UFOC

Sample UFOC

FRANCHISE OFFERING CIRCULAR

Bubbies Homemade Ice Cream &

Desserts Inc.

a Hawaii corporation

99-1267 Waiua Place, Suite B

Aiea, Hawaii 96701-3277

Telephone No. (808) 487-7218

The franchise offered is an ice cream and dessert parlor operating as Bubbies Homemade Ice Cream & Desserts and selling ice cream, baked goods, refreshments and other dessert items.

The initial franchise fee is $20,000. The estimated initial investment required, including the initial franchise fee, is $174,000 to $216,500. This sum does not represent Franchisees total investment in connection with the Bubbies Homemade Ice Cream & Desserts franchise. Items 5 through 7, inclusive, of this offering circular, beginning at page 4, should be consulted for further explanation regarding the total investment.

RISK FACTORS:

1. THE FRANCHISE AGREEMENT PERMITS THE FRANCHISEE TO SUE BUBBIES ONLY IN HAWAII. OUT-OF-STATE LITIGATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST MORE TO SUE BUBBIES IN HAWAII THAN IN YOUR HOME STATE.

2. THE FRANCHISE AGREEMENT STATES THAT HAWAII LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS.

3. THE FRANCHISE AGREEMENT STATES THAT IF A CLAIM IS ASSERTED BY OTHERS OF A PRIOR USE OF ANY TRADEMARKS, SERVICES MARKS OR TRADE NAMES, BUBBIES MAY REQUIRE YOU TO DEFEND SUCH CLAIMS.

34. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

Information comparing franchisors is available. Call the California Department of Corporations 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 anything in the offering circular is untrue, contact the Federal Trade Commission and California Department of Corporations.

EFFECTIVE DATE:

INFORMATION FOR PROSPECTIVE FRANCHISEES REQUIRED BY FEDERAL TRADE COMMISSION

To protect you, we've required your Franchisor to give you this information. We haven't checked it. and don't know if it is correct. It should help you make up your mind. Study it carefully. While it includes some information about your contract, do not rely on it alone to understand your contract. Read all of your 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's 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.

Effective Date:

Federal Trade Commission Washington. D.C. 20580

TABLE OF CONTENTS

1. THE FRANCHISOR. ITS PREDECESSORS AND AFFILIATES .................1

2. IDENTITY AND BUSINESS EXPERIENCE OF PERSONS AFFILIATED WITH BUBBIES HOMEMADE ICE CREAM & DESSERTS. INC.; FRANCHISE BROKERS

......................................................................3

3. LITIGATION.................'..........................................3

4. BANKRUPTCY ........................................................4

5. FRANCHISEE'S INITIAL FRANCHISE FEE OR OTHER INITIAL PAYMENT.....4

6. OTHER FEES ..........................................................5

7. FRANCHISEE'S INITIAL INVESTMENT ...................................7

8. RESTRICTIONS ON SOURCES OF PRODUCTS OR SERVICES...............II

9. FRANCHISEE'S OBLIGATIONS .........................................12

10. FINANCING ARRANGEMENTS .........................................15

11. OBLIGATIONS OF BUBBIES; OTHER SUPERVISION. ASSISTANCE OR SERVICES............................................................15

12. EXCLUSIVE AREA OR TERRITORY.....................................27

13. TRADEMARKS. SERVICE MARKS. TRADE NAMES. LOGOTYPES AND COMMERCIAL SYMBOLS..............................................28

14. PATENTS AND COPYRIGHTS ..........................................29

15. OBLIGATION OF THE FRANCHISEE TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS.............................30

16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL..................30

17. RENEWAL. TERMINATION. TRANSFER. DISPUTE RESOLUTION AND RELATED INFORMATION..............................................30

18. ARRANGEMENTS WITH PUBLIC FIGURES...............................36

19. EARNINGS CLAIMS...................................................36

20. LIST OF OUTLETS ....................................................36

21. FINANCIAL STATEMENTS.............................................37

[22. CONTRACTS ........................................................3?|

RECEIPT..................................................................38^;

''""It

appendix...............................................................e&W;

EXHIBITS

A. FINANCIAL STATEMENTS

B. BUBBIES HOMEMADE ICE CREAM & DESSERTS INC. FRANCHISE AGREEMENT

i'ii ' ?* ."■ ii i

1. THE FRANCHISOR. ITS PREDECESSORS AND AFFILIATES

Bubbies Homemade Ice Cream & Desserts, Inc.:

Bubbies Homemade Ice Cream & Desserts, Inc. (referred to as ~~"Bubbic&''~~"Bubbies'T) is a Hawaii corporation, incorporated September 5, 1984, and doing business as Bubbies Homemade Ice Cream & Desserts. Bubbies has also registered with the State of Hawaii the trade name ^'Tutu's Homemade Ice Cream,¹¹^ which in 1998 was used for the first time, in connection with a Hawaiian sherbet confection. Its principal business address is 99-1267 Waiua Place, Suite B, Aiea, Hawaii 96701-3277. Bubbies' agent for service of process in the State of California is the Commissioner of the State of California Department of Corporations. In Hawaii, the agent for service of process is Keith B. Robbins, president of Bubbies.

To simplify the language in this offering circular, ~~"vou'^~~voin means the franchisee - that is, the person or entity who buys the franchise. If the franchisee is a corporation, partnership or other entity, "you" includes the franchisee's owners.

Predecessors and Affiliates:

There are no predecessor entities related to Bubbies.

Bubbies Homemade Ice Cream & Desserts. Inc.'s Business:

Bubbies is a dessert manufacturing and sales company, and a franchising company which sells franchises for the operation of retail ice cream and dessert parlors operating under the Bubbies Homemade Ice Cream & Desserts name. Bubbies presently owns and operates one retail ice cream and dessert parlor. All frozen and baked dessert items are prepared at Bubbies' factory located at 99-1267 Waiau Place, Suite B, Aiea, Hawaii 96701-3277. Bubbies also sells ice cream and baked goods on a wholesale basis to customers such as hotels and restaurants. Since January 2, 1987, Bubbies' wholesaling operations have accounted for approximately fifty percent (50%) of Bubbies' gross sales. Bubbies is also the sole supplier of the frozen desserts offered for sale at the franchised ice cream and dessert parlors. The market for ice cream and frozen dessert products is developed. Products are sold across the demographic spectrum, although families with children and young adults (teenage through mid-twenties) comprise a substantial portion of the likely market. Sales are seasonal to some extent, with typically stronger sales during warm weather months.

Bubbies Homemade Ice Cream & Desserts Franchise:

The franchised ice cream and dessert parlor is a retail establishment devoted to the sale of ice cream, sherbet, sorbet, ice cream novelties, baked goods, and similar dessert items. The ice cream and other frozen dessert items are manufactured by Bubbies and sold to you for resale at the ice cream and dessert parlor. You may seek from independent suppliers your inventory of syrups, toppings, refreshments and similar products which are sold in conjunction with the frozen dessert items supplied by Bubbies, as well as baked goods and beverages. The ice cream and dessert parlors are furnished with antique items designed to project a warm and casual atmosphere. Although patrons are served at a service counter, the typical franchised store will provide seating for patrons who wish to eat on the premises. The ice cream flavors and variety of other desserts offered at any given time will change regularly.

The franchised business also sells articles of clothing (including cotton T-shirts and hats) and novelty ceramic ice cream containers (for example, in the shape of a bathtub) bearing Bubbies' distinctive service mark.

You will have to compete with other existing retail ice cream and frozen yogurt shops, and other shops providing frozen desserts. This includes other franchise programs specializing in frozen dessert items. Bubbies' franchises are subject to all regulations that apply to food service businesses, including food handling and other health and safety laws.

Bubbies Prior Business Experience:

Bubbies has operated ice cream and dessert parlors since March 1985. Its first retail shop is located at 1010 University Avenue, #B-4, Honolulu, Hawaii. (The ice cream and dessert parlor at this location was forced to close as a result of fire damage, caused by a fire originating at adjoining premises, from September 2, 1986 through January 1, 1987.) The existing ice cream and dessert parlor is company-owned and substantially similar to the franchises currently being offered by Bubbies. A second retail shop was opened in 1995 at the Kahala Mall Shopping Center, Honolulu, Hawaii. Bubbies sold its ongoing retail operations at Kahala Mall as a franchised business in April 1996 and may also sell its ongoing retail operations at University Avenue as a franchised business.

