UFOC

Sample UFOC

INFORMATION FOR PROSPECTIVE FRANCHISEES REQUIRED BY FEDERAL TRADE COMMISSION

BLENDZ FRANCHISE SYSTEM, INC.

267 E. Campbell Avenue, Suite 200

Campbell, CA 95008

(866) 4-BLENDZ

www.blendz.com

TO PROTECT YOU, WE'VE REQUIRED YOUR FRANCHISOR TO GIVE YOU THIS INFORMATION. WE HAVE NOT CHECKED IT, AND DO NOT KNOW IF IT IS CORRECT. IT SHOULD HELP YOU MAKE UP YOUR MIND. STUDY IT CAREFULLY. WHILE IT INCLUDES SOME INFORMATION ABOUT YOUR CONTRACT, DON'T RELY ON IT ALONE TO UNDERSTAND YOUR CONTRACT. READ YOUR ENTIRE CONTRACT CAREFULLY. BUYING A FRANCHISE IS A COMPLICATED INVESTMENT. TAKE YOUR TIME TO DECIDE. IF POSSIBLE, SHOW YOUR CONTRACT AND THIS INFORMATION TO AN ADVISOR, LIKE A LAWYER OR AN ACCOUNTANT. IF YOU FIND ANYTHING YOU THINK MAY BE WRONG OR ANYTHING IMPORTANT THAT HAS BEEN LEFT OUT, YOU SHOULD LET US KNOW ABOUT IT. IT MAY BE AGAINST THE LAW.

THERE MAY ALSO BE LAWS ON FRANCHISING IN YOUR STATE. ASK YOUR STATE AGENCIES ABOUT THEM.

FEDERAL TRADE COMMISSION WASHINGTON, D.C. 20560

Issuance Date: March 28, 2006

10J848.2

blendz"

BLENDZ FRANCHISE SYSTEM, INC.

267 E. Campbell Avenue, Suite 200

Campbell, CA 95008

(866) 4-BLENDZ

www.Blendz.com

Blendz Franchise System, Inc., a California corporation, ("Blendz") offers franchises to operate a quick service restaurant specializing in tossed-to-order salads, grilled Panini sandwiches, blended smoothies, gourmet soups and specialty coffees and espresso under the trademark Blendz® ("Blendz® Store").

We charge an initial franchise fee ("Initial Franchise Fee") of $25,000 for a single Blendz® Store. If you already operate a Blendz® Store, you may qualify to open an Express Unit. We charge an Express Unit fee of $10,000 ("Express Unit Fee") for a single Express Unit. In addition to the Initial Franchisee Fee and/or Express Unit Fee we also charge an Initial Training, Site Development and Architectural Design and Marketing Fee in the total amount of $40,000 for a Blendz® Store and $25,000 for an Express Unit. We also offer to select qualified persons the opportunity to acquire the exclusive right to develop multiple Blendz® Stores in a designated Development Area.

The estimated initial investment required to open a new Blendz® Store ranges from $227,800 to $295,300. The estimated initial investment required to open a new Express Unit ranges from $92,400 to $139,800.

RISK FACTORS:

1. THE FRANCHISE AND DEVELOPMENT AGREEMENTS PERMIT YOU TO ARBITRATE WITH US ONLY IN CALIFORNIA. OUT OF STATE ARBITRATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST MORE TO ARBITRATE WITH US IN CALIFORNIA THAN IN YOUR HOME STATE.

2. THE FRANCHISE AND DEVELOPMENT AGREEMENTS STATE THAT CALIFORNIA LAW GOVERNS THE AGREEMENTS AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS.

3. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

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

Registration of this franchise by a state does not mean that the state recommends it or has verified the information in this Offering Circular. If you learn that anything in this Offering Circular is untrue, contact the Federal Trade Commission and the appropriate state authority listed in Exhibit F.

Date of Issuance for Non-registration States: March 28,2006

Effective Dates for States Requiring Registration and Notice Filings:

California: September 8, 2005

Florida: _______________

Hawai i: _______________

Illinois: _______________

Indiana: _______________

Kentucky: _______________

Maryland: _______________

Michigan: _______________

Minnesota: _______________

Nebraska: _______________

New York: _______________

North Dakota: _______________

Rhode Island: _______________

South Dakota: _______________

Texas: _______________

Utah: _______________

Virginia: _______________

Washington: _______________

Wisconsin:

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ITEM1 THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES

To simplify the language in this offering circular ("Offering Circular"), "Blendz Franchise", "Blendz", "us" or "we" means Blendz Franchise System, Inc., the Franchisor. We will refer to the person, corporation or partnership that buys the franchise as "Franchisee" or "you". If the Franchisee is a legal business entity, certain terms of the Franchise Agreement also apply to the owners of the entity and will be noted.

The Franchisor, its Affiliates and Predecessors

Blendz is a California corporation formed on May 20, 2005. We currently maintain our principal business office at 267 E. Campbell Avenue, Suite 200, Campbell, California 95008 and conduct business under our corporate name. We began offering franchises for Blendz® Stores in August 2005. We do not operate any Blendz® Stores and we do not engage in any other business activities.

We have 1 predecessor ("Predecessor") and 1 affiliate ("Affiliate"). Our Predecessor, Blendz, LLC ("BL"), is a California Limited Liability Company formed in September 2002. BL operates 4 Blendz® Stores in Campbell, Saratoga and Santa Clara, California. Our Affiliate, Blendz Enterprises, Inc. ("BE") is a California corporation formed in December 2004. BE does not engage in any line of business. BL and BE do not offer franchises in this or any other line of business. We share an address with BL and BE.

Our agents for service of process are disclosed on Exhibit F.

The Franchise

We offer franchises for the use of the trademark Blendz® and our other trademarks, tradenames, service marks and logos ("Marks") for the operation of Blendz® Stores. The franchise is operated under a business format per a unique system, including or valuable know-how, information, trade secrets, methods, Operations Manual, standards, designs, methods of trademark usage, copyrights, sources and specifications, confidential electronic and other communications, methods of Internet usage, marketing programs, and research and development connected with the operation and promotion of Blendz® Stores ("System"). We reserve the right to change or otherwise modify the System at any time in our sole discretion.

Each Blendz® Store offers the public a variety of fresh food products, including tossed-to-order salads, grilled Panini sandwiches, blended smoothies, gourmet soups and specialty coffees and espresso. Blendz® Stores are typically located in strip shopping centers, suburban power centers, downtowns, business centers, office parks and malls. Blendz® Stores may also be placed in a permanent, temporary or seasonal food service facility (e.g., a kiosk, concession, or multi-brand facility) and may be placed in a variety of settings, such as food courts, transportation facilities (e.g., airports, train stations, bus terminals, port authorities), hospitals, military, festivals and other health care facilities, cafeterias, commissaries, schools, automobile dealerships, hotels, sports and entertainment facilities (e.g., stadiums, ballparks, convention centers), and other mass gathering locations or events.

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You must operate your Blendz® Store per our standard business operating practices and sign our standard franchise agreement ("Franchise Agreement"). Your Blendz® Store must offer authorized products. We reserve the right to add, modify or delete any product that you must offer or sell at your Blendz® Store at any time in our sole discretion. You must also obtain all necessary permits, licenses and approvals to operate your Blendz® Store.

We offer a standard franchise ("Franchise"). As a Franchise operator you may operate 1 Blendz® Store per Franchise Agreement that you sign with us. We also offer to select qualified persons the opportunity to acquire the exclusive right to develop multiple Blendz® Stores in a designated development area ("Area Development Agreement"). Under an Area Development Agreement, you agree to open 2 or more Blendz® Stores within a particular territory according to a development schedule. The development schedule is determined at the time you sign the Area Development Agreement and will depend in part upon the number of Blendz® Stores you agree to open. Area Development Agreements are negotiated individually and on a case-by-case basis. If you enter into an Area Development Agreement, you must sign a Franchise Agreement in the form attached to this Offering Circular for your first Blendz® Store when you sign the Area Development Agreement. We will require you to sign our then-current form of Franchise Agreement after that for each Blendz® Store that you develop under the Area Development Agreement. Unless otherwise stated, any reference in this Offering Circular to "you" or "Franchisee" includes you both as an Area Developer under an Area Development Agreement and as Franchisee under a Franchise Agreement.

