCTURE AT YOUR BELLA VIA COFFEE LOCATION (THE "COLLATERAL") IF (i) YOU DONT MAKE REQUIRED PAYMENTS OR OTHERWISE DONT COMPLY WITH YOUR FRANCHISE AGREEMENT, (ii) YOU MAKE FALSE STATEMENTS OR REPRESENTATIONS, (iii) THE COLLATERAL BECOMES SUBJECT TO A LEVY OR OTHER JUDICIAL PROCESS, (iv) YOU OR ANY GUARANTOR OF THE COLLATERAL ASSIGNMENT ARE INVOLVED IN AN INSOLVENCY PROCEEDING OR (v) IF LAST SURVIVOR OF YOU OR ANY GUARANTOR OF THE COLLATERAL ASSIGNMENT DIE.

3. AS OF DECEMBER 31. 2005, WE HAD $27,966 IN CURRENT ASSETS AND HAD $37.641 IN CURRENT LIABILITIES. THIS MEANS THAT FOR EVERY DOLLAR OF LIABILITIES DUE WITHIN ONE YEAR, WE HAVE $.74 IN CURRENT ASSETS. SINCE OUR INCEPTION, WE HAVE LOST $102.175. CAUSING US TO HAVE A DEFICIT NET WORTH OF -$2,075.

4. THE FRANCHISE AGREEMENT REQUIRES A SUBSTANTIAL INVESTMENT AND A COMMITMENT OF TIME. ALL INVESTMENTS INVOLVE A DEGREE OF RISK. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

Information about comparisons of franchisors is available. Call the state administrators listed in Exhibit F to this circular or your public library for sources of information.

Registration of this franchise with the state does not mean that the state recommends it or has verified the information in this offering circular. If you learn anything in this offering circular is untrue, contact the Federal Trade Commission and the California Department of Corporations at any of its offices.

Effective Date:

, 2006.

ITEM 1: THE FRANCHISOR. ITS PREDECESSORS AND AFFILIATES

In this Offering Circular, "BVC", "we", "us" or "our" refers to Bella Via Coffee, Inc., the franchisor. "You" or "your" refers to the person who buys the Bella Via franchise. If you are a corporation, limited liability company ("LLC") or other legal entity, "you" also includes your owners.

BVC's principal business address is 25655 Springbrook Avenue, Suite 2-A, Santa Clarita, California 91350-2520. Our telephone number is (661) 260-2353. Our agent for service of process in California is Mr. Rick Espinosa, whose address is 25655 Springbrook Avenue, Suite 2-A, Santa Clarita, California 91350-2520. A different agent for service of process may appear on the receipt (very last page of this circular) if the franchise is in a state other than California.

BVC does business under the name "Bella Via Coffee." BVC is a California corporation that was incorporated on February 25, 2004. Although BVC has no predecessors, our co-founders also own and operate Coffee Kiosk, Inc. ("CKI"), a California corporation that is engaged in the same business as BVC. CKI was incorporated on September 7, 1994, and opened its first drive-through retail coffee location in Santa Clarita, California in September 1996. CKI now operates 4 drive-through retail coffee locations in Los Angeles County and Ventura County under the brand name "Coffee Kiosk", and a fifth drive-through retail coffee location is now being remodeled, and will re-open under the brand name "Bella Via". Our co-founders also are Principals of Christian Brothers Development LLC ("CBD"), a California limited liability company that owns real estate for development and sale (including the land on which some of the CKI outlets are situated). CBD was organized on January 13, 1997. CBD will not be providing sites for Bella Via Locations to you or other franchisees. Both CKI and CBD are located at 25655 Springbrook Avenue, Suite 2-A, Santa Clarita, California 91350-2520. BVC began offering franchises in August 2004.

BVC offers and sells "Franchises" to independent operators of drive-through retail coffee locations ("Bella Via Locations") offering a variety of gourmet coffee drinks and other food, beverages and related products (collectively, "Bella Via Products"), using the Marks, operational techniques, service concepts and proprietary information owned or authorized to be used by and identified with BVC.

The Franchise is a license for an initial term of 6 years (the term is renewable for additional 5 year terms) permitting you to offer Bella Via Coffee Products under an assumed name containing service marks owned by BVC. All Bella Via Coffee Locations will compete with numerous other gourmet coffee shops and outlets, retail stores, chains and other drink and food retailers offering products comparable to the Bella Via Coffee Products. The Franchise granted to you is exclusive within the shopping center, parking lot or other building or area where your Bella Via Location is situated, but not elsewhere.

You will be signing a Collateral Assignment of Store Structure (see Exhibit 2-U to the Franchise Agreement) which would allow BVC to take over from you the store structure (the "Collateral") at your Bella Via Coffee Location if (i) you don't make payments under or otherwise don't comply with your Franchise Agreement, (ii) you make false or misleading statements or representations, (iii) the Collateral is subject to a levy or other judicial process, (iv) you (or any

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guarantor of the Collateral Assignment) are involved in an insolvency proceeding or (v) if neither you nor any guarantor of the Collateral Assignment are still alive.

BVC does not do business under any other name. BVC offers subfranchisor agreements under a separate master franchisee offering circular. BVC does not directly operate a business of the type being franchised, nor do we engage in other business activities. BVC has not offered franchises in other lines of business.

Although there is no industry specific license you will need to operate a Bella Via Coffee Franchise in your state, you will need a business license and health permit.

ITEM 2: BUSINESS EXPERIENCE

Chief Executive Officer and Director: Rick Espinosa.

Mr. Espinosa was named Chief Executive Officer and Director of BVC at our inception in February 2004. He also serves as Chief Executive Officer (since 2004, and before then as Vice President of Administration since 1995) and Director for CKI (since 1995). Mr. Espinosa also is a Principal of CBD (since 1997).

President, Chief Operating Officer, Chief Financial Officer and Director: Darrell Johnson.

Mr. Johnson was named Chief Operating Officer, Chief Financial Officer and Director of BVC at our inception in February 2004. He also serves as President and Director of CKI (since 1995). He also is a Principal of CBD (since 1997). Mr. Johnson is married to Carolyn Johnson.

Secretary: Carolyn Johnson.

Ms. Johnson was named Secretary of BVC at our inception in February 2004. She also serves as Secretary and Chief Financial Officer of CKI (since 1995). Ms. Johnson is married to Darrell Johnson.