In April 1989, Bubbies moved its ice cream manufacturing and baking operation to a factory located at 99-930 Iwaena Street, Room B102, Aiea, Hawaii 96701. In June 1997, Bubbies commenced manufacturing and baking operations at a new factory located at 99-1267 Waiau Place, Suite B, Aiea, Hawaii 96701. Frozen and baked goods are delivered from the factory to the retail outlets and to wholesale accounts in Hawaii via a freezer truck owned and operated by Bubbies. Ice cream and other frozen dessert items are

shipped to off-island, U.S. mainland and foreign destinations principally via freezer containers on marine vessels. Where expedited delivery has been required, Bubbles has shipped product via air freight. Bubbies began offering franchises in Hawaii as of December 18, 1995. Four franchises have been sold by Bubbies - (1) the retail ice cream and dessert parlor originally located at Kahala Mall Shopping Center in Honolulu, Hawaii, which was sold as a franchise in April 1996, and moved to Koko Marina in 2001, (2) a franchise that opened on June 1, 1998 at 2424 Kalakaua Avenue, Honolulu, Hawaii (terminated in September 1998), (3) a franchise that opened in the fall of 2000 in Mililani, Hawaii, and (4) a franchise to ~~open in 2002~~be located in Kapolei, Hawaii. Bubbies has also entered into a license agreement with a party in Singapore that owns and operates a retail ice cream and dessert parlor that may be construed as establishing a franchise under U.S. law.. Bubbies has not offered franchises in other lines of business.

IDENTITY AND BUSINESS EXPERIENCE OF PERSONS AFFILIATED WITH BUBBIES HOMEMADE ICE CREAM & DESSERTS. INC.: FRANCHISE BROKERS

President and Treasurer. Director: Keith B. Robbins

Mr. Robbins is a nutritionist, and has earned a Masters degree in Public Health from the University of Hawaii. He has been the President and Treasurer, and a Director of Bubbies since its formation in 1984, and has personally managed all phases of the existing Bubbies ice cream and dessert parlor since that time, including the past five years, as well as all other aspects of Bubbies' business. Prior to the formation of Bubbies, he was a nutritionist for Kokua Kalihi Health Center.

Vice President. Secretary. Director: Gertrude Robbins

Mrs. Robbins is the mother of Bubbies' President, Keith B. Robbins. She is a retired homemaker, and is engaged in volunteer work in her community in Connecticut. She is not actively involved in the day-to-day management of Bubbies, but serves in an advisory capacity, and has served in such capacity for the past five years. She has served as Secretary and a Director of Bubbies since 1984, and as Vice President since 2002.

There are no franchise brokers in connection with the sale of the Bubbies franchise.

LITIGATION

No litigation is required to be disclosed in this offering circular.

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.

5. FRANCHISEE'S INITIAL FRANCHISE FEE OR OTHER INITIAL PAYMENT

An initial franchise fee of $20,000.00 is due and payable in a lump sum by you upon execution of the Franchise Agreement by all parties.

The $20,000.00 franchise fee is uniform in all cases.

Proceeds from the initial franchise fee are, in part, profit to Bubbies and, in part, used to pay some of the following expenses of Bubbies:

(1) Assistance and supervision provided by Bubbies for the design, furnishing and opening of your ice cream and dessert parlor;

(2) Your training in connection with the operation of the ice cream and dessert parlor;

(3) Legal fees, accounting fees and compliance with federal, state and other laws;

(4) Employees' salaries and benefits;

(5) Enforcement and protection of all Bubbies' trademarks, trade names and commercial symbols;

(6) Research and development relating to products and methods used by Bubbies and the ice cream and dessert parlors;

(7) Selling, general and administrative expenses;

(8) Costs associated with the review and approval of your lease, title to property, construction and/or improvement plans, insurance coverage and other approvals provided for in the Franchise Agreement.

The initial franchise fee will be refunded, subject to the following charges, if for any reason you have not opened the ice cream and dessert parlor within 180 days after the, premises are available for your possession and Bubbies elects to terminate the Franchise Agreement pursuant to Paragraph 23 of the Agreement. Bubbies may, in any event, deduct those costs and expenses incurred prior to such termination, including travel,

living expenses and reasonable compensation for Bubbles' agents and employees and legal fees and other professional fees in connection with Bubbies' efforts pursuant to the Franchise Agreement. The amount deducted for such costs and expenses will not be less than $5,000.00 or more than $20,000. The initial franchise fee is not refundable in whole or in part under any other circumstances.

6. OTHER FEES
DescriotionCl)	Amount	Due Date	Remarks
Royalty	3% of gross	Payable	See Note 2
	receipts	monthly on Tenth (10th) day after end of preceding month
Group Advertising	Greater of	Same as	See Note 3
	$250/mo or	Royalty Fee
	1-1/2% of monthly
	gross receipts
Additional Training	$500 per week	Upon completion of additional training	See Item 11
Additional	Not to exceed	14 days after	See Item 11
Assistance	$25.00 per hour	billing
Audit	Cost of audit	30 days after	See Note 4
	plus 12%	billing
	interest (or highest
	rate allowed by law
	if less than 12%) on
	underpayment
Transfer	Greater of	Prior to	See Items 5
	$5,000 or 25%	consummation	and 17
	of franchise	of transfer
	fee charged at
	time of transfer

Renewal Not to exceed

25% of franchise fee charged at time of renewal

NOTES:

(1) All fees are imposed by and are payable to Bubbies. All fees are not refundable.

(2) You are required to pay a royalty to Bubbies in an amount equal to three percent (3%) of your gross receipts. Gross receipts include the total of all sales and all business transacted in, on, upon and from your business premises whether payment is received in cash, services, merchandise or in kind, less general excise tax or sales tax.

(3) Bubbies has reserved the right to require that you pay to Bubbies an advertising fee not to exceed the greater of $250.00 per month or one and one-half percent (1 !/2%) of your total monthly gross receipts. Gross receipts are defined in Note 2 above. The advertising fee will be uniform as to all persons currently acquiring a franchise and such fee will be nonrefundable. The fee will be used to defray the cost of advertising, and Bubbies may prepare the advertising itself or purchase the advertising and promotional materials from nonaffiliated third parties.

(4) You are required by the Franchise Agreement to submit monthly reports. In addition, quarterly profit and loss statements (unaudited) and annual financial statements are required, such financial statements to be audited every other year. Bubbies will have the right to audit or cause to be audited all of your records and tax returns. In the event such audit discloses an understatement of the gross receipts of your ice cream and dessert parlor for any period or periods, you are obligated to pay to Bubbies, upon receipt of the audit report, the applicable royalty fee and advertising fee on the amount of such understatement, plus interest at the rate of twelve percent (12%) per annum from the date the payments originally were due; provided, however, the interest charged will not exceed the highest interest rate allowed by law.

The audits will be conducted at the expense of Bubbies, provided that if an audit discloses an understatement of annual gross receipts of Four Thousand and no/100 dollars ($4,000.00) or more of your gross receipts for any period or periods, you are required to reimburse Bubbies for the cost of such audit including, without limitation, travel, lodging and wage expenses, and reasonable accounting and legal fees.

Prior to See Items 5

renewal and 17

FRANCHISEE'S INITIAL INVESTMENT

Franchisee's	. Estimated Initial Investment and Other Financial Obligations:
	Amount	Method of Pavment	When Due	To Whom Payment Is to be Made
Initial Franchise Fee	$20,000	Lump Sum	Upon execution of Franchise Agreement	Bubbies
Travel and Living Expenses	$2,500 -$5,000	As Incurred	During training	Airlines, Hotels & Restaurants
Equipment	$44,300	Lump Sum (Note 1)	Prior to Opening	Suppliers
Opening Inventory	$10,500	Lump Sum (Note 2)	Prior to Opening	Bubbies and Suppliers
Real Estate Costs	$ 7,000	(Note 3)	(Note 3)	(Note 3)
Leasehold Improvements, Remodeling, Decorating Costs	$75,000 to $115,000	Lump Sum (Note 4)	Prior to Opening	Contractors and Suppliers
Additional Funds - 3 months	$ 15,000	As Incurred	As Incurred	Employees, Suppliers, Uti and Tradesme
Legal Fees	(Note 5)	(Note 5)	(Note 5)	(Note 5)
TOTAL	$174,000 to $216,500
	$174,000 to $216,500

NOTES:

(1) Equipment is shown at list price and with discounts that may be available from certain vendors. Costs do not include applicable taxes or freight charges.