We also offer to select qualified persons already operating a Blendz® Store the opportunity to operate an Express Unit. (See Items 7 and 12 for more information on Express Units).

Market and Competition

The restaurant and food service industry is highly competitive and fragmented. There are numerous restaurants and other food service operations that compete directly and indirectly with Blendz® Stores. In addition to other restaurant companies, Blendz® Stores compete with numerous other retail businesses for suitable locations. Investing in a Blendz® Store is a speculative risk and there is no guaranty that you will be successful. You will also face normal business risks that could have an adverse affect on your Blendz® Store. These include industry developments, such as pricing policies of competitors, supply and demand and changing consumer tastes. Another risk factor is our dependence on key personnel, the loss of whom could have an adverse affect on us. Our ability to fulfill our obligations under our Franchise Agreement or Area Development Agreement depends in part on our present and future financial condition. Litigation risks also exist, including product liability litigation against you or us because of food-related illnesses, and future litigation which may not be foreseeable.

The restaurant industry is affected by changes in consumer tastes. In addition, the restaurant industry may be adversely affected by discretionary spending priorities, national, regional or local economic conditions, demographic trends, consumer confidence in the economy, traffic patterns, weather conditions, employee availability and the type, number and location of competing restaurants. Changes in any of these factors could adversely affect a Blendz® Store. In addition, factors like inflation and increased food, labor and other costs could

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adversely affect a Blendz® Store. Another risk factor is our dependence on key personnel, the loss of whom could have an adverse affect on us. Our ability to fulfill our obligations under our Franchise Agreement depends in part on our present and future financial condition.

There are no regulations specific to the quick serve casual dining industry in which our Blendz® Stores operate, although you will be required to comply with all local, state and federal laws and regulations that apply to restaurant operations, including health, sanitation, smoking restrictions, EEOC, OSHA, discrimination, employment and wage and hour statutes, Family Medical Leave Act, and the federal Americans with Disability Act of 1990. (See Exhibit I). There may be more. You should consult with your attorney to determine what federal, state and local laws may affect your Blendz® Store operations. We also require your compliance with all provisions of the USA Patriot Act and Executive Order 13224. You should talk to an advisor or your attorney regarding compliance with these laws.

ITEM 2 BUSINESS EXPERIENCE

Our directors, principal officers and other executives are:

Matthew Phipps, President and CEO:

Mr. Phipps has been the President and CEO of Blendz since its inception in May 2005. Prior to forming Blendz, Mr. Phipps served as the President and CEO of BL since its inception in September 2002 and President and CEO of BE since its inception in December 2004. Mr. Phipps also acted as President and CEO of GelFuzion, Inc. in Campbell, California from September 2002 to April 2004 and Director of Operations for Liquid Agency, Inc. in San Jose, California from November 2000 to September 2002. Prior to joining Liquid Agency, Inc., Mr. Phipps was the General Manager for the San Jose Division of Full Moon Interactive, Inc/Image Network, Inc. from May 1997 until November 2000.

Denise Phipps, Vice President:

Ms. Phipps has been the Vice President of Blendz since its inception in May 2005. Prior to joining Blendz, Ms. Phipps served as the Vice President of BL since its inception in September 2002 and Vice President of BE since its inception in December 2004. Ms. Phipps also acted as Production Manger at Carta Products, Inc. in San Jose, California from June 2002 to March 2003 and Director of Promotions for Liquid Agency, Inc. in San Jose, California from April 1999 to May 2002.

Kim Cho Torres, Training Manager:

Ms. Torres has been Blendz's Training Manager since December 2005. Prior to joining Blendz, Ms. Torres was the Senior Operating Manager at FedEx Kinkos in Santa Cruz, California from September 2004 until December 2005. She also was a Manager at J. Crew Group in Pleasanton, California from July 2003 until September 2004. Before joining J.Crew Group, Ms. Torres was a Recruiter/Trainer at Compass Group, PLC from February 2001 until March 2002. Prior to that, she worked as a Manager/Trainer for Starbucks Coffee Company in San Francisco, California from August 1999 until February 2001.

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Ryan Cunningham, Director of Real Estate:

Mr. Cunningham acts as Blendz's Director of Real Estate since August 1, 2005. Mr. Cunningham is also President of Javelin Solutions, located in Denver, Colorado since its inception in May 2005. Before that, Mr. Cunningham was an Executive Vice President for Jones Lang LaSalle from July 1985 until April 2005.

James P. Whiteside, Director of Architectural Design and Site Development:

Mr. Whiteside acts as Blendz's Director of Architectural Design and Site Development since BL's inception in May, 2005. Mr. Whiteside is also the President of J.P. Whiteside Consulting located in San Jose, California since its inception in August 2003. Before that, Mr. Whiteside was the Director of Special Projects for Allied Domecq in San Jose, California from September 1999 until August 2003.

Michael Watoski, Director of Sales:

Mr. Watoski acts as Blendz's Franchise Broker since March 2005. Mr. Watoski is also the President of Zgurus, Inc. since February 2006 in San Diego, California. Prior to joining Zgurus, Mr. Watoski was the Vice President of PostalAnnext, Inc. in San Diego, California.

Manish Adhiya, Director of Sales:

Mr. Adhiya acts as Blendz's Franchise Broker since March 2005. Mr. Adhiya is also the CEO of Zgurus, Inc. since March 2006 in San Diego, California. Prior to joining Zgurus, Mr. Adhiya was the Vice President of Development for PostalAnnext, Inc. in San Diego, California.

ITEM 3 LITIGATION

No litigation or dispute resolution is required 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

When you sign a Franchise Agreement, you must pay us an initial franchise fee ("Initial Franchise Fee") of $25,000 for the rights to operate 1 Blendz® Store. You must also pay us at the time you sign a Franchise Agreement the Initial Training, Site Development and Architectural Design and Marketing Fee in the total amount of $40,000.

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We also charge an Express Unit Fee of $10,000 and an Initial Training, Site Development and Architectural Design and Marketing Fee in the amount of $40,000 for each Express Unit you are authorized to open.

We have not sold any Franchises since our last fiscal year ended December 31, 2005 and have not collected any Initial Franchise Fees, Express Unit Fees or Initial Training, Site Development and Architectural Design and Marketing Fees. We are not obligated to sell any additional franchises to any particular applicant.

Area Developers

At our discretion, we may offer to qualified candidates an Area Development Agreement, attached to this Offering Circular as Exhibit C, pursuant to which the area developer ("Area Developer") obtains the right to develop and operate a prescribed number of Blendz® Stores. When you sign an Area Development Agreement for the development of more than 1 Blendz® Store, we will grant you the right to build a mutually agreed upon number of Blendz® Stores in a specified territory ("Development Territory") in accordance with a specified Development Schedule. The Development Territory will be established based on the consumer demographics of the Development Territory, geographical area, city, county and other boundaries. If you are purchasing a Development Area you must execute an Area Development Agreement.

You must pay an area development fee ("Area Development Fee") of $10,000 for each additional Blendz® Store (after the first Blendz® Store) you intend to develop under the terms of the Area Development Agreement. We will credit $5,000 of the Area Development Fee towards the Initial Franchise Fee for your second and any subsequent Blendz® Store that you open pursuant to the Area Development Agreement at the time you sign each Franchise Agreement. This $5,000 credit will not apply to the first Blendz® Store you open. You must pay the Area Development Fee when you sign the Area Development Agreement. It is fully earned at the time you make the payment to us and is not refundable regardless of whether you ultimately open any or all of your Blendz® Stores.

The Area Development Fee may not be uniform for all franchisees due to the variable nature of negotiations including but not limited to the size of the Development Territory to be developed, the number of Blendz® Stores to be developed, demographic data and trends and other variable conditions. We reserve the right to charge different Area Development Fees in our sole discretion. We calculate the Area Development Fee uniformly for all franchisees, but the total amount you pay will depend on the number of Blendz® Stores you commit to develop. During our last fiscal year ended December 31, 2005, we have not negotiated any Area Development Agreements and have not collected any Area Development Fees.