ITEM 3: LITIGATION

There are no proceedings that need to be disclosed in this Offering Circular.

ITEM 4: BANKRUPTCY

No person previously identified in Items 1 or 2 of this Offering Circular has been involved as a debtor in proceedings under the U.S. Bankruptcy Code required to be disclosed in this Item.

ITEM 5: INITIAL FRANCHISE FEE

You will pay a lump sum "Initial Franchise Fee" of $35,000 when we have completed our initial pre-opening obligations to you as set forth in Item 11 of this circular.

If you qualify, you may open additional Bella Via Locations under an Area Development Agreement (Exhibit D to this circular). If you sign the Area Development Agreement when you

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pay the initial franchise fee of $35,000 for your first Bella Via Location, you will also pay an option fee of $13,750 for each additional Bella Via Location you commit to open (the option fee is applied toward the initial franchise fee of $27,500 for each additional Bella Via Location).

There are no refunds under any circumstances. BVC does not offer any financing of the Initial Franchise Fee.

ITEM 6: OTHER FEES

Type of Fee	Amount	Due Date	Remarks
Weekly Royalty¹	6% of your weekly Gross Receipts. Beginning the 53rd week after you open, the minimum weekly royalty will be $175.00.	The Wednesday following the week the gross sales were made.²	"Gross Receipts" include all revenues you receive from your operation of the Bella Via Location. Gross Receipts do not include sales tax or use tax.
Weekly Advertising¹	Greater of (i) 2% of total weekly Gross Receipts or (ii) $125.00.	Beginning 60 days after BVC announces a national advertising program is being established, this fee is due the Wednesday following the week the gross sales were made.²	You also must spend the greater of (i) 2% of total weekly Gross Receipts or (ii) $125.00.
Grand Opening	$2,500	Within 30 days before and 7 days after your Bella Via Location opens.
Additional Training Fees	$250 per day for each trainee	When training is completed.	This only is charged for the 4th (or additional beyond 4) trainee at Initial Training and for any successor General Manager.
Transfer¹	$7,500	Before completion of transfer.	Payable when you sell your franchise. There is no charge (i) for the 2nd or additional Franchise Agreement you are transferring in the same transaction or (ii) if the franchise is transferred to a corporation or LLC that you control.
Audit¹	Cost of audit (varies from $1,500 to $3,000) plus 12% interest on underpayment³	30 days after billing.	Payable only if audit shows understatement of 3% (or more) of gross revenues or it takes 8 or more hours to organize your records.
Renewal Fee¹	$100	When you sign the new Franchise Agreement.
Other Authorized Goods and Services	$10,000 per year maximum	When necessary	BVC has the right to add other authorized goods and services that you must then offer. There are no limits on our right to do so except that the additional cost will not exceed $10,000 per year.

(1) All fees are imposed by and are payable to BVC. All fees are non-refundable. All fees may be automatically withdrawn and transferred to our account from your Depository Account when due (see section 8.10 of the Franchise Agreement).

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(2) If payment is late (must be received in our office on or before Wednesday of each week), it shall bear interest at an Annual Percentage Rate ("APR") of 12% or the highest rate permitted by law, whichever is lower (see section 4.05 of the Franchise Agreement).

(3) Interest begins from the date of underpayment. ITEM 7: INITIAL INVESTMENT.

	Amount	Method of Payment	When Due	To Whom Payment is Paid
Initial Franchise Fee¹	$35,000	Lump sum; nonrefundable	When we complete our pre-opening obligations	BVC
Area Development Option Fee²	0 to $110,000	Lump sum; nonrefundable	When you sign the Area Development Agreement	BVC
Travel / Living Expenses for Initial Training³	$100 to $5,000	As incurred	During training	Travel and Lodging Vendors
Pre-fabricated structure, location build out, furnishings, fixtures, accessories, initial inventory and equipment (including point of sale system)⁴	$200,000 to $275,000	Lump sum	Before opening	CKI, Approved Suppliers and Vendors³
Grand Opening Advertising	$2,500	Variable	Before opening	Advertisers
Licenses and Permits	$15,000 to $25,000	Lump sum	Before opening	Governmental agencies
Rent (including real estate and other taxes)	$2,000 to $8,000	Lump sum; nonrefundable	Monthly	Lessor
Rental Security Deposit	$2,000 to $8,000	Lump sum	As agreed with Lessor	Lessor
Business Insurance	$5,000 to $15,000	Lump sum	As required by insurance company policy	Insurance company
Legal/Accounting	$5,000 to $10,000	Lump sum	As incurred	Attorneys/Accountants
Additional Funds - 1st 3 months⁵	$15,000 to $30,000	As incurred	As incurred	See below
*TOTAL⁵**	$281,600 to $523,500

1. The initial franchise fee is $35,000. Fees received by BVC under the Franchise Agreement are not refundable. BVC does not offer financing of any fees.

2. If you qualify, you may be offered the opportunity to open additional Bella Via Locations by paying an option fee of $13,750 for each (this is applied towards the initial franchise fee for the additional Bella Via Locations). It is highly unlikely that we would allow you to commit to open more than 8 additional Bella Via Locations. Option fees received by BVC under the Area Development Agreement are not refundable. BVC does not offer financing of any fees.

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3. There is no separate fee for (i) the BVC training program for up to 3 attendees at initial; training and (ii) store opening training provided to your staff just before and when your Bella Via Location opens. The costs for the initial training program are a part of the Initial Franchise Fee. Additional trainees might each have to pay BVC $250 per day for tuition.

4. The figures include everything necessary to build and equip one Bella Via Location. Our affiliated company Coffee Kiosk, Inc. provides a pre-fabricated and fully equipped coffee store structure to be placed on the site. You will own this store structure, but you will also sign a Collateral Assignment of Store Structure (the form is Exhibit 2-U to the Franchise Agreement) providing that if you commit a material breach of the Franchise Agreement, at our option, we may assume ownership of the store structure. The itemized list of minimum inventory items is a trade secret, but it is in the Operations Manual and this list will be disclosed to you before you sign the Franchise Agreement. You must arrange and pay for the necessary water, electrical and sewer lines and hook-ups to the store structure, and you must obtain the inventory and supplies needed to begin operations. At our request, but not more often than once every 5 years (unless you must do so sooner under the terms of your lease), you must refurbish your Bella Via Location to conform to the then-current building design, trade dress, and color schemes for a new Bella Via Location (see section 3.02(e) of the Franchise Agreement). BVC estimates the cost of this refurbishment will range from $5,000 to $50,000.

