UFOC

Sample UFOC

RECEIVED

MAR 2 f 2005

INFORMATION FOR PROSPECTIVE FRANCHISEES REQUIRED BY THE FEDERAL TRADE COMMISSION

PRETZEL TIME FRANCHISING, LLC

2855 East Cottonwood Parkway

Suite 400

Salt Lake City, Utah 84121

(801) 736-5600

www. p

www.mrsfieldsfranchise.com

Effective Date: See Exhibit 2

To protect you, we've required your franchisor to give you this information. We haven 7 checked it and don't know if it's correct. It should help you make up your mind. Study it carefully. While it includes some information about your contract, don't rely on it alone to understand your contract. Read all of your contract carefully. Buying a franchise is a complicated investment. Take your time to decide. If possible, show your contract and this information to an advisor, like a lawyer or an accountant. If you find anything you think may be wrong or anything important that's been left out, you should let us know about it. It may be against the law.

There may also be laws on franchising in your state. Ask your state agencies about them.

FEDERAL TRADE COMMISSION

Washington, D.C. 20580

PTFUFOC-3/<05>IM]


FRANCHISE OFFERING CIRCULAR

FOR PROSPECTIVE FRANCHISEES

PRETZEL TIME FRANCHISING, LLC

2855 East Cottonwood Parkway

Suite 400

Salt Lake City, Utah 84121

(801) 736-5600

www. p

www.mrsfieldsfranchise.com

The name of the franchisor is Pretzel Time Franchising, LLC. If you become a Pretzel Time Store franchisee, you will have the right to operate a Pretzel Time Store from which you will offer a variety of freshly baked, hand-rolled soft pretzels prepared according to our unique recipe, other pretzel-related products, toppings, beverages and other food products.

The standard initial franchise fee for a Pretzel Time Store is $25,000, although it may be less if <(a)->you are an existing qualified franchisee developing an additional store, <(b)-you-are developing a Pretzel Time Store as a location co-branded-with a concept owned by one of our Affiliates7-or-{o)>[ojJfJ you are purchasing the assets of an existing store. The estimated fees and amounts payable to us or our Affiliates before your store opens, including the initial franchise fee or transfer fee, is from $25,200 to $26,000 if you are developing a new store, and $8,000 to $258,000 if you purchase the assets of an existing store. The estimated initial investment required for a franchise, including the initial franchise fee, is from $<449r5QQ>f 158.0001 to $<242j500T>B4pJ5ftOJ ifu are developing a new <otoro, and $11,500 to $317,500,>[ifl: line store: $153.000 to $225.500. if vou are developing a new modular. prPfabribed kiosk: and $48.000 to $315.500.] if you purchase the assets of an existing store. These sums do not include real estate lease costs or any franchise fees payable to our Affiliates for any co-brand you develop at your Store. You must pay us a $5,000 initial fee if we allow you to operate a Non-Baking Kiosk< in connectiea>fJ with one of your full-service Pretzel Time Stores. This is the only amount payable to us or our Affiliates before you open your Non-Baking Kiosk. The estimated initial investment required for a Non-Baking Kiosk, excluding real estate lease costs, ranges from $9,000 to $50,000. These sums are not your total investment in your franchise. For a detailed explanation of your total investment, you should consult Items 5 through 7 of this Offering Circular.

Risk Factors:

THE FRANCHISE AGREEMENTS REQUIRE THAT ALL DISAGREEMENTS BE SETTLED BY ARBITRATION IN SALT LAKE CITY, UTAH. OUT OF STATE ARBITRATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT. IT MAY ALSO COST YOU MORE TO ARBITRATE WITH US IN UTAH THAN IN YOUR HOME STATE.

THE FRANCHISE AGREEMENTS STATE THAT UTAH 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.

ALTHOUGH THE FRANCHISE AGREEMENTS INCLUDE THE ARBITRATION AND GOVERNING LAW PROVISIONS DESCRIBED ABOVE AND FURTHER DISPUTE RESOLUTION PROVISIONS THAT WOULD ALLOW US TO SUE YOU IN UTAH UNDER CERTAIN CIRCUMSTANCES, LOCAL LAW MAY GOVERN THESE REQUIREMENTS IN YOUR STATE. TO THE EXTENT NOT GOVERNED BY LOCAL LAW, YOU MUST CONSENT TO LITIGATION BEING BROUGHT AGAINST YOU IN UTAH. PLEASE REFER TO ANY STATE-SPECIFIC ADDENDUM THAT MAY BE ATTACHED TO THE OFFERING CIRCULAR FOR DETAILS.

THE FINANCIAL STATEMENTS PROVIDED AT EXHIBIT 14 TO THIS OFFERING CIRCULAR ARE THOSE OF OUR PARENT, MRS. FIELDS FAMOUS BRANDS, LLC ("MFFB"). AS EXPLAINED IN NOTE 1 TO THE FINANCIAL STATEMENTS, THE FINANCIAL STATEMENTS ARE PRESENTED IN A "CARVE-OUT" FORMAT THAT ASSUMES THAT MFFB HAD EXISTED AS A SEPARATE LEGAL ENTITY FOR ALL PERIODS PRESENTED, AND MAY NOT PROVIDE A COMPLETE PRESENTATION OF THE FINANCIAL POSITION OF MFFB HAD IT OPERATED AS AN INDEPENDENT STAND-ALONE ENTITY FOR ALL PERIODS PRESENTED. ALTHOUGH OUR FINANCIAL STATEMENTS ARE NOT


INCLUDED IN THIS OFFERING CIRCULAR, MFFB HAS PROVIDED A GUARANTEE OF PERFORMANCE OF OUR OBLIGATIONS. PER THE AUDITED BALANCE SHEET DATED <JANUARY 4,>rDecember31.1 2005, MFFB HAD A NET WORTH DEFICIENCY OF $<43.501.000.M81.762.000.1

THE FRANCHISEE WILL NOT BE GRANTED ANY EXCLUSIVE TERRITORY.

FRANCHISES ARE GRANTED FOR A SPECIFIC LOCATION AND ARE NOT EXCLUSIVE. THE FRANCHISOR RETAINS THE RIGHT TO SELL AND GRANT OTHERS THE RIGHT TO SELL PRODUCTS AND SERVICES AND RETAINS THE RIGHT TO OWN, OPERATE AND GRANT OTHERS THE RIGHT TO OWN OR OPERATE STORES OR OTHER BAKED GOOD OR SNACK FOOD BUSINESSES UNDER THE TRADEMARKS AND SERVICE MARKS ON ANY TERMS AND CONDITIONS AND AT ANY LOCATIONS WHICH IT DEEMS APPROPRIATE. THESE ACTIVITIES MAY COMPETE WITH YOU.

BY ENTERING INTO THE FRANCHISE AGREEMENT, YOU AGREE TO BE HELD RESPONSIBLE AND MAY BE HELD IN BREACH OF THE FRANCHISE AGREEMENT FOR ACTS OR FAILURES TO ACT OF THIRD PARTIES OVER WHOM YOU EXERCISE NO LEGAL CONTROL.

THERE MAY BE OTHER RISKS CONCERNING THESE FRANCHISES.

Information comparing franchisors is available. Call the state administrators listed on Exhibit 2 to this Offering Circular or your public library for sources of information.

Registration of these franchises by a state does not mean that the state recommends them or has verified the information in this Offering Circular. If you learn that anything in this Offering Circular is untrue, contact the Federal Trade Commission or the state administrator in your state.

Effective Date: See Exhibit 2


NOTICE REQUIRED

BY

STATE OF MICHIGAN

THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.

Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:

(a)         A prohibition on the right of a franchisee to join an association of franchisees.

(b)         A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protections provided in this act. This shall not preclude a franchisee, after entering into a franchise agreement, from settling any and all claims.

(c)         A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause. Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.

(d)         A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures, and furnishings. Personalized materials which have no value to the franchisor and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of the franchise business are not subject to compensation. This subsection applies only if: (i) the term of the franchise is less than 5 years and (ii) the franchisee is prohibited by the franchise or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does not receive at least 6 months advance notice of franchisor's intent not to renew the franchise.

(e)         A provision that permits the franchisor to refuse to renew a franchise on terms generally available to other franchisees of the same class or type under similar circumstances. This section does not require a renewal provision.

(f)         A provision requiring that arbitration or litigation be conducted outside this state. This shall not preclude the franchisee from entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside this state.

THE MICHIGAN NOTICE APPLIES ONLY TO FRANCHISEES WHO ARE RESIDENTS OF MICHIGAN OR LOCATE THEIR FRANCHISES IN MICHIGAN.


(g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:

(i)        The failure of the proposed transferee to meet the franchisor's then-current

reasonable qualifications or standards.

(ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.

(iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.

(iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.

(h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor. This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchise on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchise for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).

(i)        A provision which permits the franchisor to directly or indirectly convey, assign, or

otherwise transfer its obligations to fulfill contractual obligations to the franchisee unless provision has been made for providing the required contractual services.

