UFOC

Sample UFOC

FEDERAL TRADE COMMISSION REGULATIONS REQUIRE ACKNOV^LEBtalTfENT OF FRANCHISE DISCLOSURES. PLEASE SIGN, DATE, AND RETURN THE LAST PAGE OF THIS DISCLOSURE DOCUMENT TO JOHN MILLS, FIGARO'S ITALIAN PIZZA, INC., P.O. Box 12575, SALEM, OREGON 97309-0575.

IF YOU CHOOSE TO SIGN A FRANCHISE AGREEMENT, THE FRANCHISE AGREEMENT MUST BE DATED AND YOUR FRANCHISE FEE MUST BE RECEIVED AT LEAST TEN BUSINESS DAYS AFTER YOU RECEIVE, DATE AND RETURN THE DISCLOSURE ACKNOWLEDGMENT TO US. YOU MUST ALSO RECEIVE THE FRANCHISE AGREEMENT IN FINAL FORM, READY FOR EXECUTION, AT LEAST FIVE BUSINESS DAYS BEFORE YOU EXECUTE THE AGREEMENT.

THANK YOU,

RON BERGER, PRESIDENT/CEO

FIGARO'S ITALIAN PIZZA, INC.

P.O. BOX 12575

SALEM, OREGON 97309-0575

(503)371-9318

www.Figaros.com

THIS CIRCULAR WAS DELIVERED ON THE_____DAY OF________, 200.

06 February 20 UFOC Master Franchisee - Clean.doc

INFORMAfTlpNFOMPgggRECTIVE|FRANCHISEES REQUIRED BY THEffiEDEBAl! TRADE COMMISSION

FIGARO^ TAl!rAN|PIZZA,|INC.

(An ^g|n||orooratior

Salem,Bje&cffli^|l9^309-05p

IP)3^-9318

TO PROTECT YOU, WE'VE REQUIRED YOUI^ HAVEN'T CHECKED IT, AND DON'T iSJNOW II

MIND. STUDY IT CAREFULLY. || WHILE CONTRACT, DON'T RELY ON IT ALONE TO ' CONTRACT CAREFULLY. BUYING K FRAN' TIME TO DECIDE. IF POSSIBLE, | SHOW ADVISOR, LIKE A LAWYER OR AN ACCOUNT]

jp\|MuSOR ip GIVE YOU THIS INFORMATION. WE ifiS]i6.6)RiECT. [T SHOULD HELP YOU MAKE UP YOUR

n.Qt

IDES

OME INFORMATION ABOUT YOUR UR CONTRACT. READ ALL OF YOUR

iSDEgSIIjAND Y

jiSEj COMPLICATED INVESTMENT. TAKE YOUR

SJi!rj|c^NTRA(|t AND THIS INFORMATION TO AN

IF YOU FIND ANYTHING YOU THINK MAY LEFT OUT, YOU SHOULD LET US KN®W ABO]

THERE MAY ALSO BE LAWS ON FRANCHII ABOUT THEM.

LG OR ANYTHING IMPORTANT THAT'S BEEN IAY BFJAGAINST THE LAW.

INIYOUR S1ATE. ASK YOUR STATE AGENCIES

FEDERAL TRADE COMMISSION

Washington, D.C. 20580

06 February :*0 UFOC Master Franchisee - Clean.doc

FRANCHISE OFFERING CIRCULAR

FIGARO'S ITALIAN PIZZA, INC.

(An Oregon Corporation)

P.O. Box 12575

Salem, Oregon 97309-0575

(503)371-9318

www.Figaros.com

The franchise will offer a limited menu of pizza, caizones and other food and beverage products. Company will grant you the right to use the Mark "FIGARO'S."

Company offers franchises for you to act as a Figaro's Master Franchisee. A Master Franchisee acts as our representative to advertise for and market to prospective franchisees of Figaro's stores within a territory, and to support the stores located in that territory. The Initial Franchise Fee ranges from $100,000 to $1,000,000 for a Master Franchisee. The initial investment ranges from $253,500 to $1,538,000 for a Master Franchisee in addition to the cost of opening at least three required individual store franchises.

The offering and documentation for these individual store franchises are included in a separate Uniform Franchise Offering Circular we have prepared and submitted to the relevant state regulatory authorities. The range of the initial fees for individual store franchises is disclosed in the separate Uniform Franchise Offering Circular. Currently, the total initial fees for the three required individual store franchises is $62,500. The range of the initial investment for individual store franchises is disclosed in the separate Uniform Franchise Offering Circular.

The initial investment estimate is only approximate and initial fees are more fully described in Items 5, 6 and 7 of this Offering Circular.

RISK FACTORS:

1. THE MASTER FRANCHISEE AGREEMENT REQUIRES THAT FRANCHISEES MUST SUE IN OREGON. THE MASTER FRANCHISE AGREEMENT REQUIRES THAT ALL DISAGREEMENTS, EXCLUDING ANY CLAIM CONCERNING CONFIDENTIAL INFORMATION OR THE MARKS, BE SETTLED BY ARBITRATION IN MARION COUNTY, OREGON. THESE PROVISIONS MAY BE SUPERSEDED BY CERTAIN STATE LAWS. SEE STATE ADDENDA IN EXHIBIT H. OUT OF STATE ARBITRATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO ARBITRATE WITH COMPANY IN OREGON THAN IN YOUR HOME STATE

2. THE MASTER FRANCHISEE AGREEMENT STATES THAT OREGON 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. THE STATE OF MICHIGAN AND CERTAIN OTHER STATES PROHIBIT CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. CERTAIN STATE LAWS MAY SUPERSEDE THE APPLICATION OF OREGON LAW TO THE MASTER FRANCHISEE AGREEMENT. SEE STATE ADDENDA IN EXHIBIT H FOR A SUMMARY OF SOME OF THESE LAWS.

3. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

iii

06 February 20 UFOC Master Franchisee - Ctean.doc

Information comparing franchisors is|availablej Callgge|sjate administrators listed in Exhibit C or your public library for sources of information.

Registration of this franchise with thelstate does, rK>flSiean that the state recc information in this Offering Circular, jf you learn injthis Offering

recommends it or has verified the Circular is untrue, contact the

Federal Trade Commission and the state administrate lis¹

FTC and States That Do Not Require Begistratiei June 28, 2005

sted in Exhibit C.

[Februa^ 20, 2006

California:

Florida:

Hawaii:

Illinois:

Indiana:

Kentucky:

Maryland:

Michigan:

Minnesota:

Nebraska:

New York:

North Dakota:

Rhode Island:

South Dakota:

Texas:

Utah:

Virginia:

Washington:

Wisconsin:

January 22,1999

July30,2005l March 25, 2002

February 14,1997

06 February 20 UFOC Master Franchisee - Cleaadoc

TABLE OF CONTENTS

ITEM PAGE

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

2. BUSINESS EXPERIENCE.....................................................................................................................2

3. LITIGATION............................................................................................................................................5

4. BANKRUPTCY.......................................................................................................................................6

5. INITIAL FRANCHISE FEE.....................................................................................................................6

6. OTHER FEES.........................................................................................................................................7

7. INITIAL INVESTMENT.........................................................................................................................11

8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES................................................13

9. FRANCHISEE'S OBLIGATIONS.........................................................................................................17

10. FINANCING..........................................................................................................................................18

11-. FRANCHISOR'S OBLIGATIONS.........................................................................................................19

12. TERRITORY.........................................................................................................................................23

13. TRADEMARKS.....................................................................................................................................25

14. PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION...................................................28

15. OBLIGATION TO PARTICIPATE IN THE ACTUAL

OPERATION OF THE FRANCHISED STORE...................................................................................29

16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL............................................................31

17. RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION.......................................32

18. PUBLIC FIGURES................................................................................................................................35

19. EARNINGS CLAIMS............................................................................................................................35

20. LIST OF OUTLETS..............................................................................................................................37

21. FINANCIAL STATEMENTS.................................................................................................................39

22. CONTRACTS.......................................................................................................................................40

23. RECEIPT..............................................................................................................................................40

EXHIBITS

A FINANCIAL STATEMENTS

AA MASTER FRANCHISEE ITEM 19 INFORMATION

B MASTER FRANCHISEE AGREEMENT

EXHIBIT 1-TERRITORY EXHIBIT 2 - DEVELOPMENT SCHEDULE C LIST OF STATE AGENTS FOR SERVICE OF PROCESS AND STATE ADMINISTRATORS

D TABLE OF CONTENTS OF CONFIDENTIAL OPERATIONS MANUAL

E INFORMATION REGARDING FIGARO'S FRANCHISEES AND CERTAIN FORMER

FRANCHISEES F SUMMARY OF LAWS

G TRAINING SCHEDULE

H STATE AND PROVINCIAL ADDENDA

I CONDITIONAL ASSIGNMENT OF TELEPHONE AND DIRECTORY LISTINGS

ASSUMED NAME RELINQUISHMENT FORM

TRANSFER AGREEMENT AND RELEASE FORM

RENEWAL AGREEMENT AND RELEASE FORM J LIST OF FRANCHISE BROKERS AND MASTER FRANCHISEES

K RECEIPT FOR COMPLETED AGREEMENTS

L RECEIPT

06 February 20 UFOC Master Franchisee - CIean.doc

THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES

a. Definitions. To simplify the language in this Offering Circular, "Company," "we," "our" or "us" refers to FIGARO'S ITALIAN PIZZA, INC., the Franchisor of this business; "You" refers to you, the prospective Figaro's franchisee whether you are a person or an entity; "Master Franchisee" refers to a person or entity who purchases a Master Franchisee franchise as described in Item 1 (e), below; and "Figaro's store" and "Franchised Store" refer to a franchised store operating under the name "Figaro's Pizza."

b. The Franchisor, Affiliates and Predecessors. FIGARO'S ITALIAN PIZZA, INC., the name under which we currently conduct business, is an Oregon corporation incorporated on March 21, 1986 as Italian Pizza, Inc. It is the continuation of Figaro's Pizza, an unincorporated entity, that operated from 1981 to 1986, in Salem, Oregon. The name of the corporation was changed to FIGARO'S ITALIAN PIZZA, INC. by duly filed Articles of Amendment on March 24, 1986. Company's principal place of business is 1500 Liberty Street SE, Suite 160, P.O. Box 12575, Salem, Oregon, 97309-0575. Its Internet URL is www.Figaros.com. Company does not do business under any other name. Company has no predecessors or affiliates.

c. Company's Business. Company's business activities include the grant to qualified persons or entities of the right to establish and operate individual retail food facilities for limited Italian menu on or off-premises baking and consumption under the trade names, trademarks and service marks "Figaro's" and associated logos and commercial symbols ("Marks") in accordance with the terms of the Franchise Agreement ("Franchise Agreement"). Company also sells to qualified parties multiple franchise agreements to develop and operate more than one Figaro's Franchised Store within an exclusive geographic area ("Designated Territory") according to the terms of a Multiple Franchise Purchase Addendum to each of the franchise agreements ("Multiple Franchise Purchase Addendum").

d. The Figaro's Franchise. Figaro's stores offer a limited menu of pizzas, calzones, salads, beverages and other food products which are prepared using the Trade Secret Food Products and the Trade Secret Process ("Menu Items"). Most Figaro's stores operate from leased space. Some Figaro's stores may be established in connection with another chain or concept, which could include a sublease to or from that concept, under the Co-Branding Addendum attached as Exhibit 3 to the Franchise Agreement. We may offer an Express franchise, typically a reduced sized store or counter with limited production and storage or as a cart or kiosk, under the Express Addendum, attached as Exhibit 2 to the Franchise Agreement. A Retail Premises franchise, to be established within a supermarket store or other retailer premises, may be established under the Retail Premises Addendum attached as Exhibit 4 to the Franchise Agreement.

Each Figaro's store operates with a unique System ("System") regarding the establishment, development and operation of Figaro's stores. The characteristics of the System include distinctive exterior and interior layout, design and color scheme; exclusively designed signage, decorations, furnishings and materials; special recipes, formulae, menus and food and beverage designations; the Trade Secret Process ('Trade Secret Process") and the Trade Secret Food Products ("Trade Secret Food Products"); the Figaro's Confidential Operations Manual ("Confidential Operations Manual"); Local Store Marketing Manual, food and beverage storage, preparation and service procedures and techniques; operating procedures for sanitation and maintenance; and methods and techniques for inventory and cost controls, record keeping and reporting, personnel management, purchasing, sales promotion and advertising, all of which Company may periodically change.

The Figaro's store is not subject to any industry-specific laws and regulations beyond those affecting restaurant businesses generally. See Exhibit F for a brief summary of these laws.

1 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee - Clean.doc

Company believes the market for pizzas, ca developed. The Figaro's stores' products will

local quick-service food businesses and with other p₍izza stu

1 I Ml

salads, beverages and other Italian food products is *:6]the general public in competition with national and

The Figaro's Master Franchises

St'ores.

s Mas er Franchisee franchise gives you the right

and obligation to market for, train and supportlFigarOjS¹ jhdividuaj unit franchisees ('franchisee(s)") within a limited territory. Your territory is specified in th8lvlls?e^]|nanchisee Agreement. You may not sign franchise agreements on our behalf. We retainljall nghtsHolsp^rathe forna of individual franchise agreement, and to accept or reject all franchise candidates. YoufmustlalsQipurchaJbe and execute three standard franchise agreements, open one f ranchised store and b& tr jnltdljaQd certified by us before beginning to service and train franchisees as a Master Franchisee. If ym JaJelaffaster Franchisee, certain states, such as Illinois, Maryland and Washington, may require you t<acpmply, with all franchise registration and disclosure laws pertaining to franchise sales and service agentsincMiaglregistratfon as a franchise broker or subfranchisor. You will, at your expense, comply with all fraMisepb'gistrationland disclosure laws that pertain to you (including registration as a franchise broker, if ijequiredj)iJJ|We will comply with all franchise registration and disclosure laws that pertain to us (inctiding pre5aringj|l'rraj registering, if required, the offering circular). If ,_ ------------,__i:--------------_:__ _ ___i:!.:.:-------St. J_J*Ajiffi^ Franchise Agreement require the preparation,

_________, _. ......₉ _....._________ _______ ;-v^_Ta-eri(including an appointment of broker, and broker

information in the offering circular), we|and you will pVepaje such qocuments and filings cooperatively. We and you will each bear our own costs oflcompliaSbe witrasueh requirements. You will cooperate with us, and

___ .:_■_ _,i-------...-------1--------._ _!!■------------^gistcat:i§B information requested by us or required by law.

i _j'^lljS-"disclose or fail to disclose material facts to us,

provide all complete and accurate disclosure an

You will not make any material misrepresentatiolasi Snjftftj

prospective Franchisees or governmental authorises.

f. Prior Business Experience. C^mpajjyi jwas incorporated on March 21, 1986 as the

continuation of Figaro's Pizza, an unincorporated eniiftjffi^eperated from 1981 to 1986, in Salem, Oregon.. Company conducted businesses of the type to begpetateiitoy you from 1986 to 2001. Company has offered for sale Figaro's franchises since May if, 1986, ajd l^as^either offered nor sold franchises in any other line of business.

g. Other Matters. In certain regions]

agents or Master Franchisees to perform certain of persons will be identified in Item 2.