5. Although BVC does not require minimum funds for you to start your business, there are some expenses you will incur after you begin your franchise operations (for example inventory, supplies and salaries). It is always a good idea to have some cash reserves available to cover initial operating expenses.

6. This estimates your initial start up expenses. BVC relied on the experience of our President and Chief Executive Officer (more than 30 years combined in the retail food service industry) to compile these estimates. You should review these figures carefully with your business or financial advisor before making any decision to purchase a BVC franchise. These figures are estimates and BVC cannot guarantee that you will not have additional expenses starting the business.

ITEM 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

Any materials containing the BVC marks must be obtained only from us or from suppliers we have approved, which are listed in the Operations Manual. We approve suppliers after careful review of the quality of the products they provide to BVC and our franchisees. If you would like us to consider another supplier, we will do so at no charge to you, but the supplier must provide us with samples of its products. If the supplier meets our specifications for quality control and accurate reproduction of our Service Mark, we will approve it as an additional supplier. A review of a proposed new supplier typically is completed within 30 days. BVC will not unreasonably withhold consent of a proposed new supplier.

We have approved other suppliers of items you will need to operate your business which are listed in the Operations Manual. We anticipate that the cost of our proprietary products which you must purchase from BVC or approved suppliers on an ongoing basis will be approximately 19% to 35% of your monthly investment. The portion of your total investment that are purchases from BVC or approved suppliers in establishing your business (including the proprietary products that must be purchased from approved suppliers) range from 9.9% to 14.8%. (See Item 7 above.) BVC does not provide material benefits to you based on your use of designated or approved sources.

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You must purchase or lease a point of sale ("POS") system that we specify. We currently require the Select One Business System POS. If this changes you will be notified. The POS includes the BVC management system and related materials to be used as your cash register system. You must purchase all fixtures, furniture, and equipment in accordance with BVC's specifications, which will be provided to you when you sign your Franchise Agreement.

If you request BVC employees to assist you in setting up your POS system, you may be charged a reasonable set up fee (not to exceed 20% of the cost of the POS system). BVC also recommends you have a business computer available, but there are no specific requirements regarding computer equipment or software.

One of the most important rights you have as a Bella Via Coffee franchisee concerns the strength of the brand we are licensing to you. The continued validity of our service marks is dependent on all Bella Via Coffee franchisees following our rules on displaying the brand. Carefully review Article VI of the Franchise Agreement, which provides details of the requirements on usage and display of the Bella Via Coffee brand and service marks.

BVC is not presently involved in any purchasing or distribution cooperatives. However, in the future we may implement an advertising cooperative (see section 4.03 of the Franchise Agreement) In our last fiscal year, BVC did not obtain any revenue payments from its approved suppliers. BVC has not yet received any revenues from the sale of proprietary products.

ITEM 9: FRANCHISEE'S OBLIGATIONS

THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE FRANCHISE AND OTHER AGREEMENTS. IT WILL HELP YOU FIND MORE DETAILED INFORMATION ABOUT YOUR OBLIGATIONS IN THESE AGREEMENTS AND IN OTHER ITEMS OF THIS CIRCULAR.

	Obligation	Section or Article in Unit Franchise Agreement	Section or Article in Area Development Agreement	Item in Offering Circular
a.	Site selection and acquisition/lease	3.01,3.02,3.04	None	7,11
b.	Pre-opening	3.02, 4.04, 7.02, VIII	None	8,11
c.	Site development and other pre-opening requirements	3.02-3.05,8.12	None	6, 7, 11
d.	Initial and ongoing training	1.10,7.01-7.05	1.05	11
e.	Opening	111,8.01	None	7,11
f.	Fees	IV, 5.02(a), 7.01-7.03, 7.04(c), 7.05, 9.02(b)	IV	5,6
g-	Compliance with standards and policies/Operating Manual	3.03,3.05,8.01, 8.03-8.08,8.16	3.01	8,11,13
h.	Trademarks and proprietary information	1.11, II, VI, 7.06, 8.03	None	13,14
i.	Restrictions on products/services requirements	2.02, 2.04, 6.02, VIM	None	8,16
J-	Warranty and customer service requirements	None	None	11
k.	Territorial development and sales quotas	None	1.01, 2.01, Exhibit 1-A	12
1.	Ongoing product/service purchases	8.01,8.04,8.05	None	8

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	Obligation	Section or Article in Unit Franchise Agreement	Section or Article in Area Development Agreement	Item in Offering Circular
m.	Maintenance, appearance and remodeling requirements	3.02(e), 3.04, 5.02(d), 8.12	None	11
n.	Insurance	8.13	None	7
0.	Advertising	4.03, 8.08, 8.09	None	6,11
P-	Indemnification	13.02	9.01	14
q-	Owner's participation/management/ staffing	7.01,8.01,9.02	3.03, 3.05	11,15
r.	Records/reports	8.02	None	6,11
s.	Inspections/audits	8.14,8.15	None	6
t.	Transfer	IX	V	17
u.	Renewal	5.02	None	17
V.	Post-termination obligations	8.09, 12.01	8.01	17
w.	Non-competition covenants	8.18, 12.01(e)	None	15,17
X.	Dispute resolution	XI	VII	17

ITEM 10: FINANCING

BVC does not offer direct or indirect financing of the Initial Franchise Fee. However, BVC may assist in arranging the lease or purchase of equipment you need to operate your Bella Via Location. BVC does not guarantee any of your note or lease obligations.

ITEM 11: FRANCHISOR'S OBLIGATIONS

Except as listed below, we need not provide any assistance to you. Before you open your business, BVC will:

1) Assist you in locating the site for the Bella Via Location (section 3.04 of the Franchise Agreement). You and your landlord may have to sign a Lease Assignment Agreement with us for the Bella Via Location (Exhibit E to this circular and section 4.04 of the Franchise Agreement.) The layout of the Bella Via Location must be solely in accordance with BVC's specifications. CKI provides a pre-fabricated and fully equipped coffee store structure to be placed on the site. You must arrange for necessary improvements to the on-site infrastructure and access to the necessary water, electrical and sewer lines and hook-ups to the store structure. Before you open your Bella Via Location and before final inspections by any governmental agency, BVC will conduct a final "walk through" inspection of the Bella Via Location and issue a written statement of review and consent. You must commence within 5 business days correction of any deficiencies noted by BVC as a result of this inspection and complete them as soon as you can, or the Franchise Agreement may be terminated by BVC without any liability to us.