The fact that there is a notice of this offering on file with the attorney general does not constitute approval, recommendation, or endorsement by the attorney general.

Any questions regarding this notice should be directed to the Department of Attorney General, State of Michigan, 670 Williams Building, P.O. Box 30213 Lansing, Michigan 48913, telephone (517) 373-7117.

THE MICHIGAN NOTICE APPLIES ONLY TO FRANCHISEES WHO ARE RESIDENTS OF MICHIGAN OR LOCATE THEIR FRANCHISES IN MICHIGAN.


Item

TABLE OF CONTENTS

Page

ITEM1. ITEM 2. ITEM 3. ITEM 4. ITEM 5. ITEM 6. ITEM 7. ITEM 8. ITEM 9. ITEM 10. ITEM 11. ITEM 12. ITEM 13. ITEM 14. ITEM 15.

ITEM 16. ITEM 17.

ITEM 18. ITEM 19. ITEM 20. ITEM 21. ITEM 22. ITEM 23.

THE FRANCHISOR, ITS PREDECESSORS, AND AFFILIATES

BUSINESS EXPERIENCE.____..........._........................................................ .......

LITIGATION............_...........___................................................................... ........................

BANKRUPTCY......................_..... ..................................__.............................................

INITIAL FRANCHISE FEE.____................................___..................._._..........

............._.........................1

...............<W>[11]

-----..............<«>U3]

..........--.....<«>[ld]

................_<W>[ld]

OTHER FEES..................................................................... ___..__._..........................._............................_........................._........_16

INITIAL INVESTMENT..............-........................................____................._......................................_...<24>[2fl

RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES.._.................<39>Q1]

FRANCHISEE'S OBLIGATIONS........................................................._....................................................<U>\M\

FINANCING......................................................................................................._._.....................................................<34>[2U

FRANCHISOR'S OBLIGATIONS.. ................................ ................................ ..................<^>[2S]

TERRITORY............ ............................ .............................. ____............................ ........................<4>[4fi]

TRADEMARKS............................_........................................................................._____..........._.................<44>[4Z]

PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION............____..........<A6>\42\

OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF

THE FRANCHISE BUSINESS................................_..................................____..............._.................__<48>[5fl]

RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL......................................<4S>1]

RENEWAL, TERMINATION, TRANSFER AND DISPUTE

RESOLUTION......___.........................._......................................................................................................_.....<49>[52]

PUBLIC FIGURES.......................................................................____...............................................................<59>[2]

EARNINGS CLAIMS..................--........................................................................._.....................................<59>[&]

LIST OF OUTLETS...............................___........................................................................ ................<59>[fi2]

FINANCIAL STATEMENTS.........______................................. ............................_____..........-<&>M1

CONTRACTS......................._...........___..........................................................._............................................<^>W\

RECEIPT..............................................................................................____.....................................................<64>[fi2]

STATE-SPECIFIC ADDENDA - CALIFORNIA, ILLINOIS, MARYLAND, MINNESOTA, NEW YORK, NORTH DAKOTA, RHODE ISLAND, SOUTH DAKOTA AND WASHINGTON

EXHIBITS

EXHIBIT 1 EXHIBIT 2 EXHIBIT 3

EXHIBIT 4 EXHIBIT 5 EXHIBIT 6 EXHIBIT 7 EXHIBIT 8 EXHIBIT 9 EXHIBIT 10

DEFINITIONS

STATE ADMINISTRATORS/AGENTS FOR SERVICE OF PROCESS

FRANCHISE AGREEMENT WITH ACKNOWLEDGEMENT ADDENDUM,

OWNERSHIP ADDENDUM, GUARANTY, APPENDDC A

(AUTHORIZATION AGREEMENT FOR PREARRANGED PAYMENTS

(DIRECT DEBITS)), STATE-SPECIFIC ADDENDA AND RIDERS -

CALIFORNIA, ILLINOIS, MARYLAND, MINNESOTA, NEW YORK,

NORTH DAKOTA, RHODE ISLAND, SOUTH DAKOTA AND

WASHINGTON, AND RENEWAL ADDENDUM

NON-BAKING KIOSKS ADDENDUM TO FRANCHISE AGREEMENT

CONFIDENTIALITY AGREEMENT

ASSIGNMENT, ASSUMPTION AND CONSENT

TERM PRE-PURCHASE ADDENDUM

LEASE ADDENDUM

PURCHASE OPTION AGREEMENT AND ADDENDA

ASSET PURCHASE AGREEMENT; SUBLEASE AGREEMENT

-1-


EXHIBIT 11           OPERATIONS MANUALS TABLE OF CONTENTS

EXHIBIT 12           FRANCHISEE INFORMATION

PART 1 - LIST OF PRETZEL TIME FRANCHISEES

PART 2 - LIST OF PRETZEL TIME FRANCHISEES TERMINATED, CANCELLED, NOT RENEWED, OR THAT HAVE CEASED DOING BUSINESS EXHIBIT 13           LIST OF PRETZEL TIME AREA DEVELOPERS

EXHIBIT 14           FINANCIAL STATEMENTS

EXHIBIT 15           EARNINGS CLAIM

NOTICE

UNLESS OTHERWISE INDICATED, THE INFORMATION APPEARING IN THIS OFFERING CIRCULAR APPLIES TO PRETZEL TIME STORE FRANCHISES. UNLESS OTHERWISE INDICATED, THE TERMS OF ALL FRANCHISE OFFERS ARE THE SAME.


ITEM 1. THE FRANCHISOR, ITS PREDECESSORS, AND AFFILIATES

Description of the Franchisor and its Predecessors and Affiliates.

To simplify the language in this Offering Circular, "we", and similar words, refer to Pretzel Time Franchising, LLC, the franchisor; "MFFB" means our parent, Mrs. Fields Famous Brands, LLC; "PTI" means Pretzel Time, Inc.; "MFOC" means Mrs. Fields' Original Cookies, Inc.; "MFHC" means Mrs. Fields' Holding Company, Inc.; "MFCI" means Mrs. Fields' Companies, Inc.; "PMF" means Pretzelmaker Franchising, LLC; "PMI" means Pretzelmaker, Inc.; "Pretzelmaker-Canada" means Pretzelmaker-Canada, Inc.; "MFF" means Mrs. Fields Franchising, LLC; "New MFBI" means The Mrs. Fields' Brand, Inc. "MFC-Canada" means Mrs. Fields Cookies (Canada) Ltd.; "MFC-Australia" means Mrs. Fields Cookies Australia; "GACCF" means Great American Cookie Company Franchising, LLC; "GAM" means Great American Manufacturing, LLC; "GACC" means Great American Cookie Company, Inc.; "TCBY" means TCBY Systems, LLC; "TCBY Enterprises" means TCBY Enterprises, LLC; and "Juice Works" means Juice Works Development, Inc. "You", and similar words, means the person or persons, including a corporate or other legal entity, individually and collectively, buying a franchise from us; and "your Store" means the Pretzel Time Store that you will operate if we enter into a Pretzel Time franchise agreement with you. We have also attached as Exhibit 1 a list of additional defined terms used in this Offering Circular. If a capitalized term is not defined in the body of this Offering Circular, please refer to Exhibit 1 for the definition.

We are a Delaware limited liability company organized on February 4, 2004. We are a wholly-owned subsidiary of MFFB, a Delaware limited liability company organized on February 4, 2004, which is a wholly-owned subsidiary of MFOC, a Delaware corporation incorporated in February 1996. MFOC is a wholly-owned subsidiary of MFHC, a Delaware corporation incorporated in July 1996, which is a wholly-owned subsidiary of MFCI, a Delaware corporation incorporated in August 2001 under its former name, Mrs. Fields Famous Brands, Inc. We do business under the name Pretzel Time Stores (or variations of that name). Our Affiliates do business under the names Pretzel Time Stores, Pretzelmaker Stores, <Hot Sam Pretzel and Bakery Stores, >Mrs. Fields Cookie Stores, Mrs. Fields Bakery Cafes,<-Original Coolde Company Storos,>[J Great American Cookie Company Stores, <aftd->TCBY[ Stores. and Yovanal Stores (or variations of those names). Our principal business address is 2855 East Cottonwood Parkway, Suite 400, Salt Lake City, Utah 84121, and our telephone number is 801-736-5600. The principal business address and telephone number of PTI, MFCI, MFHCI, MFOC, MFFB, PMF, PMI, Pretzelmaker-Canada, MFF, New MFBI, MFC-Canada, MFC-Australia, GACCF, GAM, GACC, TCBY, TCBY Enterprises and Juice Works are the same as ours. Our agents for service of process are listed on Exhibit 2 to this Offering Circular.

We acquired a substantial portion of our assets from PTI, a Utah corporation incorporated in January 2000, who in turn acquired a substantial portion of its assets from Predecessor PTI (as further described below in this Item 1).