Company's agents for service of process are listed

This Offering Circular contains a summary of some] However, these agreements express and. govern willing to negotiate the terms of these agreemen" existing franchise owners, multiple franchise purcha'

p. | iiiin i

1 the RiJ|iited States, we may contract with independent

luradwies* including training and inspections. If so, these

ate rial) provisions of the Master Franchisee Agreement.

The Master Franchisee Agreement does not make employee, or servant for any purpose. You will b make any contract, agreement, warranty oij repres us.

feu our agent, legal representative, joint venturer, partner, ri Independent contractor and will not be authorized to ^l!J" " o createjany obligation, express or implied, for

2 - FIGARO'S UNIFORM FRANCHISE OFFERING G|RGUJl»

06 February 20 UFOC Master Franchisee - Clean.doc

2. BUSINESS EXPERIENCE

COMPANY PERSONNEL:

Chairman/CEO/President: Ron Berger

Mr. Berger has served as Chairman/CEO of Figaro's Italian Pizza, Inc. since June 1, 2001. From 1980 to September 2000, he served as founder, Chairman and Chief Executive Officer of Rentrak Corporation (formerly known as National Video, Inc. a franchisor of consumer video rental stores) in Portland, Oregon. From September 2000 to June 2001, Mr. Berger was retired from having served as Chairman of Rentrak Corporation and prior to that as Chairman of The Pro Image, a franchisor of sports apparel stores and founder and Chairman, Chief Executive Officer, and President of National Video, Inc.. He has served three terms as a member of the Board of Directors of the International Franchise Association, on which he currently serves. Mr. Berger also currently serves on the Board of Directors of National Lampoon, Inc., a publicly traded Delaware corporation, Fast Forward to End Hunger and the Diversity Institute of the International Franchise Association.

Director: Carol Berger

Mrs. Berger has been a Director of Company since June 1, 2001. She has been retired since July 1998.

Director: Bruce Cotton

Mr. Cotton has been a Director of the Company since February 2002. He has served as Vice President of Government Affairs for Cracker Barrel Old Country Store since October 1997. Mr. Cotton received the franchising industry's highest honor, the Hall of Fame Award, from the International Franchise Association in 2002 in part based upon his involvement with Jerrico, Inc., the parent company of Long John Silver's Restaurants and his service as a former President of the IFA and a member of the Board of Directors of the National Restaurant Association. He is a Director of the International Hotel and Restaurant Association and the National Council of Chain Restaurants, where he served two terms as chairman. He has also served as a Director of the Association of Mexican Restaurants and the Canadian Restaurant Association.

Director: Bill LeVine

Mr. LeVine has been a Director of Company since June 2001. He has been retired since 1985 after having served as founder of Postal Instant Press (PIP) and as a founding member of the Boards of Directors of Business Cards Tomorrow, Fast Frame, and California Closet Company, among other franchise organizations, for which he has been named Outstanding Franchisor by the International Franchise Association. He currently serves on the board of Mellon First Business Bank

Director: Steve Weber

Mr. Weber has been a Director of the Company since April 1, 2003. Mr. Weber retired in December 1997 as President/CEO of Compass/Programming Resources Co., an insurance software services organization in Harford, Connecticut. Mr. Weber has been Chair and CEO of Priority Food Group, LLC formerly Hollywood Partners LLC, our New England Master Franchisee since August 2001.

Vice President - Operations: Donald P. Suklis

Mr. Suklis has served as the Company's Vice President - Operations since August 2005. Mr. Suklis served as the Company's National Director - Operations from June 2001 to August 2005. From 1986 to 2001, Mr.

3 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee - Clean.doc

Suklis was the President and operator of Figar®s|l&cat]6tis in Springfield and Cottage Grove, Oregon. From 1984 to 1986, he was the Operations Director f& Figa'r'o'afinc., in Albany, Oregon.

: :: if

Executive Vice President - Operations and Branch is el Development: John L. Mills

Ell

Mr. Mills has served as Executive Vice President - operations and Franchise Development since August 2005. Mr. Mills served as National Director - fSahehii^[Development from October, 2001 to August 2005. From May 1991 to September 2001, h'e served itn senSrffranchisepevelopment capacities with Dwyer Group Companies, Waco, Texas. These positions JBcjudeti'jvIce President and Executive Vice President of Rainbow International, Vice Presidentijof Geneal| iusingsjs Servjces and Vice President of Glass Doctor.

Each of these entities is a wholly owned membejjehtityjof yre Dwye r Group.

Vice President - Marketing: Jerry Doty

Mr. Doty has served as the Company's Vice Prlsi'deril the Company's director of marketing from January 2^0j[ Mr. Doty served as the director of marketing fos a start'

Oregon. Since 1995, he has served College and Portland State University.

as profe

arketing since August 2005. Mr. Doty served as

August 2005. From July 2000 to December 2000,

'jtHb company, Purple Mountain Media, in Portland,

aWertisinq and marketing at Portland Community

arolvn Pihl

ent 4 f^isiance since August 2005. Mrs. Pihl has served as iawKcfe. She (served as Financial <

Vice President - Finance and Chief Financial

Mrs. Pihl has served as the Company's j/ice Prestti.

the Company's Chief Financial Officer] since Januarjyl^!20j)'2. She (served as Financial Consultant for the Company from June through December]2001. She hSdsjaJljjIaster'sJdegree in Accounting from Georgetown University and has been a Certified Public Accounmr|itisineei|985. I

From 2000 to May 2001, Mrs. Pihl seLed as SFpJ antilsecretaly of 3PF, a Chicago based third-party fulfillment business. From 1996 to 2OO0J she was (btoieJilFirfencial (Bfficer and Vice-President - Finance for Rentrak Corporation, a publicly held retailer and drcaribilkoijjirfl Portland, Oregon.

Director of Purchasing: Stephen E. Thursby

Mr. Thursby has served as Company's January 2003, Mr. Thursby served as Washington. Mr. Thursby served as . _,

cooperative of the 2900 store Arby's system in Atlanta Dairy Queen's 5500 store system.

Directorfofi RJrjclSi|ing sirjce October 2003. From April 2000 to Vice Presiden|ofli^,urchasing for Papa Murphy's in Vancouver, [Senior GjrectojiliOjIPurchasing for Arcop, Inc., the purchasing

Franchise Service. Operations and Tra ning Personnel:

eo_fl gia and

Cassandra Dornhecker has served as one of the Conip,any|« 2005 and is responsible for regional training of frSiclnisees

Director of Purchasing for International

ijegionaj Business Consultants since February sponsible for regional training of frSicljiis|^s From Rebruary 2001 to December 2004 she worked in the marketing and human resources department]jatlWillamette Broadband in Woodburn, Oregon. From May 1999 to February 2001 she served as Djje'ptpfpfl^able Operations for BuySellBid.com in Dallas, Oregon and Vancouver, Washington.

David Ruddell has served as the Company's Oper* September 2005, he served as General Manager fl installer with Speedline Solutions in Lyndera, Washi! to May 2004, Mr. Ruddell served as Restaurant Mai was a server at Summit Lake Lodge in flloose Pi August 2001 to February 2003, Mr. Ruddell serve!

Longview, Washington. He was Restaurant 2000 to August 2001.

4 - FIGARO'S UNIFORM FRANCHISE OF

Managei

Iiorjs IMdSager since October 2005. From June 2005 to B!aekj|Beⁱar Diner in Mt. Shasta, California. He was an jto'n ffonjjjune 2004 to May 2005. From January 2004 igar Kfflittle Crelk Casino in Shelton, Washington. He isJAIasRa from April 2003 to November 2003. From aslJal'D'ar&nder for Cleopatra's Wild Grizzly Casino in for Izzy's Pizza ir Longview, Washington from October

FERING GIRO!)

06 February 20 UFOC Master Franchisee ■ Clean.doc

Brian Newkirk has served as the Company's Senior Director of Operations since February 2006. From March 1999 to February 2006, he served as Senior Director of Operations for Papa Murphy's International in Seattle, Washington and Sacramento, California.

Bruce Laikko has serviced as one of the Company's Regional Business Consultants since April 2005. From March 2003 to March 2005 he was operations consultant with Sarpinos Pizzeria in Victoria, British Columbia. He was marketplace training manager for Dominos Pizza in Phoenix, Arizona from February 2002 to September 2002 and vice president of training for Siena_Sonora in Scottsdale, Arizona from May 1982 to February 2002.

Steven C. Biancalana has served as one of the Company's Regional Business Consultants since July 2004. From August 2002 to July 2004, he owned and operated a deli called Dada Binks in San Jose, California. From March 2000 to August 2002, he was general manager of Tavern 190 dba Round Table Pizza in Pleasanton, California.

Mark Hagel has served as our Restaurant Development Coordinator since February 2005. From June 2003 to January 2005, he was project manager for Market Contractor in Portland, Oregon. From November 2000 to January 2002, he served as project manager for Russell Construction in Portland. He was project manager for P.M. Hagel and Associates in Eugene, Oregon from June 1999 to October 2000.

FRANCHISE BROKERS: Our franchise brokers and Master Franchisees are in Exhibit J. They are listed by state.

3. LITIGATION

Other than the following single item, no litigation is required to be disclosed in this Offering Circular.

RENTRAK Corporation v. Ron Berger (Case No. 0102-01814), filed February 20, 2001, Circuit Court, Multnomah County, Oregon, settled May 6, 2002 by mutual agreement of the parties. Rentrak Corporation announced in a published press release "that it settled litigation with its former Chairman and Chief Executive Officer Ron Berger. Rentrak had asserted various claims arising from the performance of Berger while employed at Rentrak prior to a change of control in September 2000. Berger made claims for certain employment agreement benefits. In announcing the settlement, Rentrak stated that while Rentrak and Berger disagreed on various business decisions made by Berger while he was CEO and by the prior board of directors while it was in control, Rentrak determined that there was a lack of evidence of misconduct by Berger. The consideration for this settlement was the parties' agreement to dismiss their respective cases and to seek nothing further from the other in litigation."

BANKRUPTCY

From January 1990 to October 2002, Figaro's Master Franchisee for Illinois and Iowa Jeffrey Welter was president and general manager of J. P. Hering Distributing Co., Inc. in Prairie Du Chien, Wisconsin. The company was reorganized in Chapter 11 Bankruptcy on September 24, 2002, bankruptcy file number 02-16113-11, U.S. Bankruptcy Court for the Western District of Wisconsin.

5 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee Clean.doc

Except as described above, no person previo involved as a debtor in proceedings under the

d in Iteiris 1 or 2 of this Offering Circular has been 'tcy Code required to be disclosed in this Item.

Master Franchisee Franchise Fee

The initial non-refundable Master Franchisee fesisi 1[6o!©0O per 5,000,000 persons in population. It is paid when you execute the Master Franchis'e Agreen^rJt|T^er^jis a minimum population of 1,000,000 ($100,000 fee), and a maximum population of 10JOOO,OOOl($lfojjD0'!e®O fee).| The fee may be discounted for special

territorial limits (such as limited to special sites)

master franchises if the terms subsequently are imjcreaseqflbr; changed. We do not finance this fee.

offer extensions of time in which to acquire

The Master Franchisee initial fees are uniform exsept a"s|d|scribed|jn this Item 5. Information about the three individual store franchises that you must purchase is|disel®*ed in ajseparate offering circular. The total initial fees for the three standard franchises is $62,50®. MpiSI mist pay initial fees for the standard franchises at such times and as described in thejseparat8lframcjiis|lagreernents that correspond to the standard franchises and as disclosed in the separate UnifoHn Eranc'rase Offering Circular.

Occasionally, we may grant new franchises with reduced

rlc

existing franchisees who have excelled tin the Figaijojsfsyaem. I

may make such an award to the owner [of the fra^chisejjsraffi with Ijie highest volume, highest comparative

no initiaflfees as an award to a limited number of Fori example, at a franchise convention we

sales increase or similar achievements. [Althoughfyeiavej|iever done so, we reserve the right to grant new franchises to our shareholders and their (amily memoej-slwitweduceD ^or ^no initia.T fees.

areTnotl refundable in whole or in part under any

These Fees are uniform to all franchisees an circumstances other than those listedlabove.

paid to Company are non-refundable unless otherw

othervvise noted. Any interest owed begins to or payments to Company and Company will part pn behalf of any third party. Any fees

Name of Master

Franchisee Fee or Payment

Amount

Due Date

Paysiblelto you 2! daysiaftec franch

#§' receip

Remarks

You Receive Commissions Paid and Earned on Initial

50% of initial and transfer fees collected from

tfayaoieito \ dayslafteii franchise

rec.eip wees b\

See note 1

6 - FIGARO'S UNIFORM FRANCHISE OFFERING 6IRGULAR

06 February 20 UFOC Master Franchisee Clean.doc

Name of Master Franchisee Fee or Payment	Amount	Due Date	Remarks
and Transfer Fees¹	franchisees	Company, and satisfaction of all legal conditions precedent to Company's receipt and use of fee payments
You Receive Commissions Paid and Earned on Continuing Licensing Fees²	50% of royalties received from each franchisee and company owned store in territory	Payable on the 25^thday of each month based on continuing licensing fees paid by franchisees for the previous month	See note 2
You Receive Interest Payments³	10% per annum on past due commissions	Varies	See note 3
Local Advertising Payments	Negotiated if placed jointly by you and Company	Upon placement	See note 6
Audit⁴	Cost of audit plus interest on underpayment/overp ayment	Within 15 days after receipt of audit report	Payable by you or by us only if audit shows a default greater than 2%. See note 4
Insurance Policies	Premium amounts	You must maintain E&O insurance to protect you and Company	Cost will not exceed amounts reasonably required
Cost of Enforcement or Defense	All costs including attorneys' fees	Upon settlement or conclusion of claim or action	Prevailing party may recover costs
Indemnification	All costs including attorneys' fees	Upon settlement or conclusion of claim or action	Each party will indemnify the other
Cure Fee	$1,000	As Billed	If you breach any provision of the Franchise Agreement that is

7 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee - Clean.doc

Name of Master

Franchisee Fee or Payment

Amount

Due Date

Remarks

curable and Company gives you notice of the breach, in addition to curing the breach you must pay Company a Cure Fee of $1,000 to heip defray the Company's administrative and corporate costs related to the breach and remedy.