2) Train you (there is no additional fee for training up to 3 people), using the following training schedule (section 7.01 of the Franchise Agreement). (In our discretion, we may decide to conduct training at your Bella Via Location, and if we do so, the BVC training schedule may be adjusted.)

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SUBJECT	TIME BEGUN	INSTRUCTIONAL MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Company Overview	9:00 a.m. (Day1)	Manual/Handouts	2	0	CEO, COO
Why We Do What We Do How We Do What We Do	10:00 a.m.	Manual/Handouts	2	0	CEO, COO, GM
Store Functions	1:00 p.m.	Manual/Handouts	2	0	GM, COO
Store Opening	5:00 a.m. (Days 2-5)	Manual/Handouts	0	3	GM
Product Marketing, Register Procedures	9:00 a.m.	Manual/Handouts	5	0	GM, Product Trainer
Closing Procedures	8:00 p.m.	Manual/Handouts	0	1.5	Closing Trainer
Opening Store, Setting Positions, Managing Rush	5:00 a.m. (Days 6-9)	Manual/Handouts	0	5	GM, Product Trainer
Product Making, Register Procedures, Ordering, Stocking	11:00 a.m.	Manual/Handouts	3	0	GM, Product Trainer
Introduction to Report Generation	3:00 p.m.	Manual/Handouts	0	1	GM
Closing Procedures	8:30 p.m.	Manual/Handouts	1	0	Closing Trainer
Profits and Margins	8:00 a.m. (Day 10)	Manual / Handouts	1	0	COO
Filing, Accounting	9:00 a.m.	Manual/Handouts	2	0	COO
Register Reports	11:00 a.m.	Manual/Handouts	1	0	GM
Final Review/Questions	1:00 p.m.	Manual/Handouts	2	0	CEO/COO

The principal instructor for each day's training determines the actual time the training begins. The instructional material consists of appropriate handouts and information directly from the Operations Manual. The instructor will be BVC's CEO and COO, who have more than 17 years of combined experience in the gourmet coffee shop business. Most of the time it is reasonable to complete the training in 10 working days, but it is up to the President whether the program will be completed in a different time frame.

BVC does not charge for this training or service for your General Manager and 2 additional trainees, but you must pay their travel and living expenses (each additional trainee must pay BVC $250 per day per instructor for training). Initial training is provided within 30 days before you open the Bella Via Location. BVC may require attendance at training courses, seminars, conferences or other programs other than Initial Training, which provide updated information on Bella Via Coffee operations. These required programs will be held in southern California not more often than once each 3 months and will last no longer than 3 days. BVC will not charge you for required programs but you must pay any travel and lodging expenses of your attendees. BVC may provide you with proprietary information and related materials for use in training your staff. These materials are the sole property of BVC and must be returned to us when you are finished with them. All classroom training occurs at a training center designated by BVC.

3) Provide you with copies of the standard business forms designated in the Operations Manual (see section 7.01(c)(vi) of the Franchise Agreement).

4) Lend you 1 copy of the Confidential Operations Manual and other applicable manuals during initial training (see section 7.01(c)(viii) of the Franchise Agreement). You will have an

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opportunity to view the Confidential Operations Manual before you sign the Franchise Agreement.

During the operation of the franchised business, BVC:

1) Provide you with "Store Opening Training" (without additional charge) at your Bella Via Location for 1 week before and up to 3 days after your Bella Via Location opens, to set-up and instruct in all phases of the Bella Via Coffee Franchise (see section 7.01 (c)(i) of the Franchise Agreement).

2) Will provide you access to BVC's proprietary gourmet coffee recipes and an adequate supply of other BVC proprietary products, which you must purchase from approved suppliers (see section 3.03 of the Franchise Agreement). Also, we will continue to develop new recipes and food products. (See Item 8 of this circular for more proprietary product information.)

3) Will expend Marketing and Advertising Fees collected from all Bella Via Coffee franchisees for national and local advertising, public relations, market research, and promotional campaigns designed to promote and enhance the value of the Bella Via Coffee brand and its general public recognition and acceptance (see section 4.03 of the Franchise Agreement). All Bella Via Coffee franchisees contribute to the advertising fund based on monthly gross sales (see Item 6 of this circular). BVC owned outlets contribute to the advertising fund on the same basis as all other franchisees. We intend to use print media initially and, subsequently, electronic media where appropriate and cost effective. We will be using in-house advertising personnel, but we also intend to engage the services of advertising and public relations firms to assist in our advertising program. For supervising the advertising program, BVC will receive an administrative fee of 15% of the annual aggregate Marketing and Advertising Fees. Marketing and Advertising Fees will be deposited into our general operating account and no interest is imputed for your benefit or paid to you. BVC is not presently involved in any advertising cooperatives; however, we reserve the right to create advertising cooperatives in the future for your benefit.

You may only use the Bella Via Coffee trademarks on the Internet if BVC permits you to do so in the Operations Manual, or otherwise in writing. (See section 6.01 and section 8.17 of the Franchise Agreement.)

We will determine, in our sole discretion, the cost, form or media, content, format, production and timing, including regional or local concentration and seasonal exposure, location and all other matters involving advertising, public relations and promotional campaigns (see section 4.03 of the Franchise Agreement). On a national or regional basis, BVC may impose an additional assessment on all affected Bella Via Coffee franchisees for special advertising or promotional activities if Bella Via Coffee franchisees owning 2/3 of all affected franchised Bella Via Locations agree to this additional assessment, confirmed in writing by each franchisee. (See section 4.03(b) of the Franchise Agreement and Item 6 of this circular.)

You may develop advertising materials for your own use, at your own cost. But we must approve all advertising materials in advance and in writing (we have 30 days to do this). Advertising funds are used to promote Bella Via Coffee Products sold by you and are not used to sell additional Bella Via Coffee franchises. If we do not expend all Advertising Fees collected

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for one year, the remaining monies are retained for future advertising years. (See Item 9 of this circular for more information about your responsibilities as a franchisee.) We are not absolutely required to spend any advertising fees in your Territory; however, advertising fees are spent to benefit all franchises, including you. None of our advertising funds are used primarily for the solicitation of franchised sales.

4) Will provide you (if requested in writing) with a statement of annual receipts and expenditures of Marketing and Advertising Fees during the prior calendar year on or before each March 31. (See section 4.03(c) of the Franchise Agreement.)