In keeping with a business strategy of separating franchise activities from company store operations, on March 16, 2004 MFOC and a number of its Affiliates contributed their franchising activities to MFFB and, ultimately, to newly formed subsidiaries of MFFB (the "Contributions"). In anticipation of the Contributions, we were formed by MFFB to act as the franchisor of the Pretzel Time franchise system. As part of the Contributions, PTI contributed all of its franchise-related assets, including all existing franchise agreements, area development agreements and Pretzel Time Trademarks, to MFFB. Immediately <thcreafter>[after]. MFFB contributed these assets to us. Also as part of the Contributions, we entered into a franchise agreement with MFOC to license it to continue to operate company-owned Pretzel Time Retail Outlets. As a result of the Contributions, we are now the franchisor of the Pretzel Time franchise system and a party to the existing area development agreements (as<-

-1-


fether>[J described below in this Item 1), and MFOC operates all company-owned Pretzel Time Retail Outlets. Although we are the franchisor of the Pretzel Time franchise system, MFFB employees perform the day-to-day operations of the franchise system and provide services to our franchisees. <Pr4ef> [Before] to the Contributions, PTI and Predecessor PTI operated the Pretzel Time franchise system. While MFOC will continue in the near term to operate all company-owned Pretzel Time Retail Outlets and the company-owned stores of a number of our Affiliates, MFOC also will continue its ongoing strategic review of company-owned store performance, with identified Pretzel Time Retail Outlets and other stores being sold to new or existing franchisees or closed. Accordingly, MFOC anticipates a reduction in its total number of company-owned Pretzel Time Retail Outlets and other retail stores over time with a corresponding reduction in its involvement in related company-store operations.

Our predecessor, PTI, acquired a substantial portion of its assets from Pretzel Time, Inc., which was a Pennsylvania corporation incorporated in May 1991 ("Predecessor PTI"). Predecessor PTI originally incorporated under the name Mr. Pretzel, Inc., but shortly after its incorporation changed its name to Pretzel Time, Inc. In September 1997, MFHC, acquired 56% of the common shares of Predecessor PTI. At the same time, MFHC and Predecessor PTI entered into a management agreement under which MFHC agreed to provide, either by itself or through one of its Affiliates, management services to Predecessor PTI. In November 1997, MFHC assigned all of its interest in the common shares of Predecessor PTI to MFOC. Following this assignment, MFOC acquired an additional 4% of the common shares of Predecessor PTI in January 1998, 10% of the common shares of Predecessor PTI in June 1998 and 30% of the common shares of Predecessor PTI in December 1998. As a result of these acquisitions, MFOC acquired 100% of the common shares of Predecessor PTI. In January 2000, MFOC merged Predecessor PTI with and into PTI and PTI is the surviving entity.

We have a number of Affiliates that offer franchises or provide products or services to our franchisees.

PMF is a Delaware limited liability company formed by MFFB on February 4, 2004 to act as the franchisor of the Pretzelmaker franchise system. As part of the Contributions, PMI contributed all,of its franchise-related assets, including all existing franchise agreements and Pretzelmaker Trademarks, to MFFB. Immediately <thereafter>rafterl. MFFB contributed these assets to PMF. Also as part of the Contributions, PMF entered into a franchise agreement with MFOC to license it to continue to operate company-owned Pretzelmaker Stores. In addition, as part of the Contributions, all franchise-related assets of Pretzelmaker-Canada, if any, were transferred to PMF. Pretzelmaker-Canada is an Ontario corporation incorporated on September 26, 1996, and a wholly owned subsidiary of PMI. As a result of the Contributions, PMF is now the franchisor of the Pretzelmaker franchise system, and MFOC <operates>roperated] all company-owned Pretzelmaker Stores<T>r until the last one was franchised in June 2005.1 Although PMF is the franchisor of the Pretzelmaker franchise system, MFFB employees perform the day-to-day operations of the franchise system and provide services to PMF's franchisees. <Prior to>[Before] the Contributions, PMI and its predecessors operated the Pretzelmaker franchise system in the United States, and PMI and/or Pretzelmaker-Canada and its predecessors operated the Pretzelmaker franchise system in Canada. Pretzelmaker-Canada no longer acts as the franchisor of the Pretzelmaker franchise system in Canada.

MFF is a Delaware limited liability company formed by MFFB on February 4, 2004 to act as the franchisor of the Mrs. Fields franchise system. As part of the Contributions, MFOC contributed the Mrs. Fields Trademarks to MFFB and, ultimately, to New MFBI. New MFBI is a Delaware corporation incorporated on February 4, 2004 and a wholly owned subsidiary of MFFB. Immediately <thoroaftcr>[afterj. New MFBI granted to MFF a perpetual, fully paid license to use the Mrs. Fields Trademarks< in conneotion>L] with all franchised Mrs. Fields Cookie Store. Also as part of the Contributions, MFOC contributed all of its other franchise-related assets, including all existing Mrs.

-2-


Fields franchise agreements, to MFFB. Immediately <theroafter>[after]. MFFB contributed these other franchise-related assets to MFF. At the same time, MFF entered into a franchise agreement with MFOC to license it to continue to operate Mrs. Fields Cookie Stores. In addition, as part of the Contributions, all franchise-related assets of MFC-Canada, if any, were transferred to MFF. MFC-Canada is an Ontario corporation incorporated on May 24, 1984, and a wholly owned subsidiary of MFOC. As a result of the Contributions, MFF now the franchisor of the Mrs. Fields franchise system, and MFOC operates all company-owned Mrs. Fields Cookie Stores. Although MFF is the franchisor of the Mrs. Fields franchise system, MFFB employees perform the day-to-day operations of the franchise system and provide services to MFF's franchisees. <Prior to>[Before] the Contributions, MFOC and its predecessors operated the Mrs. Fields franchise system in the United States, and MFOC and/or MFC-Canada and its predecessors operated the Mrs. Fields franchise system in Canada. MFC-Canada no longer acts as the franchisor of the Mrs. Fields franchise system in Canada.

As part of the Contributions, MFOC also contributed the Original Cookie Company Trademarks and Hot Sam Trademarks to MFFB and, ultimately, to New MFBI. Immediately <thereaftor>rafter1. New MFBI granted to MFF a license to use the Original Cookie Company Trademarks and Hot Sam Trademarks. MFF has in turn licensed the use of these Trademarks to MFOC<. Accordingly, MFOC operates all company ownod>r. and MFOC has granted a small number of licenses to third parties to operate Original Cookie Company and Hot Sam Stores formerly owned and operated bv MFOC. MFOC no longer operates anvl Original Cookie Company <Storos and>[flLj Hot Sam Stores. There are no franchised Original Cookie Company or Hot Sam Stores<. MFOC eontinuos to evaluate the performance of these Gtorca and cxpeota that during 2005 and 2006, substantially all Original Cookie Company and Hot Sam Stores will >[. and the small number of licensed locations will, ^either be closed or franchised and converted to another concept franchised by us or our Affiliates.

GACCF and GAM are both Delaware limited liability companies formed by MFFB on February 4, 2004. GACCF was formed to act as the franchisor of the Great American Cookie Company franchise system, and GAM was formed to own and operate the batter facility (as <further >described below in this Item 1). As part of the Contributions, GACC contributed all of its franchise-related assets, including all existing franchise agreements, Great American Cookie Company Trademarks, and the batter facility to MFFB. Immediately <thercaftcr>[after]. MFFB contributed the franchise agreements, Trademarks and related assets to GACCF and the batter facility and related assets to GAM. Also as part of the Contributions, GACCF entered into a franchise agreement with MFOC to license it to continue to operate company-owned Great American Cookie Company Stores. As a result of the Contributions, GACCF is now the franchisor of the Great American Cookie Company franchise system, and MFOC operates all company-owned Great American Cookie Company Stores. Although GACCF is the franchisor of the Great American Cookie Company franchise system, MFFB employees perform the day-to-day operations of the franchise system and provide services to GACCF's franchisees. <Prior to>rBefore1 the Contributions, GACC and its predecessors operated the Great American Cookie Company franchise system and the batter facility.

TCBY is a Delaware limited liability company organized on May 30, 2000. TCBY has been the franchisor of the TCBY franchise system since July 2000, and, <prior to>[heiafg] this date, TCBY's predecessors, including TCBY Enterprises (a Delaware limited liability company) and TCBY Systems, Inc. (an Arkansas corporation), operated the TCBY franchise system. As part of the Contributions, TCBY Enterprises exchanged its 100% ownership interest in TCBY to MFOC for shares in MFOC. Immediately <thereafter>["after1. MFOC contributed 100% of its ownership interest in TCBY to MFFB. As a result, TCBY is currently a wholly-owned subsidiary of MFFB. At the time of the Contributions, the management agreement between TCBY and MFOC was terminated, and MFFB employees now

-3-


perform the day-to-day operations of the TCBY franchise system and provide services to TCBY's franchisees.