In addition to the Area Development Fee, for each Blendz® Store that you agree to open pursuant to the Area Development Agreement you agree to pay the then-current Initial Franchise Fee for the first Blendz® Store. You will pay the Initial Franchise Fee being charged by us at the time you sign the Area Development Agreement for each additional Blendz® Store you open under the Area Development Agreement. If you agree to open between 3-5 additional Blendz® Stores (after the first Blendz® Store you open) per an Area Development Agreement, we will reduce the Initial Franchise Fee charged at the time you sign the Area Development Agreement by 25%. If you agree to open 6 or more additional Blendz® Stores per an Area Development

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Agreement, we will reduce the Initial Franchise Fee charged at the time you sign the Area Development Agreement by 40%. You will also be required to pay the then-current Initial Training, Site Development and Architectural Design and Marketing Fee for your first and all subsequent Blendz® Stores. If you form an entity to open any of the additional Blendz® Stores within the Development Territory, you must own at least 51% of the issued equity securities in each entity. You must provide us with necessary documentation to show your ownership interest.

ITEM 6 OTHER FEES

Fees^(l)	Amount	Due Date	Remarks
Royalty Fee	The greater of (a) 6% of Gross Sales; or (b) $900 per month ("Minimum Royalty Fee")	Bi-monthly on or before the 5th and 20th day of each month, or such other period as we may determine	See footnote (2) for definition of Gross Sales. The Royalty Fee payment will be collected by us by electronic funds transfer (EFT) and supported by a royalty report
Marketing Fund Contribution	l%ofGrossSales(3)	Bi-monthly on or before the 5th and 20th day of each month, or such other period as we may determine	The Marketing Fund Contribution will be collected by us by EFT and supported with the royalty report
Local Advertising Expense	The greater of (a) 3% of Gross Sales; or (b) $450 per month ("Minimum Local Advertising Expense") (4)	Monthly	If a Local Advertising Cooperative exists, you must submit monthly reports to us for your local advertising. We reserve the right to direct where your Local Advertising Expense is spent
Local Advertising Cooperative Contribution	Not less than 1% of Gross Sales; more if members of the Local Advertising Cooperative approve (5)	As determined by members of the cooperative	Your total contribution to a Local Advertising Cooperative and Local Advertising Expense will not exceed 3% of your Gross Sales unless the members of the Local Advertising Cooperative vote to increase the amount the members contribute to the Local Advertising Cooperative. In no event will the Local Advertising Cooperative Contribution increase to more than 6% of your Gross Sales
Advertising & Promotional Materials	Varies, based on advertising needs	10 days following invoice date	See ITEMS 7 and 11
Late Fees and Interest	$100 plus the lesser of 18% per annum or highest rate allowed by applicable law	On demand	Interest accrues on all overdue amounts beginning with the first day each payment was due and continues until payment is received by us
Franchise Agreement Transfer Fee	$5,000 plus $3,500 for the transferee to attend the initial training program and transferee's travel and personal expenses incurred to attend the initial training program. Travel and room and board is estimated at $1,000 to $2,500 (6)	Submitted with transfer application	You may only transfer subject to the satisfaction of certain conditions with our consent ( See ITEM 17)

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Fees'¹'	Amount	Due Date	Remarks
Area Development Agreement Transfer Fee	$5,000 for each unopened Blendz® Store under the Area Development Agreement Development Schedule	Submitted with transfer application	You may only transfer subject to the satisfaction of certain conditions with our consent
Subsequent Franchise Fee	$2,500	On signing Subsequent Franchise Agreement	None
Audit Fee	Cost of audit. Cost may range from $500 - $5,000	As incurred	Payable only if you understate your Gross Sales by 2% or more
Inspection and Testing	Cost of inspection or testing for new products, supplies, equipment and/or suppliers	10 days following invoice date	We may require you to pay us or an independent laboratory for the cost of inspection or testing if you purchase or lease items used in the Blendz® Store from sources we have not previously approved (See ITEM 8)
Indemnification	Varies according to circumstances	On demand	You must reimburse us for and defend us against claims against us and taxes imposed on us due to your activities from your Blendz® Store's operation, the Franchise Agreement and/or the Area Development Agreement (See ITEM 9)
Legal Fees and Expenses	Amounts incurred	On demand	If you breach any of the Agreements, you must pay our costs and expenses to enforce the agreement
Arbitration Costs	1/2 of arbitrator's costs	When billed	If we arbitrate any disputes, you must pay 1/2 of the arbitrator's expenses
Insurance	Cost of insurance (7)	When billed	We have the right to acquire insurance on your behalf if you fail to do so
Replacement Manuals	$500 plus shipping and handling	10 days following invoice date	This is the cost for replacement of the Operations Manual. Can be in hard copy or via a CD or secured website
Technology Maintenance Expense	The then-current cost of purchasing required hardware and software upgrades. The estimated range of costs are $0 -$5,000	At the time of upgrade, which may be required at any time if we determine that the existing hardware and/or software is outdated	We impose no cap or limitation on the amount of expense you may incur for hardware or software upgrades
N on-Proprietary Hardware and Software Updates and Upgrades	Cost of upgrade. The estimated range of costs are $0 to $5,000 per year	When incurred	You must maintain, upgrade and update POS and back office hardware, software, and ISP or other communications system as we determine. These upgrade expenses are not limited or capped by us in any way (See ITEM 11)
Equipment Replacement and Upgrades	Cost of upgrade or replacement	As incurred	You must replace or upgrade worn out improvements, fixtures, furniture, furnishings, equipment, signs and utensils as needed, in our sole determination. These expenses are not limited or capped by us in any way
Refurbishing	Varies based on refurbishment needs. The estimated range of costs is $5,000 to $25,000	At time of refurbishment. The refurbishment may be required after 5 years after opening your Blendz® Store or when a majority of Blendz® Store's that we or our Affiliate owns are making or made such refurbishments	We impose no cap or limitation on the amount of expense you may incur for refurbishing your Blendz® Store

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Fees'¹'	Amount	Due Date	Remarks
Management Fee	S200 per day plus travel expenses, meals, and lodging	Payable only upon the death or permanent disability of a Controlling Principal or you	This amount is in addition to any royalties due and the salaries and fringe benefit costs for any of our management employees used to manage the Blendz® Store
Remedial Training	Currently $250 to $300 per day for services of trained representatives plus travel and other expenses incurred. Travel and other expenses are estimated at $500 to $2,500 (8)	10 days following invoice date	We will provide you with trained representatives to provide on-site remedial training, if required in our discretion
Additional Assistance	Currently $250 to $300 per day for services of trained representatives plus travel and other expenses incurred (8)	10 days following invoice date	We will provide you with trained representatives to provide on-site additional training at your request
Return Check Fee	$25.00 for the first returned check and $35.00 for the second return of the same check	At the time the check is returned	We reserve the right to require you to pay all subsequent orders by credit card terms or certified funds
Training for Additional Persons	$2,000 per additional person plus travel and expenses incurred by such additional persons to attend the initial training program. Travel and other expenses are estimated at $1,500 to $2,500 (9)	As incurred	Training for 2 people is included in the Initial Training, Site Development and Architectural Design and Marketing Fee
Relocation Fee	$5,000	Upon approval of relocation request	Payable only if we approve your request to relocate your Blendz® Store
Mandatory Seminars, Conventions or Programs	You must pay your expenses as well as the expenses your employees incur in attending these meetings. The estimated range of costs is $500-$2,500 plus materials estimated at $50	As incurred	We reserve the right to conduct periodic meetings of all Blendz® Store franchisees that you must attend
Music and TV License	Varies based on contract. The range of estimated fees is $15 to $110 per month	When billed	None
High Speed Internet Access Service	Varies based on contract. The range of estimated fees is $25 to $75	When billed	None
Inventory and Supplies	Varies based on need	As incurred	None
Training Fee for a Replacement Designated Store Manager or Operating Principal	$1,300 plus the cost of travel and other expenses. Travel and other expenses are estimated at $1,500 to $2,500(10)	As incurred	Payable only when training a replacement Designated Store Manager or Operating Principal