OUANTITY	ITEM	LIST PRICE	COST	TOTAL
	Tempering Cabinet Nelson BD14	$5,600.00	$2,768.00	$2,768.00
	Flavor Rail 8FR	$4,736.00	$2,426.00	$2,426.00
2	Display Cabinet FPD 3	$6,120.00	$3,134.00	$6,268.00
	1 Door Hardening T30	$9,614.00	$2,363.00	$2,363.00
	2 Door Refer True T-49	$4,414.00	$2,200.00	$2,200.00
	Mochi Upfront Freezer Nelson BD4 $2,600.00		$1,242.00	$1,242.00
	2 Door Under Counter Refer
	w/4" Casters Randell	$3,300.00	$1,595.00	$1,595.00
	Dipperwell	$303.00	$125.00	$125.00
	Dipping Cabinets KDC 87	$5,779.00	$2,959.00	$2,959.00
4	Can Clamps Sets	$254.00	$130.00 Each $520.00
	6x8 Backup Freezer (20 Degrees)	$8,800.00	$5,375.00	$5,375.00
	6x8 Backup Freezer shelving	$1,149.00	$762.00	$762.00
	(8 - 74" Posts, 5 - 24" shelf,
	5-30" Shelf)
	2 - 3202 Scales Edlund	$95.00	$60.00	$60.00
	2 Compact Fudge Warmer	$465.00	$290.00	$290.00
	3 Compartment sink	$1,800.00	$1,200.00	$1,200.00
	(5 - 7" In overall length)
	Hand Sink - Front		$130.00	$130.00
	Microwave		$350.00	$350.00
	Prince Castle Multi-mixer Hard
	Ice Cream	$1,200.00	$730.00	$730.00
1	Shelving		$600.00	$600.00
2	Hamilton Beach Commercial
	Blender		$95.00 Each	$190.00
2	Brewing Pitchers		$3.50 Each	$7.00
2	Toledo Scales #8433	$550.00	$390.00	$780.00
	Creamer		$4.50	$4.50
	Espresso Machine	$6,100.00	$5,100.00	$5,100.00
	Knox Box		$17.00	$17.00
	Pot Scrubber Bristles		$8.00	$8.00
	Semi-Automatic Coffee Grinder
2	Steaming Pitcher		$15.00 Each	$30.00
3	#16 Ice cream Scoops	$19.00	$12.00 Each	$36.00
1	8" Chef Knife		$20.00	$20.00

1	8" Spatula - Decoration	$10.00	$10.00
1	Can Opener	$5.00	$5.00
1	Cutting Board	$10.00	$10.00
1	Decorating Bag #12	$10.00	$10.00
2	Measuring Cups	$4.00 Each	$8.00
2	Napkin Holder	$23.00	$46.00
1	Open Sign	$20.00 ■	$20.00
1	Hours Sign	$30.00	$30.00
2	Rubbermaid Scrapper - 9 Vi"	$2.00	$4.00
2	Ice Cream Spades	$19.00 $12.00 Each	$24.00
4	Stainless Milk Shake Cups	$8.00 Each	$32.00
1	Stereo/CD Player/Speakers	$500.00	$500.00
1	Server Products Model #82600		$83.00
1	Server Products Model #82550		$100.00
7	Server Products Model #82559	$10.00 Each	$70.00
7	Server Products Model #82562	$8.00 Each	$56.00
7	Server Products Model #82633	$73.00 Each	$511.00
1	Outside Storefront Sign		$2,000.00
1	Thermometer	$12.00	$12.00
1	Toddy Maker	$40.00	$40.00
2	Topping Shaker	$2.00	$4.00
24	Black Aprons	$5.00 Each	$120.00
1	Towels (12)	$12.00/Dozen $12.00
1	Garbage Can (Back)	$30.00	$30.00
1	Refuse Container	$25.00 Each	$25.00
1	Broom/Dust Pan	$12.00	$12.00
1	Mop - Mop Bucket	$90.00	$90.00
1	Ice Machine QM 30	$1,800.00 $1,109.00	$1,109.00
1	Electric Cash Register	$1,000.00	$1,000.00
2	Undercounter Waste Baskets	$5.00 Each	$10.00
20	Glass Plates with Platinum Rim	$70.00	$70.00
	Old Pay Phone	$110.00	$110.00
1	Desk	$300.00	$300.00
1	Bubbies Sign	$650.00	$650.00
1	Clock	$150.00	$150.00
12	Canisters for Cookies and
	Toppings	$12.00	$144.00
1	Hot Water Heater	$250.00	$250.00
5	Menu Holders (clear plastic)	$10.00 Each	$50.00
6	Espresso Cups	$2.50	$15.00
6	Cappuccino Cups	$2.50	$15.00
	Miscellaneous		$1,000.00
		GRAND TOTAL	$46,916.50

(2) Opening inventory will include paper products, ice cream and sherbet, baked goods, toppings, soda, cones, cleaning products, boxes and t-shirts and other clothing items. The opening inventory cost is based on 30 to 60 days of operation. You may choose to purchase more opening inventory to save on freight charges from Hawaii. A 20 foot freezer container fully loaded with tubs of Bubbles ice cream costs approximately $38,000 for product and freight charges. You must pay Bubbies one-half ('A) of the amount due for products supplied by Bubbies not less than five (5) days prior to shipment for orders exceeding $10,000, and the balance within seven (7) days after receipt of the product or the invoice date, whichever is later. Orders under $10,000 must be paid within seven (7) days of Bubbies' invoice date.

(3) If you do not own adequate space, you will need to lease the land and building for the ice cream and dessert parlor. The typical location for a Bubbies franchise would be in a commercial area, including business and shopping areas, and shopping malls. The typical Bubbies franchise will have from 900 to 1200 square feet, depending on the amount of space allotted for customer seating. Assuming base monthly rent of $3.00 to $4.00 per square foot, the annual rent obligation would range from $32,400.00 to $57,600.00. Such factors as size, condition and location of the leased premises will affect the actual cost. The estimated initial investment is calculated based upon 1,000 square feet of space at a base monthly rent of $3.50 per square foot - i.e., one month's base rent equals $3,500 - plus a damage deposit equal to one month's base rent, or a total of $7,000. If the franchised business is located in a major shopping mall (such as Ala Moana Shopping Center or Kahala Mall, both located in Honolulu, Hawaii) the base monthly rent will be significantly higher -- approximately $12.00 to $13.00 per square foot.

(4) The range in cost estimates for leasehold improvements is based principally upon the existing condition of the leased space (e.g., walls, electricity, air conditioning and plumbing). The cost of the antique decorative items, signs, customer seating and other such furnishings are in addition to the basic leasehold improvements and equipment, and are estimated to cost from $7,500 to $9,500, depending principally upon the size of the leased space.

(5) In the event that a claim is asserted by others of a prior use of any trademarks, service marks or trade names, Bubbies may require you to defend such claims. Legal fees connected with such claims will depend on the cost of the attorney retained, the length and complexity of any resulting litigation, and other factors.

(6) You are required to procure insurance from an insurance company with a Bests Triple A rating (or equivalent).

Bubbies does not offer, either directly or indirectly, financing to you for any items.

THERE ARE NO OTHER DIRECT OR INDIRECT PAYMENTS IN CONJUNCTION WITH THE PURCHASE OF THE FRANCHISE.

8. RESTRICTIONS ON SOURCES OF PRODUCTS OR SERVICES

The goods, services, supplies, fixtures, equipment or inventory listed below must be purchased by you from Bubbies or other sources designated by Bubbies:

All ice cream, ice milk, sherbet and other frozen dessert products.

Bubbies will derive revenue from the sale of the required purchases listed in the paragraph above. It is estimated that required purchases from Bubbies are 2 percent to 3 percent of the cost to establish a Franchise and approximately 45 percent to 65 percent of total operating expenses thereafter. In the fiscal year ending September 30, 200+2, Bubbies revenues from the sale of these products to franchisees (including the retail location in Singapore) was approximately ~~$216,325.18~~$ *?-4,fafe% j, or approximately 2*%' >*% of Bubbies' total revenues.

The following items are to be purchased in accordance with Bubbies' specifications or from sources approved by Bubbies, and Bubbies shall have the right, but not the obligation, to procure such items and sell them to you at your request:

(1) Baked goods;

(2) Syrups, toppings, flavorings and refreshments;

(3) Ice cream cones;

(4) Paper products used in serving desserts;

(5) Clothing items with the Bubbies service mark.