MFC1, MFHC, MFOC, MFFB, PTI, PMF, PMI, Pretzelmaker-Canada, MFF, New MFBI, MFC-Canada, MFC-Australia, GACCF, GAM, GACC, TCBY and TCBY Enterprises are separate entities and, except as described in Item 21 of this Offering Circular, are not liable to you for any actions taken or obligations incurred by us.

Description of the Franchises Offered.

We offer franchises (the "Franchises") for Pretzel Time Stores[. including modular. prefabricated hakinfl kiosks.] offering various Pretzel Time Products in accordance with the terms of our Pretzel Time franchise agreement (the "Pretzel Time Franchise Agreement" or "Franchise Agreement"). A copy of the Pretzel Time Franchise Agreement is attached to this Offering Circular as Exhibit 3. If you enter into a Pretzel Time Franchise Agreement, you will be authorized to use the Pretzel Time System under which Pretzel Time Stores operate. In establishing your Store, MFOC may sell you one or more of its existing Pretzel Time Stores. (See Item 5 of this Offering Circular). If you do business as an Entity, each of your Entity Owners must guarantee your obligations under the Franchise Agreement by signing the Guaranty attached to the Franchise Agreement, a copy of which is included in Exhibit 3 to this Offering Circular.

We also may grant you the right to operate a non-baking kiosk ("Non-Baking Kiosk") <m-oonnection >with one of your full-service Pretzel Time Stores (the "Host Store")!". A Non-Baking Kiosk mav not he operated with a modular, prefabricated baking kioskl. A Non-Baking Kiosk is a stationary or mobile kiosk, cart, wagon or similar unit that you operate within the same shopping mall or center as the Host Store, but away from the Host Store's actual premises. We do not consider a temporary, promotional holiday display case or decorating table to be a Non-Baking Kiosk, although you must get our approval to operate one under the Franchise Agreement for your Host Store. A Kiosk sells products that you actually produce at the Host Store. If we grant you the right to operate a Non-Baking Kiosk, you must sign our non-baking kiosks addendum ("Non-Baking Kiosks Addendum") to the Franchise Agreement for the Host Store. A copy of the Non-Baking Kiosks Addendum is attached to this Offering Circular as Exhibit 4.

The Market.

Your Pretzel Time Store will offer a variety of Pretzel Time Products to the general public, and you will have to compete with bakeries, some fast-food restaurants, snack food stores, convenience stores (including Pretzelmaker Stores), and facilities owned or managed by us or our Affiliates, all of which offer specialty retail snack foods and beverages. You will also have to compete with other Pretzel Time Retail Outlets selling various Pretzel Time Products and other products and services (such as frozen pretzel dough sold through various retail outlets) under the Pretzel Time Trademarks or other trademarks or service marks. In addition, you will have to compete with other individuals and entities in the search for suitable store locations, managers, and employees. Pretzel Time Products appeal to persons of all ages, but particularly appeal to families with children and to adults between the ages of 21 and 60.

We and our Affiliates are engaged in the business of the sale of frozen pretzels and other food products in the food service industry. We and our Affiliates are interested in market penetration by distribution of frozen dough products, including frozen pretzels, to alternative locations such as airports, amusement parks, schools, hospitals, office work sites, military facilities, grocery stores, convenience stores, supermarkets, entertainment or sporting facilities and/or other similar facilities and eventual food service distribution in non-franchised outlets at or from which we, in our absolute discretion, authorize.

-4-


We and our Affiliates intend to distribute frozen pretzels for sale in other non-franchised and non-company-owned outlets. We and our Affiliates are interested in developing, marketing, and/or distributing other food products in the food service industry.

As discussed elsewhere in this Item 1, our Affiliate, PMF, operates the Pretzelmaker franchise system which serves principally pretzel products and may compete with you. During the effective period of this Offering Circular, we and PMF <w4U-be>[are in the process of] conducting research<-> and studies to identify best practices and specific strengths of both the Pretzel Time and Pretzelmaker systems. <As-a-part of this prooess,-we and PMF may share information, develop and test produets,-trade-droGO, operations, marketing, and other system features and standards that are the same or similar for both braads, and-may-ask franchisees of both systems to work-together to provide data to us and our Affiliates. Thn rer.ultr, nf thor.o activities A selected group of Pretzel Time and Pretzelmaker franchisees are participating in tests to determine potential synergies between the brands and to offer consumers a similar experience in both types of stores. One result of these activities has been the development of a single pretzel dough that is now being used to bake pretzels of a single taste and texture (prepared from either a drv mix or frozen doughl hv this group of test stores from both systems. We and PMF anticipate that this single dough will be introduced as a required product for both systems sometime during 2006. We and PMF have also developed a series of promotions, point of purchase and other marketing materials that are being used in stores of both systems. Further results of these studies and tests! may affect both the Pretzel Time and Pretzelmaker systems in a number of [additional lwavs. including the possible future development of pretzel stores and products by us or our Affiliates under new trademarks and <tradenames>[trade names, the possible conversion of one of the systems to the other, and/or the possible conversion of both systems to a third pretzel system developed hv us or our Affiliates under new trademarks, trade names and/or trade dress. We and PMF will make anv decisions after consultation and advice from franchisee representatives from both systems]. If you become our franchisee, you may be asked to participate in this process, and will be affected by any resulting changes.

Some states may require franchisees to obtain restaurant, business, occupational, food products, and miscellaneous licenses. Some states also have laws regarding who may secure certain of these licenses. You may also have to obtain health licenses and to comply with health laws and regulations that apply to restaurant and food product sales establishments. We urge you to make inquiries about these laws and regulations.

The Business of the Franchisor, its Predecessors, and Affiliates.

Since March 2004, we have been in the business of granting licenses and franchises for the operation of Pretzel Time Stores to franchisees or licensees who successfully complete our application process and qualify to purchase a franchise or license. We acquired a substantial portion of this business fromPTI.

From January 1992 to February 2004, PTI (or Predecessor PTI) was in the business of granting licenses and franchises for the operation of Pretzel Time Stores. From October 1991 to December 1997, Predecessor PTI was also in the business of owning and operating Pretzel Time Stores. As< further>[J described above, MFOC entered into a franchise agreement with us at the time of the Contributions<raHd-now operates its>r for the operation of its companv-ownedl Pretzel Time Stores< as our single largest franchisee.Sfflee->I". From ]Novemher 1997, MFOC has also been in the business of owning and operating Pretzel Time Stores <whi6h>rthatl it purchased or acquired from Pretzel Time franchisees or Area Developers. See the table below in this Item 1 and Item 20 of this Offering Circular for more

-5-


information regarding franchised and company-owned Pretzel Time Stores. As of the date of this Offering Circular, neither we, PTI nor Predecessor PTI own or operate any Pretzel Time Stores.

Under a national sales agreement Predecessor PTI entered into with a predecessor of TCBY, Predecessor PTI and PTI offered Pretzel Time franchisees the opportunity to add the TCBY concept to a new or existing Pretzel Time Store under certain circumstances from February 1995 to May 2000. Neither we nor PTI are offering this opportunity to Pretzel Time franchisees under the national sales agreement. You may, however, be granted the right under certain circumstances to operate a Pretzel Time Store in conjunction with a TCBY license or franchise under a different program with either us or TCBY.

In certain instances, you may be able to enter into a co-branding arrangement with one or more of our Affiliates, m <sHeh>fthat| case, you will enter into a Pretzel Time Franchise Agreement with us for the Pretzel Time Store, and a separate franchise agreement with each our respective Affiliates for each brand you are co-branding with the Pretzel Time brand. These locations may, in some cases, be developed as a Mrs. Fields Bakery Cookie Cafe, which generally includes a Mrs. Fields Cookie Store and one or more additional concepts of us or our Affiliates (including the Pretzel Time concept) as well as other approved products, such as sandwiches and soups. Our Affiliates may also offer co-branding arrangements with their franchisees that do not include the Pretzel Time brand. All of these co-branded locations may compete with you.

We or one of our Affiliates may establish a new business or franchise system or acquire an existing business or franchise system (which may be one of your competitors) operating under trademarks, service marks and trade names other than the Pretzel Time Trademarks. The new or existing business or franchise system may compete with you.

We or one of our Affiliates may enter into co-branding arrangements with other snack-food companies. In <SHeh>[those] cases, we or our Affiliates may or may not allow you to offer co-branded products from your Pretzel Time Store, depending on<-sueh>[J factors [such ]as the terms of the co-branding arrangement, the terms of your Pretzel Time Franchise Agreement, applicable geographic restrictions and our and our Affiliates' other rights and obligations. These co-branding arrangements may compete with you.