Reinstatement

10% of current Master Fee

ijlpon

Reinstatement

See Note 7 below

afie not ilar servic

Commissions Paid and Earned. ComijnissioTiSi Grand Opening Fee, qualification, site selection,mrjiJjsiM __. Fee, goods, inventory, equipment, real estate or fixtures norfwill vol franchises sold/acquired. Your own stores are {ej^Jiirgd' Franchisee Agreement.

and

[aid for advertising services including the s, including the Franchise Coordination |be entitled to a commission on your own lescribed in Section 3.8 of the Master

aster Franchisee under the Master Franchisee

Commission means all sums to be paid to yoi! Agreement as specified in Section 5 of tjfie MasteijFr^heHis^ Agreejnent ("MFA"). You will NOT receive any commission on interest income earned; by Company ranlLncoliected initial franchise fees, transfer fees, continuing licensing fees, or on promissory notes florfrahcnisees, and will NOT receive any commission on any other franchisee payment other than'ifor initialBrarnclaisejfees, transfer fees and continuing licensing fees as outlined in Section 5 of the MFC. You only will receive! commission on initial franchise fees, transfer fees

and continuing licensing fees earned and If Company refunds any initial franchise

collectedfoy Company in c<

111 (ill

fee, you will Jefundfthe related commission paid within 10 days of

l [ v*/*-/i nuui iv ik^ivij%4*j ui iv ii iiirt.^.1 m ui ivi iiu>^ ■ w^_f yuu win iuiui i\j ui iv i \^"-*fc'-**-* *-*<*-* i i ii i iimvivi ■ wuiu mn m i i v uu y ■»/ wi

notice or it will be deducted from the next payment |due|tb|Ivpu. If a franchise agreement is not renewed,

expires or is terminated for cause, you will, receive only of expiration or termination. See Item 19 for relatedfiifc

expiration

See Item 12 from a Master Franchisee.

the commission earned and accrued through the date matiQia and i fistrations.

, below, concerning the allocation of Com missions when a franchisee purchases a franchise er Franchisee in one territory but opeps the 'franchise |tore in the territory of another Master

You have exclusive right to sell Figaro's franchises 'within jour TerStory. However, you may request that Company handle some, but never all, of ypur franchiselsales]efforts, regardless of the source of the lead. In instances in which Company handles the sale, you will eorh'p'emsate Company at a level of 10 percent of the Initial Franchise Fee (this does not inclucle the Franchise Coordination fee and the Grand Opening fee) generated by that sale. By way of example, a frandjs'elsflclII $25,000 Initial Franchise Fee will generate a payment to Company of $2,500 (10 percent of $25,0OO)i' ©ompany wiD deduct this payment from your share of franchise fees collected. j II 1 II I

If Company is handling some franchise sales for Rrau]| at any time you may determine that Company's assistance is no longer desired. Provided (that you Ire ithen 'performir g at the level required by the Master

8 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 FeDmary 20 UFOC Master Franchisee ■ Cleaadoc

Franchisee Agreement, upon 90 days advance written notice, you may instruct Company to no longer handle franchise sales for you.

² Commissions Paid and Earned on Continuing Licensing Fees. No commissions will be paid for future Company-owned stores in the territory or stores which were operational or are the result of franchises sold prior to your execution of the Master Franchisee Agreement, unless Company assigns these stores to you for quality control. Until you open your first franchised Figaro's store and you have become certified by you or your designated Director of Training attending and passing Figaro's training school for Master Franchisees, you may not service or support any stores.

Commissions will be paid on royalties received from stores you own in your Territory.

You have exclusive rights within your Designated Territory. However, you may request that Company, or a Master Franchisee designated by Company, handle some or all of your initial store opening assistance and initial and ongoing training, site acquisition services and quality control efforts in the Designated Territory as follows:

Type 1 Master Franchisee: You may elect to handle only franchise sales marketing and ask Company to provide initial store pre-opening and opening assistance and initial and ongoing training and all site acquisition services and quality control to franchisees in the Designated Territory. If so, you will pay the applicable pre-opening and opening assistance and initial and ongoing training fees to Company or to the designated Master Franchisee. In addition, you will pay to Company or to the designated Master Franchisee the applicable site acquisition services and quality control fees. The applicable fees will be established in the Operations Manual and may be changed at any time by Company upon not less than 30 days prior written notice. In this instance, Company or the designated Master Franchisee will provide:

i. training school facilities and coordinate the scheduling of trainees and training

sessions, and

ii. store pre-opening and opening assistance and initial and ongoing site acquisition

services and quality control for all franchisees in the Territory.

Type 2 Master Franchisee: You may elect to handle franchise sales marketing and to offer local store pre-opening and opening assistance and all initial and ongoing site acquisition services and quality control to franchisees in the Designated Territory while asking Company to provide all initial and ongoing training. You then may be certified and designated by Company to provide initial store pre-opening and opening assistance and initial and ongoing site acquisition services and quality control on behalf of Type 1 Master Franchisees in consideration for the applicable fees established in the Operations Manual. You will pay to Company or to the designated Master Franchisee the applicable initial and ongoing training fees for training rendered for franchisees located in the Designated Territory. The applicable fees will be established in the Operations Manual and may be changed at any time by Company upon not less than 30 days prior written notice. In this instance, Company or the designated Master Franchisee will provide training school facilities and coordinate the scheduling of trainees and training sessions.

Type 3 Master Franchisee: You may elect to handle all franchise sales marketing, local store pre-opening and opening assistance and all other initial and ongoing training and site acquisition services and quality control to franchisees in the Designated Territory. In order to do so, you must be certified by Company to provide store pre-opening and opening assistance, initial and ongoing training and site acquisition services and quality control on behalf of Type 1 and Type 2 Master Franchisees in consideration for the applicable fees established in the Operations Manual.

Currently, the initial training fees are: a) training school - $1,500 for up to two trainees for two weeks; b) through the first 90 days of a store's opening - including store pre-opening and opening assistance fees, site acquisition services fees, and initial and ongoing quality control fees - $5,000; c) ongoing servicing fees are $440 per service staff person per day, $220 per service staff person per half-day. Each fee is in addition to travel time and out-of-pocket travel costs. You also incur the fully burdened costs of mystery shopping

9 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee Clean.doc

services and support and quality control written notice and are more fully described

programs!

,l1 Ail H

in th

foese fees are subject to change upon 30 days prior Qp'ejations Manual.

Interest Payments. Company will fl owed. Company's commission payments to youlv'il|De' during the previous month, and no commission will b!e payments from franchisees are first sent to Corrfpa

Vo per

3as'ed on paid on ai

nnum interest on past due commissions [mounts actually collected from franchisees crued or earned but uncollected fees. All

Audit. Company and you may, with reasor^ableiprior no ice, inspect and audit records of the other party. If inspection or audit reveals that any paymerftsKiavJ been i nderstated by more than 5%, the party will reimburse the wronged party for the cost of thefliseWtibn pr audi' | including the charges of the accountants and reasonable travel expenses, roomland boara and compensatic n of employees.

We will provide the minimum one-week store o^ningjonjsite support for your first store (per Section 3.8 of the Master Franchisee Agreement) and. for any franofiisedls'tores opened within your territory before your first store opens for business, as well as for each francftiledJEtore opened in your territory after your first store opens for business until you have successfully ^;|omplel:ed pur training for Master Franchisees, specified in

it occurs, wepjl leiuejSrom monies due from us to you our standard fee ses|i®race youlhave successfully completed the training, pdralkgoing training and operational assistance will be 4o'ryJfj4FC Section 3.7.1 (h).

Item 11, to our satisfaction. Until that for our provision of on-site and ongoinglsupport s' all initial store opening and ongoing on-site suppq provided by you to all Figaro's franchisees in you

.ii I

iryices

any fr&nchised stores transferred within your as weljas for each franchised store transferred rou have successfully completed our training for

We will provide the required assistance and t' ......

franchise territory before your first storelopens fojj bu'sij 3s*

in your territory after your first store opens for busfriessun^:tj ,__. __________,___,_______.._......_a ...

Master Franchisees, specified in Section 3.6 of the Master Iranchisee Agreement, to our satisfaction. We will deduct from monies due from us to youlour standardffeejfbrpur provision of this assistance and training until you have successfully completed your training. Affer ypSppen yourjirst store and successfully complete our training for Master Franchisees, you will provide all trarJsfeJfessistajice and training and all ongoing training and operational assistance to all Figaro's transferrers Jin Jour territory or pay the applicable fee to us to provide the service on your behalf.

⁶ Local Advertising Payments. You are spjey responsible fc

Your advertising to attract franchisee candidates¹. approved in advance by the Company. lExcept

----------------------..----------- ---------- j .,_r._ , preparing and placing all advertising to

attract franchisee candidates, at your expense. You .mift^Dirchasel place and run not less than $1,000 in such advertising during each calendar.- quarter_;oirjng||thel first twelve months the Master Franchisee Agreement is in effect; $2,000 during each calendar jquaWSduring tne second year and $2,500 during each calendar quarter during each remaining year sf tjiei 'jjiansement. If your Master Franchisee territory encompasses more than one million inhabitants, the minimum quarterly advertising placement is increased pro rata. i.e. - if your territory contains three millionabitant5j(200%|more than one million), the minimum in the first twelve months is $3,000 during each quartej v^i<$ij^!is200% more than $1,000.

i paced io media in your territory and must be prior written permission, you will not under any circumstances place advertisements using the MarSs|irJ] o*r daginatingjfrom any area other than the Territory. Master may not advertise in any media wljjpse primary iGirel. Ialin is outside the Territory, except with Figaro's prior written permission. No local advertising will bejMa&eS injtjie terril >ry without the prior written approval of

mjJs5|fgirow the provisions of the Master Franchisee

both Company and you. All advertising lyou plac,

"^sjfl

ttff

agreement. Company's regional and national advefiising JTJia"ylresult n leads being generated for prospects within your territory. Company will deliver or direct tSek^ IsaGfjato you. From time to time, you and Company

-----:-:_*!.. _i__* _t. -i---------1i:---------*. j_Q _sej| fr^efoiseslini local media located in your territory. Prior to

and CorSip|ariii3|y^i]l| negotiate the portion of the costs of such

may jointly elect to place advertisements placement of any such advertising, you advertising each will be responsible to pay

⁷ Reinstatement Payments. If yo jr Master^faTji^hiselAgreerJient is terminated or not renewed, at Company's sole discretion and where legally available.Fassu'Siing sonje or all of your territory has not been resold to another master, Company may, ilpon writte/i amplication frorr you, reinstate your Master Franchise

10- FIGARO'S UNIFORM FRANCHISE OFFERING]OIReUlKR

06 February 20 UFOC Master Franchisee - CIean.doc

Agreement. In addition to curing any default(s) which led to such termination or non-renewal, you will be required to pay a Reinstatement Fee equal to 10% of the then current standard price for the master rights for the territory being reinstated, execute the then current form of master franchise agreement, present an acceptable business plan and management plan to demonstrate and explain in detail how you will correct the deficiencies which led to the termination or non-renewal and to show sufficient capital, resources, management and personnel to do so and perform other conditions that may be described in the Operations Manual.

In addition to the fees described in this Item 6, you must also pay the fees associated with at least three required individual store franchises. Those fees are disclosed in a separate Uniform Franchise Offering Circular for individual store franchises.

7. INITIAL INVESTMENT

You should anticipate the following initial expenditures in connection with the establishment of a Master Franchisee franchise. Additional factors related to each expenditure category are described in the notes following each chart.

Company does not offer any financing in connection with your initial investment. Financing sources may reduce your initial cash requirements, and the availability and terms of financing to any individual master franchisee will depend upon factors like the availability of financing in general, your credit worthiness, the collateral security that you may have and policies of lending institutions concerning the type of business to be operated by you. The investment and expenditures required of actual master franchisees may vary considerably from the projections set forth below, depending on many factors, including geographical area, the amount of space leased by you and the capabilities of any particular management and service team.

Name of Expenditures	Actual or Estimated Amounts For Franchisee	Method of Payment	When Due	To Whom Payment Is to be Made
Initial Fee '	$100,000-$1,000,000	Lump Sum	Upon Signing Master Franchisee Agreement	Company
Computer Equipment and Software	$1,500-$10,000	As incurred	As incurred	Third parties. See requirements under Section 3.7.1 of Master Franchisee Agreement and see Item 11.
Franchise Compliance⁷	$0 to $10,000 or more per year	As incurred	As incurred	Third Parties. Costs incurred only if required by certain state franchise regulatory authorities. See note 7.
Training"	$2,000 to $3,000	As incurred	As incurred	Transportation lines, Hotel & Restaurants

11 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee Clean.doc

Working Capital

$100(000-$40d000

approximately three years of opening

Various third parties

Miscellaneous and Additional Funds³'⁴

$50,©00 -$125*000

Before or within approximately one year of opening

Various third parties

TOTAL

$253,500 -$1,53fj,000⁵

NOTES

Initial Fee. The initial fee ranges are desbBbed inlitem 5.'

Working Capital. You will need to provide maweting, administrative, and training services before significant revenue is derived by you. See Item 1§ fp,jf| relate^ inforrrfation and illustrations.

³ Miscellaneous. You will

advertising placement, and your own training by us to protect you and us against your activities!

ill have significant- costs jor legal expense, marketing materials, insurance, own training costsjh&u must obtain liability insurance reasonably required

reasonably required

ciation offthe Master Franchisee Agreement, we will name

rlffllomissjons insurance policy. We obtain this insurance

partieslagainst [various acts and omissions by you and

.uifecS |bl||)nd that which you obtain under your individual

ssions|c|yerage fncludes a single policy for $1 million with

J approximately $35,000, which represents a base cost of

a pro rataadditipnfcased upon comparative gross reported revenue

Insurance Obtained by Figaro's. Upon e you as an additional insured party under an erre coverage to protect you, us and other; intereste others. There is no liability coverage currently re; unit franchise agreements. Current errors and o a $25,000 deductible. The 2006 premium will be] $1,500 for each master franchisee plus produced by each master franchisee.

Company will charge you annually for a 'pro rata p&rfiSh&f 'ftfe premiums for this insurance and a reasonable administration fee. You will pay Compan^ for thesejchargesjwithin 3fidays after receipt of invoice.

As the number of Master Franchisees grows in the Figaro's systemlit is expected that your pro rata portion of the total premium and administration [costs wil|fflecjje|se1accordiijgly, offset by any increase in the gross premium amount. In its sole discretion, Company maw)ePect|to discontinue or modify or not obtain insurance. In addition to participation in any coverage obtained dw[Company, you may obtain similar coverage to protect your interests.