The following items are to be purchased or leased in accordance with Bubbies' specifications:

(1) Equipment used for food storage, refrigeration and preparation;

(2) Fixtures, furnishings and decorative items.

Bubbies has approved suppliers of these items not previously approved by Bubbies at the request of franchisees. If you would like to purchase these items from a supplier not previously approved by Bubbies, you may submit a written request for such approval to Bubbies, describing the supplier, product and proposed use. Bubbies will review the request based upon the supplier's business reputation and performance, and the product's quality, taste (food items), price, availability, consistency with products featured at other Bubbies' franchises and other criteria. A list of criteria for approval is not made available to suppliers or franchisees. Bubbies will negotiate purchase arrangements with suppliers (including price terms) for your benefit if requested to do so. There are currently no purchasing or distribution cooperatives.

Bubbies reserves the right to modify the standards of operation in any manner it deems reasonable, provided that, to the extent possible, such modifications are applied to all franchisees. The confidential operating manual also may be unilaterally modified or amended from time to time by Bubbies in its sole discretion, as is reasonably necessary to enhance the successful operation of the franchised business or protect any names or marks.

Bubbies is an approved supplier of baked goods (which it manufactures) and may also obtain from third parties, for sale to you, syrups, toppings, flavorings, refreshments, cones and paper products.

Supplies, fixtures, equipment or inventory which must be purchased or leased in accordance with Bubbies' specifications, or from suppliers approved by Bubbies, and which are purchased directly from the supplying source, will not result in any income to Bubbies. In the event any such goods are purchased from Bubbies, whether manufactured by Bubbies or by a third party, Bubbies may, in its discretion, derive income from such sales, not to exceed 15% of the gross price paid by Bubbies.

You are required to procure insurance from an insurance company with a Bests Triple A rating (or equivalent).

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 Item in

Agreement Offering Circular

Site selection and acquisition /lease

Pre-opening purchases/leases

Site development and other pre-opening requirements

Initial and ongoing training

Opening

Fees

Compliance with standards and policies/Operating Manual

Para. 5

of Franchise

Agreement

Paras. 7, 11 of Franchise Agreement

Paras. 5, 7, II of Franchise Agreement

Para. 10 and 14 of Franchise Agreement

Paras. 5, 8 of Franchise Agreement

Paras. 3, 5, 7, 11 12, 13 of Franchise Agreement

Paras. 1,7,8, 11, 15 of Franchise Agreement

Item 11

Items 7, 8

Items 6, 7, 11

Item 11

Items 5, 6, 7

Item 11

Trademarks and

proprietary

information

Restrictions on

products/services

offered

Warranty and customer service requirements

Para. 4, 9, 10 of Franchise Agreement

Para. 11 of Franchise Agreement

None

Items 13, 14

Items 8, 16

None

Territorial development and sales quotas

Ongoing product/ service purchases

Maintenance, appearance and remodeling requirements

None

Para. 11 of Franchise Agreement

Paras. 5, 7 of Franchise Agreement

None

Item 8

Item 11

Insurance

o. Advertising

p. Indemnification

q. Owner's par-

ti cipation/manage-ment/staffing

r. Records/reports

s. Inspections/audits

Para. 16 of Franchise Agreement

Para. 12(b), 13 of the Franchise Agreement

Para. 4(e), 17 of the Franchise Agreement

Para. 18

of the Franchise

Agreement

Para. 21

of the Franchise

Agreement

Paras. 15,21 of the Franchise Agreement

Items 6, 8

Item 6

Item 13

Items 11, 15

Item 6

Transfer

Paras. 25,27 of the Franchise Agreement

Item 17

u. Renewal Para. 22 Item 17

of the Franchise Agreement

v. Post-termination Para. 25 Item 17

obligations of the Franchise

Agreement

w. Non-competition Paras. 19,25 Item 17

x. Dispute Resolution Paras. 32,33 Item 17

There are no performance quotas or minimum royalty amounts that you must meet in order to retain your franchise.

Specific payment terms for products supplied by Bubbies are set forth in paragraph 11 (g) of the Franchise Agreement. You must pay for all products supplied by Franchisor promptly, in most cases within seven (7) days of Bubbies' invoice date. In the case of any order exceeding Ten Thousand Dollars ($10,000) based on Franchisee's cost, you must pay one-half (!4) the amount due to Bubbies not less than five (5) days prior to shipment, and the balance within seven (7) days after your receipt of the product or the invoice date, whichever is later.

10. FINANCING ARRANGEMENTS

There are no financing arrangements offered directly or indirectly by Bubbies, its agents or any affiliated company.

11. OBLIGATIONS OF BUBBIES: OTHER SUPERVISION. ASSISTANCE OR SERVICES

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

The obligations to be performed by Bubbies prior to the opening of the franchise business are:

(1) Bubbies shall approve or disapprove the proposed site for the ice cream and dessert parlor within 30 days after submission of such proposed site (Franchise Agreement - paragraph 5(c)).

(2) Bubbies shall approve or disapprove any proposed lease to be entered into by you within a reasonable period of time, not to exceed 30 days (Franchise Agreement -paragraph 5(d)).

(3) Bubbles shall deliver to you such plans, drawings and specifications for construction of the premises, if any, as are necessary to ensure compliance with the Franchise System (Franchise Agreement - paragraph 5(e)).

(4) Bubbies shall designate an exclusive territory for you, and Bubbies shall not locate, operate or grant a franchise for another ice cream and dessert parlor within the Franchise Area (Franchise Agreement - paragraph 6).

(5) Bubbies shall assist you, as requested, in your efforts to acquire such furnishings and fixtures as are required by Bubbies' specifications (Franchise Agreement -paragraph 7).

(6) Bubbies agrees to train you with regard to preparation and sale of Bubbies' products, and the operation of the ice cream and dessert parlor, as more fully described below (Franchise Agreement - paragraph 10).

TRAINING PROGRAM: DAY ONE

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Origins of Bubbies	11:00 a.m.	Handout	1 Hour		Keith Robbins/ Samantha Kauai
The Menu and The Origins of our Name	12:00 p.m.	Handout	lHour		Keith Robbins/ Samantha Kauai
What makes the quality of our ice cream outstanding	1:00 p.m.	Handout	lHour		Keith Robbins/ Samantha Kauai
Equipment in Store	2:00 p.m.	Equipment in Store		1 Hour	Keith Robbins/ Samantha Kauai
Company Policies - Your First Day	3:00 p.m.	Operating Manual	2 Hours		Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY TWO

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Review of Company Policies	10:00 a.m.	Operating Manual	1 Hour		Keith Robbins/ Samantha Kauai
Critical Details for Immediate Attention	11:00 a.m.	Operating Manual	Yi Hour		Keith Robbins/ Samantha Kauai
Health Department Requirements	11:30 a.m.	Operating Manual - Handouts	1 Hour		Keith Robbins/ Samantha Kauai
Fire Department/ Wastewater Management Requirements	12:30 p.m.	Operating Manual - Handouts	Yi Hour		Keith Robbins/ Samantha Kauai
Utilities and Services	2:00 p.m.	Operating Manual - Handouts	lHour		Keith Robbins/ Samantha Kauai
Monies: Bank Accounts, Petty Cash, Cash Register	2:30 p.m.	Operating Manual	1 Hour		Keith Robbins/ Samantha Kauai
Payroll Services, Accounting System, ASCAP	3:30 p.m.	Operating Manual	lHour		Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY THREE

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Quick Review of Day 2	9:00 a.m.		'A Hour		Keith Robbins/ Samantha Kauai
Personal Selection	9:30 a.m.	Operating Manual	1 Hour		Keith Robbins/ Samantha Kauai
Personal Job Description	10:30 a.m.	Operating Manual	1 Yi Hours		Keith Robbins/ Samantha Kauai
Store Manager - Job Description	1:00 p.m.	Operating Manual	lHour		Keith Robbins/ Samantha Kauai
Shift Leader - Job Description	2:00 p.m.	Operating Manual	lHour		Keith Robbins/ Samantha Kauai

Opening Duties	2:30 p.m.	Operating Manual	45 Minutes	Keith Robbins/ Samantha Kauai
Duties During Operating Hours	3:15 p.m.	Operating Manual	45 Minutes	Keith Robbins/ Samantha Kauai
Closing Duties	4:00 p.m.	Operating Manual	45 Minutes	Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY FOUR

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Review of Duties for Store	9:30 a.m.		'/a Hour		Keith Robbins/ Samantha Kauai
Open Store	10:00 a.m.			2 Hours	Keith Robbins/ Samantha Kauai
Review of Menu	12:30 p.m.	Store		Vi Hour	Keith Robbins/ Samantha Kauai
By the Scoop - Scooping Ice Cream	1:00 p.m.	Store		1 Hour	Keith Robbins/ Samantha Kauai
Sundae's	2:00 p.m.	Store		1 Hour	Keith Robbins/ Samantha Kauai
Working with Customers -Scoops and Sundae's	3:00 p.m.	Store		2 Hours	Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY FIVE

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Opening Store	9:30 a.m.			2 Hours	Keith Robbins/ Samantha Kauai
Fountain Creations	12:00 p.m.	Operating Manual		1 Hour	Keith Robbins/ Samantha Kauai
Cakes and Pies	1:00 p.m.	Operating Manual		lHour	Keith Robbins/ Samantha Kauai

Working Store

2:00 p.m.