5) Will be available by phone and telefax for guidance concerning the operation and management of the Franchisee! Business and provide additional on-premise assistance up to an additional 5 days after the 2 days of our Bella Via Location opening assistance described above in this Item 11; however you must pay travel and living expenses of our representative and at our option $250 per day (see section 7.01 of the Franchise Agreement).

We will approve or disapprove the site for a Bella Via Location within 5 business days after we receive the form of lease of the Bella Via Location premises. In approving the site for your Bella Via Location, we consider availability within retail strip centers and the following additional factors: potential competition within the retail strip center or immediate vicinity of the Bella Via Location, the general location and neighborhood where the Bella Via Location would be located, traffic patterns, availability of parking, physical characteristics of existing buildings, availability of necessary space for the Bella Via Location and master lease terms.

BVC may make available to you optional annual staff training courses, seminars, conferences, or other programs at a location suitable to both you and BVC. We do not charge an attendance fee, but you must pay all travel and living expenses. These elective courses are approximately 2 to 3 hours in duration.

Upon reasonable notice, not more often than once each year, BVC may hold a required system-wide or regional meeting, and not more often than 4 times each year, training courses, seminars, conferences or other programs to discuss Bella Via Coffee business activities or other matters relating to the franchised business. Attendance of your General Manager at these meetings will be mandatory (and is highly recommended for other principals of yours). We will not charge you a training fee for these meetings, but you will be solely responsible for all costs of transportation, accommodations and living expenses incurred by your attendees. These meetings will vary in length from 8 hours to 3 days in duration. These required meetings are in addition to any voluntary convention or sales conference, or voluntary staff training courses, seminars, conferences or other programs that may be arranged by us (see sections 7.03 and 7.04 of the Franchise Agreement).

BVC may hold voluntary annual conferences to discuss Bella Via Coffee Products, sales techniques, personnel training, bookkeeping, accounting, inventory control, performance standards, advertising programs and merchandising procedures. BVC does not charge a conference attendance fee, but you must pay all travel and living expenses of your attendees. Any voluntary annual conference will be held at our Santa Clarita, California headquarters or other locations that we designate (see section 7.03 of the Franchise Agreement). The annual conference is approximately 8 hours in duration.

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And BVC may arrange and provide to you at suitable locations we determine optional and voluntary staff training courses, seminars, conferences or other programs that we consider relevant or appropriate to the efficient operation of a Bella Via Location. BVC does not charge a tuition or training fee for voluntary training and conferences, but you must pay all travel and living expenses of your attendees (see section 7.04 of the Franchise Agreement).

You must purchase or lease a suitable point of sale ("POS") system (which includes a business computer, there are no other computers you must obtain). We will provide you with the BVC management system, proprietary accounting and reporting manuals and related materials designed to be used on the POS system (see section 8.12 of the Franchise Agreement). The brand name of the POS system BVC currently uses is the Select One Business System. You will use your POS system to complete point-of-sale transactions, and track your weekly sales and accounting, employee hours, labor timekeeping and inventory tracking. BVC may have independent access to your POS system. If BVC updates the POS system you will receive a 90-day notice and the cost will not exceed $10,000 in any 12-month period.

BVC estimates the typical length of time between the signing of the Franchise Agreement and beginning of the Franchised Business will be 60 to 210 days. Factors that affect this time period include the satisfactory completion of initial training by your designated attendees and availability of a retail store ready to begin operations.

ITEM 12: TERRITORY

You are granted a Franchise to operate at and from your Bella Via Location, within the Territory (Exhibit 1-U to the Franchise Agreement) specified in the Franchise Agreement. While the Franchise Agreement is in effect, BVC will not locate another Bella Via Coffee outlet within a specified radius (varies from 1/4 mile in densely populated urban areas (this is the minimum territory BVC grants) to 1 mile in less densely populated or rural areas) of your Bella Via Location. There are no circumstances that would permit BVC to modify your territorial rights. There are no restrictions on BVC selling Bella Via Coffee Products in your Territory (but not from a Bella Via Coffee outlet).

In assisting you to find a location for your Bella Via Location, BVC considers population density, competition, area pricing, market potential and geographic area. BVC and our direct or indirect affiliates reserve the right to offer and sell other types of franchises that are not directly competitive with the Franchise. Before you sign the Franchise Agreement, BVC and you mutually determine the size and location of your Bella Via Location. You must devote all of your business activities and to use your best efforts to develop and promote the franchised business, utilizing the trademarks, within your Bella Via Location. You must comply with all applicable laws, regulations and ordinances (including zoning laws) in establishing a Bella Via Location and must obtain all required business licenses and other permits. The continuation of your rights to the Bella Via Location is not dependent upon you attaining a certain sales volume, revenues, market penetration or other contingency. The Bella Via Location may not be altered except with the mutual agreement of BVC and you.

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You must diligently promote and market the Franchised Business, develop to the best of your ability the potential for Franchised Business at your Bella Via Location, and devote and focus your attentions and efforts to this promotion and development. You must not engage in activities that are equivalent to the franchised business outside your Bella Via Location without the prior written consent of BVC.

Unless you have signed an Area Development Agreement (under which you would be entitled to open additional Bella Via Locations according to a schedule you and BVC negotiates), you must not open additional Bella Via Locations without our prior written consent. You have no other options, rights of first refusal or similar rights to acquire additional Bella Via franchises within your territory or contiguous territories.

If you desire or are required to relocate your Bella Via Location, you must request our consent to relocate the Bella Via Location if at least 180 days before the desired date of relocation (unless prior notice is impractical because of a required relocation, then notice shall be made as soon as possible), you make a written request for consent to relocate, describing the reasons for the relocation and providing details respecting the proposed new Bella Via Location. Within 21 days after receiving your request, we either approve or disapprove the new Bella Via Location in writing in the exercise of our reasonable business judgment, which may include consideration of the following: alternative locations, proximity of the proposed location to existing and potential locations, increased market penetration expected, quality of location and the effect on the System. If we disapprove, you may request an alternative proposed new Bella Via Location under section 3.06 of the Franchise Agreement.

BVC and our related entities reserve the right to use or allow others to use the Service Marks, including the express right to establish in the future company owned stores selling Bella Via Coffee Products using the Bella Via Coffee brand or other marks, but not in your territory.