Additional Funds. You should Have an a^eqijafe' cjijh resejve before beginning operations to help meet the ordinary expenses of selling <

including salaries. The estimate may .._.______,___._fi--^*______B- ■--.____.....__■____a___* -i___-■

salary and other commitments made bylyou. 'Addffiohal junds will be required to finance operations until a positive cash flow is produced. Companyjhas reliecJon|tsiexpViencejsince its inception and ongoing reports and communications from its franchisees in preparing these estimate

r I |i ni i

⁵Cost of Opening Individual Unit Stores. This totajdpes not include the cost of opening at least three required individual store franchises that yo'u are required' tolppen as a Master Franchisee. (See the separate offering circular that corresponds to each of your ind|/ia"Qa]sto?r& franchises.)

draining. There is no separate bharge fog the! t"r;aimi&g itselfi but you must pay for the travel and living expenses of the persons attending [Figaro's trainlhg'Hsjsfoool forlMaster Franchisees. The actual cost may vary from the estimate due to distances, memoasjofiScansponation and personal preferences. The training school for Master Franchisees willlbe held iSx kjmir]in|8m of ten da by us. The training school for Master Franchisees isjoffe'rebiifo! up to four f ...

mandatory for you or your Designated Director of *yairjing| tolattend.iYou must complete it to Company's satisfaction (and must open your first individual unife Fiianchjsed Stor|) before servicing or supporting any

12-FIGARO'S UNIFORM FRANCHISE OFFERING

CIRCULAR

06 February 20 UFOC Master Franchisee - Clean.doc

Franchised Stores. In addition, you must satisfactorily complete any aptitude or other qualification testing required by Company.

franchise Compliance. The amount you must pay for franchise compliance varies depending on the location of your territory. You will pay $0 if your territory is located in states not regulating franchise activities. This amount includes filing fees, attorneys and accountants fees.

In addition to the expenditures described in this Item 7, you must also pay the cost of opening at least three required individual store franchises. The range of the initial investment for individual store franchises is disclosed in a separate Uniform Franchise Offering Circular for individual store franchises.

8. RESTRICTIONS ON SOURCES OF PRODUCTS & SERVICES

Approved Supplies and Suppliers

Periodically, Company may provide to individual unit franchisees ('franchisee{s)") identities of approved manufacturers, suppliers and distributors, service providers, and approved food and non-food products, recipes for menu items, fixtures, smallwares, furniture, counters, freezers, cash register, computer, equipment, signs, stationery, supplies, multi-area marketing programs, and other items or services necessary to operate the Franchised Store. Company may also specify that franchisees carry or use products and services previously approved for use in the Figaro's System. Company may revise the approved suppliers and the approved products and services periodically in its sole discretion. We currently provide material benefits to franchisees based on use of designated or approved sources including the right to renew franchisees' franchise rights and to obtain additional franchises.

All Menu Items and other food and beverage products and materials, containers, packaging materials, other paper and plastic products, menus, uniforms, forms, cleaning and sanitation materials, and other materials and services used in the operation of the Franchised Store will conform to the specifications and quality standards established by Company periodically. Franchisees may purchase products which meet these standards from suppliers approved by Company as meeting its criteria for Figaro's suppliers. If a franchisee proposes to offer for sale at the Franchised Store any brand of product, or to use in the operation of Franchised Store any brand of food ingredient or other material or supply, which is not then approved by Company as meeting its minimum specifications and quality standards, or to purchase any product from a supplier that is not then designated by the Company as an approved supplier, the franchisee will first notify Company in writing and will, upon request by Company, submit samples and other information as Company requires for examination and/or testing or to otherwise determine whether this product, material or supply, or the proposed supplier, meets its specifications and quality standards. We may make a charge which the franchisee must pay that will not exceed the actual cost of testing. Company will notify the franchisee within a reasonable time, usually within 30 days, whether it approves the product, material or supply, and/or the supplier.

Company applies the following general criteria in approving a proposed supplier:

1. Taste, texture, appearance and consistency of product;

2. Product conformity with recipe or Company specifications;

3. Ability to purchase product in bulk;

4. Quality of services;

13- FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee Cfean.doc

5. Production and delivery capability

6. Proximity to franchised businefse|

7. Dependability of the supplier.

jeable to make timely deliveries of product; and

There are no required quotas as to quantity ofl purchases franchisees must make from Company or from

dors. Franchisees must only hare rt@iig|ls franchisees elect to purchase equipment, inveratoiw,{am|supp!y(items from Company at our then current

approved vendors.

supplies on hand to meet customer demand. If

prices, payment must be made when franchisees plaeeltjteir order. The items Company offers may include among other things equipment, merchandise, andls applies that bear its Service Marks. Franchisees may offer these items only at the Franchise jpremisesjoj {gtaijl QJ^tomerl.

Except as otherwise disclosed in this Item 8] categories of products or services. Any products}

f to mere.

iraot currently the only approved supplier of any gooaslsold, licensed, or leased by or through Company to franchisees will be sold, licensed, orlleased infacGbrilainee with ftie terms of the Operations Manual or as otherwise provided for in writing by us or thel manufaeturer ofl the products and goods. EXCEPT AS EXCLUSIVELY SET FORTH IN WAITING A^bf S^IG^IED BYj COMPANY, COMPANY MAKES NO EXPRESS OR IMPLIED WARRANTIES WITH fES/ECgfrO THE PRODUCTS AND GOODS, AND ALL WARRANTIES, EXPRESS OR IMPUIED, ING^UDIKgJBUT N*OT RESTRICTED TO, THE IMPLIED

FMN|1^ES OH MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AlgE EXPRjSS_BLM|rSCLAIMED. UNDER NO CIRCUMSTANCES WILL OUR LIABILITY IN CONNECTION WITHJAWjirfcljipDUCTS OR GOODS EXCEED THE DOLLAR AMOUNT OF THE PURCHASE PRjCE OR ll'pf BseIfEE ^AID BY A FRANCHISEE FOR THE PRODUCTS OR GOODS. IN NO EVENT WILiIg^MR^Y BE LIABLE TO ANY PARTY, INCLUDING BUT NOT LIMITED TO, FRANCHISEES AND ffriEIR (CUSTOMERS, FOR ANY TORT DAMAGES OR INDIRECT, SPECIAL, GENERAL, INCIDENTAL} p[p [CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS OR |N|IGif$TED PROFITS AND LOSS OF GOODWILL, ARISING IN CONNECTION WITH THE [USE (OR| "----------------------------------------------------------------

ANY PURPOSE, EVEN IF COMPANY POTENTIAL LOSS OR DAMAGES.

S A WAR!

_B M TO USE) THE PRODUCTS OR GOODS FOR OrIIHAS BEEN ADVISED OF THE POSSIBILITY OF

Company will not be liable to franchisees if we areiunableltoideliverKquipment, inventory or supply items to you because of any loss, damage, orldelay cajsjea ©^Istrikes, riots, fire, insurrection, war, elements, embargoes, failure of carriers, inability to [obtain trajspgrtaticjjfacilities, forces majeure, acts of God or of the public enemy, or any other cause beyond (Compan)

contrail

Franchisees, their families, employees, partners, prjjhcijjaisjj members! managers, directors and shareholders

' jiatf rlnciisees buy from Company nor any of our trade kdlinjjhe.operatioTi of franchisees' franchised business inSh'eroberatioG) of any other business without

may not resell the products, supplies or equipment

secret products, regardless of the source.jthat are i .,.,-,, _1|r

and may not use such products, supplies ©r equipm|nt|njfi^pperation ot any ..

Franchisor's prior written approval, which may be wiMejdliVfifenchisQr's sole discretion.

Company provides assistance to first time indivic efficiently as possible. The cost of such lassistancj derived $165,000, which was approximately 3.94% Coordination Fees in our most recent fisc'al year We will derive income from the Franchise Coordi

St*

franchise owners in opening their units as

|j1]QS3bo (the] "Franchise Coordination Fee"). We

ifiSuntofai reven&es of $4,183,379 from the Franchise

i0S),Fas|KJerived from our audited financial statements.

.. _ ..... ___________ .._....... ._________jwiifeiiftjae. Except as provided above, Company will

pass through to a franchisee or to the Advertising fljRillaijiyHAid all rebates it receives as a direct result of equipment purchases by a franchisee, to] the extent jtJese|Bce received. (As more fully described in the separate Uniform Franchise Offering Circular for in^vidual store franchises.)

I I 111 II I

You will purchase the necessary software and compifier|nfornaation and communications systems that meet

our specifications. (See the Master Franchise Agreement ama" l*!m 7, above, and Item 11, below).

14- FIGARO'S UNIFORM FRANCHISE OFFERING

06 February 20 UFOC Master Franchisee Clean.doc

Some vendors and other companies pay money to market at our annual or every other year franchisee conference, for booth space and other sponsorships. We place this money in our general account and apply it entirely for conference expenses. In our latest fiscal year we received approximately $65,800 from third parties for our conference expenses.

Company's specifications and standards for purchasing are in the Confidential Operations Manual, as modified periodically.

Company has negotiated and has in place group rates for purchases of products and materials with a number of suppliers. Until a franchisee's store is located in a geographical market containing a minimum of ten other operating stores, the franchisee should expect to incur additional freight and charges for products and materials, which may range from as low as $150 to as much as $900 per month in the costliest areas.

There are no purchasing cooperatives in existence at this time.

Pepsi-Cola Company

Pepsi-Cola Company is currently the designated supplier of all of Company's soft drinks. We may change the designated supplier or deal through designated distribution brokers without prior notice to franchisees.

Trade Secret Food Products

Company has developed proprietary pizza dough starter mix, pizza sauce spice mix and calzone spice mix (ingredients prepared in accordance with a Trade Secret Process, which process includes time, unique spices and recipes, dough mixing process, portion charts and holding, handling and cooking procedures). Franchisees must use the Trade Secret Food Products and purchase these from Company or its designated suppliers. The formulae for, and methods of, preparation of Trade Secret Food Products are trade secrets of Company. Company has determined that in order to protect the trade secrets and to monitor the manufacture and sale of Trade Secret Food Products, it will (1) manufacture and supply Trade Secret Food Products to franchisees of Figaro's System and/or (2) disclose the formulae for and methods of preparation of Trade Secret Food Products to a limited number of suppliers who we will authorize to manufacture Trade Secret Food Products to Company's precise specifications and sell Trade Secret Food Products to franchisees.

SYSCO is currently the designated supplier of all of Company's Trade Secret Food Products which includes proprietary pizza dough starter mix, pizza sauce spice mix and calzone spice mix. We may change the designated supplier or deal through designated distribution brokers without prior notice to franchisees. Franchisee purchases of Trade Secret Food Products represent approximately 2 to 5% of all costs required to establish and approximately 3 to 5% of all costs required to operate the Franchised Store (and approximately 11% of food/packaging costs, not including Pepsi/produce). A nominal charge totaling approximately 3% of franchisees purchases of proprietary items is added to franchisees' prices in order to provide a fund from which to pay the costs of such one time items as development, die cut, plate fees and obsolescence, for ongoing consumer help, information, assistance, for freight adjustments and to permit Company to acquire inventories of slow moving items at favorable rates to keep franchisees' costs as low as possible. Company may derive revenue, placed into the Fund, through commissions, allowances or rebates paid by certain approved suppliers and from the nominal charge described above. Company received such funds in our last fiscal year (2005) in the approximate amount of $197,070, which was approximately 4.7% of our total revenue of $4,183,379, as shown on our 2005 audited financial statement. Company placed all such amounts in the Fund.

Company employs purchasing staff for the purpose of negotiating on products to be utilized in franchisees' stores. In addition, Company may direct a third party firm that specializes in such procurement to negotiate on its behalf. The full costs, including travel, support, overhead and benefits, of these personnel will be deducted from any rebates, commissions, free goods or other remuneration Company receives based upon the purchases of franchisees. The balance, if any, will be contributed to the Fund. If the cost of these

15 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee - Clean.doc

personnel exceeds the rebates, commissions,, jref excess from its own accounts. I

Company estimates that the total purchases o 85-95% of franchisees' total initial purchases, a~

other remuneration, Company will absorb the

ranGhisees that Company specifies or approves represent &5-f95fi!of franchisees' overall ongoing purchases.

A franchisee may elect to offer Company's aSpr0^d|'|fa*ethods!of delivery service to its customers in its franchise territory, including homes, schools, busiijiessesrand corrrmercial accounts. To do so, the franchisee must fully comply with Company's policies andlpr^ejiurifs as outlined in the Operations Manual related to delivery and obtain delivery vehicles and insuraj ic'elrne&g Company's requirements. The estimated initial costs to implement the delivery service are footr otedyn|iltem 7. AYiy unapproved delivery service or delivery methods that a franchisee offers will je a violaton|pfJtr/|,[Franchfse Agreement and grounds for immediate termination of that franchisee's franchise.

Insurance

You.and franchisees must obtain arnd maintain latltheji own expense insurance policies with insurers satisfactory to us covering the items! specified inltrnej|'individual| unit and master franchise agreements, including workers' compensation, general public jiabiliw (iraeluding products and injury) and property damage insurance. We do not represent or wa rant that these jsowages are adequate. You should consult with your advisors as to any additional types of CDveraq'eSor hiqheV limits they

insurance advisors as to any aaaitionai types of cj)vera"ge|&r high of the individual unit Uniform Franchise Offering GircilaV [a'rad Item Is

they may recommend. See Item 7 above, for details.

FRANCHISEE

IGATH

THE FOLLOWING TABLE LISTS YOUf§ PRINCIRAli

OBLIGATIONS UNDER THE MASTER FRANCHISEE

AGREEMENT. THIS TABLE WILL HELP YOU'f flMM§iitE DETAILED INFORMATION ABOUT YOUR OBLIGATIONS IN THE MASTER FIJANCHISEEfAGREEMENT AND IN OTHER ITEMS OF THE OFFERING CIRCULAR. (REFERENCES ARE T<!> MASTB& FRANCHISEE AGREEMENT, AS SPECIFIED IN THE TABLE, UNLESS OTHERWISE STATED.? ' * *' "

MASTER FRANCHls'EElF/feREEMENT

Obligation

iMiiaun uijthe Master

fir-'¹ «■)■ I- I

■ I [Franchisee I

And Otherlyqreements

Item in The Offering Circular

a. Site selection and

acquisition/lease

Parag§apf3l7|

Items 11 and 12

b. Pre-Opening purchases/

leases

Pa rag rapS

Items 6, 7 and 11

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Obliaation	Paragraph in the Master Franchisee And Other Aareements	Item in The Offering Circular
c. Site development and other pre-opening requirements	Paragraph 3.7.1	Items 6, 7 and 11
d. Initial and on-going training	Paragraph 3.7.1	Items 6 and 11
e. Opening	Paragraph 3.7.1	Item 11
f. Fees	Paragraphs 2.1, 5, and 6.3	Items 5 and 6
g. Compliance with Standards and Policies/Operating Manual	Paragraphs 1.2 and 3.7.2	Item 11
h. Trademarks and Proprietary Information	Paragraphs 2.2, 2.7, 3.7.2, 7.1, and 12	Items 13 and 14
i. Restrictions on Products/Services Offered	Paragraph 7.1 and Section 12	Items 8 and 16
j. Warranty and Customer Service Requirements	None	N/A
k. Territorial Development and Sales Quotas	Paragraph 3.5 and Exhibit 2	Item 12
1. On-going Product/Service Purchases	None	Items 8 and 11
m. Maintenance, Appearance and Remodeling Requirements	None	Items 6 and 17
n. Insurance	Paragraph 10.4	Items 6, 7 and 8
o. Advertising	Paragraphs 3.3 and 5.1	Items 6 and 11
p. Indemnification	Section 10	Item 6
q. Operator's Participation/ Management/Staffing	Paragraph 3.4	Item 15
r. Records/Reports	Section 6	Items 9 and 11

17 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

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Paragraph in the Master

Obligation

^Ranchisee And [Other Agreements

Mil

'HI Mil _

PaWrapfo '6$

Item in The Offering Circular

Inspections/Audits

Items 6,11 and 13

Transfer

Items 9 and 17

Renewal

Item 17

v. Post-Termination

Obligations

Sec tib&s|8 aTTd12

Item 17

w. Non-Competition

Covenants

Item 17

Dispute Resolution

Item 17

Franchise Compliance

Panigra'p! 3i§

Tpjl

FWNeiNd

Hi (I'll L

We do not provide direct or indirect financing. Weldojriot 'assist in providing financing for you. We are unable to predict whether you will be able to obtain financing .rowan? part or all of your investment and, if you are able to obtain financing, we cannot predict thl terms of pelfiraancing. We| do not guarantee any notes or financial obligations you may incur in setting up an'd operating your! frarnchise. I

FRANCHISOR'SJOBLIGATIONS

Except as listed below, Company need not provide e ny assistance to you.