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Fees¹"	Amount	Due Date	Remarks
Catering Vehicle (11)	Varies based on contract. Estimated lease payment amount is $300 per month	Monthly	These expenses will not be incurred unless and until you elect, subject to our approval, to provide catering services
Sign Wrap for Catering Vehicle 01)	Estimated range of costs is $2,500 - $5,000	As incurred	These expenses will not be incurred unless and until you elect, subject to our approval, to provide catering services
Catering Equipment and Supplies (11)	Estimated range of costs is $500-$1,000	As incurred	These expenses will not be incurred unless and until you elect, subject to our approval, to provide catering services

Notes to ITEM 6:

(1) We reserve the right to require you to pay fees and other amounts due to us via electronic funds transfer or other similar means, as described in the Franchise Agreement and Attachment D to the Franchise Agreement. If payments are required in this method, you must comply with our procedures and/or perform all acts and deliver and execute all documents, including authorization (in the form attached to the Franchise Agreement as Attachment D or any other form that we may accept) for direct debits from your business bank operating account, which may be necessary to assist in or accomplish payment by this method. Under this procedure you shall authorize us to initiate debit entries and/or credit correction entries to a designated checking or savings account for payments of fees and other amounts payable to us and any interest that may be owing. You shall make the funds available to us for withdrawal by electronic transfer no later than the payment due date. If you have not timely reported your Blendz® Store's Gross Sales to us for any reporting period, then we shall be authorized, at our option, to debit your account for (a) the fees transferred from your account for the last reporting period for which a report of the Blendz® Store's Gross Sales was provided to us (b) the amount due based on information retrieved from our approved computer system; or (c) the Minimum Royalty Fee and Marketing Fund Contribution paid to us or our Affiliates are non-refundable under any circumstances once paid. Fees paid to vendors or other suppliers may or may not be refundable depending on your arrangement with your vendors and suppliers. Except as specifically stated above, the amounts given may be subject to increases based on changes in market conditions, our cost of providing services, and future policy changes. At the present time, we have no plans to increase payments over which we have control.

(2) Gross Sales. "Gross Sales" means the total selling price of all food, beverages, services and merchandise at or from your Blendz® Stores, and all income of every other kind and nature related to the Blendz® Store's, operation (including income related to take-out, catering and delivery), whether for cash or credit and regardless of collection in the case of credit (See Franchise Agreement, Section 4.5 for a complete definition of Gross Sales).

(3) Marketing Fund Contribution. The Marketing Fund Contribution is used for national advertising, to generate marketing materials and for administrative costs associated with our marketing efforts ("See ITEM

11).

(4) Local Advertising Expense. Your Local Advertising Expense will be used on local marketing and advertising. You must make these expenditures directly, subject to our approval. We will provide guidelines for local advertising and placement of this advertising in telephone and web directories. (See ITEM 11). We reserve the right to direct where your Local Advertising Expense is spent.

(5) Local Advertising Cooperative Contribution. Local Advertising Cooperatives will be composed of all franchised and Affiliate-operated Blendz® Stores located in a designated market area. You total contribution to the Local Advertising Cooperative and Local Advertising Expense will not exceed 3% of your Gross Sales, unless the members vote to increase the amount of contribution to the Local Advertising Cooperative. In no event will the Local Advertising Cooperative Contribution exceed 6%. We anticipate

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that each franchisee will have 1 vote for each Blendz® Store operated by the member in the designated market. No Local Advertising Cooperatives have been established as of the date of this Offering Circular.

(6) Franchise Agreement Transfer Fee. You must pay a transfer fee of $5,000 plus $3,500 for the transferee to attend the initial training program. The transferee will also be required to pay for its travel and other expenses to attend the initial training program. These expenses are estimated at $1,500 - $2,500. However, no Transfer Fee is required if you transfer your Franchise Agreement to a business entity in which you own the majority of the company's issued equity securities.

(7) Insurance. You must procure and maintain, at your own expense, insurance policies protecting you, us, our designated Affiliates and the officers, directors and employees of us and our designated Parent and Affiliates against any loss, liability, personal injury, death, property damage, or expense resulting from the operation of your Blendz® Stores and all services you provide in connection with the operation of your Blendz® Stores as we may require for your and our protection in our sole discretion in amounts set forth in the Operations Manual and Franchise Agreement (which may be adjusted in our sole discretion). You must also procure and maintain all other insurance required by state or federal law, including workers compensation insurance and unemployment insurance and vehicle insurance if you offer catering services in the amounts we determine from time to time. The policies must also stipulate that we shall receive a 30-day prior written notice of cancellation and must contain endorsements by the insurance companies waiving all rights of subrogation against us. Original or duplicate copies of all insurance policies, certificates of insurance, or other proof of insurance acceptable to us, including original endorsements affecting the coverage required by us, shall be furnished to us together with proof of payment within 10 days of issuance thereof. You shall also furnish us with certificates and endorsements evidencing this insurance coverage within 10 days after each of the following events: (i) at all policy renewal periods, no less often than annually, and (ii) at all instances of any change to, addition to, or replacement of any insurance. The certificates and endorsements for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. All certificates and endorsements are subject to our approval. If you fail to procure and maintain the required insurance coverage, we have the right and authority to procure the insurance coverage and charge you, which charges, together with a reasonable fee for our expenses incurred in this procurement, you will pay immediately upon notice.

(8) Remedial Training and Additional Assistance. The Initial Training, Site Development and Architectural Design and Marketing Fee includes the initial training for you or your Designated Store Manager or Operating Principal and 1 additional person and airfare, lodging and some meals for 2 attendees. If we determine that you require on-site remedial training or if you request additional assistance beyond what is provided by us as part of the initial training, we will provide additional remedial training or additional assistance at your request at our then published rate. Currently, our published rate is $250 per day. You will also pay for our travel, meals and lodging.

(9) Training for Additional Persons. Training, for you or your Designated Store Manager or your Operating Principal and 1 additional person is included in your Initial Training, Site Development and Architectural Design and Marketing Fee. We may charge $2,000 per additional persons we train at your request. Training fees can be increased or decreased by us at any time in our discretion. You will be responsible for all travel expenses for all additional attendees attending the initial training program including airfare, lodging, meals, ground transportation, and personal expenses.

(10) Training a Replacement Designated Store Manager or Operating Principal. If your Designated Store Manager or Operating Principal is replaced, you must allow us to train your new Designated Store Manager or Operating Principal, as the case may be, at a location designated by us in our discretion. We charge a training fee of $1,300, plus you will need to pay for airfare, lodging, ground transportation, meals, salary and benefits, and other personal expenses of your new Designated Store Manager or Operating Principal, as the case may be, while he or she is in training.

(11) Catering. We require that you purchase or lease a new sports utility vehicle or van. We will provide you with the type and model, vehicle required, including color. The range provided in this Offering Circular assumes that you will lease a vehicle. If you buy a vehicle the range will be more. You will also be

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required to purchase a sign wrap approved by us, insurance and catering equipment and supplies, including but not limited to, warming equipment and catering menus.