ITEM 13: TRADEMARKS

You are licensed to operate the franchise business under the name "Bella Via Coffee" and other current or future trademarks. By "trademark", BVC means trademarks, trade names, service marks and logos BVC may authorize for you to identify your franchised business.

The following trademark has been registered with the United States Patent and Trademark Office ("USPTO") on the principal register:

REGISTRATION/SERIAL NUMBER	TRADEMARK	REGISTRATION DATE
3078144	BELLA VIA.	April 11, 2006 [Class 035]
3078144	Coffee Made Jp Convenient'"	April 11, 2006 [Class 035]

BVC also registered the above trademark with the California Secretary of State on April 21, 2004, in class 35 (Registration Number 059072).

You must follow our rules when you use this mark. You cannot use a name or mark as part of a corporate name or with modifying words, designs or symbols except for those which BVC

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licenses to you. You may not use our registered name in the sale of unauthorized products or services or in a manner not authorized in writing by BVC. There are no agreements currently in effect that significantly limit BVC's rights to use or license the use of our trademarks that are material to the franchise.

You must notify BVC immediately when you learn about an infringement or challenge to your use of our trademark. We then will take the action we think appropriate. At a minimum, and at our cost, we will defend you against any claim or action challenging or attempting to stop or limit your use of the BVC trademark and otherwise protect your right to use our marks in the manner permitted under the Franchise Agreement.

You must modify or discontinue the use of a trademark if BVC modifies or discontinues it. You must not directly or indirectly contest our right to our trademarks, trade secrets or business techniques that are part of our business.

BVC does not know of any superior prior rights or infringing uses or material determinations of the USPTO, Trademark Trial and Appeal Board, trademark administrator of this state or of any court. Nor does BVC know of any pending infringement, opposition or cancellation proceedings that could materially affect your use of our trademark. There is no known litigation involving BVC's trademarks.

ITEM 14: PATENTS. COPYRIGHTS AND PROPRIETARY INFORMATION

You do not receive the right to use an item covered by a patent or copyright, but you can use the proprietary information in our Operations Manual. The Operations Manual is described in Item 11 of this circular. Although BVC has not filed an application for a copyright registration for the Operations Manual, we claim a copyright and the information is proprietary. Item 11 describes limitations on the use of this manual by you and your employees. All recipes of BVC are proprietary trade secrets and you must not disclose them to any unauthorized persons. You must also promptly tell us when you learn about unauthorized use of any of our proprietary information. BVC is not obligated to take any action but will respond to this information as we think appropriate. BVC will indemnify you for losses brought by a third party concerning your authorized use of this information.

ITEM 15: OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS

The Franchise Agreement specifically requires that a principal of your franchise entity personally participate in the direct operation of the Bella Via Location, and it is our intention to select only those Bella Via Coffee franchisees whose principals plan to actively participate in the direct operation and daily affairs of the Bella Via Location. BVC is not seeking to license franchisees if the principals of these franchisees are merely seeking a passive investment. Additionally, as disclosed in section 8.01 of the Franchise Agreement, you must employ on a full time basis at least 1 General Manager for the Bella Via Location who has successfully completed initial training (we recommend this be a principal of your franchise entity, but he or she doesn't need to be an equity owner). The identity of the General Manager must be disclosed to us and if the General Manager changes, we must be notified in writing. The General Manager must devote his or her entire time during normal business hours to the

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management, operation and development of the Franchised Business. The General Manager must maintain confidentiality of the trade secrets described in Item 14 and conform to the covenants not to compete described in Item 17.

ITEM 16: RESTRICTION ON WHAT FRANCHISEE MAY SELL

You must offer all Bella Via Coffee Products and other goods and services that BVC designates as required for all Bella Via Coffee Franchisees. Our franchisees will provide an array of gourmet coffees and related products. The precise recipes are contained in the Operations Manual, which you will be provided when you become a franchisee of BVC. Whenever you use our trademarks, you must only provide the goods and services that we authorize (see Item 8 of this circular).

BVC has the right to add other authorized goods and services that you must then offer. There are no limits on our right to do so except that the additional investment required of you (for equipment, supplies and initial inventory) will not exceed $20,000 per year.

You are not limited as to the customers to whom you may sell Bella Via Coffee Products.

ITEM 17: RENEWAL. TERMINATION. TRANSFER AND DISPUTE RESOLUTION

The table below lists important provisions of the franchise and related agreements. You should read these provisions in the agreements attached to this circular.

	Provision	Section in Unit Franchise Agreement	Section in Area Development Agreement	Summary
a.	Term of the franchise	5.01	1.03	The initial term is 6 years. The Area Development Agreement continues until the Production Schedule has been completed.
b.	Renewal or extension of the term	5.02	None	If you are in good standing, you can add additional term of 5 years.
c.	Requirements for you to renew or extend	5.02	None	Sign new agreement and new sublease (if necessary); pay fee; update and remodel Bella Via Location if necessary; and sign release.
d.	Termination by you	None	None
e.	Termination by BVC without cause	None	None
f.	Termination by BVC with cause	10.01	6.01	BVC can terminate for material breach.
g-	"Cause" defined - defaults that can be cured	10.03	None	You have 30 days to cure non-submission of fees or reports, sanitation problems, and any other default not listed in Section 10.03.
h.	"Cause" defined - defaults that cannot be cured	10.02	None	Non-curable defaults: insolvency, inaccurate reporting of gross receipts, repeated defaults even if cured, abandonment, trademark misuse and unapproved transfers.