Operating Manual

3 Hours

Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY SIX

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Review Cakes and Pies	9:00 a.m.	Operating Manual		1 Hour	Keith Robbins/ Samantha Kauai
Open Store	10:00 a.m.			1 Vi Hours	Keith Robbins/ Samantha Kauai
Coffee and Beverages	12:00 p.m.	Operating Manual		45 Minutes	Keith Robbins/ Samantha Kauai
Work with Customers	1:00 p.m.	Operating Manual		3 Hours	Keith Robbins/ Samantha Kauai
Review of Scoops -Fountain Creations	4:00 p.m.	Operating Manual - Handouts		1 Hour	Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY SEVEN

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Test on Cakes and Pies	9:00 a.m.	Written Test	Vi Hour		Keith Robbins/ Samantha Kauai
Test on Weights of Ice Cream	9:30 a.m.	Written Test	Y₂ Hour		Keith Robbins/ Samantha Kauai
Open Store	10:00 a.m.			1 Vi Hour	Keith Robbins/ Samantha Kauai
Work Store	12:00 p.m.			4 Hours	Keith Robbins/ Samantha Kauai
Closing Duties	4:00 p.m.	Operating Manual	1 Hour		Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY EIGHT

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Review Closing Procedures	9:00 a.m.	Operating Manual		lHour	Keith Robbins/ Samantha Kauai
Open Store Duties	10:00 a.m.			1 Yi Hours	Keith Robbins/ Samantha Kauai
Open Store/Work Store	12:00 p.m.			3 Hours	Keith Robbins/ Samantha Kauai
Food Specifications	3:00 p.m.	Operating Manual	1 Yi Hours		Keith Robbins/ Samantha Kauai
Review Menu Items	4:30 p.m.	Operating Manual	Yi Hour		Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY NINE

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Packing Ice Cream	4:00 p.m.	Operating Manual	Yi Hour		Keith Robbins/ Samantha Kauai
Store Appearance	4:30 p.m.	Operating Manual	Yj Hour		Keith Robbins/ Samantha Kauai
Guest Relations	5:00 p.m.	Operating Manual	Yi Hour		Keith Robbins/ Samantha Kauai
Safety Programs	5:30 p.m.	Operating Manual	Yi Hour		Keith Robbins/ Samantha Kauai
Work Store on Night Shift	6:00 p.m.			6 Hours	Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY TEN

SUBJECT

TIME BEGUN

INSTRUCTION MATERIAL

HOURS OF

CLASSROOM

TRAINING

HOURS OF

ON THE JOB

TRAINING

INSTRUCTOR

Work Store Night Shift

4:00 p.m.

8 Hours

Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY ELEVEN

SUBJECT

TIME BEGUN

INSTRUCTION MATERIAL

HOURS OF

CLASSROOM

TRAINING

HOURS OF

ON THE JOB

TRAINING

INSTRUCTOR

Financial Controls

4:00 p.m.

Operating Manual - Handouts

2 Hours

Keith Robbins/ Samantha Kauai

Work Store at Night

6:30 p.m.

6 Hours

Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY TWELVE

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Questions and Answers	12:00 p.m.		2 Hours		Keith Robbins/ Samantha Kauai
Financial Controls -Inventory	2:00 p.m.	Operating Manual	2 Hours		Keith Robbins/ Samantha Kauai
Work Store	8 p.m.			4 Hours	Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY THIRTEEN

SUBJECT

TIME BEGUN

INSTRUCTION MATERIAL

HOURS OF

CLASSROOM

TRAINING

HOURS OF

ON THE JOB

TRAINING

INSTRUCTOR

Work Store

4:00 p.m.

7 Hours

Keith Robbins/ Samantha Kauai

Closing Duties

11 p.m.

Operating Manual

1 Hour

Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY FOURTEEN

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Coffee Related Test	11:00 a.m.	Handout	45 Minutes		Keith Robbins
Cakes and Pies Test	11:45 a.m.	Handout	45 Minutes		Keith Robbins
Scoops and Sundaes Fountain Test	1:00 p.m.	Handout	45 Minutes		Keith Robbins
Equipment Maintenance/Equipment Emergencies	2:00 p.m.	Operating Manual - Handout	30 Minutes		Keith Robbins
Menu Items Suggestions -Happy Hour - Special Orders	2:30 p.m.	Operating Manual	30 Minutes		Keith Robbins
Ice Cream Terms -Ingredients	3:00 p.m.	Operating Manual - Handout	30 Minutes		Keith Robbins
Store Security -Confidentiality of Operations	3:30 p.m.	Operating Manual - Handout	30 Minutes		Keith Robbins
Sexual Harassment - Other Liabilities	4:00 p.m.	Operating Manual - Handout	45 Minutes		Keith Robbins

TRAINING PROGRAM: DAY FIFTEEN

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Financial Controls	9:00 a.m.	Operating Manual - Handout	1 !/₂ Hours		Keith Robbins
Opening Store	10:30 a.m.			1 Y₂ Hours	Keith Robbins/ Samantha Kauai
Work Store	12:00 p.m.			6 Hours	Samantha Kauai/Staff

TRAINING PROGRAM: DAY SIXTEEN

SUBJECT

TIME BEGUN

INSTRUCTION MATERIAL

HOURS OF

CLASSROOM

TRAINING

HOURS OF

ON THE JOB

TRAINING

INSTRUCTOR

Questions and Answers

10:00 a.m.

2 Hours

Keith Robbins

Work Store

6:00 p.m.

6 Hours

Samantha Kauai/Staff

TRAINING PROGRAM: DAY SEVENTEEN

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Financial Controls -Test/Review	12:00 p.m.	Handout	lHour		Keith Robbins
Customers/Staffing Review	1:00 p.m.	Handout	lHour		Keith Robbins
Questions and Answers Am I Ready?	2:00 p.m.		2 Hours		Keith Robbins
Work Store	8:00 p.m.			4 Hours	Samantha Kauai/Staff

TRAINING PROGRAM: DAY EIGHTEEN

SUBJECT

TIME BEGUN

INSTRUCTION MATERIAL

HOURS OF

CLASSROOM

TRAINING

HOURS OF

ON THE JOB

TRAINING

INSTRUCTOR

Store Meeting/Shift Leader Meeting

4:00 p.m.

Handout

1 Hour

Keith Robbins

Work Store

5:00 p.m.

7 Hours

Samantha Kauai/ Keith Robbins

TRAINING PROGRAM: DAY NINETEEN

SUBJECT

TIME BEGUN

INSTRUCTION MATERIAL

HOURS OF

CLASSROOM

TRAINING

HOURS OF

ON THE JOB

TRAINING

INSTRUCTOR

Review Question and Answers

12:00 p.m.

2 Hours

Keith Robbins

Work Store

2:00 p.m.

6 Hours

Keith Robbins/ Samantha Kauai

TRAINING PROGRAM: DAY TWENTY

SUBJECT	TIME BEGUN	INSTRUCTION MATERIAL	HOURS OF CLASSROOM TRAINING	HOURS OF ON THE JOB TRAINING	INSTRUCTOR
Review Closing Duties	9:00 a.m.	Operating Manual		1 Hour	Keith Robbins
Open Store	10:00 a.m.			4 Hours	Keith Robbins/ Samantha Kauai
Review Daytime Duties	2:00 p.m.		45 Minutes		Keith Robbins
Closing Duties	10:00 p.m.			2 Vi Hours	Keith Robbins/ Samantha Kauai

The cost of training is included in the initial franchise fee, but you must pay the travel and living expenses for you and any full time manager other than you. All training is held in Honolulu, Hawaii, at Bubbies' headquarters and its company-owned store.