A. Company's Obligations BEFORE Y )u ©oe

Store:

1. Assist you in preparing frapcrjisje

3.6, Master Franchisee Agreement)

Agreement)

Provide you with required forms am

e documents, if required. (Paragraph

(Paragraph 3.7.1, Master Franchisee

Provide training fjbr your fifet< ItdrelfiSer paragraph 3.8 of the Master Franchisee Agreement). Provide training for any frane'hised storesji)|ened withirjyour Territory before your first store opens for business and you have been cefiified by CpmpanMo train franchisees. Training for franchisees in

18-FIGARO'S UNIFORM FRANCHISE OFFERING C

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your Territory will be provided by Company at your expense in an Oregon-based training store or at other locations designated by Company.

4. Provide the minimum one-week store opening on-site support for any franchised stores opened within the Territory and provide training of new employees hired by franchisees in your Territory before your first store opens for business and you have been certified to train by Figaro's .

5. Provide training for you or your Designated Director of Training. The training school for master franchisees will be held for a minimum of ten days at Company's training facilities or other agreed locations. The training school for Master Franchisees is offered for up to four persons and is further described below.

6. Loan you a Confidential Operations Manual. The Table of Contents of the Confidential Operations Manual is attached to this Offering Circular as Exhibit D.

(Paragraph 3.7.2, Master Franchisee Agreement)

B. Company's Obligations AFTER You Open Your First Store:

1. Provide the minimum one-week store opening on-site support for your first store (per paragraph 3.8 of the Master Franchisee Agreement)

2. Approve or disapprove in writing within 10 business days of our receipt, applications for franchisees referred by you. (Paragraph 4.1, Master Franchisee Agreement)

Your computer and communications system will include the following hardware and software:

Minimum Hardware:

650 mhz PC

64 MB RAM

10 GB hard drive

24 Speed CD ROM Drive

56K Modem

15" Monitor

Printer

Minimum Software:

Microsoft Office 2000, including Windows operating system

Other:

Internet access (You are required to have DSL or other high speed Internet service to your

business or home office where you will be able to access downloads from Company of

advertising materials, operations manual revisions, training materials and corporate

news.)

Separate phone line for internet access

ISP service

Separate phone line for fax machine

There is no other specific hardware or software required. See the last paragraph of Item 13 below and section 3.3.5 of the Master Franchisee Agreement concerning Company's exclusive right to use electronic media including the internet and related restrictions upon you.

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None of this hardware or software is hardware and software during the

but are not obligated to, update or upgrade

Droprietart' to us, "to may

jterm of |h'e ]a"gremient. This hardware and software is used for communications, accounting and record keepin'g I flVeldo not now have, but may in the future require, independent access to and use of [the infom}a|ti|jn|!anj^ data |n your computer systems. There are no contractual limits on such access andl'use.

E-Problem Disclaimer: Computer systems ark jvjjilr|er&5e in varying degrees to computer viruses, bugs, power disruptions, communication linel disruptions |lntem|? access failures, Internet content failures, the Year 2000 and similar date related problems, and latfic'ks i|bj hacklrs and other unauthorized intruders ("E-Problems"). We have taken reasonable steps so trfetiE-BrobJemslwill not materially affect our business. We do not guarantee that information or communication systems thaawe or others supply will not be vulnerable to E-Problems. It is your responsibilityjo protect^oiars'elf ifrom E-Problems. You should also take reasonable steps to verify that your suppliers, lenders, landfords,|cu|tomers,rand governmental agencies on which you rely, have reasonable protection from E-problemsJ' jf fois¹ may induce taking reasonable steps to secure your systems (including firewalls, passwordfprotection] ^rjidjahtjjirus systems), and to provide backup systems.

Although not bound by agreement, Company mfeyijiroyicM other Supervision, assistance or services during the operation of the franchised business, including', pravidfrig you wrth promotional materials and bulletins on new products or promotional technique^; revisingjahd tapdafing thefconfidential Operations Manual; providing refresher training programs and seminalrs; and dqvejMnglaVid marketing special promotional items.

C. Typical Length of Time; Before Operation;

Prior to or simultaneously with signing the Masters Franchisee Agreement, you must purchase and execute a Figaro's standard form of Franchise Agreement far jeadplofi three st|res, amended to require opening a Store within the Designated Territory within 18 months, |heKecbn<5 within &6 months and the third within 60 months after execution of the first franchise agreement. Tjhejfirstislore to be opened by Master in the Territory must be a dine-in model strictly conforming to Figaro's thbci¹ c'urr|Bit specftications for newly opened dine-in stores. Once the first store is open, Master may open eilher|]sma|er delivery/take-out models or dine-in models for the second and third stores. As outlinedlin Section]8'(iE)fof't|ie Master Franchisee Agreement, Master's failure to open any of these three stores when requirep B ahcj|n strica compliance with the relevant franchise agreement and Master's failure to maintain one oqenfsto'relat all times beginning 24 months from the date of the Master Franchisee Agreement are material brea'ctiesloMhe Master Franchisee Agreement, which will be a default constituting a substantial breach of a of the Master Franchisee Agreement pursuant to relevant law, thus establishing good eaSseifoMerminalion, that will result in termination of the Master Franchisee Agreement without refund. Mastenij understands &nd agrees that an essential element of the Master Franchisee Agreement and! of the rejations'hira [betweeJi the parties is that these three model stores will be built and opened for business in theJTeJrifoiiyJwithin thjp required time frames and that at least one store remain operational at all I

J ...,,, Any failure to commence operation of thjs stores causes byra war or civil disturbance, a natural disaster, a

labor dispute, shortages or other events >eyond yoWijjeasbnable control will be excused for a period of time

that is deemed reasonable by us under tjjie circumstamcesliws of 24jnonths from the date you execute your

first store franchise agreement and continuously afcei|tl}atjljpu musj own the majority interest in and have

and operate at least one store open and continuin'cjiirjii .operation in the Designated Territory, and be in

compliance with the applicable franchisejagreemeptjijf ypulfail to rrfeet the requirements of this paragraph

'unit stores (ur

related to the opening and operation of your own inpiviauat, so by war or civil disturbance, naturallldisaster,

Uljll

organizes reasonable control) we may terminate th'g Franchi: e $g ee~ Franchisee Agreement).

The factors that we consider in approving site selections the consequences if you and we cannot [agree onjajsjtf Offering Circular for individual store franchises.

inless you are precluded from doing

labor dispute or other events beyond your

lent. (Paragraph 3.8 and Paragraph 8, Master

Forfflffldividual stores, the time limit for approval and arlldescrioed in the separate Uniform Franchise

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D. Training

You or your Designated Director of Training must attend Figaro's conventions that are held annually or every other year and an up to two-day session that may be held for master franchisees' field staffs just before or after the convention. You or your Designated Director of Training also must attend, if Company so requires, up to two additional annual sessions of up to three days duration during each year, at your expense. You agree that it will be a default constituting a substantial breach of a material provision of the Master Franchisee Agreement pursuant to relevant law, thus establishing good cause for termination, if you {or your owners, officers, or key employees) do not attend the required convention sessions and additional annual sessions.

You or your Designated Director of Training must attend Figaro's training school for Master Franchisees. The training school is offered for up to four persons. The training school for Master Franchisees will be held for a minimum of ten days at our training facilities. This training includes the following:

1. The initial training required of all individual unit franchisees for a minimum of two six-day weeks as described in the tabular chart in Exhibit G.

2. You or your Designated Director of Training must successfully pass the National Restaurant Association ServSafe Course with a score that allows you or your Designated Director of Training to be certified to train ServSafe in your territory (recertification is required every 5 years).

3. You must conduct your first store opening for an individual unit franchisee in your Territory under the direction of and to the reasonable satisfaction of Company.

4. If you wish to train in your territory, you must conduct a supervised training session for the first individual unit franchisee you train under the direct supervision of and to the reasonable satisfaction of Company. Company will then make a follow up visit to a subsequent training session to confirm that you are following Figaro's standards in your training processes.

There is no separate charge for the training itself, but you must pay for the travel and living expenses of the persons attending Figaro's training school for Master Franchisees (See ftem 6). You must complete the training to our satisfaction (and must open your first individual unit Franchised Store) before servicing or supporting any Franchised Stores. In addition, you must satisfactorily complete any aptitude or other qualification testing we require before you may service or support or train any franchisees in your Territory. All initial store opening and ongoing on-site support and all ongoing training and operational assistance will be provided by you or at your expense to all Figaro's franchisees in your Territory and their employees, unless otherwise agreed in writing. (Paragraph 3.7.1, Master Franchisee Agreement) (See Item 6, table note 2, above, concerning provision of services by Figaro's or other designated master franchisees).

In addition to the above training, we may deem it appropriate or necessary to provide additional training and supervision to you at the location of your franchise operations. If so, you will fully participate in and complete this additional training and supervision, including additional or revised training programs and processes that may be added to the Manual in the future.

Don Suklis, whose experience is listed in Item 2, is in charge of franchisee training for us. Your training will be supervised by Mr. Suklis and by Cassandra Dornhecker whose experience is listed in Item 2.

The training materials are the Manual.

E. Advertising

You must diligently market for new Franchisees in the Territory. You must submit all ads, marketing materials and programs for prospective franchisees to us for approval prior to use. Our approval will not be unreasonably withheld. Advertising to attract franchisee candidates is to be placed in media in the Territory. Except with our prior written permission, you will not under any circumstances place advertisements using the Marks in or originating from any area other than the Territory. You may not advertise in any media whose

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06 February 20 UFOC Master Franchisee - Clean.doc

primary circulation is outside the Territory, exceptjwitjji ,ot Franchisee Agreement)

You

may De required to participate in adveYtsjhg¹agreements for your individual store franchises ' *' " Circular for individual store franchises!

, oregrams ia'si disclosed

prior written permission. {Paragraph 3.3.1, Master

as required in your standard franchise i the separate Uniform Franchise Offering

and will be subject to (among other things)

Any web site will be deemed "advertising" under thrs ^Agreement ani

our approval. As used in this offering circular, trjelterfipli'web site"5neans an interactive electronic document, contained in a network of computers linked by camWiupications software that you operate or authorize others to operate and that refers to the franchised bus1ne$s|prfflprietary|marks or us. The term web site includes, but is not limited to, Internet and World] Wide Wee home pages. "Internet" means any of one or more local or global interactive communications media, that islnbwravffliable, orjthat may become available, and includes

...... -..-- -.-------------------------- i.-r_ u__ ^-.-...ll J^---------

web sites and domain names.

Unless

the Gpritext lotherwise

accessing limited access electronic networks, sl web site, you agree to the following:

A. B.

;fji|Ss|lntranets,

indicates, Internet includes methods of tranets, and WANs. In connection to any

We will allow you to establish a webibageias part qf our web site.

II 111 II

You will not establish or use the J/etjJpag^without our prior written approval.

Before establishing the web pa^e !5pfi,wJJ submi

to us a sample of the web page format

you will comply with our standards and

and information in the form and manneslwe may reastAb'lyfrequire

I ill III 11]|I

D. In addition to any other applica¹ lerequirsments,

specifications for web sites as prescribed by us f cjrgj t[i}i}iejtp time [n the Operations Manual or otherwise in writing or on a franchisee forum intranetlsystem.

E. If you propose any material revislopitc tfjia web page or any of the information contained in the web site, you will submit the revisionlto us for nrio§|wrirtenv approval.

You will use only approved key

We will e-mail or respond via facsimile approved k or facsimile.

End titles pertaining to the pizza industry. ^fyoYdsJ Jneta tags and titles upon your request by e-mail

Subject to the terms of (use on oJrWebjsiteJ we may gather, develop and use in any lawful manner information about any visitor to (he web sijeAcudjrng but npt limited to any customers, franchisees

or prospective franchisees of you regardless of wjietjjejj otherwise in contact with you.

H. require. We

sy were referred to you via the web site or were

If we establish an intranet or com -

may elect to provide ceSain assistance

iareibre^lo55Jif'ie facility, you must utilize it in the manner we iver information and materials or otherwise

communicate with you via the intranet. You, at yoyrjj!splel'expense, will maintain and update as needed all computer system requirements and services necessa^ te-ia&eess the intranet in the manner we require. You are required to have DSL or other high s|eed Interijei'|eJviGeJto youi be able to access downloads from ul of advejtisiiigl 'hjiajerials, materials and corporate news. 1

business or home office where you will operations manual revisions, training

Training and training materials may be delivered in :he formats or media of our choosing, including but not limited to course books For training] exercises! on paper, video, CD-ROM or other electronic format, via web cast or an intranet. You vf\\\ participHi'eJinJth'e Braining and shall be solely responsible for the cost of doing so, including costs of computer equiprr|e[j|)arjid |ervices eeded to participate.

J. The Operations Manual Ijnay be dfeliyered jfoj you b hard paper copy, computer diskette,

CD-ROM, via an intranet or other downloading mechanism'itofyour cojnputer or via another medium chosen at our discretion.(Paragraph 3.3.5, MasterfFranchisep (^grger^ent)

22-FIGARO'S UNIFORM FRANCHISE 0FFERIN ____._

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12. TERRITORY

In the Master Franchisee Agreement, you are granted the right to develop a specified number of Figaro's stores within a designated territory ("Designated Territory"). Your Designated Territory will be defined in Exhibit A to your Master Franchisee Agreement. Each Designated Territory will vary in size and dimensions, based upon advertising coverage, population, growth trends, topographies, geographies, density, and demographics. Except for facilities and licenses granted in the Designated Territory (or granted for yet to be assigned areas) prior to execution of the Master Franchisee Agreement, Company has not and will not establish or license anyone other than you to establish, develop or operate any Figaro's facility or businesses under Company's Marks within your Designated Territory before the expiration of the development schedule established by the Master Franchisee Agreement. (See Item 6, Master Franchisee table note 2, above, concerning provision of services by Figaro's or other designated master franchisees in your Designated Territory).