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	Provision	Section in Unit Franchise Agreement	Section in Area Development Agreement	Summary
i.	Your obligations on termination/non-renewal	12.01	VIII	Obligations include complete removal of our trademarks and trade dress, and payment of amounts due (also see r., below).
J-	Assignment of contracts by BVC	9.01	5.01	No restriction on our right to assign.
k.	"Transfer" by you - definition	9.02	5.01	Includes transfer of assets or ownership change.
1.	BVC approval of transfer	9.02	5.01	BVC must approve all transfers, but we will not unreasonably withhold approval.
m.	Conditions for BVC approval of transfer	9.02	5.01	New franchisee qualifies, transfer fee paid, training arranged, current agreement signed by new franchisee
n.	Our right of first refusal to acquire your business	9.03	5.02	BVC can match any offer for your business.
o.	Our option to purchase	None	None
P-	Your death or disability	9.06	None	Franchise must be assigned by estate to approved buyer within 6 months.
q-	Non-competition covenants during the term of the franchise	2.04.8.01(a), 8.18	None	No involvement in competing business anywhere in U.S.
r.	Non-competition covenants after the franchise is terminated or expires	8.18, 12.01(e)	None	No competing business for 1 year within a 50 mile radius of your Bella Via Location or any other Bella Via Coffee restaurant.
s.	Modification of the agreement	14.02, 14.05	9.07	No modifications generally, but Operating Manual subject to change.
t.	Integration/merger clause	14.02, 14.06	9.02	Only the terms of the franchise agreement and Operations Manual are binding (subject to state law). Any other promises may not be enforceable.
u.	Dispute resolution by arbitration or mediation	11.01-11.02	VII	Except for certain claims, all disputes must be arbitrated before one arbitrator from the American Arbitration Association who is an attorney with at least 5 years of experience in franchise law. BVC and you waive punitive or exemplary damages, but the arbitrator may award attorneys' fees.
V.	Choice of forum	11.01	7.01	Arbitration must take place in Los Angeles County, California. Any litigation must be in an appropriate court in California.
w.	Choice of law	14.01	7.01	Federal law applies to trademark and arbitration issues. California law applies to all other issues.

These states have statutes which may supersede the franchise agreement in your relationship with BVC including the areas of termination and renewal of your franchise: ARKANSAS [Stat. Section 70-807], CALIFORNIA [Bus. & Prof. Code Sections 20000-20043], CONNECTICUT [Gen. Stat. Section 42-133e et seq.], DELAWARE [Code, tit.], HAWAII [Rev. Stat. Section 482E-1], ILLINOIS [815 ILCS 705/1-44], INDIANA [Stat. Section 23-2-2.7], IOWA [Code

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Sections 523H.1-523H.17], MICHIGAN [Stat. Section 19.854(27)], MINNESOTA [Stat. Section 80C.14], MISSISSIPPI [Code Section 75-24-51], MISSOURI [Stat. Section 407.400], NEBRASKA [Rev. Stat. Section 87-401], NEW JERSEY [Stat. Section 56:10-1], RHODE ISLAND [Stat. Section 19-28.1-14], SOUTH DAKOTA [Codified Laws Section 37-5A-51], VIRGINIA [Code 13.1-557-574-13.1-564], WASHINGTON [Code Section 19.100.180], WISCONSIN [Stat. Section 135.03]. These and other states may have court decisions that may supersede the franchise agreement in your relationship with BVC, including the areas of termination and renewal of your franchise.

ITEM 18: PUBLIC FIGURES

We do not use any public figure to promote our franchise.

ITEM 19: EARNINGS CLAIMS

BVC began franchising in August 2004, and as of the date of this circular, there is only 1 Bella Via franchise, who has been open for business for less than 1 year. BVC does not make any representation or statement of actual, or average, or projected, or forecasted sales, profits or earnings to BVC franchisees except for the information that appears in this document. BVC specifically instructs our agents, employees and officers that they are not permitted to make any claims or statements as to the earnings, sales or profits, or prospects of any chances of success of a prospective franchise, nor do we authorize them to represent or estimate dollar figures as to any prospective franchise operation. Any representations as to earnings, sales, profits, or prospects for success, except as set forth in this document, are unauthorized.

You should disregard any unauthorized information, whether oral or written, concerning the actual, average, projected, forecasted, or potential sales, costs, income or profits, or the prospects or chances of success, or representations or estimated dollar figures as to a prospective franchised operation. Actual results will vary from franchise to franchise and we cannot estimate the results of a particular franchise. A new Bella Via franchise's results are likely to differ from the results shown in this document. We recommend you make your own independent investigation to determine whether the franchise may be profitable, and consult with an attorney and other business advisors before signing the Franchise Agreement.

The following is a sales, expense (note: these stores do not pay weekly royalty or weekly advertising fees, but you will) and income profile of all 4 existing coffee outlets that use the same business model as BVC and that have been operated by CKI (Coffee Kiosk, Inc.), a company affiliated with BVC during the stated periods:

KIOSK 1

5/1/01-4/30/02	5/1/02-4/30/03	5/1/03-4/30/04
Gross Sales 740,451	Gross Sales 733,430	Gross Sales 781,675
Cost of Goods 202,405	Cost of Goods 211,843	Cost of Goods 233,856
Gross Profit 538,045	Gross Profit 521,857	Gross Profit 547,819

Total Expenses 295,167	Total Expenses 313,086	Total Expenses 305,519

\| Net Income 242,878	Net Income 208,501	Net Income 242,301

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KIOSK 2

5/1/01-4/30/02		5/1/02-4/30/03		5/1/03-4/30/04
Gross Sales	570,534	Gross Sales	651,066	Gross Sales	604,119
Cost of Goods	165,439	Cost of Goods	181,955	Cost of Goods	181,073
Gross Profit	405,164	Gross Profit	469,111	Gross Profit	423,046

Total Expenses	264,524	Total Expenses	295,112	Total Expenses	290,115

Net Income	140,641	Net Income	173,999	Net Income	132,931 \|

KIOSK 3

5/1/01-4/30/02	5/1/02-4/30/03	5/1/03-4/30/04
Gross Sales 333,046	Gross Sales 351,256	Gross Sales 371,259
Cost of Goods 87,114	Cost of Goods 98,690	Cost of Goods 110,697
Gross Profit 245,932	Gross Profit 252,566	Gross Profit 260,562

Total Expenses 167,103	Total Expenses 167,294	Total Expenses 189,629

Net Income 78,829	Net Income 85,272	Net Income 71,933

KIOSK 4

5/1/01-4/30/02	5/1/02-4/30/03	5/1/03-4/30/04
Gross Sales 723,256	Gross Sales 719,242	Gross Sales 698,994
Cost of Goods 181,202	Cost of Goods 210,412	Cost of Goods 209,664
Gross Profit 542,054	Gross Profit 509,330	Gross Profit 489,330

Total Expenses 279,482	Total Expenses 294,726	Total Expenses 284,955

Net Income 262,571	Net Income 214,603	Net Income 204,374

Upon your written request, BVC will make available to you for inspection and review all data used to compile the results presented in this document.