Between January 1992 and March 1998, PTI (or Predecessor PTI) was in the business of granting area developer rights to certain qualified persons ("Area Developers") under a Pretzel Time area development agreement. As part of the Contributions further described above, in March 2004 PTI contributed all of its area development agreements to MFFB, who in turn contributed these assets to us. Although the form of area development agreement has varied over the years, Area Developers generally have been granted the right to develop, own and operate a specified number of Pretzel Time Stores at certain approved locations within a defined geographic area (the "Territory"). Most Area Developers also have been granted the right to market and service the Pretzel Time System at certain locations within their Territories, for which they receive a fee. Finally, Area Developers typically have been granted the right under their area development agreements to receive compensation from us or our predecessors for finding Pretzel Time franchisees for certain locations within their Territories. Area Developers, however, do not have the authority to grant the rights to license or operate a Pretzel Time franchise or enter into a Pretzel Time franchise agreement with a potential franchisee. Currently, neither we nor PTI is entering into area development agreements with new Area Developers. We may, however, offer some other form of area development grants for Pretzel Time Stores <whi6h>[that] permit the development and operation of multiple Pretzel Time franchises in designated geographic areas. We will offer area development rights through separate offering circulars, if at all. As of the date of this Offering Circular, there were 4 Area Developers, who hold the rights to separate Territories. See Item 2 and Exhibit 13 for

-6-


a list of our Area Developers and their respective Territories. These Area Developers are independent contractors. As <further >described in Item 11 of this Offering Circular, an Area Developer may be obligated to provide certain services to you if your Store is located within such Area Developer's Territory.

Through asset and stock purchases occurring over the past 7 years, MFOC and other of our Affiliates have acquired the Pretzel Time area development rights of certain Area Developers. As of the date of this Offering Circular, the related area development agreements have been effectively terminated, and any services previously provided to Pretzel Time franchisees located within the Territories covered by these area development agreements are now being provided by MFFB.

For more than 20 years, PTI and its predecessors and other of our Affiliates have offered international master franchise agreements, franchise agreements and other types of licensing agreements for the Pretzel Time brand and other brands in foreign countries. As of <Januarv l>rDecember 31.] 2005, there were 7 Pretzel Time locations in <>|jl] foreign countries, <4G>[^2] Pretzelmaker locations in 2 foreign countries, <S2>[8Z] Mrs. Fields locations in <44>[jJJ foreign countries, <4>[one] Great American Cookie Company <looations> rio catio nl in one foreign country, and <20&>[1S] TCBY locations in <20>[12] foreign countries. As a result of the Contributions, going forward, we will offer international master franchise agreements, franchise agreements and other types of licensing agreements in foreign countries for the Pretzel Time brand, and PMF, MFF, GACCF and TCBY will offer international master franchise agreements, franchise agreements and other types of licensing agreements in foreign countries for their respective brands, and MFC-Australia (a Utah corporation incorporated in June 1983) may still provide some services to Mrs. Fields, franchisees or licensees in Australia. Licenses and franchises for Pretzel Time Retail Outlets in other countries may be under different terms and conditions than are described in this Offering Circular.

Since the Contributions in March 2004, PMF has been in the business of granting franchises for the operation of Pretzelmaker Stores. From September 1992 to February 2004, PMI was in the business of granting franchises for the operation of Pretzelmaker Stores in the United States. Since August 1995, PMI has also been in the business of owning and operating Pretzelmaker Stores either directly or through its parent MFOC. In addition, from September 1996 to February 2004, Pretzelmaker-Canada was in the business of granting franchises for the operation of Pretzelmaker Stores in Canada, but is no longer offering these franchises. A Pretzelmaker Store offers soft pretzels, pretzel products and other complementary food and beverages. In some circumstances, a Pretzelmaker Store may also offer branded frozen desserts and coffee products. See table below in this Item 1 for more information regarding franchised and company-owned Pretzelmaker Stores.

Since November 1997, MFOC has been in the business of owning and operating Pretzel Time Stores <wh4eh>[that] it purchased or acquired from Pretzel Time franchisees or Area Developers. Since November 1998, MFOC has also been in the business of owning and operating Pretzelmaker Stores <whieh>[that1 it purchased or acquired from Pretzelmaker franchisees. MFOC now operates its company-owned Pretzel Time Stores and Pretzelmaker Stores under separate franchise agreements with us and PMF. See table below in this Item 1 for more information regarding these company-owned Pretzel Time Stores and Pretzelmaker Stores.

Between September 1996 and November 1997, MFOC was in the business of granting licenses and franchises for the operation of Hot Sam Pretzel and Bakery Stores. Currently, neither MFOC nor any other of our Affiliates <are>[isj granting Hot Sam Pretzel and Bakery Store licenses and franchises. <SfflGe>rFroml September <449fe>ri996 to November 2005.1 MFOC <has>b^s] also <feeen->in the

business of owning and operating Hot Sam Pretzel and Bakery Stores.<MFOC now operates ito>[__

MFF has given MFOC the right to grant a limited number of sublicenses to third parties for the

-7-


operation of the remaining] Hot Sam Pretzel and Bakery Stores <as a liomnoo of MFFr>fformerlv owned and operated hv MFOC. 1 A Hot Sam Pretzel and Bakery Store offers a variety of freshly prepared soft pretzels and pretzel products (including Bavarian and sweet dough pretzel sticks), various toppings and sauces, freshly squeezed lemonade and other food items and beverages. <See table below in thia Item 1 for more information regarding oompanv owned Hot Sam Protzol and Bakery Stores.>[We anticipate that the remaining licensed locations will'either close or convert to another concept franchised bv ns or one of our Affiliates during 2006.1

<In certain situations, you may bo able to purchase an existing Hot Sam Pretzel and Bakery Store location and ito physioal assets from MFOC and convert the location to a Protzol Time Store of the type offered in this Offering Circular. The acquisition of the existing Hot Sam Pretzel and Bakery location and assets from MFOC will be negotiated between you and MFOC on an individual basis, independently, separately and in addition to your entering into a Pretzel Time Franchise Agreement with us to operate a Protzol Time Store. This Offering Circular makes no disclosures or representations regarding the terms and oonditiono of any ouoh transaction you may negotiate with MFOC.In oortain situations, a prospective franchisee of PMF also may be able to purchase an existing Hot Sam Pretzel and Bakery location and its physioal assets from MFOC and convert the location to a Protzelmaker Store.>

Since the Contributions in March 2004, MFF has been in the business of granting licenses and franchises for the operation of Mrs. Fields Cookie Stores. From May 1986 to February 2004, MFOC or its predecessors were in the business of granting licenses and franchises for the operation of Mrs. Fields Cookie Stores. Since July 1977, MFOC or its predecessors have been in the business of owning and operating Mrs. Fields Cookie Stores. MFOC now operates its company-owned Mrs. Fields Cookie Stores under a franchise agreement with MFF. Mrs. Fields Cookie Stores offer a variety of specially prepared food items, such as cookies, brownies, muffins and beverages. <Sm6e>fFrom1 September <44)96t>F1996 to November 2005.] MFOC <has>[w^a] also <been->in the business of owning and operating Original Cookie Company Stores< An Original Cookie Company Store offers a variety of specially prepared food items, ouoh as oookios, brownies, muffins and beverages. MFOC now operates its Original Cookie Company Stores as a licensee of MFF>. See the table below in this Item 1 for a summary of the Mrs. Fields Cookie Stores (and Mrs. Fields Bakery Cookie Cafes, which are Mrs. Fields Cookie Stores operated< in oonjunotion>LJ with Pretzel Time or Pretzelmaker Stores and/or TCBY Stores) <and Original Coolde Company Stores >in the United States <whi6h>[that] are owned and operated by MFOC.

In November 2000, MFOC entered into a master lease with Wal-Mart, a large, discount retail chain. From November 2000 to September 2002, as a result of this leasing arrangement, MFOC owned and operated stores located within the chain as company-owned units operating under trademarks and commercial symbols of our Affiliates. Additionally, in certain isolated instances, MFOC constructed, built-out and developed a store at a particular Wal-Mart, then sold the assets of the store and subleased the store premises to a franchisee. MFOC no longer offers these Wal-Mart franchised locations, and all stores previously operated by MFOC located within Wal-Marts have been closed. We or our Affiliates may, however, enter into similar arrangements with other retailers in the future. These arrangements may compete with you.

Since the Contributions in March 2004, GACCF has been in the business of granting licenses and franchises for the operation of Great American Cookie Company Stores, and GAM has been in the business of operating the batter facility that produces proprietary batter, dough and other ingredients for making cookies that Great American Cookie Company franchisees must buy from GACCF or GAM. From September 1977 to February 2004, GACC was in the business of granting licenses and franchises for the operation of Great American Cookie Company Stores. Since June 1977, GACC has also been in the business of owning and operating Great American Cookie Company Stores either directly or through

-8-


its parent MFOC. A Great American Cookie Company Store offers different types of cookies, other baked products and beverages and is typically located in an enclosed shopping mall.<In oortain situations, a prospective Great American Cookie Company Store licensee may bo able to purchase an existing Original Cookie Company Store location and its physioal assets from MFOC and convert the

location to a Great American Cookie Company Storo.>[__] See table below in this Item 1 for more

information regarding franchised and company-owned Great American Cookie Company Stores.