Company does not operate or franchise the operation of, or has any presently formulated plans or policy to operate or franchise the operation of, any business selling or leasing under different trade names or trademarks, goods or services similar to or competitive with those to be offered by you.

If you fail to comply with the Master Franchisee Agreement, you will be deemed in default. Upon default, Company may terminate the Master Franchisee Agreement and all rights granted under the Master Franchisee Agreement.

Continuation

Continuation of a Master Franchisee's exclusivity of territory and right to sell additional franchises is dependent on the achievement of a certain sales volume called the Minimum Performance Requirement. It is outlined in Section 3.5 of the Master Franchisee Agreement and is applied as follows when the territory is based upon the minimum population base of one million persons (it is modified pro rata for larger population bases at the rate of one additional franchise per 60,000 persons and being added to the 'Total Sold per Year" column starting with year 6 and progressing back to year 1 in turn):

Minimum Performance Requirement (one million persons)

Date Franchises Sold Total Sold Per Year Cumulative Total Sold

Year 1 2 2

Year 2 3 5

Year 3 3 8

Year 4 3 11

Year 5 3 14

Year 6 3 17

You must comply with the minimum performance requirements of a minimum number of Stores sold as described in Exhibit 2 to the Master Franchisee Agreement (the "Minimum Performance Requirement" or "MPR"). We may terminate the Master Franchisee Agreement upon 30 days' written notice, at our option, if you fail to meet these Minimum Performance Requirements during two out of any three consecutive 12-month periods commencing upon execution of the Master Franchisee Agreement ("Agreement Year"). Upon

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06 February 20 UFOC Master Franchisee Clean.cloc

termination for this cause, you may mot establishian^'new or adaitional Figaro's franchise or offer, assist or service any other party to establish] or operajej'a Figaro's franchise pursuant to the Master Franchisee Agreement. You will cease training and suppojtffidlallfeuality Control services for the Figaro's Franchise Stores in the Territory and will not receive any porSpnj oflfhe Continuing Licensing Fees received from those Stores. We will be free to resell the] master frarfehis^elrights to the Territory and or to market Figaro's

iqation, ta jemit any of the revenues from sales or Continuing

Dfiypjjr rights unSer the Master Franchisee Agreement will

^,-the Master Franchisee Agreement related to its

franchises directly within the Territory with no ot Licensing Fees of those franchises to you. All

cease and you will comply with terms and co ditjpns, expiration or termination. J

Our national advertising may result in leads being ge|er^t|d for pjospects within your Designated Territory. We will deliver or direct these leads to you. I ] | ■ |

I! 11,1:1.

As a Master Franchisee you must agree to fully cbm|lyi|andfcooperate with the following:

I II Mi I

Upon the sale of a franchise, the masteijfr₍anchisee in whose territory the franchisee resides will be

paid the applicable Commission on the Initial i franchise] Fee. See Item 6, above. That master

franchisee also will receive one credit |for|itfet|ianchise sold towards the applicable Minimum

Performance Requirement for that master franchisee.

( I¹!¹ f" 11 I I 111 Pi II

If before opening the franchisee receives permission tolreassign the franchise to an available

i r ' iBi i" lift i

location outside the territory of the master (fraijehisee who made the original franchise sale,

immediately upon the openingllof the franchise i store, welwill charge back to the selling master

franchisee and the selling Master Franchiseelivill 'refund to us within thirty days of invoice, an amount

equal to 50 percent of the Commission originally, olid for tme sale (i.e. 25 percent of the net Initial

Franchise Fee). Within thirty days of the end'iMhelrrionth irr which the franchise store opens we will

remit the refund collected fromlthe sellinajmastenttranchisee to the master franchisee in whose

territory the franchised store actually opensffo'ibusMess. I

I . II !^;| I

In this instance, the master franchisee which madejhe original sale will retain one credit towards the selling master franchisee's Minimum Perfocmaijic'e.Requirement and the master franchisee in whose territory the store opens also will receivg |b"n|i credit towards the opening master franchisee's

Minimum Performance Requirement, effective

he date the franchise store opens for business.

II jlfll I

The master franchisee in whose territoryltmei fianenise store is physically located will have full responsibility to open and service the store! land 'pjavide qaality control, supervision and training services. (See Item 6, Master Franchisee table woteE, above, concerning provision of services by Figaro's or other designated master fran|hisees)"l|iat masjer franchisee will receive the entire applicable Commission on the Continuing Llceflsingjl^e payments related to the franchise store as provided for in that master franchisee's agre'emehtjfee selling master franchisee will not receive any Commission on the Continuing Licensing feelpafcents rejated to that franchise store.

Jill I

Company may open and operate in whole]or part oneiadqitianal store in the Designated Territory per year during the term and any renewal terms of (the Master Franchisee Agreement. If Company does not open a given year, Company may not open thatlstp'fjejin any Lture year. These stores will qualify linimum Performance Requirements underlyojijr, Ivlaster Franchisee Agreement.

store in any towards the Minimum

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13. TRADEMARKS

Company grants you the right to operate under the name "FIGARO'S PIZZA" and other Marks Company may authorize you to use.

Company is the owner of the trade name and service mark "FIGARO'S." Company claims common law rights to the service marks and any other marks it uses in interstate commerce in the United States. This claim is based upon our widespread use of the names in interstate commerce.

Company has registrations of the Marks on the Principal Register of the U.S. Patent and Trademark Office as follows:

Service Mark: Registration Number: Registration Date:

Service Mark:

Registration Number: Registration Date:

Service Mark: Registration No.: Registration Date:

FIGAROS

Fresh-to-Bake

PIZZA

AND MORE

"FIGARO'S FRESH-TO-BAKE PIZZA & MORE"

1,427,937

February 3,1987

"DESIGN OF MAN'S FACE WITH

MOUSTACHE"

2,087,824

August 12, 1997

"FIGARO'S ITALIAN KITCHEN" 1,924,275 October 3,1995

"FIGARO'S ITALIAN PIZZA & MORE - YOU BAKE & SAVE"

1,295,211

September 11,1984

"FIGARO'S" 2,086,079 August 5, 1997

"FIGARO'S" 2,433,573 March 6, 2001

"WHERE PAPA GOES FOR GREAT PIZZA"

2,547,326

March 12,2002

"FICOOKY" 2,576,016 June 4, 2002

"FIGGY" 2,664,457 December 17, 2002

25 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee - Clean.doc

Service Mark: Registration No.: Registration Date:

"WHf RlMAf&A AND PAPA GO FOR GREAT PIZZA"

2,664^6jl I¹, Til

Decefnb^l|rSi7,p002

til [lli

"PERFEfflPlfZA GUARANTY" 2,697]23§, ₍ , _tMarcrj #| 200:

"FIGAHpjSiULlOlSMATE PIZZA"

2,692M52|

MarchM'ilQ03i

-PIZZA GUARANTEE"

"PIZZAIRRODK

2004

"MAMA'S OMOWE"

2,865,2831

July20M4|

TAPA'SlSMPfiElylE"

2,939,70|

April 12, 0075

Company has applied for registration of tine followin

Service Mark: Application Serial No. Date of Application:

Marks,

ith U.S.

jaws |Witr "TEN GREAf BIZMS - ONE GREAT PRICE!"

³atent and Trademark Office:

76/426, June 28,

eiZZA

}THE BEST 178/287,11 'August 131 2(303

I! 1:11

{DON CABZONEl'i 8/466,79^; ' '' " , ajgust12 2'0p4

OU CAN HAVE AT HOME"

26 - FIGARO'S UNIFORM FRANCHISE OFFERING G RCULAR

06 February 20 UFOC Master Franchisee - Clean.ctoc

Service Mark:

Application Serial No.: Date of Application:

"NEW DESIGN OF MAN'S FACE WITH MOUSTACHE" 78/469,072 August 17, 2004

Service Mark: Application Serial No.: Date of Application:

"FLAVORS THAT SING"

78/685,824

August 4, 2005

Company has also applied for registration of the following Marks with the Canadian Intellectual Property Office:

Service Mark: Application Serial No. Date of Application:

"FIGARO'S" 1,151,915 September 6, 2002

"DESIGN OF MAN'S FACE WITH MOUSTACHE"

1,151,916 September 6, 2002

"FIGARO'S PIZZAZZ" 1,151,917 September 6, 2002

"PIZZA PRODIGY" 1,160,808 December 2, 2002

Service Mark: Application Serial No. Date of Application:

Service Mark:

Application Serial No. Date of Application:

"TEN GREAT PIZZAS - ONE GREAT PRICE!

1,160,431

November 27, 2002

"NEW DESIGN OF MAN'S FACE WITH MOUSTACHE" 78/469,072 August 17, 2004

Company has registrations of the Marks in the following foreign Intellectual Property Offices:

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06 Febnjary 20 UFOC Master Franchisee - Clean.doc

Australia

Service Mark: Registration No.: Registration Date:

Chile

Service Mark: Registration No.: Registration Date:

Colombia

Service Mark: Registration No.: Registration Date:

Mexico

Service Mark: Registration No.: Registration Date:

New Zealand

Service Mark: Registration No.: Registration Date:

Panama

Service Mark: Registration No.: Registration Date:

Singapore

Service Mark: Registration No.: Registration Date:

Taiwan

Service Mark: Registration No.: Registration Date:

"FIGflRp 948,435 March¹ 26, 200$

"FIGApOSHC

701,1

Augusj 20, 200

"FIGAljtO'S'li (C|p9) 717,30W| J ,. November! 2, 2(36*5

"FIGAROIS"! 284,602 | J ■ May 31 2Q04

"FIGAR 545107

March

"FIGARO'S

855715

Octoberfet,

997

2004

Design 873711 March 29,2005

Design 870869 February

'FIGARO 675,855 October 6"

fFIGARO' 126,226

28, 2'OOf

2003

March 24, 2003

"flGARO'S" "IJ03/04342J March 26, 20d3^!

"FIGARO'S' 0J1081316 January 16

2004

28- FIGARO'S UNIFORM FRANCHISE OFFERING fclRCULAR

06 February 20 UFOC Master Franchisee - Clean.doc

Thailand

Service Mark: Registration No.: Registration Date:

"FIGARO'S" BOR22140 June 4, 2004

Company has also applied for registration of the following Marks with the following foreign Intellectual Property Offices:

Argentina

Service Mark: Application Serial No. Date of Application:

Brazil

Service Mark: Application Serial No. Date of Application:

China

Service Mark: Application Serial No.; Date of Application:

India

Service Mark: Application Serial No.: Date of Application:

Indonesia

Service Mark: Application Serial No.: Date of Application:

Malaysia

Service Mark: Application Serial No.: Date of Application:

Mexico

Service Mark: Application Serial No. Date of Application:

"FIGARO'S" 2.454.269 August 26, 2003

"FIGARO'S" 825,356,539 March 14,2003

"FIGARO'S" 3,750,621 October 13, 2003

"FIGARO'S" 1,189,612 April 4, 2003

"FIGARO'S" J002003.9602-9697 April 24, 2003

"FIGARO'S" 2003/03266 March 21, 2003

"FIGARO'S" 594114 March 26, 2003

"FIGARO'S PIZZA" 685847 November 3, 2004

"FIGARO'S PIZZA" 685853 November 3, 2004

"FIGARO'S PIZZA" 685854 November 3, 2004

29- FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 30 UFOC Master Franchisee - Clean.doc

Service Mark: Application Serial No.: Date of Application:

Philippines

Service Mark: Application Serial No.: Date of Application:

Venezuela

Service Mark: Application Serial No.: Date of Application:

Madrid Protocol

Service Mark: Application Serial No.: Date of Application:

United Arab Emirates

Service Mark: Application Serial No.: Date of Application:

Ecuador

Service Mark: Application Serial No.: Date of Application:

Israel

Service Mark: Application Serial No.: Date of Application:

Peru

Service Mark: Application Serial No.: Date of Application:

Qatar

Service Mark: Application Serial No.: Date of Application:

Saudi Arabia

Service Mark: Application Serial No.: Date of Application:

"FIGAFjt©'S PpZA" & (Design 6858Ml] I ' NoveWfcferfel |§04

"FIGAR®^ PI&ZA" & Resign 685850, | j 1 I] Novemberfe, 2004

TIGAR^O's|'RI?2A" & Design

DD4

6858e 1| Novel ibSr 3, |2

"FIGAROJsf 4-200: -©0O262| March 2b1 200311

30M

"FIGARO, 1-2795kJ_r3: March (l 8|

2003

"FIGARO',!"! unknown June 11, 2j )05

"FIGARPiS; 69,875 May 21

20O5i

"FIGAR©' 158,429 June 14

20 35¹

"FIGARO'S 180,745 May 22, fcOOk

"FIGARO'S 243,327 | I May 26, 200*

"FIGARO

;35,822

May24,2p®3

f FIGAROS, unknown Uuly 12,2005

30 - FIGARO'S UNIFORM FRANCHISE OFFERING O, RCU. !»R

! i' H:

06 February 20 UFOC Master Franchisee - Claan.doc

Company has also registered the following Mark with the State of Oregon as follows:

Service Mark: "FIGARO'S ITALIAN KITCHEN"

Registration Number: T/S - 28450

Registration Date: August 10,1994

We will grant you the right under the Master Franchise Agreement to use the above described Marks and other Marks as the Company will in the future designate.

There are no effective registrations or pending applications for registration of the Marks in any other state.

There are no presently effective determinations of the United States Patent and Trademark Office, the trademark administrator of any state or any court, any pending interference, opposition or cancellation proceeding, or any pending material litigation involving these trademarks, service marks, trade names, logotypes or other commercial symbols which are relevant to their use in this state or the state in which the Figaro's store is to be located.

There are no agreements currently in effect which significantly limit the rights of Company to use or license the use of these trademarks, service marks, trade names, logotypes or other commercial symbols in any manner material to the franchise.

There are no infringing uses actually known to Company that could materially affect your use of these trademarks, service marks, trade names, logotypes or other commercial symbols in this state or any other state in which the Figaro's stores are to be located.

All usage of the marks by you and any goodwill established from their use will exclusively benefit Company.

You derive all of your rights regarding the Marks solely from the Master Franchise Agreement, and any unauthorized use of the Marks constitutes a breach of the Master Franchise Agreement. You are prohibited during or after the term of the Master Franchise Agreement from contesting the validity or ownership of the Marks or future Marks of Company and/or assisting another in contesting the validity or ownership of the Marks or future Marks of Company.

Company may change or modify the System presently identified by the Marks, including the adoption and use of new or modified trade names, service marks, trademarks or copyrighted materials, new products, new equipment or new techniques and you will accept, use and display any changes in the System, as if they were part of the Master Franchise Agreement at the time of its execution.