THE RESULTS THAT APPEAR IN THIS DOCUMENT SHOULD NOT BE CONSIDERED AS THE ACTUAL OR PROBABLE SALES, INCOME, GROSS OR NET PROFITS THAT WILL BE REALIZED BY ANY FRANCHISEE. BVC DOES NOT REPRESENT THAT YOU CAN EXPECT TO ATTAIN SUCH SALES, INCOME, GROSS OR NET PROFITS. THERE IS NO ASSURANCE THAT YOU WILL DO AS WELL. IF YOU RELY UPON OUR FIGURES, YOU MUST ACCEPT THE RISK OF DOING AS WELL.

ITEM 20: LISTS OF OUTLETS

The attached charts describe Bella Via Location and Franchise status for the past 3 years:

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FRANCHISED LOCATION STATUS SUMMARY FOR YEARS 2005/2004/2003

State

Transfers

Canceled or Terminated

Not Renewed

Reacquired byBVC

Left for

Other

Reasons

Total From

Left Columns

Unit

Franchisees

Operating at

Year End

California

0/0/0

1/0/0

TOTALS

0/0/0

1/0/0

BVC began offering franchises in August 2004. Exhibit C lists the franchisees in the Bella Via Coffee system as of March 31, 2006. No Bella Via Coffee franchisees have had a Bella Via Coffee outlet terminated, canceled, not renewed, or otherwise voluntarily or involuntarily ceased to do business under the franchise agreement during the 12 months ended March 31, 2006, or who has not communicated with BVC within the 10 weeks ended March 31, 2006.

STATUS OF BVC OWNED OR AFFILIATED LOCATIONS FOR YEARS 2005/2004/2003
State	Locations Closed During Year	Locations Opened During the Year	Total Locations Operating at Year End
California	0/0/0	0/0/0	5/5/5
TOTALS	0/0/0	0/0/0	5/5/5

BVC does not own or operate Bella Via Locations. The 5 affiliated locations listed in the table immediately above are owned and operated by CKI, and 1 has been remodeled to operate under the trade name and style of Bella Via.

PROJECTED OPENINGS FOR THE 12 MONTH PERIOD ENDING APRIL 30, 2007

State	Franchise Agreements Signed But Not Open	Projected New Franchised Bella Via Locations in Next 12 Months	Projected BVC or CKI Owned Bella Via Location Openings In Next 12 Months
Arizona	0	1	0
California	0	1	0
TOTAL	0	2	0

ITEM 21: FINANCIAL STATEMENTS

Attached as Exhibit B are BVC's (i) audited financial statements for the fiscal years ended December 31, 2005 and December 31, 2004 (BVC was formed on February 25, 2004), (ii) unaudited balance sheet as of March 31, 2006, and (iii) unaudited profit and loss statement for the 3 month period ended March 31, 2006.

ITEM 22: CONTRACTS

Exhibit A - Franchise Agreement Exhibit D - Area Development Agreement Exhibit E - Lease Assignment Agreement

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ITEM 23: RECEIPT

The very last page of this circular is a detachable document for you to return to BVC acknowledging receipt of this circular. The next to the last page is a duplicate receipt to be kept by you. If this page or any other pages or exhibits are missing from your copy, please contact BVC at the address and phone number on the cover page of this circular.

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3.05. Employment Practices. During the term of this Agreement, and for a period of 12 months thereafter, Area Developer shall not, without the written consent of such person's employer, employ or attempt to employ any person who is at the time employed by Franchisor, and Franchisor shall not, without the written consent of Area Developer, employ or attempt to employ any person who is at that time employed by Area Developer, nor shall Area Developer or Franchisor otherwise directly or indirectly induce or attempt to induce any such person to leave his employment as aforesaid.

ARTICLE IV. FEES AND PAYMENTS

4.01. Area Development Fee. For the rights to develop the Development Area, concurrently upon Franchisor completing its pre-opening obligations to Area Developer under the Unit Franchise Agreement for the first Bella Via Location, Area Developer shall pay to Franchisor a separate and one-time "Area Development Fee" equal to (i) $35,000.00 (in full payment of the Initial Franchise Fee for the first Bella Via Location), plus (ii) $13,750.00 (representing 50% of the Initial Franchise Fee for the other Bella Via Locations to be opened in the

Development Area) multiplied by the total number (___) of Unit Franchises committed to be opened under the

Development Schedule. Accordingly, the Area Development Fee will be $_______________________. This

fee is not refundable.

4.02. Unit Franchises Licensed to Area Developer. Area Developer will sign a separate Unit Franchise Agreement for each Bella Via Location opened by Area Developer in the Development Area. Except for a reduction in the Initial Franchise Fee to $27,500 and variations in location addresses, the terms and conditions of each Unit Franchise Agreement applicable to the Development Area will be the same.

ARTICLE V. TRANSFER OR ASSIGNMENT

5.01. Assignability. This Agreement and all rights hereunder may be assigned by either party (in the case of Area Developer, subject to Franchisor's consent), and if so assigned, shall be binding upon and inure to the benefit of the assignor's assigns; provided that, in respect to any assignment resulting in the subsequent performance by the assignee of the obligations of the assignor:

(a) The assignee shall be financially responsible and economically and technically capable of performing the obligations of the assignor hereunder; and

(b) The assignee shall expressly assume and agree to perform such obligations in writing, delivered to the party hereto not assigning its rights.

5.02. Right of First Refusal. If Franchisor consents to an assignment by Area Developer, the right of Area Developer to assign, transfer or sell its interest in the rights granted by this Agreement or substantially all of its assets shall be subject to Franchisor's right of first refusal with respect thereto. Franchisor's said right of first refusal may be exercised in the following manner:

(a) Area Developer shall serve upon Franchisor a written notice setting forth (i) all of the terms and conditions of any bona fide offer relating to a proposed assignment by Area Developer, and (ii) all available information concerning the proposed assignee of Area Developer.

(b) Within 15 days after Franchisor's receipt of such notice (or if it shall request additional information, within ten days after receipt of such additional information), Franchisor may either consent or withhold its consent to such assignment by Area Developer or, at its option, may accept the assignment by Area Developer itself or on behalf of its nominee upon the terms and conditions specified in the notice.

(c) If Franchisor elects not to exercise said right of first refusal and shall consent to such assignment by Area Developer, Area Developer shall for a period of 90 days be free to assign this Agreement to such proposed assignment by Area Developer upon the terms and conditions specified in said notice. If, however, said terms shall materially change, or if said 90-day period expires before consummation of the assignment by Area Developer, Franchisor shall again have such right of first refusal with respect thereto and Area Developer shall again be required to comply with this section 5.02.

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