ITEM 7 INITIAL INVESTMENT

BLENDZ® STORE

Expenditure'¹*	Actual or Estimate (Low)	Actual or Estimate (High)	Method of Payment	When Due	Payable To
Initial Franchise Fee^t:ii	$25,000	$25,000	Lump Sum	Signing of Franchise Agreement	Us
Initial Training, Site Development and Architectural Design and Marketing Fee^<3>	$40,000	$40,000	Lump Sum	Signing of Franchise Agreement	Us
Leasehold Improvements/ Construction^<4)	$65,000	$90,000	Negotiable	Negotiable	Landlord and Contractors
Leasehold Negotiation Fee	$0	$1,800	Payable only if our attorneys or we negotiate a lease or sublease on your behalf for your Blendz® Store	As Invoiced	Us
Furniture, Fixtures, Computer Hardware and Software and POS⁽⁵>	$18,000	$24,500	Negotiable	As Invoiced	Vendors
Equipment^,6)	$38,000	$55,000	Negotiable	As Invoiced	Vendors
Signs^{,)	$3,500	$5,000	Negotiable	As Invoiced	Vendors
Insurance	$300	$500	Installment	As Invoiced	Vendors
Opening Inventory and Supplies^<s'	$8,000	$10,000	Negotiable	As Incurred	Vendors
Security and Utilities Deposits /Licenses⁽⁹⁾	$2,500	$5,000	Negotiable	As Incurred	Landlord/Utilities/Local Government Agencies
Pre-Opening and Grand Opening Promotional Expenses 00)	$4,000	$5,500	Cash	As Incurred	Vendors
Legal and Accounting Fees^<ll)	$1,500	$3,000	Negotiable	As Incurred	Attorneys/Accountants
Additional Funds/ Working Capital for 3 Months⁰²'	$22,000	$30,000	Cash	As Needed	Various Payees
TOTAL^(l3)	$227,800	$295,300

Notes to ITEM 7:

(1) Expenditures. All estimates in this ITEM 7 are based upon new Blendz® Store locations with a

building/premises size of approximately 1,250 to 1,500 square feet for a Blendz® Store which are constructed within a 2 to 3 month period. Your costs will be higher if you choose to open a larger Blendz® Store or if it takes longer to construct your Blendz® Store. The costs for fixtures, rent, and improvements will vary based on the square footage, location and other factors. All fees imposed by us or our Affiliates are non-refundable unless otherwise noted. Fees and expenses paid to vendors or other third parties may or may not be refundable depending on the arrangements you make with them.

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(2) Initial Franchise Fee. The Initial Franchise Fee is $25,000. The Initial Franchise Fee is non-refundable once paid.

(3) Initial Training, Site Development and Architectural Design and Marketing Fee. The Initial Training, Site Development and Architectural Design and Marketing Fee is $40,000 and is non-refundable once paid. The Initial Training, Site Development and Architectural Design and Marketing Fee includes: (i) training for you, your Designated Store Manager or Operating Principal and 1 additional person for 4 weeks at our corporate headquarters located in Campbell, California and 1 week of home study training. We will pay for you, your Designated Store Manager or Operating Principal and 1 additional person's airfare, lodging and some meals incurred during the initial training program. You are responsible for all additional expenses; (ii) permit process guidance and assistance and design plans for your Blendz® Store site; (iii) assistance with site selection; and (iv) an initial set of branded supplies, including, uniforms, paper products, menus, gift cards and marketing materials determined in our sole discretion.

(4) Leasehold Improvements. In most cases you will need to alter the interior of your Blendz® Store location before you open your Blendz® Store. The costs will vary widely and may be significantly higher than projected in this table, depending on such factors as property location, labor and material costs, economic climate, prevailing interest rates and other financing costs, the conditions of the property and the extent of the alterations required. The estimates do not include the costs of any necessary site development or site engineering work, nor do they include capitalized costs of rent or other occupancy costs, over either the life of the lease or the life of your investment. In addition, these amounts do not reflect costs for the purchase of unimproved land and construction of a Blendz® Store building, which also would result in a significantly greater initial investment. These estimates assume that the landlord will provide a shell space which, at a minimum, includes concrete floors, demised walls, HVAC, roof, exhaust vent chaseway, and utilities sufficient for a Blendz® Store. You should investigate all of these costs in the area where you wish to establish your Blendz® Store.

(5) Furniture, Fixtures, Computer Hardware and Software and PQS. These amounts include costs for chairs, tables, restaurant smallwares, TV/Stereo system, cameras, wireless network equipment, office furniture, safe, window treatments, artwork/artifacts, fans, flooring, plants, computer hardware and software lighting fixtures, miscellaneous decor items and interior signs required for the Blendz® Store. These estimates also include costs for a complete point-of-sale (POS) system (See ITEM 11), back of the house computer hardware, and all necessary guest check printers, credit card "swipe/read" terminals, printers, and modems. These estimates do not include any freight, tax or installation costs, and will vary depending on the location and size of the Blendz® Store.

(6) Equipment. These amounts include costs for Panini grills, refrigerators, blenders, coffee and espresso makers, other kitchen equipment, prep station, freezers, salad display, soup crocks, all necessary stainless steel fixtures and kitchen smallwares. Costs do not include freight, tax or installation costs that may vary substantially depending on the Blendz® Store's location, configuration and local regulations.

(7) Signs. You must purchase our approved sign for your storefront. We will provide you with the specifications that must be followed.

(8) Opening Inventory and Supplies. We estimate that the range given will provide sufficient inventory (food, beverages and disposables) for opening your Blendz® Store. These amounts may vary according to your sales volume and approved local suppliers' terms. We reserve the right to change the selection of Opening Inventory at any time. Your initial supplies will vary depending upon the anticipated sales volume as well as current market prices. The required supplies will include, but not be limited to, non-branded paper products, silverware, etc., some of which will be purchased directly from us.

(9) Security and Utilities Deposits/Licenses. These amounts include estimated security deposit (equal to 1 months' rent) and utility deposits. The actual amount of these deposits will vary depending on local landlord practices and other factors. These amounts also include the estimated cost of obtaining a license or permit from a state agency to sell food. Other permit and license fees will also vary depending on location

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and on whether applicable laws require the payment of occupational or other taxes for the Blendz® Store. Franchise taxes are not included.

(10) Pre-Qpening and Grand Opening. You should plan to spend a minimum of $1,500 on your pre-opening advertising at least 30 days before your grand-opening of your Blendz® Store. You should also plan to spend a minimum of $2,500 on your grand opening. The recommended grand opening celebration should last at least 2 days.

(11) Legal and Accounting Fees. In most cases, the terms and conditions of all agreements relating to the purchase, lease or alteration of the property for your Blendz® Store will be negotiated by you and/or your legal counsel. However, we may require you to incorporate certain provisions into your lease. This estimate includes the legal expense for negotiating your lease. We may also require you to let us or our attorneys negotiate your lease, in which case we may charge you a Lease Negotiation Fee.

(12) Additional Funds. These amounts represent our estimate of the amount needed to cover your expenses for the initial 3-month start-up phase of your Blendz® Store. They include rent, common area maintenance, insurance, property taxes, and other typical lease expenses, payroll, administrative, janitorial, maintenance and utilities. These figures do not include standard pre-opening expenses, royalties or advertising fees payable under the Franchise Agreement or debt service and assume that none of your expenses are offset by any sales generated during the start-up phase. For purposes of this disclosure, we estimated the start-up phase to be 3 months from the date the Blendz® Store opens for business. These figures are estimates, and we cannot guarantee that you will not have additional expenses starting the business. You must bear any deviation or escalation in costs from the estimates that we have given. Your costs will depend on factors such as: how well you follow our methods and procedures; your management skill, experience and business acumen; local economic conditions; the local market for your products and services; the prevailing wage rate; competition; the sales level reached during the start-up period; and the size of your Blendz® Store.

(13) Total. We relied on the experience of our Affiliate and their principals in opening and developing company-owned Blendz® Stores to compile these estimates. You should review these figures carefully with a business advisor before making any decision to purchase the franchise. We do not offer financing directly or indirectly for any part of the initial investment. The availability and terms of financing will depend on factors such as the availability of financing generally, your creditworthiness, collateral you may have and lending policies of financial institutions from which you may request a loan.

(14) Area Development Opportunity. If you enter into an Area Development Agreement with us, you must pay us an Area Development Fee in the amount of $10,000 when you sign the Area Development Agreement multiplied by the number of Blendz® Stores you intend to develop after your first Blendz® Store under the terms of the Area Development Agreement. You must also pay the full amount of the then-current Initial Franchise Fee for your first Blendz® Store. For each subsequent Blendz® Store you open under your Area Development Agreement you must pay the Initial Franchise Fee being charged at the time you sign your Area Development Agreement. After your first Blendz® Store is opened and operating you will receive a credit of $5,000 toward the payment of each subsequent Initial Franchise Fee due pursuant to the Area Development Agreement. We will also reduce the Initial Franchise Fee if you open a certain number of Blendz® Stores per the Area Development Agreement. (See ITEM 5) The fees set forth in ITEM 7 may be multiplied by the number of Blendz® Stores you are establishing under your Area Development Agreement.