Since August 1998, MFOC has been in the business of owning and operating Great American Cookie Company Stores, which it purchased or acquired from GACC franchisees. MFOC now operates its company-owned Great American Cookie Company Stores under a franchise agreement with GACCF. See table below in this Item 1 for more information regarding these company-owned Great American Cookie Company Stores.

Since July 2000, TCBY has been in the business of offering franchises for TCBY Stores. TCBY's predecessors, including TCBY Enterprises and TCBY Systems, owned and operated and offered franchises for TCBY Stores between October <1981. Currently, there are>[1981 and .Tune 2000. fTistoricallv. TCBY has offered! 2 types of TCBY franchised Stores: "Traditional TCBY Stores" and "Other Concepts TCBY Stores." A Traditional TCBY Store typically has 800 to 1,600 square feet, seats 10 to 34 customers and caters to both carry-out and eat-in business. In some instances, however, a Traditional TCBY Store may be smaller, having no more than 800 square feet, because it operates as part of a food court or other shared dining opportunity, or serves small urban or even rural communities. Other Concept TCBY Stores involve co-branding arrangements and are sometimes referred to by TCBY as non-traditional TCBY stores. An Other Concepts TCBY Store is located at or within premises operated under trade names or trademarks belonging to another concept, which may include another concept owned and franchised by us or our Affiliates. A franchisee of an Other Concepts TCBY Store typically offers and sells a basic menu of core TCBY products, such as cones, cups and sundaes, but generally will not sell an extended menu, such as cakes or pies.

rTCBY is in the process of developing and testing in certain markets and locations it identifies a reconcepting program (the "Reconcepting Test"! for Traditional TCBY Stores. die TCBY will continue to offer franchises for Other Concents Stores during and Test. TCBY does not, as of the date of this Offering Circular, intend to offer franchises for anv new Traditional TCBY Stores during the Reconcepting Test. Tnstead. opting Test. TCBY will allow some existing, franchised Traditional TCBY Stores irkets and locations it identifies to participate in the Reconcepting Test. TCBY mav also grant single and/or multiple unit franchises for new stores in certain markets and locations it identifies that will narticipate in the Reconcepting Test. Existing, franchised Traditional TCBY Stores and new franchised stores that participate in the Reconcepting Test are collectively referred to in this Offering Circular as "Test Stores." Test Stores will operate under and use newlv-develoned trade dress, trademarks, trade names and service marks TCBY owns and/or registers. which mav include the Berivo trademark (the "New Marks"!, as well as certain existing TCBY trademarks, and will sell certain new proprietary, premium quality smoothies, frozen vogurt products and menu items containing such products (the "Test Products"!, together with some of the menu items TCBY has already approved for sale from TCBY Stores.l

rif TCBY determines that the Reconcepting Test has been a success and has resulted in the development of a "Store of the Future" program. TCBY will require all Test Stores to operate as TCBY Stores of the Future. Tn addition, in the event of a successful Reconcepting Test. TCBY will "" 'onger offer Traditional TCBY Store franchises, but will instead focus on the conversion and development of TCBY "Stores of the Future" operated in accordance with the "Store of the Future" program. Tn contrast, if TCBY determines that the Reconcepting Test has not been a

-9-


snccess. the Test Stores will he required to purchase and install new signage, point of purchase materials and other hranded elements necessary to make the Test Stores' branding consistent with other Traditional TCBY Stores operated hv TCBY franchisees in accordance with it then-current standards. TCBY will reimburse Test Store franchisees for certain costs arising from this change in hranded elements. Further, in the event of an unsuccessful Recnncenting Test. TCBY mav once again continue offering franchises for Traditional TCBY Stores.1

See table below in this Item 1 for more information regarding franchisee! and company-owned

On June 1, 2000, MFOC entered into a management agreement with TCBY, the franchisor of the TCBY system, under which MFOC managed and operated the TCBY franchise system on a day-to-day basis from June 2000 to February 2004. As part of the Contributions, that management agreement was terminated in March 2004 and employees of MFFB, the current parent of TCBY, now perform the day-to-day operations of the franchise system and provide services to TCBY's franchisees.

[Since December 2005. TCBY has been in the business of granting single and multiple unit franchises for the operation of Yovana stores ("Yovana Stores"!, in certain limited markets, to Qualified franchisees. A Yovana Store is a retail meal, treat, snack and beverage outlet that offers a variety of specially prenared food items, such as fresh vogurt. smoothies, drinkahle vngurt blends and frozen vogurt treats, granolas. cereals, breads, pastries, preminm coffee, espresso and teas. juices, and other products and beverages. Tn addition to offering single unit franchises for new Yovana Stores. TCBY also offers a Yovana multi-unit development program. In the future. TCBY mav develop new Yovana Stores as companv-owned stores, or for eventual sale tn a new or existing franchisee. All Yovana Store locations mav compete with vou. See table below in this Item 1 for more information regarding franchised and companv-owned Yovana Stores.]

Juice Works began franchising Juice Works stores in October 1996 and ceased franchising in February 1998. From February 1998 to December 2002, TCBY or its predecessors offered the right to add the Juice Works product line to its franchised TCBY stores under a Juice Works addendum to the TCBY franchise agreement. TCBY no longer offers this program.

The following table summarizes the franchises and licenses offered by us and our Affiliates in the United States that were operating as of <Jnnuary l.>[December 31.] 2005. All of these franchised and licensed locations may compete with you. While the current franchisors/licensors of each concept are listed in the table below, these entities did not actually become the franchisors/licensors of their respective concepts until the Contributions in March 2004. Except as described in the table below or elsewhere in this Item 1, as of <Januarv 1.>[Decemher 31.] 2005, neither we nor our Affiliates have offered franchises in any other lines of business. In addition, except for the company-owned stores operated by MFOC under franchise agreements with us and our Affiliates, as of<Januarv l.>[Decemher 2L] 2005, neither we nor our Affiliates operate any company-owned stores for the concepts listed in the table below. [J

Franchisor/ Licensor

Concept

Number of Franchises(l)

Number of Company-Owned Stores Operated by MFOC(2)

Us

Pretzel Time

<4S&>[195]

<^>[1Q]

PMF

Pretzelmaker

<454>tt421

<Mfil

-10-


Franchisor/ Licensor

Concept

Number of Franchises(l)

Number of Company-Owned Stores Operated by MFOC(2)

<ffi>

<Hot Sam Pretzel and Bakery >L1

<0>

<44>

MFF

Mrs. Fields Cookies (and Mrs. Fields Bakery Cookie Cafes)

<M0>[222]

<26>[ij

GACCF

Great American Cookie Company

<^>[225]

<&>W

<&fl>[I

<Original Cookie Companv>[Yovana1

<0>tl]

<7>ffi]

TCBY

TCBY

<4086>r2Zll(3)

<44>ffll

Traditional TCBY Stores

<449>[i21]

0

Non-traditional TCBY Stores

<6W>[54S]

<44>[fl]

(1)        This column lists the number of franchises open and operating as of <January 1,>[ 31.1 2005, excluding those stores operated by MFOC (which are disclosed in the next column). These numbers include combo units so that the same location may be included in the total for more than one concept.

(2)         This column lists the number of stores operated by MFOC as of <January l.>[December 31r] 2005. While MFOC operates these stores under separate franchise agreements with us, PMF, MFF, GACCF and TCBY, we refer to them as "company-owned" rather than "franchised" in certain sections of this Offering Circular because MFOC is an Affiliate of each of these franchisors.

(3)         While there are no longer any Juice Works Stores, as of <Januarv l.>fDecember 31.] 2005, there were <?>[lfl] Juice Works units operated <in cnniunotion with>rwithin] franchised TCBY Stores.

ITEM 2. BUSINESS EXPERIENCE

The following list discloses our managers and principal officers who will have management responsibility relating to the franchises offered under this Offering Circular, and the principal occupation of each of them during the preceding 5 years. Individuals who are our officers or managers may hold the same or equivalent positions with MFFB and other of our Affiliates.

President. Chief Executive Officer and Manager: Stephen Russo

Mr. Russo has been our President and Chief Executive Officer, and one of our Managers since March 2004. He also has held the same or equivalent positions with a number of our Affiliates since May 2003. From July 1997 to April 2003, Mr. Russo was Director, Retail Operations Officer for Allied Domecq,

-11-


QSR in Randolph, Massachusetts. From January 1978 to June 1997, he served in various capacities for Dunkin' Donuts in Randolph, Massachusetts.