(7) Bubbies shall sell to you its requirements of frozen dessert products, and such products shall be of consistent and good quality (Franchise Agreement - paragraph

. H(b)).

(8) Bubbies will make available a list of approved suppliers for supplies, baked goods, beverages, syrups and toppings sold in conjunction with Bubbies' frozen dessert products as well as clothing which has been imprinted with Bubbies' service mark, trademark or other approved logo (Franchise Agreement - paragraph ll(c)-(e)).

Bubbies, although not obligated to do so by the Franchise Agreement or any other agreement, assists you, mainly by providing advice with regard to making improvements

to an existing commercial/retail space for operation as a Bubbies ice cream and dessert parlor.

The obligations to be performed by Bubbies during the operation of the franchised business are:

(1) Bubbies shall not locate, operate or grant a franchise for another Bubbies Homemade Ice Cream & Dessert parlor within the Franchise Area (Franchise Agreement - paragraph 6).

(2) Bubbies shall loan to you its Confidential Operating Manual, which Bubbies may revise in its discretion from time to time (Franchise Agreement - paragraph 9). The total number of pages in the Confidential Operating Manual (as of the date of this offering circular) is 177; addenda regarding food service and sales are added from time to time, and currently total 75 pages. The table of contents of the current Bubbies' Confidential Operating Manual is as set forth below:

Introduction	PP	1-2
Critical Details	PP	3-29
Financial Controls	PP	30-52
Personnel Selection	PP	53-70
Employee Handbook	PP	71-93
Management	PP	94-98
Operations	PP	99-112
Food Specifications	PP	113-134
Menu	PP	135-152
Packaging	PP	153-156
Equipment	PP	157-164
Store Atmosphere	PP	165-170
Guest Relations	PP	171-175
Safety Program	PP	176
Addenda	PP	177

(3) Bubbies shall sell to you your requirements of frozen and baked dessert products, and such products shall be of consistent and good quality (Franchise Agreement -paragraph 11).

(4) Bubbies shall use the advertising assessments received from you to pay all costs associated with the creation, production, distribution, placement and administration of advertising and promotion programs (Franchise Agreement -paragraph 13).

(5) Bubbies shall be available to consult with you concerning any aspect of the

franchised business (Franchise Agreement - paragraph 14). You will reimburse Bubbies for all expenses incurred in connection with any visit to your business premises, and in the event Bubbies' agent is requested or required to visit your premises on more than two (2) occasions in any 30 day period, Bubbies may also charge a reasonable fee for travel and consultation time not to exceed $25.00 per hour.

Following the opening of the franchised business, although not obligated to do so by the Franchise Agreement or any other agreement, Bubbies will be in contact with you on a regular basis during the first 90 to 120 days of operation to discuss any questions or concerns regarding operation of the ice cream and dessert parlor.

You select the site of your business within the exclusive Franchise Area. Bubbies, however, must approve your site. Based upon Bubbies' familiarity with the Franchise Area, it will assist in the site selection by sharing with you any information available to Bubbies regarding other Bubbies franchises, competing ice cream and frozen yogurt locations, and demographics of the Franchise Area.

As of the date of this offering circular, one ~~"turn"key''~~"turn-key" type franchise has been sold by Bubbies in the United States, which franchise was an ongoing retail store owned and operated by Bubbies prior to its sale. The Franchise Agreement was executed on April 30, 1996 and the franchisee began operating the business on May 2, 1996. In the case of franchises in which retail premises will have to be selected, designed and improved, it is difficult to state the typical length of time between the signing of the Franchise Agreement or the first payment of any consideration for the franchise and the opening of a (~~ⁿnoii~~-~~tum~~-~~kev"n~~on-"turn-key") Franchisee's business, as only three (3) non-turn-key franchises have been sold in the United States as of the date of this offering circular. In the case of the first non-turn-key franchise, the site had already been selected and only limited improvements were necessary, and the franchised business was open for business less than 90 days after the premises were leased. In the cases of the other two non-turn-key franchises, site selection and readiness took or is ~~pro~~j~~ected to take~~ taking considerably longer. Bubbies expects the average time from execution of the Franchise Agreement to opening of a non-turn-key Franchisee's business will be approximately six months. Factors that may affect this time period include the ability to obtain a lease, financing or building permits, improvements to the leased space (such as electrical, plumbing, floors, walls) and installation of equipment and other fixtures. The Franchise Agreement provides that your business shall commence operations within 180 days after the franchised business premises are available for your possession.

The training program of Bubbies will be held both at its manufacturing/office site in Aiea, Hawaii, and at an operating retail outlet in Honolulu, Hawaii, or at such other operating Bubbies Ice Cream & Dessert parlor location determined by Bubbies. The initial training

period will last approximately five to seven days, up to eight hours per day, and will include instruction regarding all phases of the operation of the franchised business, including the following: (a) proper storage, handling, preparation and presentation of the frozen and baked dessert items, (b) procedures for maintaining the appearance of the franchised business premises, (c) hiring, management and training of employees, (d) review of Bubbies' Confidential Operating Manual and its application to the franchised business, and (e) maintenance of financial records required by Bubbies. The remaining training will continue for approximately seven to 14 days, and will consist of~~''hands"~~ on^'hands-on" instruction in an existing and operating parlor, along with continuing training on store procedures using the Confidential Operating Manual as a text. The training program will be conducted approximately 30 days before the ice cream and dessert parlor commences operations. You and any manager training with you must pass a written test at the completion of the initial phase of training.

The training program will be conducted and/or supervised by Mr. Keith Robbins, the President of Bubbies. Mr. Robbins has personally managed every phase of the existing Bubbies manufacturing, retail and wholesale operations. Training also will be provided by Ms. Samantha Kauai, the manager of Bubbies' company-owned retail outlet.

The cost of the training program is included in the initial franchise fee paid to Bubbies. All of your transportation, meals and lodging expenses, however, are to be borne by you. This training is mandatory for you and any full-time manager other than you.

There is currently no requirement that you attend additional training or refresher courses. Bubbies may, at your request and in Bubbies* discretion, make available additional training programs for key employees and/or persons other than you who will ultimately gain responsibility for the day-to-day operations of the franchised business. Additionally, all new full time managers hired by you and not trained during the initial pre-opening training program must undergo training by Bubbies. The cost of this additional training is $500 per week, exclusive of travel, lodging and other expenses which are paid by you.

As of the date of this Offering Circular, Bubbies has not assessed an Advertising Fee from any franchisee, and has not developed an advertising program. The Franchise Agreement does grant Bubbies the right to assess an Advertising Fee. This Offering Circular will be amended, and existing Franchisees will be consulted and notified, at least 60 days before initiating the assessment of any Advertising Fee as provided for by the Franchise Agreement.

12. EXCLUSIVE AREA OR TERRITORY

You will be granted an exclusive territory usually designated by boundary streets or highways. In no case will the exclusive territory extend less than one-half mile in any one

direction from your premises. Prior to the execution of the Franchise Agreement, a general area for the franchise will be designated. After the ice cream and dessert parlor site is approved by Bubbies, which may occur after the Franchise Agreement is signed, the exclusive franchise area shall be designated in Exhibit A to the Franchise Agreement. Except when advertising cooperatively with Bubbies or appropriate franchisees, you cannot advertise or solicit orders within another franchisee's territory (including a retail store owned and operated by Bubbies).

Bubbies may not locate, operate or grant franchises for another Bubbies ice cream and dessert parlor or other similar or competitive business within the exclusive franchise area. Any relocation of the existing franchised business will require the approval of Bubbies under the terms of the Franchise Agreement. Bubbies retains the right to open, franchise, operate and/or manage food service establishments within your area which are not similar in name or menu to the franchised business. Bubbies may also distribute its products in the franchise area by methods other than Bubbies franchised ice cream and dessert parlors, including restaurants and other food service establishments, hotels and sales of prepackaged products at supermarkets, convenience stores and the like. Bubbies currently sells ice cream for re-sale at restaurants and hotels in Hawaii, and also sells prepackaged products at supermarkets and convenience stores (in Hawaii only).