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EXPRESS UNIT

Expenditure'¹'	Actual or Estimate (Low)	Actual or Estimate (High)	Method of Payment	When Due	Payable To
Express Unit Fee ^	$10,000	$10,000	Lump Sum	Signing of Franchise Agreement	Us
Initial Training, Site Development and Architectural Design and Marketing Fee'³'	$25,000	$25,000	Lump Sum	Signing of Franchise Agreement	Us
Leasehold Improvements/ Construction '⁴⁾	$20,500	$40,700	Negotiable	Negotiable	Landlord and Contractors
Leasehold Negotiation Fee	$0	$1,800	Payable only if our attorneys or we negotiate a lease or sublease on your behalf for your Express Unit location	As Invoiced	Us
Furniture, Fixtures, Computer Hardware and Software and POS⁽⁵⁾	$11,900	$20,000	Negotiable	As Invoiced	Vendors
Equipment'⁶⁾	$10,000	$18,000	Negotiable	As Invoiced	Vendors
Signs'⁰	$1,300	$2,500	Negotiable	As Invoiced	Vendors
Insurance	$300	$500	Installment	As Invoiced	Vendors
Opening Inventory and Supplies ⁽⁸⁾	$1,100	$2,800	Negotiable	As Incurred	Vendors
Deposits^(y'	$800	$1,500	Negotiable	As Incurred	Vendors
Pre-Opening and Grand Opening Promotional Expenses {i(5	$1,000	$2,000	Cash	As Incurred	Vendors
Legal and Accounting Fees¹"'	$0	$2,000	Negotiable	As Incurred	Attorneys/Accountants
Additional Funds/ Working Capital for 3 Months'¹²'	$10,500	$13,000	Cash	As Needed	Various Payees
TOTAL "³⁾	$92,400	$139,800

Notes to ITEM 7:

(1) Expenditures. All estimates in this ITEM 7 are based upon new Express Unit location with a size of approximately 250 square feet for an Express Unit, which are constructed within a 1 to 2 month period. Your costs will be higher if you choose to open a larger Express Unit location or if it takes longer to construct your Express Unit location. The costs for fixtures, rent, and improvements will vary based on the square footage, location and other factors. All fees imposed by us or our Affiliates are non-refundable unless otherwise noted. Fees and expenses paid to vendors or other third parties may or may not be refundable depending on the arrangements you make with them.

(2) Express Unit Fee. The Express Unit Fee is $10,000. The Express Unit Fee is non-refundable once paid.

(3) Initial Training. Site Development and Architectural Design and Marketing Fee. The Initial Training, Site Development and Architectural Design and Marketing Fee is $25,000 and is non-refundable once paid. The Initial Training, Site Development and Architectural Design and Marketing Fee includes: (i) training for you, your Designated Store Manager or your Operating Principal and 1 additional person for 4 weeks at our corporate headquarters located in Campbell, California and 1 week of home study training. We will pay for you, your Designated Store Manager or your Operating Principal and 1 additional person's airfare, lodging and some meals incurred during the initial training program. You are responsible for all additional expenses; (ii) permit process guidance and assistance and design plans for your Express Unit location; (iii)

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assist with site selection; and (iv) an initial set of branded supplies, including, uniforms, paper products, menus, gift cards and marketing materials determined in our sole discretion.

(4) Leasehold Improvements. In most cases you will need to alter the interior of your Express Unit location before you open your Express Unit. The costs will vary widely and may be significantly higher than projected in this table, depending on such factors as property location, labor and material costs, economic climate, prevailing interest rates and other financing costs, the conditions of the property and the extent of the alterations required. The estimates do not include the costs of any necessary site development or site engineering work, nor do they include capitalized costs of rent or other occupancy costs, over either the life of the lease or the life of your investment. In addition, these amounts do not reflect costs for the purchase of unimproved land and construction of a building, which also would result in a significantly greater initial investment. These estimates assume that the landlord will provide a shell space which^ at a minimum, includes concrete floors, demised walls, HVAC, roof, exhaust vent chaseway, and utilities sufficient for an Express Unit location. You should investigate all of these costs in the area where you wish to establish your Express Unit.

(5) Furniture, Fixtures. Computer Hardware and Software and POS. These amounts include costs for chairs, tables, restaurant smallwares, TV/Stereo system, cameras, wireless network equipment, office furniture, safe, window treatments, artwork/artifacts, fans, flooring, plants, computer hardware and software lighting fixtures, miscellaneous decor items and interior signs required for the Express Unit. These estimates also include costs for a complete point-of-sale (POS) system ("See ITEM 11), back of the house computer hardware, and all necessary guest check printers, credit card "swipe/read" terminals, printers, and modems. These estimates do not include any freight, tax or installation costs, and will vary depending on the location and size of the Express Unit.

(6) Equipment. These amounts include costs for Panini grills, refrigerators, blenders, coffee and espresso makers, other kitchen equipment, prep station, freezers, salad display, soup crocks, all necessary stainless steel fixtures and kitchen smallwares. Costs do not include freight, tax or installation costs that may vary substantially depending on the Express Unit's location, menu offerings, configuration and local regulations.

(7) Signs. You must purchase our approved sign for your storefront. We will provide you with the specifications that must be followed.

(8) Opening Inventory and Supplies. We estimate that the range given will provide sufficient inventory (food, beverages and disposables) for opening your Express Unit. These amounts may vary according to your sales volume and approved local suppliers' terms. We reserve the right to change the selection of Opening Inventory at any time. Your initial supplies will vary depending upon the anticipated sales volume as well as current market prices. The required supplies will include, but not be limited to, non-branded paper products, silverware, etc., some of which will be purchased directly from us.

(9) Deposits. These amounts include estimated security deposit (equal to one months' rent) and utility deposits. The actual amount of these deposits will vary depending on local landlord practices and other factors. These amounts also include the estimated cost of obtaining a license or permit from a state agency to sell food. Other permit and license fees will also vary depending on location and on whether applicable laws require the payment of occupational or other taxes for Express Units. Franchise taxes are not included.

(10) Pre-Qpening and Grand Opening. You should plan to spend a minimum of $1,000 on your pre-opening advertising and grand opening. Your pre-opening advertising should begin at least 30 days before your grand-opening of your Express Unit. The recommended grand opening celebration should last at least 2 days.

(11) Legal and Accounting Fees. In most cases, the terms and conditions of all agreements relating to the purchase, lease or alteration of the property for your Express Unit will be negotiated by you and/or your legal counsel. However, we may require you to incorporate certain provisions into your lease. This estimate includes the legal expense for negotiating your lease. We may also require you to let us or our attorneys negotiate your lease, in which case we may charge you a Lease Negotiation Fee.

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(12) Additional Funds. These amounts represent our estimate of the amount needed to cover your expenses for the initial 3-month start-up phase of your Express Unit. They include rent, common area maintenance, insurance, property taxes, and other typical lease expenses, payroll, administrative, janitorial, maintenance and utilities. These figures do not include standard pre-opening expenses, royalties or advertising fees payable under the Franchise Agreement or debt service and assume that none of your expenses are offset by any sales generated during the start-up phase. For purposes of this disclosure, we estimated the start-up phase to be 3 months from the date the Express Unit opens for business. These figures are estimates, and we cannot guarantee that you will not have additional expenses starting the business. You must bear any deviation or escalation in costs from the estimates that we have given. Your costs will depend on factors such as: how well you follow our methods and procedures; your management skill, experience and business acumen; local economic conditions; the local market for your products and services; the prevailing wage rate; competition; the sales level reached during the start-up period; and the size of your Express Unit.

(13) Total. We relied on the experience of our Affiliate and their principals in opening and developing affiliate-owned Express Units to compile these estimates. You should review these figures carefully with a business advisor before making any decision to purchase the franchise. We do not offer financing directly or indirectly for any part of the initial investment. The availability and terms of financing will depend on factors such as the availability of financing generally, your creditworthiness, collateral you may have and lending policies of financial institutions from which you may request a loan.

ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

To insure that the highest degree of quality and service is maintained, you must obtain all food and beverage items, ingredients, supplies, materials, fixtures, furnishings, equipment (including point-of-sale system, computer hardware and software), and other products used or offered for sale at Blendz® Stores solely from us or approved suppliers who demonstrate, to our continuing reasonable satisfaction, the ability to meet our then-current standards. Our criteria for a supplier to get our approval may be found in our Operations Manual (See ITEM 11), or will be provided to you in writing on request. Among other things, the suppliers must have adequate quality controls, the capacity to supply your needs promptly and reliably and must comply with our guidelines. If you wish to purchase, lease or use any products or other items from an unapproved supplier, you must give us a written request for approval, or must request the supplier to do so. We have to approve any supplier in writing before you make any purchases from that supplier. We can require that our representatives be permitted to inspect the supplier's facilities, and that samples from the supplier be delivered, either to us or to an independent laboratory for testing. You must pay the cost of the inspection, and the actual cost of the test must be paid by you or the supplier (See ITEM 6). We reserve the right to re-inspect the facilities and products of any approved supplier and to revoke our approval if the supplier fails to continue to meet any of our then-current standards. Our supplier approval procedure does not obligate us to approve any particular supplier. However, we will notify you within 60 days after we complete the inspection and evaluation process of our approval or disapproval of any proposed supplier.

You must use our designated contractors and consultants to design the layout for your Blendz® Store, draw plans for your Blendz® Store, submit permits on your behalf and build-out your Blendz® Store. You must also use a book keeper that meets our criteria and guidelines and your account charts must be in the form that we require as set forth in the Operations Manual.

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We may develop certain products for use in the Blendz® Stores which are prepared from highly confidential secret recipes and menu items and that are our trade secrets. Because of the importance of quality and uniformity of production and the significance of the use of the products in the Blendz® Stores, we will require you to use only our secret recipe products and purchase these and other items solely from us or a designated supplier.

To ensure that you maintain the highest degree of quality and service, you must operate your Blendz® Store, in strict conformity with the methods, standards and specifications which comprise the System, that we require in our Operations Manual or that we require otherwise in writing. You must maintain in sufficient supply and use and sell at all times only the food and beverage items, ingredients, products, materials, supplies and paper goods that conform to our standards and specifications. You must prepare all menu items in accordance with the recipes and procedures specified in the Operations Manuals or other written materials. You must not deviate from these standards and specifications nor use or offer any non-conforming item or differing amounts of any item, without obtaining our written consent first. You must sell and offer for sale only those menu items, products and services that we have expressly approved for sale in writing. You must sell and offer for sale all products and services required by us in the manner and style we require, including the sale of pre-packaged food products. You must not deviate from our standards and specifications without obtaining our written consent first. You must discontinue selling and offering for sale any items, products and services we may disapprove in writing at any time. We can, and expect to, modify our standards and specifications, as we deem necessary. We will provide you notice of any changes as they occur.

You must permit us and our agents, at any reasonable time, to remove a reasonable number of samples of food or non-food items from your inventory or from the Blendz® Store, free of charge for testing by us or by an independent laboratory, to determine whether the samples meet our then-current standards and specifications. Besides any other remedies we may have, we may require you to pay for the testing if we have not previously approved the supplier ofthe item (See ITEM 61.

We do not currently, but reserve the right to negotiate purchase arrangements, including price terms, with designated and approved suppliers on behalf of the System that will be made available to you. There are currently no purchasing or distribution cooperatives.

We or an Affiliate of ours are an approved supplier for paper products. We reserve the right to become an approved supplier (or appoint an Affiliate as an approved supplier) of other goods and services in the future. We estimate that the purchase of the items for us or our designated or approved sources, or those meeting our standards and specifications will be approximately 40% to 80% of your total cost to establish a Blendz® Store, if any, and 30% to 40% of your total cost of operating a Blendz® Store (not including amortization, depreciation or replacement of worn or obsolete improvements, equipment or fixtures).

We do not have any purchasing or distribution co-operatives as of the date of this Offering Circular. We may negotiate purchase arrangements with suppliers and distributors of approved products for the benefit of our franchisees in the future and we reserve the right to receive rebates on volume discounts from our purchase of products that we may re-sell to you. We do not undertake any obligation to negotiate proportional price reductions for products sold

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to you, as each supplier has its own position on granting (and tracking/accounting for) price reductions versus rebates. We do not provide material benefits, such as renewing or granting additional franchises to franchisees based on their use of designated or approved suppliers.

We reserve the right to require you to purchase specific computer, information or communications systems, cameras and wireless equipment which meet our criteria for design, function and compatibilities, and to require you to utilize specific Internet service providers or communications software, and other information technology including back office administrative programs ("Computer System"). (SEE ITEM 11 for more information regarding the Computer System).

We have not sold any franchises since our fiscal year ended December 31, 2005 and did not collect any Initial Franchise Fees, Express Unit Fees, Initial Training, Site Selection and Architectural Design and Marketing Fund Contributions, Area Development Fees, Royalties or income from 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 OFFERING CIRCULAR.

OBLIGATION	SECTION IN AGREEMENT	ITEM IN OFFERING CIRCULAR
Site selection and acquisition/lease	Section 2 of Franchise Agreement and Attachment A	ITEMS 8 and 11
Pre-opening purchases/leases	Sections 6, 7 and 8 of Franchise Agreement	ITEMS 5, 7, 8 and 11
Site development and other pre-opening requirements	Sections 2 and 5 of Franchise Agreement	ITEMS 6, 7, 8 and 11
Initial and on-going training	Section 6 of Franchise Agreement	ITEMS 6 and 11
Opening '	Section 6 of Franchise Agreement	ITEMS 7 and 11
Fees	Sections 4 and 8 of Franchise Agreement and Section 2 of Area Development Agreement	ITEMS 5 and 6
Compliance with standards and policies/Operating Manual	Sections 2, 3, 6, 7, 8, 9, 10, 11 and 12 of Franchise Agreement	ITEMS 11 and 14
Trademarks and proprietary information	Sections 9 and 10 and Attachment D of Franchise Agreement, Attachment B to the Area Development Agreement	ITEMS 11, 13 and 14
Restrictions on products/services offered	Section 7 of Franchise Agreement	ITEMS 8 and 16
Warranty and customer service requirements	Section 7 of Franchise Agreement	ITEM 8
Territorial development and sales quotas	Section 7 of the Franchise Agreement and Section 3 of Area Development Agreement	ITEM 12
On-going product/service purchases	Section 7 of Franchise Agreement	ITEMS 6 and 8
Maintenance, appearance and remodeling requirements	Sections 2,7 and 14 of Franchise Agreement	ITEMS 8 and 11
Insurance	Section 12 of Franchise Agreement	ITEMS 7 and 8
Advertising	Sections 7 and 8 of Franchise Agreement	ITEMS 6, 8 and 11

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Indemnification	Section 15 of Franchise Agreement and Section 9 of Area Development Agreement	ITEM 6
Owner's participation/management/ staffing	Sections 6, 14, 16 and 19 of Franchise Agreement and Section 5 of Area Development Agreement	ITEMS 1, 11 and 15
Records/reports	Sections 4, 7 and 11 of Franchise Agreement	ITEM 6
Inspections/audits	Sections 2, 7, and 11 of Franchise Agreement	ITEMS 6, 8 and 11
Transfer	Section 14 of Franchise Agreement and Section 7 of Area Development Agreement	ITEMS 6 and 17
Renewal	Section 3 of Franchise Agreement	ITEMS 6 and 17
Post-termination obligations	Section 18 of Franchise Agreement and Section 6 of Area Development Agreement	ITEMS 6 and 17
Non-competition covenants	Section 10 and Attachment D of Franchise Agreement and Section 8 of Area Development Agreement and Attachment B	ITEM 17
Dispute resolution	Section 19 of Franchise Agreement and Section 14 of Area Development Agreement	ITEMS 6 and 17

ITEM 10 FINANCING

Neither we, nor any agent or affiliate of ours, offers direct or indirect financing, although we reserve the right to do so in the future. We do not guarantee your note, lease or other obligation. We do not currently place financing with anyone and do not receive any payment for placement of financing, although we reserve the right to do so in the future. We do not have any past or present practice or intention to sell, assign or discount to any third party, in whole or in part, any financing arrangements.

ITEM 11 FRANCHISOR'S OBLIGATIONS

Except as listed below, we need not provide any assistance to you.