Executive Vice President <General Gomsel>[Chief Legal Officer]. Secretary and Manager: Michael R. Ward

Mr. Ward has been our Executive Vice President fand Chief Legal Officer lsince <&me-aOQ4r>fFehruarv 2006.] and our< General Counsel and> Secretary and one of our Managers since March 2004. From fJune 2004 to January 2006. he was our Executive Vice President and General Counsel. From IMarch 2004 to June 2004, he was our Senior Vice President and Genera} Counsel]

Mr. Ward also has held the same or equivalent positions with a number of our Affiliates since May 2000. He served as Vice President of Administration and Legal Department of a number of our Affiliates from September 1996 to May 2000. From 1991 to 1996, Mr. Ward's responsibilities were overseeing the Legal Department and the Human Resources Department for MFI. Mr. Ward is admitted to practice law in the State of Utah.

<Chief Finanoial Officer. Treasurer and Executive Vioe President of Finance and Administration: Sandra Btt*&>

<Mo. Buffa has been our Executive Vioe President of Finanoe and Administration since Juno 2004, and our Chiof Finanoial Officer and Treasurer sinoe March 2004. From March 2004 to June 2001, she was our Senior Vioe President of Finanoo and Administration.Mo. Buffa also has hold the same or equivalent positions with a number of our Affiliates since April 2001. Immediately boforo joining us, she and her husband spent a year on sabbatical. From November 1998 to November 1999, Ms. Buffa served as President of Crabtroo & Evelyn, Ltd., in Waltham, Massachusetts, and as Chiof Finanoial Officer and a dirootor of that company from March 1998 to November 1998. Between July 1993 and March 1998, she served as Senior vice President, Chiof Finanoial Officer, Treasurer and a Director of National Vision Associates in Lawrcnceville. GeorgiaXExcoutivc Vice Prosidont of Operations and Developments Executive Vice President and Chief Operations Officer!: Para Deibakhsh

Mr. Dejbakhsh has been our Executive Vice President [and Chief Operations Officer since February 2006. and our Executive Vice President ]of Operations and Development <sin6e>[fEm] June <3QQ4,>[2004 to January 2006.] From March 2004 to June 2004 he was our Vice President of Operations. He also has held the same or equivalent positions with a number of our Affiliates since January 2004. Immediately before joining us, Mr. Dejbakhsh spent 6 months on sabbatical. From January 1996 to June 2003, Mr. Dejbakhsh was Area Vice President covering operations, development and field marketing for the western U.S., Canada, Asia Pacific, and Australia for Allied Domecq, QSR in Randolph, Massachusetts.


Executive Vice President <e>[and Chief] Marketing Officer]: John Lauck

Mr. Lauck has been our Executive Vice President [and Chief Marketing Officer sjnce February 2006. and our Executive Vice President ]of Marketing <s4fi6e>[fxamj April <3QQ4r>f2004 to January 2006.1 He also has held the same or equivalent positions with a number of our Affiliates since April 2004. From September 2002 to April 2004, Mr. Lauck served as President and Chief Marketing Officer for Arby's Franchise Association. <Prior toMBefore] joining Arby's, he was on a one-year sabbatical. From February 2000 to July 2001, Mr. Lauck was Senior Vice President and Chief Marketing Officer for groceryworks.com, a home grocery delivery start-up company in Dallas, Texas. Between November 1998 and January 2000, he was the Senior Vice President and Chief Marketing Officer for Footaction in Dallas, Texas. Mr. Lauck is a director of Shadewell Grove Holdings, LP, a licensee of one of our Affiliates.

rChief Accounting Officer. Senior Vice-President and Treasurer: Mark McBride]

[Mr. McBride has been our Chief Accounting Officer. Senior Vice-President and Treasurer since March 2006. and our Interim Chief Accounting Officer. Vice President Controller and Interim Treasurer since Mav 2005. From March 2004 to Mav 2005. he was our Vice President Controller. and served in that capacity with a number of our Affiliates since August 2002. From June 2001 until he Joined us. he served as Chief Financial Officer of Ovid Technologies. Inc. in Salt lake Citv. Utah. From Sentemher 1996 to Anril 2001. Mr. McBride was the Vice President. Corporate Controller and Cornorate Secretary of Evans & Sutherland Computer Corporation in Salt Lake

city. Utah]

Our Area Developers are as follows:

Area Developer - Southern New York. New Jersey. Rhode Island and Connecticut: Pretzel Time of New York. Inc.

President: Alan Fleisher

Mr. Fleisher is the area developer for the southern part of the state of New York, New Jersey, Rhode Island and Connecticut and also is a franchisee. From 1989 to 1992, Mr. Fleisher was President of Professional Laundry Systems, Inc. a New York based distributor of coin-operated laundry equipment. Mr. Fleisher was on the Board of Directors of Pretzel Time from 1993 until May of 1996.

Area Developer - Ohio. Northern New York, and Western Pennsylvania: Kal Enterprises. Inc.

Co-Chairman: AlanGick

Mr. Gick has been self-employed as co-chairman of Kal Enterprises, Inc. of Fairview, Pennsylvania since September of 1988. Kal Enterprises owns and operates several retail food shops including Orange Julius, Dairy Queen and Karmelkorn. Since March of 1993, Kal Enterprises, Inc. has been the area developer for the above Pretzel Time territory.

Area Developer - Kansas and Missouri: Mid Continent Enterprises. Inc.

President: Bernard W. Mazzoni

Mr. Mazzoni has been president of Mid Continent Enterprises, Inc. since June 1992, which is a franchisee of Pretzel Time. From February 14, 1990, through July 31, 1992, he was the division

-13-


controller of Clarostat Manufacturing, Inc. in Dover, New Hampshire. From 1982 through 1990, Mr. Mazzoni was controller of Ericsson Wire and Cable, Inc., in Richardson, Texas.

Area Developer - North Carolina: Pretzel Time of North Carolina. Inc.

President: Stuart Miller

Mr. Miller is the President of Pretzel Time of North Carolina, Inc. which has been a franchisee and Pretzel Time Area Developer for North Carolina since July 1993. From July 1987 until September 1993, Mr. Miller held the position of General Manager of Auto Lighting for General Electric in Cleveland, Ohio. This $100 million North American business focused on the retail and aftermarket channels of the automotive lighting industry. Mr. Miller managed all marketing, strategic planning, market research, advertising, promotion, and sales and production oversight.

ITEM 3. LITIGATION

<State of Maryland v. Pretzel Time. Inc. (Before the Offioo of the Attorney General of Maryland File Number FR930900) On December 11, 1992, the Maryland Division of Securities notified PTI that it had offered or sold franchises in Maryland in violation of Maryland franchise law without being registered under Maryland franohiso law. On February 6, 1995, PTI entered into a consent agreement and, although it was not required to pay a fine, PTI offered 2 franchisees rescission rights under Maryland franchise

lflWr>

<Stato of Now York v. Pretzel Time, bio. (Supremo Court of the State of New York. June 17. 1993. Index Number 404832/93). Botwcon April 13, 1992 and March 19, 1993, PTI sold 4 franchises in violation of Now York franchise law by selling franchises without being registered under New York franchise law. PTI entered into a consent judgment and paid a fine of $8,000.>

[None]

fCnncluded Litigation:!

Schroeter. et al v. Pretzel Time of Independence. Inc. et al. (Superior Court Civil Action No. 95-1394D in the Commonwealth of Massachusetts). On March 13, 1995, Robert A. Schroeter, Gina Schroeter, Tulio Cabrera and Josephine Cahreraf (the "Schrneters and Cabreras"}]. filed suit against Pretzel Time of Independence, Inc., Patricia Krukoff, Steven Krukoff, Andrew Economopoulas, A.S.A.P. Construction, Bay Bank Boston, N.A., P.S. Pretzel Time of Watertown, Inc., Pretzel Time of New England, and PTI. To the best of PTI's knowledge, the <nlaintiffo>fSchroeters and Cabreras] were shareholders in a corporation that they alleged was a Pretzel Time franchisee at Independence Mall in Kingston, Massachusetts. The <plaintiffs> [Sen meters and Cahrerasl claimed to have lost $50,000 based upon the alleged fraudulent misrepresentations, unjust enrichment, wrongful termination, unfair and deceptive trade practices of various parties, including PTI. PTI was sued on an agency theory «plaintiffc>[Schroeters and Cahrerasl contended that PTI was liable for the acts of its former Massachusetts "area developer" because that person was allegedly PTI's "agent" in name, but PTI denied any liability and had Massachusetts counsel file pleadings to answer <plaintiffs'>[the1 allegations). The matter was settled for $20,000. After the settlement, <p1aintiffc>|the Schrneters and Cahrerasl have admitted that PTI was not liable for any damages.

-14-


Tony's Frozen Yogurt. Inc. v. Pretzel Time. Inc.. (Superior Court of New Jersey, September 29, 1998, Docket No. L 4997-98). On September 28, 1998, <thc pitiintiffMTony's Frozen Yogurt! filed this action against PTI for wrongful termination and breach of contract. The franchisee's claims were that PTI allegedly failed to provide a supply of parbaked pretzel product. Unspecified damages were sought. PTI answered the complaint and sought to have the matter dismissed. In March of 2000, the parties reached an agreement in principle to settle the case. Under the settlement, PTI agreed to pay $25,000.