You will promptly notify Company of any claim, demand or cause of action based upon or arising from any attempt by any other person or legal entity to use the Marks or any colorable imitation of the Marks. You will notify Company of any action, claim or demand against you concerning the Marks, and Company will have the sole right and duty to defend any such action. Company will have the exclusive right to contest or bring action against any third party regarding the third party's use of any of the Marks and will exercise this right in its sole discretion. In any defense or prosecution of any litigation concerning the Marks or components of the System undertaken by Company, you will cooperate with Company and execute all documents and take all actions as may be desirable or necessary in the opinion of Company's counsel, to carry out this defense or prosecution. Both parties will make every effort consistent with this Item 13 to protect, maintain and promote the name "FIGARO'S" and its distinguishing characteristics (and the other service marks, trademarks, slogans, etc., associated with the System) as standing for the System and only the System. Company makes no representation or warranty, express or implied, as to the use, exclusive ownership, validity or enforceability of the Marks.

Company is not obligated by the terms of the Master Franchise Agreement or otherwise to indemnify you for damages or expenses incurred as a result of any proceedings involving the Marks.

31 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee Clean.doc

sale of any unauthorized product orlservice service mark registration notices, and, obtain

You may not use any Mark as part of any legal eij tity name, or in any modified form, in connection with the

oj in| amyi unauthorized manner. You will give trademark and fictitious orj'assumejj name registration where required by law.

You will comply within a reasonable time if Company|not#jks you that the use of any Mark be discontinued or modified.

You may not establish a presence on the Internet p oh amy other electronic, national or international medium, using any domain name or address containhglany of tjae Marks' or any similar mark or word or any other names or marks owned by Company.!¹ We reals the solafsight to advertise on the Internet and create a Web site using the Marks in the domain name. We] ar,p the^jwner oj all rights to domain names and directory addresses as we designate or use.

PATENTS, CQPYRIGH

INFORMATION

No patents are material to the franchise. If .. Company to acquire a patent, you are obligated t

We affix a statutory notice of copyright to our Op our Figaro's pizza and pasta products, andl tc determinations, agreements, infringements or obi have no rights to the copyrighted maternal. You aj items only with your operation of the franchise dur

3Gomes*ijadvisable at any time in the sole discretion of isetthislpatent as required by Company.

II I 111 1

rajions Nlanual, to most of our advertising products, and to

all modifications and additions to them. There are no

gations earrently affecting these notices or copyrights. You

'^Jlirantetl1the rigot and are required to use the copyrighted

hje tewi of voir franchise agreement.

The Operations Manual is described lin Item 11. Although we nave not filed applications for copyright registration, all copyrighted materials are our pre perjtyl Itarji 11 describes limits on use of the copyrighted materials by you and your employees, ^ou must contact u||mmed lately if you learn of any unauthorized use of our proprietary information. You must also agreje tip ijot |©ntest ojjr rights to and interest in our copyrights and other proprietary information.

You will be able to use proprietary, confidential and trade sejjet info&nation of Company. We will require you to maintain the confidentiality of this information unless authorized inwriting by Company.

You will divulge confidential information or

business. All information, knowledge and

deemed confidential for purposes oft the Ffarjchfee¹' A&emenj, except information which you can

demonstrate lawfully came to your attention before Jaisclof are of it by Company; or which, at the time of

disclosure by Company to you, had lawfully become a pt

communication by others; or which, afteridisclos jre tpJyou|tS

domain, through publication or communication by ojr/er '

Any employees having access to confidential irifofrjnatibr Company will be entitled to equitable remedies, inclugint) jimj_ information, Confidential Operations Manual and proprietary fcarks.

of the public domain, through publication or ICompa'ny, lawfully becomes a part of the public

Iwill have to sign confidentiality agreements. inctive Relief, in order to protect its confidential

You can also use the copyrighted, materials tri thejICorifjcfential Operations Manual, in training, and in electronic and other form, as described in Item l|l ?>f^;|this' Offering Circular. Although Company has not filed an application for copyright registration for the <fo ificientiatljJperations Manual, Company claims common law copyrights and trade secret protection, to the Confidential Operations Manual, and to other systems, information, lists, materials, software, andj electrons communications! in whatever form. You must promptly notify Company when you learn of an unauthorized u'sl of trie confidential information, copyrighted material, or manuals. Company will not obligate ypu to take any actijjjifl again|t any infringer, but will respond to this

32- FIGARO'S UNIFORM FRANCHISE OFFER

NG C1RCUI

06 February 20 UFOC Master Franchisee - Clean.doc

information as Company thinks appropriate. Company is not obligated to indemnify you for losses brought by a third party concerning your use of this information.

You must keep the Confidential Operations Manual updated and at your franchise office. If there is a dispute with the contents of the Confidential Operations Manual, the terms of Company's master copy will control.

You will not divulge to any person or any legal entity any information, trade secrets, ingredients, recipes, cooking techniques or processes used in the Trade Secret Food Products, Menu Items and other food and beverage products used in the System or any information stated in the Confidential Operations Manual.

Company may delegate to independent agents or master franchisees performance of any of its duties, including pre-opening and opening assistance and all other initial and ongoing training and site acquisition services and inspections. (See Item 6, Master Franchisee table note 2, above, concerning provision of services by Figaro's or other designated master franchisees). Master franchisees are given specific assignments by Company and to the extent a master franchisee has been assigned to a territory containing a franchisee's franchise store, any and all data ever received by us or you from franchisees, including but not limited to franchise purchase applications, payment histories, sales reports, audit reports, performance evaluations, etc. will be shared with and made available on an ongoing basis to the master franchisee and us. Each master franchisee is required to keep all franchise and franchisee information and data confidential and to use it only for purposes related to the evaluation, service and support of franchisees.

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

You will at all times faithfully, honestly and diligently perform your obligations and will not engage in any business or other activities that will conflict with these obligations.

You, any owner who owns 50.1% or more of any franchisee legal entity, any general partner (if you are a partnership) or your fuil-time manager, must devote full-time energy and best efforts to the management and operation of the franchised business. There are no limitations on who you may hire as your full-time manager. Your full-time manager is not required to have equity interest in the franchisee legal entity. You must train each of your employees and managers.

You are not an agent, legal representative, joint venturer, partner, employee or servant of Company. You will be an independent contractor and are in no way authorized to make any contract, agreement, warranty or representation, or to create any obligation for Company.

Nothing under any agreement you make with the Company authorizes you to make any contract, agreement, warranty or representation on Company's behalf or to incur any debt or other obligation in Company's name. Company assumes no liability for you in your conduct of the franchised business. You must indemnify and hold Company harmless against claims resulting from or in connection with your operations under any Master Franchise Agreement as well as any costs in defending them.

Your employees that have access to proprietary information must sign confidentiality agreements, and your managers must sign non-competition agreements.

Owner's Agreements. If you are an entity with more than one owner, the partnership agreement, shareholders agreement, limited liability operating agreement or other similar agreement for the entity ("Owners Agreement") must contain the following provisions which will supersede any contrary provisions in that agreement:

33- FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee - Clean.doc

1. Your owners ("Owners") agree to submit any dispute they cannot resolve relating to the

operation and management of the franchised bVisime sst tpj arbitration by our president or his designee. If the arbitration submission is accepted by [our preside ntiit must be hePd at our Oregon headquarters or at another location the Owners and the arbitrator agree.1 Tme deeision oflthe arbitrator will be final and subject to enforcement by the courts of competent jurisdict afo. Ifltjll submission to arbitration is not accepted by our president, the Owners must resolve thjbir disputes ijp accojjSance with the other provisions of this Agreement.

The term "operations, and rriana'gfenjie'nVJincludes, but is not limited to, questions relating

to:

Jl I

sibilities b

responsibilities between the Owners;

jiijpqsell&f business operations, repairs and remodeling;

lJi'm i Til* i

Owners;

Allocations of managemen;

Contributions to eapital for

The reasonable salaries lofftfi

Marketing efforts-

The termination of the emplowtoent Ojan uwrie .

Procedures for making and]implementing management decisions;

Whether an Owner hasl pgrfprnjed duties with respect to the operation or

^,; J

an Owher;

management of the franchise business.

3. Unless the Owners |j and the

management" does not include questions relating

Allocations, computations or Accounting issues'; Elections of officers of the e

a'f bitraterj agree in writing otherwise, "operation and

dis

ributic

s of profit or loss;

itity;

agreement;

Investments of cash not necessary foi

Determining whetlaer an Owneji isldisabled orjincompetent within the meaning of the

the operation of the business;

6. The fair market value of the pwners'iR^terestsJin the entity;

7. Whether an event jhas occurred! whiCj Owner other than a right resulting fromlan Owne

8. Whether an Owner has met

of an

former Owner;

9. 10.

,~, ... ..M.gives |se to a right to buy the interest s|aef₍aul| determined to exist under 2.g., above; isjbbligations tolpurchase the interest of any current or

Matters relating to the windint Matters relating to the legal

The Owner's agreement must

. bf tne entity ^rafter a dissolution; lUM 9^o^e Agrejement.

..._ . ... _ -._____......__r jvidelthat the Owner or Owners who are to be

responsible for on premises operationlof the !francllis'e|tafsiness|must own 50% or more of the capital interests in the entity and that the Owners of tjjiejientityflmust have voting rights proportionate to their interests in capital.

5. The Owners agree to notify usjin

Owners Agreement. Notice must be given at least modification or amendment. The purpos'e of this section.

writing|cjitheir intent to enter into, modify or amend any

Ipjbusirjiess days before they enter into that agreement,

notiqetis! tplenablejus to review it for compliance with this

6. Inclusion of these provisjpns in the

the transfer of the Franchise to an entity.

34 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCU

Agreement will be a condition to our consent to

06 February 20 UFOC Master Franchisee - CSean.doc

16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL

Franchisees will offer for sale and sell at all FIGARO'S stores all types of Menu Items, Trade Secret Food Products and other categories of food products that Company periodically approves. Franchisees will not offer for sale or sell at any FIGARO'S store or the premises which it occupies any other category of products or use these premises for any purpose other than as described in their relevant franchise agreements. At Company's discretion, Company may allow franchisees to sell items other than Italian-related food products.

There are no limits on the area in which a franchisee or we may solicit, accept orders or sell goods or services, except as limited by multi-area programs as defined in the relevant individual unit franchise agreement; delivery and catering services as defined in the relevant franchise agreement; or as otherwise limited by the relevant franchise agreement.

Franchisees must cooperate with our Multi-Area Marketing Programs.

A franchisee may deliver Menu Items only within its approved Delivery Area, or, in the case of "catering" (as defined in the relevant individual unit franchise agreement), within the franchisee's Designated Area.

A franchisee will use the location of its franchised store solely for the purpose of conducting a FIGARO'S store, with the exception of approved co-branding.

Franchisees are prohibited from installing or maintaining any video games, juke boxes, gaming machines, games, rides, vending machines or other similar devices without the written approval of Company.

Franchisees will refrain from any merchandising, advertising or promotional practice which is unethical or may be injurious to the business of Company and/or other FIGARO'S operations or to the goodwill associated with the Marks.

Each franchisee must prominently display, by posting a sign within public view on or in the franchise premises and on any delivery vehicles the franchisee uses, a statement that clearly indicates that the Franchised Store and delivery vehicles are independently operated by the franchisee as a FIGARO'S franchisee of Company and not as an agent of FIGARO'S.

Company has the right to add additional authorized services or to modernize current services that franchisees are required to offer. There are no limits on Company's right to do so.

17. RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION

THE FOLLOWING TABLE LISTS CERTAIN IMPORTANT PROVISIONS OF THE MASTER FRANCHISEE AGREEMENT AND RELATED AGREEMENTS. YOU SHOULD READ THESE PROVISIONS IN THE AGREEMENTS ATTACHED TO THIS OFFERING CIRCULAR.

35 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee - Clean.doc

Provision in Master

Franchisee

Agreement

Paragi

Summary

10 fears

a. Length of the term

fjjaragraphpa]

■*

"3T

b. Renewal or extension of term

^aragraphp&j

Continuous successive 5 year terms

c. Requirements for you to renew or extend

Paragraph's.¹^

Must be in substantial compliance with all terms and conditions of Master Franchisee Agreement and individual unit Franchise Agreements and execute a new Master Franchisee Agreement

d. Termination by you

Paragraph*

Youjmay terminate the Master Franchisee Agreement at any time upon at least 60 prior written notice

Company may only terminate the Master Franchisee Agreement for cause

e. Termination by Company without cause

f. Termination by Company with cause

Paragraph 8'

ComDi

the Master for cause.

lpany may terminate Franchisee Agreement Reinstatement may be possible as outlined in note 7 to Item 6, above.

g. "Cause" defined (defaults which can be cured)

Paragraph 8

Master Franchisee's material breach must i cured within 60 days after notice specifying the nature of the breach. Three defaurcs within 36 months and material breacn of any other franchise or other agreement between the parties is also causelfor termination.

h. "Cause" defined (defaults which cannot be cured)

Paragraph 8

The Master Franchisee Agreement will terminate automatically if you: are convicted of a I felony reflecting disfavorably on Company or Marks; commit a material act of dishonesty resulting in direct or indirect damage to Company or Marks; abandon the business; failure to meet store opening Irequire'ments for your stores as required in

he Master Franchisee Agreement; fail on ithree or more separate occasions within any

eriod of 36 consecutive months to comply [with th'e Master Franchisee Agreement; commiq a material breach of a Franchise

greement or any other agreement between

s and Jou that is not cured upon the notice, If any, specified in the Franchise Agreement %r otheij agreement (see Master Franchisee l&greernent for more information).

36- FIGARO'S UNIFORM FRANCHISE OFFERING C

06 February 20 UFOC Master Franchisee - Clean.doc

Provision in Master Franchisee Agreement	Paragraph	Summary
i. Your obligation on termination/non-renewal	Paragraph 8	Cease all use of Marks and Confidential Information; nonsolicitation of employees; non-competition; nondisclosure.
j. Assignment of contract by Company	Paragraph 25	No restriction on Company's right to assign
k. "Transfer" by you definition	Paragraph 25	You shall not sell, assign, sub-license, mortgage, encumber, transfer by operation of law or by any other means, or otherwise dispose of Master Franchisee Agreement, or the rights or interests under the Agreement including any assets, without prior written consent
I. Company's approval of transfer	Paragraph 25	Company has the right to approve all transfers by you, except for transfers to entity in which you are controlling shareholder. Company will not unreasonably withhold approval
m. Conditions for Company's approval of transfer	Paragraph 25	For a transfer to a third party, the transferee must meet Company's then current standards; there must be no existing default by you; transferee must execute Company's current agreement forms and transferee and transferee's manager must complete training and pay reasonable training fee. The transferee must pay a transfer fee of the greater of $10,000 or 2% of the gross proceeds from the sale. In addition, you will pay an 8 percent commission on the gross transfer price (excluding the price of real property), if Figaro's obtains the transferee for you. If the transfer is an assignment of interest to a legal entity owned by you, then the transfer fee is $3,000.
n. Company's right to acquire your business	N/A
o. Company's option to purchase your business	N/A
p. Your death or disability	Paragraph 25
q. Non-competition covenants during the term of the franchise	Paragraph 12.4 and 12.6	You must not directly or indirectly compete or assist in competition with any business selling pizza

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06 February 20 UFOC Master Franchisee - Clean.doc

Provision in Master

Franchisee

Agreement

Paragr

Summary

r. Non-competition covenants after the franchise is terminated or expires

F?aragraph|12!3j4 and 12.6

Forjtwo years after termination or expiration, and] within the Territory and within a 10 mile radius of any store or of any Figaro's Master Franchisee territory, you must not directly or indirectly compete or assist in competition withlany business selling pizza

s. Modification of the agreement

The|Master Franchisee Agreement can be modified only by written agreement between Company and you

t. Integration/merger clause

Paragraph 1M

All rights under the Master Franchisee Agreement are cumulative, and no exercise or enforcement will preclude the exercise or enforcement of any other right or remedy or whicfi may be entitled by law

u. Dispute resolution by arbitration or mediation

Disputes must first be negotiated then mediated in Marion County, Oregon. Disputes not resolved after good faith negoSation and mediation shall be arbitrated in Marion County, Oregon.