You do not receive the right to acquire additional franchises within your exclusive franchise area.

Continuation of your area or exclusive territory is not dependent upon achievement of a certain sales volume, market penetration or other contingency.

13. TRADEMARKS, SERVICE MARKS. TRADE NAMES. LOGOTYPES AND COMMERCIAL SYMBOLS

Under the Franchise Agreement, Bubbies grants to you the right to operate an ice cream and dessert parlor under the name Bubbies Homemade Ice Cream & Desserts and under any other trade names, trademarks, service marks and logos currently used or that may later be used in the operation of the franchised business. The Bubbies trademark was placed on the Principal Register of the United States Patent and Trademark Office on March 7, 2000, Reg. No. 2,327,036 in International Classes 30 and 42. Bubbies also has registered with the State of Hawaii the service mark ^Bubbies Homemade Ice Cream & Desserts¹¹^ written in a distinctive script design.

As of the date of this offering circular, there are no presently effective determinations of the United States Patent and Trademark Office, Trademark Trial and Appeal Board, Trademark Administrator of the State of California, or any court, nor any pending interference, opposition or cancellation proceeding or any pending material litigation,

involving such trademarks, service marks, trade names, logotypes or other commercial symbols which is relevant to their use in the State of California. Bubbies has obtained a federally registered trademark and therefore does not intend to register its marks in the State of California.

There is one agreement currently in effect which limits the rights of Bubbies to use or license the use of such trademarks, service marks, trade names, logotypes or other commercial symbols in any manner material to the franchise. Bubbies has entered into an agreement that will limit its ability to use or license the use of its trademark, if registered, within the State of New York.

Pursuant to the terms of the Franchise Agreement, if a claim is asserted by others of a prior use of any trademarks, service marks or trade names with respect to a similar business within the franchise area, Bubbies may require you to defend any such claim and/or modify such trade names, trademarks or service marks in any manner Bubbies shall direct. You are also required to give notice to Bubbies of any knowledge you acquire concerning the use by others of substantially identical or confusingly similar trade names, trademarks or service marks. In the event of any infringement of or challenge to your use of any name or mark, Bubbies shall take such action as it deems appropriate in its sole discretion.

Pursuant to the Franchise Agreement, you acknowledge that Bubbies is the sole and exclusive owner of its names and marks, and you neither take nor may acquire any ownership interest in the names and marks. Additionally, you agree not to contest or challenge Bubbies' ownership, title, right or interest in its names or marks.

Bubbies does not know of any infringing uses that could materially affect your use of Bubbies' trademark. Bubbies is aware of a company known as Bubby's Bagels, P.O. Box 2443, South San Francisco, California 94080. Bubby's Bagels has obtained a federal trademark registration. Bubbies is also aware that a Texas company produces and distributes pickles using the name Bubbies or a derivation of that name. A federal trademark registration has been obtained on behalf of that company. Based on the United States Patent Office's determination that Bubbies is entitled to registration of its trademark despite the existence of these other companies, Bubbies does not believe that the Bubby's Bagels or Bubbies Pickles marks will materially affect your use of the Bubbies' trademark.

14. PATENTS AND COPYRIGHTS

Bubbies does not own any rights in or to any patents which are material to the franchise.

OBLIGATION OF THE FRANCHISEE TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS

Pursuant to the Franchise Agreement, you are obligated to use your best efforts to develop, market and promote the franchised business, and remain personally responsible for management of the franchised business on a day-to-day basis. In the event that you wish to retain a competent, full-time manager, such manager must first be approved by Bubbies. If Bubbies consents to management of the franchised business on a day-to-day basis by any other person, you agree to carefully monitor and retain responsibility for the performance of any such qualified, designated manager. The manager need not have an ownership interest in a corporate, partnership or LLC franchisee. The manager must sign a written agreement to maintain confidentiality of the trade secrets set out in Bubbies' Confidential Operating Manual and be trained by Bubbies.

Each individual who owns an interest in the franchisee entity agrees personally to assume and discharge all of the obligations of the "Franchisee" under the Franchise Agreement (paragraph 35|.)

RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL

Pursuant to the Franchise Agreement, you may only sell those products specified or approved by Bubbies. (See Item 8.) You are also prohibited from using the premises for any purpose other than the operation of the franchised ice cream and dessert parlor. (See Item 9.) You are not limited with respect to the customers to whom you may sell such goods or services, except that you may not sell goods or services to any customer that will resell goods (except for a charitable purpose), such as a restaurant or other for-profit enterprise.

RENEWAL. TERMINATION. TRANSFER. DISPUTE RESOLUTION AND RELATED INFORMATION

This table lists certain important provisions of the franchise and related agreements. You should read the provisions in the agreements attached to this Offering Circular.

Paragraph in Franchise Provision Agreement Summary

Term of the 22 Initial period: 10 years.

franchise Optional renewal period: 10 years.

b. Renewal or extension

of the franchise

Optional renewal period: 10 years.

c. Requirements for you

d. Termination by you

f..

Termination by Bubbies without cause

Termination by Bubbies with cause

23(a)

g. "Cause" defined - defaults

which can be cured

The renewal provisions require that: (1) the existing lease runs through the renewal period or a new lease is available; (2) you are not in default; (3) you execute the standard form Franchise Agreement; (4) you pay a renewal fee; (5) applicable state laws regarding the term and renewal take precedence over the Franchise Agreement.¹

You may terminate the Franchise Agreement based upon a material breach by Bubbies with 90 days' written notice. The notice must specify a reasonable time within which the defaults or breaches must be cured.

Bubbies will not terminate the Franchise Agreement unless it has good cause to do so.

Bubbies may terminate the Franchise Agreement for good cause, as defined in the Franchise Agreement at paragraph 23(a).

Bubbies may terminate the Franchise Agreement 90 days after giving you written notice and at least 30 days within which the defaults or breaches must be cured. Defaults or breaches constituting "good cause" for termination which can be cured by

¹ You must give written notice of your intention to renew at least six months prior

to the expiration of the then current term. Bubbies may not refuse to renew the Franchise Agreement except for good cause. In the event Bubbies refuses to renew the term of the franchise, Bubbies is obligated to give 90 days notice to you specifying the defaults or breaches by you and a reasonable time within which the defaults or breaches must be cured.

you include failure to pay fees and royalties (Franchise Agreement 23(a)(3); breach or failure to perform the terms of the Franchise Agreement or other agreements with Bubbies (Franchise Agreement 23(a)(3), (4)); false warranty or certification made in the Franchise Agreement (Franchise Agreement 23(a)(5).

"Cause" defined - defaults 23 The defaults or breaches which

cannot be cured by you constituting "good cause" for termination include your death or the death of a designated shareholder or partner (Franchise Agreement 23(a)(l),(12), (13)); if your interest in the Franchise Agreement is attached or sold, or if the premises are sold, leased or subleased without Bubbies' consent (Franchise Agreement 23(a)(6),(l 1)); if a bankruptcy is filed by or against you, a receiver or trustee is appointed, if you execute an assignment for benefit of creditors or exercise other rights or remedies under any bankruptcy law (Franchise Agreement 23(a)(6)-(10)); if a controlling interest in franchisee is sold where you are a corporation or other entity (Franchise Agreement 23(a)(14)); or if you are repeatedly in default for failure to comply with the Franchise Agreement, whether or not cured after notice (Franchise Agreement paragraph 23(a)(l 5)).

Your obligations on 25 Pay all outstanding franchise fees,

termination/nonrenewal assessments and royalties; render an

accounting for all fees or assessments due; discontinue use of Bubbies' trade names, trademarks,

service marks, and other aspects of Franchise System; remove from the premises all fixtures or furnishings associated with Bubbies' public recognition or goodwill; cease to create the impression in the mind of the public that the business is still franchised by Bubbies. Agreement not to compete for 2 years after the termination or transfer of the Franchise Agreement.²

j. Assignment of Contract

by Bubbies

27(a)

Bubbies reserves the right to sell or transfer its rights under the Franchise Agreement without your approval.

k. "Transfer" by you definition

27(b), (c) Sale, assignment, disposal or encum-berment of the franchised business or the Franchise Agreement or other transfer of 10% or greater interest in you, if you are a partnership, joint venture, corporation, LLC or other entity.

Bubbies' approval of transfer by you

Conditions for Bubbies' approval of transfer

27(b) 27(b)

Must have Bubbies' prior written approval for transfer.