Pre-Opening Obligations

Before you open your Blendz® Store, we, or our designee, will provide the following services:

1. Designate your Site Selection Area, Authorized Territory and Local Area (See Franchise Agreement, Section 5.2(a).)

2. Provide you with home-study materials ("Home-Study Materials") (See Franchise Agreement, Section 5.2(i).)

3. Assist you in your site selection process by providing site selection guidelines and criteria, providing approval for a site for your Blendz® Store and such other site selection assistance as we deem appropriate, in our sole discretion. There is an additional fee for this service (See ITEM 7 for more information on the Initial Training, Site Selection and Architectural Design and Marketing Fee and Franchise Agreement, Section 5.2(b) and (c).)

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4. Approve the lease for your Blendz® Store. (See Franchise Agreement, Section 5.2(d).)

5. Provide you, on loan, a copy of the standards and specifications for the construction of a typical Blendz® Store, including interior and exterior design, layout, floor plans, signs, color decor, equipment and fixtures. (See Franchise Agreement, Section 5.2(e).)

6. Provide you with a preliminary design meeting, guidance and assistance on submitting permits and provide copies of architectural plans for your Blendz® Store site. This does not include paying any government fees or architectural and engineering requirements or fees. There is an additional fee for this service (See ITEM 7 for more information on the Initial Training, Site Selection and Architectural Design and Marketing Fee and Franchise Agreement, Section 5.2(e).)

7. Provide you, on loan, a copy of our confidential and proprietary Operations Manual. The table of contents for the Operations Manual is attached as Exhibit D. Our Operations Manual contains approximately 250 pages (See Franchise Agreement, Section 5.2(h).)

8. Provide you a list of our approved suppliers, vendors and contractors for the build-out of your Blendz® Store (as described in,Section 7 of the Franchise Agreement), as revised by us from time to time. (See Franchise Agreement, Section 5.2(f).)

9. Conduct an initial training program for you, or if you are not an individual, your Designated Store Manager or Operating Principal and 1 other person (for a total of 2 individuals) in Campbell, California or other location designated by us prior to opening your Blendz® Store. We will pay for airfare, hotels and some meals for 2 people. You are responsible for all other expenses. There is an additional fee for this service (See ITEM 7 for more information on the Initial Training, Site Selection and Architectural Design and Marketing Fee). (See Franchise Agreement, Section 5.2(j).)

10. At our sole discretion, we may conduct a pre-opening inspection and provide pre-opening assistance of the type we determine, in our sole discretion. (See Franchise Agreement, Section 5.2 (g).)

11. At our sole discretion, attend your grand opening. (See Franchise Agreement, Section 5.2(k).)

12. Provide the initial marketing materials for use in advertising and promotional programs for the Blendz® Store. (See Franchise Agreement, Section 5.2(n).) You will pay an additional fee for this service. (See ITEM 7 for more information on the Initial Training, Site Selection and Architectural and Marketing Fee.)

13. Provide you with an initial set of branded supplies, which may include in our discretion, branded paper products, menus, event tent, event tent signage, uniforms and gift cards. (See Franchise Agreement, Section 5.2(o) and See ITEM 7 for more information on the Initial Training, Site Selection and Architectural and Marketing Fee.)

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14. Consultation regarding selection and installation of the Computer System. (See Franchise Agreement, Section 5.2(m).)

15. If you execute an Area Development Agreement, we designate your Development Territory and Development Schedule within which you may develop a specified number of Blendz® Stores.

We are not required to provide any other service or assistance to you before the opening of the Blendz® Store.

Post-Opening Obligations

We, or our designee, are obligated by the Franchise Agreement to provide the following services after the opening of the Blendz® Store:

1. Make a representative reasonably available to you on the telephone or via e-mail during our normal business hours, as we determine is necessary to discuss your operational and marketing issues. (See Franchise Agreement, Section 5.2(a).)

2. Provide guidance on advertising, marketing, hiring techniques, and pricing and develop advertising and promotional materials for use in marketing and conducting Local Advertising for the Blendz® Stores. (See Franchise Agreement, Section 5.3(c).)

3. Provide you, in our sole discretion, with advertising materials. You will pay us or our Affiliate for such advertising materials. (See Franchise Agreement, Section 5.3(b).)

4. Inform you of mandatory specifications, equipment, fixtures, furnishings, signs, promotions, products, materials, supplies, standards, recipes, and procedures for the operations of your Blendz® Store including new developments and improvements in equipment, food products, packaging and preparation as they are developed (See Franchise Agreement, Section 5.3(f) and ITEM 8). We will provide this guidance through Operations Manuals, bulletins, video or audiocassette tapes, computer diskettes, written materials, reports and recommendations, other materials and intangibles, refresher training programs and/or telephonic consultations at our offices or at your Blendz® Store, in our discretion.

5. Maintain the Marketing Fund (See Franchise Agreement, Section 5.3(e).)

6. Establish local advertising cooperatives and, at our discretion, placement of a Yellow Page and other business listings at your cost, or the cost of any applicable cooperative. (See Franchise Agreement, Section 5.3(d).)

7. Provide additional assistance or remedial training in our determination. If we provide additional assistance at your request or remedial training in our discretion, we may charge you a fee. The estimated range of charges for the additional assistance and remedial training is $250 -$300 per day plus travel expenses. The estimated range of costs for travel is $500-$2,500. (See Franchise Agreement, Section 5.3(g).)

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8. We may choose to provide you with continuing national, regional or local workshops and seminars, which we hold in our discretion. (See Franchise Agreement, Section 5.3(h).)

We are not required to provide any other service or assistance to you for the continuing operation of the Blendz® Store. We reserve the right, in our discretion, to delegate some or all of our pre-opening and continuing obligations under the Franchise Agreement to an Area Director with regional responsibility over the geographic area in which you operate your Blendz® Store. These obligations may include, but are not limited to, initial and ongoing training, site selection assistance, inspections and operations support.

Advertising

Local Advertising

You should plan to spend a minimum of $1,500 on your pre-opening advertising at least 30 days before your grand-opening of your Blendz® Store. You should also plan to spend a minimum of $2,500 on your grand opening. Thereafter, we require that you spend, each month, the greater of 3% of Gross Sales or $450 ("Minimum Local Advertising Expense"). The Minimum Local Advertising Expense will be used for local advertising, to be selected and placed by you, within the appropriate boundaries of a local area, determined in our sole discretion ("Local Area"). The Minimum Local Advertising Expense is reserved only for marketing, promotions and advertising of your Blendz® Store. You may not advertise outside your Local Area without our approval, which may be withheld in our sole discretion. You must provide us with monthly reports showing your Minimum Local Advertising Expense.

All advertising and promotions you use must be conducted in a dignified manner and must conform to the standards and requirements that we state in the Operations Manual or otherwise. You must first obtain our approval of all advertising and promotional plans and materials before your use of them if the plans and materials have not been prepared by us or previously approved by us during the 6 months before their proposed use. We reserve the right to direct your local advertising. You must submit all unapproved plans and materials to us for our approval. You may not use any unapproved plans or materials. You must promptly discontinue use of any advertising or promotional plans or materials, whether or not previously approved, on notice from us. All use of any of the Marks included in the System must meet all standards and requirements.

All advertising and promotional materials, signs, decorations, paper goods (including menus and all forms and stationery used in the Blendz® Store) and other items we designate must bear the Marks (See ITEM 13) in the form, color, location and manner we prescribe. You may not use our logos, Marks and other name identification materials on items to be sold or products to be provided without our prior written approval. If we approve of promotional items or products that will be sold in your Blendz® Store, those items must be included in your regular sales and will be subject to Royalties, Minimum Local Advertising Expense, Marketing Fund Contribution and Local Advertising Cooperative Contribution, if any.

You must also pay your pro rata share of the cost of a Yellow Pages advertisement or other business listings to be placed by us for all Blendz® Stores in the local market area, as

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determined by us. If you operate the only Blendz® Store under the System in the local market area, you will be responsible for full payment of the Yellow Pages advertising or other business listing, unless we determine, in our discretion, that placement of a Yellow Pages advertisement or other business listings for the local market area is not economically justified. Any amount you pay for the Yellow Pages listing or

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