If you are an entity with more than one ownefc then your ownership agreement must [require the provisions outlined in Sectid/i 14 of the Master Franchisee Agreement, which require submission of disputes that your owners cannot resolve relatec] to operation and management of the franchise business to arbitration by Figaro's president or his designee. If the arbitration submission is accepted by Figaro's president, it must be held at Figaro's headqiarters or at another location as the lowners" and the arbitrator agree. The 'decision of the arbitrator will be final and

ubjecfl to enforcement by the courts of [competent jurisdiction. If the submission to

rbitratfon is not accepted by Figaro's

resident, the owners must resolve their. disputes in accordance with the other provisidTis of the Master Franchisee Agreement.

Except jfor certain claims, all disputes shall be subject to good faith negotiation. disputes not resolved after good faith negotiation will be subject first to mediation and thera to binding arbitration in accordance ISith the) rules of the American Arbitration Association. Actions for temporary

injunctive relief may be sought in the appropriate court in Marion County, Oregon,

v. Choice of forum

Paragraph 14

06 February 20 UFOC Mastei Franchisee Clean.doc

Provision in Master

Franchisee

Agreement

Paragraph

Summary

except as stated in State Addenda to this offering circular.

If Figaro's president accepts an arbitration submission submitted by your owners {see above), the arbitration must be held at Figaro's headquarters or at another location as the owners and the arbitrator agree.

w. Choice of law

Paragraph 13

Oregon law applies (subject to state law), except that disputes regarding the Marks will be governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sec. 1051 etseq.).

These states and provinces have statutes which may supersede the Master Franchisee Agreement in your relationship with us including the areas of termination and renewal of the Franchise:

ALBERTA, CANADA {Franchises Act c.F-23 and Franchises Regulation AR 240/95)

ARKANSAS (Stat. Section 70-807)

CALIFORNIA (Bus. & Prof. Code Sections 20000-20043)

CONNECTICUT (Gen. Stat. Section 42-133e et seq.)

DELAWARE (Code, tit.)

HAWAII (Rev. Stat. Section 482-E1) .

ILLINOIS (815 ILCS 705/1-44)

INDIANA (Stat. Section 23-2-2.7)

MICHIGAN (Stat. Section 19.854(27))

MINNESOTA (Stat. Section 80C.14)

MISSISSIPPI (Code Section 75-24-51)

. MISSOURI (Stat. Section 407.400)

NEBRASKA (Rev. Stat. Section 8-401)

NEW JERSEY (Stat. Section 56.10-1)

SOUTH DAKOTA (Codified Laws Section 37-5A-51)

VIRGINIA (Code 13.1-557-574, 13.1-564)

39 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee - CIean.doc

WASHINGTON (Code Section 19.100.(8(3) WISCONSIN (Stat, section 135.03) These and other states and provinces may hav; court d|Sisions that may supersede the Master Franchisee

Agreement in your relationship with us including the areaslof term

nation and renewal of the Franchise.

18. PUBILIC FIGURES

FIGARO'S ITALIAN PtZZA, INC. does not use any public figures to

promote its franchise.

IMS

Except as described below, we do not

___,___________ . _ ., . ... _..._. _.^0|!weaujljorize you or our salespersons to furnish any oral

or written information concerning the| actual or 'potential] sales,! costs, income or profits of a master franchisee's business operation. Actuali results var^amonglmaster|franchisees and we cannot estimate the results of any particular master franchisee franchise'^i {Therejis ^no bisjory of franchised master franchisees on which earnings can be compiled and reported.

Attached to this Offering Circular in Exhibit AA are

hejifo lowing tables:

Proforma Statement of Income (Master

2. Compensation Schedule

MATERIAL ASSUMPTIONS FOR TABLE

Franchisee Model)

Master Franchisee Model

10-Year Plan Major Model Assumptions

New Store Royalty and Franchise ffefe

Mode

The revenues and expenses shown in the table are basedojr our actual experience in selling and servicing franchises and estimates of the actual revenues of cjuf'franchjsjees ba|ed upon their reports to us. The tables have not been audited.

1. We have based our current projectiqns our most recent completed fiscal year.

Ljponftfata gathered since January 1993 and through

I I i m I

2. Of the 57 stores which have been open at least one year and for whom we have data, 27 or 47 percent exceeded our forecast. The average stonp g^n'erajpjf $255^)25, or 111 percent of our forecast.

we have friei ' ~^as~' '~

3. Of the 40 stores for which

our forecast. The average store generated

40- FIGARO'S UNIFORM FRANCHISE O

$278,361 or

FFERING

second year's results, 27 or 68 percent, exceeded 116; percent o|our forecast.

06 February 20 UFOC Master Franchisee - Clean.doc

4. Of the 38 stores for which we have their third year's results, 19 or 50 percent, exceeded our forecast. The average store generated $278,123, or 111 percent of our forecast.

5. Of the 36 stores for which we have their fourth year's results, 18 or 50 percent, exceeded our forecast. The average store generated $263,738, or 101 percent of our forecast.

6. Of the 42 stores for which we have their fifth year's results, 18 or 43 percent, exceeded our current forecast. The average store generated $258,526, or 96 percent of our forecast.

7. Of the 42 stores for which we have their sixth year's results, 19 or 45 percent, exceeded our forecast. The average store generated $277,443, or 99 percent of our forecast.

8. Of the 42 stores for which we have their seventh year's results, 19 or 45 percent, exceeded our forecast. The average store generated $298,908, or 101 percent of our forecast.

9. Of the 38 stores for which we have their eighth year's results, 15 or 39 percent, exceeded our forecast. The average store generated $329,409, or 103 percent of our forecast.

10. Of the 33 stores for which we have their ninth year's results, 16 or 48 percent, exceeded our forecast. The average store generated $374,951, or 104 percent of our forecast.

11. Of the 23 stores for which we have their tenth year's results, 11 or 48 percent, exceeded our forecast. The average store generated $400,443, or 103 percent of our forecast.

12. Four of our stores could not be included in the above analysis because they had been in business for more than ten years before 1993, when our data begins.

SUBSTANTIATION OF THE EARNINGS CLAIMS DATA

Data used in preparing the earnings claim will be made available to prospective master franchisees on reasonable request.

MASTER FRANCHISEE RESULTS MAY DIFFER

A new master franchisee's individual financial results are likely to differ from the results stated in the earnings claim since he or she may have less experience in franchise sales and operations, specifically with Figaro's store operations. In addition there are any number of other reasons why operating results may differ including geographical locations that are not near existing Figaro's markets where the name and concept are currently known.

THE SALES, PROFITS AND EARNINGS OF AN INDIVIDUAL MASTER FRANCHISEE MAY VARY GREATLY DEPENDING ON A WIDE VARIETY OF FACTORS, INCLUDING THE LOCATION OF THE DESIGNATED TERRITORY, POPULATION DEMOGRAPHICS, COMPETITION IN THE AREA, AN INDIVIDUAL MASTER FRANCHISEE'S BUSINESS AND MANAGEMENT EXPERTISE, ECONOMIC AND MARKET CONDITIONS, LABOR AND PRODUCT COSTS, ETC.

A NEW MASTER FRANCHISEE'S INDIVIDUAL FINANCIAL RESULTS ARE LIKELY TO DIFFER FROM THE RESULTS DISCLOSED IN THIS ITEM 19. THESE RESULTS SHOULD NOT BE CONSIDERED AS THE ACTUAL OR POTENTIAL SALES, PROFITS OR EARNINGS THAT WILL BE REALIZED BY ANY FRANCHISE. WE DO NOT REPRESENT THAT ANY MASTER FRANCHISEE CAN EXPECT TO ATTAIN THESE SALES, PROFITS OR EARNINGS.

We recommend that you make your own independent investigation to determine whether or not the franchise may be profitable, and consult with an attorney and other advisors prior to executing the Master Franchise Agreement.

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06 February 20 UFOC Master Franchisee Ctean.doc

LIST OF FRANCHISE OUTLETS

Our franchisee! store status summary and Retail fiscal years ending December 31, 2005/2004^003 the next fiscal year may be found in our Individua

A list of the names, addresses andltelephon Agreement with Company as of the end of our as Exhibit E.

pr<

riises licensed pizza store status summary for Pour projected openings of individual stores for [it Uniform Franchise Offering Circular.

of all

ast tfiscalyear (unless another date is specified) is attached

FIGARO'S franchises under a Franchise

MASTER FRANGHISEEOTATUS SUMMARY FOR FISCAL YEARS ENDING DEGEMBErIsI, 2005/2004/2003

State

Alabama

Arizona

California

Connecticut

Florida

Idaho

Iowa

Illinois

Kentucky

Maine

Massachusetts

Michigan

Minnesota

Mississippi

Nevada

New Hampshire

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

S. Carolina

S. Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

Wisconsin

Totals

Transfers

0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0

Canceled or j Terminated

0/0/0 0/0/0 0/0/0 0/0/0 1/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/0/0 0/0/0 0/0/0 0/0/0 0/0/0 2/0/0

o/oyo o/oyc

0/070 O/OJO

o/ojo

0/0 0/0. 0/0 0/0/j

0/0/L

0/0/0

0/0/C'

0/0/(

0/0/C

0/0/

0/0/I

O/0/i

0/0/C

0/0/0

, Reacquired iBviCornpa'nv

0/0/0

0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 [0/0/0 fa/070

I/0/0 [0/0/0

i/0/O .0/0/0 B/070 0/0/0 {p/0/0 0/0/0

|o/o/o

(9/0/0 0/0/0

fo/o ;o7o/o

7/0/0

42 - FIGARO'S UNIFORM FRANCHISE OFFERING

0(0/0

/0/O

Left

The

System

Other

0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/0/0

Total From Left Columns

0/0/0 0/0/0 0/0/0 0/0/0 1/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/0/0 0/0/0 0/0/0 0/0/0 0/0/0 3/0/0

Master

Franchisees

Operating At

Year End

1/1/0 1/1/0 2/1/0 0/0/0 3/2/1 1/0/0 1/1/0 1/0/0 1/0/0 1/1/1 0/0/0 1/1/0 1/1/0 1/0/0 1/1/0 0/0/0 0/1/0 1/0/0 0/0/0 0/0/0 0/0/0 1/1/0 1/0/0 1/0/0 1/0/0 0/1/1 0/0/0 1/1/0 0/1/0

1/1/1

23/17/4

06 February 20 UFOC Master Franchisee - Clean.doc

A list of the names, addresses and telephone numbers of all FIGARO'S master franchisees under a Master Franchisee Agreement with Company as of the end of our last fiscal year (unless another date is specified) is attached in Exhibits E and J.

Note: Although some master franchisees' areas include more than one state, the chart above shows only one state for each director in order to accurately reflect the total number of master franchisees.

PROJECTED MASTER FRANCHISEE FRANCHISE OPENINGS FOR FISCAL YEAR ENDING DECEMBER 31, 2006

		PROJECTED NEW
	MASTER FRANCHISEE	MASTER
	FRANCHISE	FRANCHISEES	PROJECTED
	AGREEMENTS SIGNED	FRANCHISE	COMPANY-OWNED
	BUT NOT YET	OPENINGS IN NEXT	OPENINGS IN NEXT
STATE	OPERATING	FISCAL YEAR	FISCAL YEAR
Alabama	8	1	0
Arizona	14	1	0
California	5	2	0
Connecticut	0	0	0
Florida	8	1	0
Illinois	1	1	0
Idaho	3	1	0
Iowa	3	1	0
Kentucky Maine	2 8	1 1	0 0
Massachusetts	0	0	0
Michigan Minnesota	0 0	0 0	0 . 0
Mississippi Nevada	3 9	1 1	0 0
New Hampshire Ohio	0 4	0 1	0 0
Oklahoma	2	1	0
Rhode Island	0	0	0
S. Carolina	8	0	0
Texas	4	1	0
Utah	0	0	0
Vermont	0	0	0
Virginia Washington Wisconsin	2 0 2	1 0 0	0 0 0
TOTALS	86	16	0

The name and last known home address and telephone number of every franchisee within the most recently competed fiscal year who has had an outlet terminated, canceled, not renewed, or otherwise voluntarily or involuntarily ceased to do business under the Franchise Agreement or who has not communicated with us within 10 weeks of the date of this Offering, are in Exhibit E.

43 - FIGARO'S UNIFORM FRANCHISE OFFERING CIRCULAR

06 February 20 UFOC Master Franchisee - Clean.doc

:ii

21; FINANCIAL STATEMEI

TEMENjn

w n r

iferj J31[ Attached p

The fiscal year end for Company is Decemb, Company's audited financial statements for fisjaljjyears and December 31

this Offering Circular as Exhibit A are Ending December 31, 2005, December 31, 2004

The MASTER FRANCHISEE AGREEMENT forjuse in this] state and elsewhere is attached to this Offering Circular as Exhibit B,

We will ask you to sign the State and provincial Adderida Iftachedlas Exhibit H, the Conditional Assignment of Telephone and Directory Listings attached asl Exhibit!, and She Receipt for Completed Agreements attached as Exhibit K. Upon transfer or renewal off ypurlfranchise we may ask you to sign the Transfer Agreement and Release or the Renewa Agreement knd Release attached as Exhibit

RECEIPT

Attached to this offering circular are thre'e Acknowjebgmenfelof Re< sipt. The first evidences your receipt of the Master Franchisee Agreement in final form ready,for execution. The last two are duplicates that evidence your receipt of this Offering Circular - sicjn each co¹ )y|pne|isjto be retained by you, the other by us. You must

usiness Jays before execution of the Franchise

sign and date this Receipt and deliver itlto us at I fast" Agreement or payment of any fee by you!

44- FIGARO'S UNIFORM FRANCHISE OFFERING C

RCULAR

06 February 20 UFOC Master Franchisee - Clean.doc

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