Your requirements: Substantial performance of your duties and obligations under the Franchise Agreement; payment of all sums owed under the Franchise Agreement; execution of a general release of all claims you have against Bubbies; agreement of the landlord to assignment of lease. You do not

² The Franchise Agreement contains a covenant not to compete which extends

beyond the termination of the franchise. This provision may not be enforceable under California law.

have the right to grant a sub franchise.

Bubbies' right of first refusal to acquire your business

Bubbies' option to purchase your business

27(d)

Your death or disability

23(a)(1)

Non-competition covenants 25(g)

during the term of the franchise

r. Non-competition

covenants after the franchise is terminated or expires

s. Modification of the

Agreement

25(g)

9, 30(c)

Bubbies has the first right to purchase the franchised business if you offer to sell it.

Bubbies has 30 days to accept or reject your offer to sell. If you do not sell the franchise within 6 months of the date of your offer to Bubbies, you must again give Bubbies the first right to purchase the franchise prior to any sale.

If you die, the Franchise Agreement may be terminated by Bubbies.

During the term of the Franchise Agreement, you may not participate in a competing business within 2 miles of the franchised business, other Bubbies franchises or business premises owned, operated or managed by Bubbies.

Non-competition covenant in effect for 2 years after termination or expiration (see items i and q, above)

You may modify the Agreement only upon the execution of a written agreement between Bubbies and you. Bubbies may unilaterally modify or amend the confidential operating manual in its sole discretion. In the event of a material modification to the Franchise Agreement, the modification must be qualified prior to its implementation. Additionally, if the modification to the Confidential Operating Manual

Integration/merger clause

Dispute resolution by arbitration or mediation

30(a)

None

modifies the terms of the Franchise Agreement, it must receive prior approval from the California Department of Corporations.

Franchise Agreement is sole agreement between the parties with respect to the franchise.

Choice of forum

w. Choice of law

32 Venue is proper only in the City and

County of Honolulu.

32 The Franchise Agreement requires

application of the laws of Hawaii. This provision may not be enforceable under California law. The laws of California shall in all cases govern the registration and regulation of franchises.

The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law.

The Franchise Agreement contains a covenant not to compete which extends beyond the termination of the franchise. This provision may not be enforceable under California law.

The Franchise Agreement requires application of the laws of Hawaii. This provision may not be enforceable under California law.

California Business and Professions Code Sections 20000 through 20043 provide rights to you concerning termination or non-renewal of a franchise. If the Franchise Agreement contains a provision that is inconsistent with the law, the law will control.

18.

ARRANGEMENTS WITH PUBLIC FIGURES

Bubbies currently does not use any public figure to promote its franchise.

19. EARNINGS CLAIMS

Bubbies does not furnish or authorize its salespersons to furnish any oral or written information concerning the actual or potential sales, costs, income or profits of a Bubbies retail ice cream parlor. Actual results vary from unit to unit and Bubbies cannot estimate the results of any particular franchise.

20. LIST OF OUTLETS

FRANCHISED STORE STATUS SUMMARY

FOR YEARS ~~2001/2000/1999~~2002/2001/2000

STATE	TRANSFERS CANCELED	NOT
	OR	RENEWED
	TERMINATED
HAWAII	0/0/0

REACQUIRED

FRANCHISOR

LEFT THE

SYSTEM,

OTHER

TOTAL FROM LEFT COLUMNS

0/0/0

FRANCHISES OPERATING AT YEAR END

2/2/+2

STATUS OF COMPANY OWNED STORES FOR YEARS ~~2001/2000/199~~92002/2001/2008

STATE

STORES CLOSED DURING YEAR

STORES OPENED DURING YEAR

TOTAL STORES OPERATING AT YEAR END

Hawaii

0/0/0

1/1/1

PROJECTED OPENINGS AS OF SEPTEMBER 30, 200+2

STATE

FRANCHISE AGREEMENTS SIGNED BUT STORE NOT OPENED

0 1

PROJECTED FRANCHISE NEW STORES IN NEXT FISCAL YEAR

1 I

PROJECTED COMPANY

California Hawaii Nevada Totals

OWNED OPENINGS IN NEXT FISCAL YEAR

0 0

The franchisee name, address and telephone number of the existing franchised outlets are:

Koko Marina Shopping Center

7192 Kalanianaole Highway

Honolulu, Hawaii 96825

(808) 396-2788

Franchisee: Papyrus, Inc.; Winton Schoneman, President

Mililani Town Center

Suite E-5

Mililani, Hawaii 96789

(808) 623-5959

Franchisee: BEG Management Inc.; Brian T. Katahira, officer and director

A franchise agreement has also been signed by Reynold Hong Investments, Inc., Reynold Hong, President, 3543 Edna Street, Honolulu, Hawaii, 96815. This franchise had planned to open in late November, 2001 in Kapolei, Hawaii. The opening has been delayed, however, and ~~as of this wri~~t~~ingjt appears that t~~he franchisee may choose to transfer the franchisebr otherwise terminate hisEreJationship.witlfBubbies. The planned location of the franchise currently owned by Reynold Hong Investments, Inc. is as follows:

563 Farrington Highway Kapolei, Hawaii 96707 (Telephone number pending)

During the three year period immediately before the close of Bubbies most recent fiscal year, Bubbies has not terminated any franchises. There is no franchisee who has had an outlet terminated, canceled, not renewed, or otherwise voluntarily or involuntarily ceased to do business under the Franchise Agreement during the most recently completed fiscal year ~~or who has not communica~~t~~ed with Bubbies within 10 weeks of the application date~~. As set forth above; ho~~weve~~r, it appears that Reynold Hong Investments, Inc. may voluntarily cease to do business under the franchise agreement by transferring its franchise prior to opening a franchised outlet.0 Reynold Hong Investmigr^

ij . _c .-, ii- - i > 'i- %&m**~mimyi~isiimm~>.ii^y- ... ri;ai"^W/^3'^^^V5i;ri"''^4^ii^«'«i|gAiBeK^j'|"i!VH!^«^^^d...iBwiiB{^:.^^,; -¹

date oi bubbles apphcatiomfoprenewajgorjit^

21. FINANCIAL STATEMENTS

Bubbles¹/; audited financial statements for the fiscal years ending September 30, 200+2, 20001 and +99920Q& and a verified and notarized Balance Sheet as of a date within 90 days of the date of this offering circular, are attached hereto as Exhibit ^-tV'A^.¹¹

22. CONTRACTS

The Franchise Agreement is attached hereto as Exhibit ^J1B^!1"B".

RECEIPT

THIS OFFERING CIRCULAR SUMMARIZES PROVISIONS OF THE FRANCHISE AGREEMENT AND OTHER INFORMATION IN PLAIN LANGUAGE. READ THIS OFFERING CIRCULAR AND ALL AGREEMENTS CAREFULLY.

IF BUBBIES OFFERS YOU A FRANCHISE, BUBBIES MUST PROVIDE THIS OFFERING CIRCULAR TO YOU BY THE EARLIEST OF:

(1) THE FIRST PERSONAL MEETING TO DISCUSS OUR FRANCHISE; OR

(2) TEN BUSINESS DAYS BEFORE THE SIGNING OF A BINDING AGREEMENT; OR

(3) TEN BUSINESS DAYS BEFORE A PAYMENT TO BUBBIES.

YOU MUST ALSO RECEIVE A FRANCHISE AGREEMENT CONTAINING ALL MATERIAL TERMS AT LEAST FIVE BUSINESS DAYS BEFORE YOU SIGN A FRANCHISE AGREEMENT.

IF BUBBIES DOES NOT DELIVER THIS OFFERING CIRCULAR ON TIME OR IF IT CONTAINS A FALSE OR MISLEADING STATEMENT, OR A MATERIAL OMISSION, A VIOLATION OF FEDERAL AND STATE LAW MAY HAVE OCCURRED AND SHOULD BE REPORTED TO THE FEDERAL TRADE COMMISSION, WASHINGTON, D.C. 20580 AND THE CALIFORNIA DEPARTMENT OF CORPORATIONS.

Bubbles authorizes the Commissioner of the State of California Department of Corporations to receive service of process for Bubbies.

I have received a Uniform Franchise Offering Circular dated_________________. This offering

circular included the following exhibits:

A. Financial Statements

B. Franchise Agreement

Date Franchisee

APPENDIX

THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE OFFERING CIRCULAR.

The Free Franchise Resource Center

UFOC

Sample UFOC