Joseph and Eileen Siegel v. Pretzel Time. Inc.. (Circuit Court for the Twelfth Judicial Circuit, Sarasota County, Florida, February 6, 2004, File No. 2004CA1223NC). The plaintiffs, <collectively a >former Pretzel Time <franohifiee>[franchisees]. filed suit against PTI alleging PTI effectively abandoned their franchise agreement and otherwise breached the terms of the franchise agreement by refusing <the>[loJ negotiate a renewal lease on their behalf and failing to provide them with certain advertising materials. <Plaintiffs prav>fThe Siegels asked] for rescission and fargued ]that PTI [should jrestore them to their pre-contractual position by paying <plaintiffs>mtgjnj an unspecified amount equal to all consideration paid to PTI under the franchise agreement. PTI <will denv>[denied] each of <plaintiffB>rSiegelsV claims in its answer! In Octoher 2004. the parties entered into a Mutual Release. Termination and Settlement Agreement, and the Siegels naid SI .512.39 in royalties owed to PTf.1

Other than these <5>[1] actions, no litigation must be disclosed in this Offering Circular.

ITEM 4. BANKRUPTCY

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

ITEM 5. INITIAL FRANCHISE FEE

Initial Franchise Fee:

You must pay an initial franchise fee of $25,000 when you sign a Franchise Agreement for a Pretzel Time Storef. either for an in-line Store or a modular, prefabricated haking kiosk] The initial franchise fee represents payment to us for the right to use the Pretzel Time Trademarks and the Pretzel Time System in the development and operation of your Store. The initial franchise fee also covers the cost of goods and services that we and our Affiliates may provide to you before your Store opens, such as site evaluation and approval, prototypical plans, certain grand opening assistance, marketing materials and training. If you acquire an existing Pretzel Time Store from MFOC, or you are an existing franchisee in good standing with us or one of our Affiliates, and you qualify to acquire a second or subsequent franchise from us, we have the right, at our option, to reduce or waive the initial franchise fee. [Typically. ]you must pay the initial franchise fee in a lump sum upon your signing of the Franchise Agreement. fHowever. we have the option to allow vnu to oav a portion of the initial franchise fee when vou sign the Franchise Agreement, and the halance no later than the date that

If you acquire an existing Pretzel Time Store from MFOC or another franchisee, you will not pay an initial franchise fee to us, but will pay us a transfer fee (currently $8,000) as more fully described in Item 6, Note 14 of this Offering Circular.

If an Area Developer has the rights to the Territory in which your Store is located, we are contractually obligated, under the applicable area development agreement, to pay the Area Developer 25% of the initial franchise fee you pay to us. This payment is to reimburse the Area Developer for its expense in providing certain services to you, as further described in Item 11 of this Offering Circular.

-15-


See Items 1 and 2, and Exhibit 13 of this Offering Circular for a further description of our Area Developers.

if [(a) ypw foil tp obtain, a tocatiQn approved by us for your Store within 6Q flays from the

date vou sign the Franchise Agreement, or flrilvou or your initial store manager do not satisfactorily complete the initial training program, we will refund the initial franchise fee less all reasonable expenses incurred by us in preparing the Franchise Agreement and all related agreements, the grant of the Franchise, site selection and approval, and any other services performed by us in establishing and developing your Store. However, the total refund will not exceed 50% of the initial franchise fee<r-fe-limited situations, we may refund all or a portion of your franchisee fee if we agree to do go in writing at the time you sign your Franchise Agreement, and you fail to obtain a lease for your Store at its approved nito within a donignatcd time nuhncquont to nigning the Frunohino Agreement. >[. and if vou have paid less than 50% of the full initial franchise fee at the time of the refund, no portion of that payment will be refundable under anv circumstances.. ]We will make any refund to you upon your signing of all releases, waivers and other agreements necessary to terminate the relationship between you and us. We do not offer refunds of the initial franchise fee under any other circumstances.

Other Initial Fees:

If you acquire an existing Pretzel Time Store from MFOC, you must enter into an Asset Purchase Agreement in the form included in Exhibit 10 to this Offering Circular. The assets purchased typically include trade furnishings and fixtures, such as display cases, signage, shelving, counters and work tables, and equipment, such as ovens, refrigerators, soft drink beverage dispensers, coffee preparation and dispensing equipment and small wares. MFOC sets the purchase price for the Store assets by taking a multiple of store cash flow after royalty and also taking into account other economic factors, such as current operating trends and length of lease term. The purchase price also will include payment for the goodwill and going concern value of the store. You must pay the purchase price upon transfer of the Store assets to you. As <IUfthe^->described in d.2 and Note 5 to Item 7 of this Offering Circular, we estimate that the cost of the Store assets (referred to in Item 7 as "Improvements and Equipment") purchased from MFOC, will range from $0 to $175,000. If MFOC is leasing any of the assets of the Store to you, you must also assume the obligations and make the required payments due under the equipment lease from the date you purchase the assets. You are not entitled to a refund of the purchase price for an existing Store under any circumstances even if you lose the right to lease or sublease the Store premises after taking possession of the assets. In some instances, you may be required to enter into a Confidentiality Agreement in the form of Exhibit 5 <in oonneotion >with your purchase of a franchised or a MFOC-owned Pretzel Time Store. No fees are paid to us or our Affiliates< in oonneotion> with the Confidentiality Agreement.

The assets of an existing Store do not include any initial supplies, product inventory, paper goods and other soft goods, accounting forms and systems, and other items necessary to comply with our standards (collectively, the "Product and Soft Goods Inventory"). When you purchase the assets of an existing Store, you must also purchase the store's existing Product and Soft Goods Inventory. The purchase price for the Product and Soft Goods Inventory is determined based on a physical inventory of the Product and Soft Goods Inventory and by multiplying the inventory quantities by the actual unit cost for the items. You must pay to MFOC the purchase price for the Product and Soft Goods Inventory when you purchase and pay for the assets of the Store. As <further >described in Item 7 of this Offering Circular, we estimate that the cost of the Product and Soft Goods Inventory purchased from MFOC will range from $1,000 to $5,000. You are not entitled to a refund of the purchase price for the Product and Soft Good Inventory under any circumstances.

-16-


Under certain circumstances, one of our Affiliates may sublease the premises for your Store to you. If this occurs, you may be required to pay a security deposit to our Affiliate at the time you sign the Sublease Agreement. This security deposit and the conditions under which it may be refundable are explained in Note 9 under Item 6 of this Offering Circular.

If you participate in our optional Resale Facilitation Program and purchase a <Mro. Fields ftflkie>[Pretzel Time] Store from an existing franchisee, you will pay to us a Resale Facilitation Fee. The Resale Facilitation Fee and Program are< further> described in Note 22 of Item 6.

You must pay us a $5,000 initial fee if we allow you to operate a Non-Baking Kiosk. The $5,000 initial fee is non-refundable and must be paid to us upon your signing of the Non-Baking Kiosks Addendum. See Items 1, 7 and 12 of this Offering Circular for more information on Non-Baking Kiosks. [_]

<From time to timo>[Periodicallv]. we may offer special incentive programs< in conjunotion>[J with our franchise development activities. These special incentive programs may include awards, prizes, bonuses, rebates, product discounts and credits, or other types of incentives. We may offer these incentives to any of our existing franchisees who refer a third party to us who subsequently becomes a new <Mrti. Fields Cookie Store>fPretzel Timel franchisee within a specified period of time. We have the right, however, to offer, modify, withdraw or reinstate any incentive programs in the future without notice to you.

As< furthor>[J described in Item 7, if you are developing a new Pretzel Time Store, you must conduct a grand opening advertising and promotion program for at least 7 days, beginning within 30 days after opening of your Store. You also agree to spend at least $5,000 for the grand opening of your Store. The grand opening promotion may not be required when you purchase an existing Pretzel Time Store from us. In your grand opening advertising and promotion, you <must>jmav he required tol purchase from us or our Affiliates the standard marketing and public relations programs and media and advertising materials that we develop for grand opening programs and new Store initial programs, flf we develop these materials. Iwe will make these materials available to you upon written request, in advance of opening your Store. We estimate that the cost of these materials will range from $200 to $1,000. Neither we nor our Affiliates refund any payments for these materials. You may also incur expenses from other vendors and suppliers in your grand opening promotion.

<As further doQeribcd in Item 1 of this Offering Circular, PTI woo the franchisor of the Pretzel Timo franchise system until Moroh 16, 2001 Accordingly, during PTFo last fisoal year, franchisees paid to PTI an initial foe, including tho initial franohise fee, any lease and sublease deposits, any costs associated with the purchase of the assets of an existing Pretzel Timo Storo and other foes paid to PTI, ranging from $0 to approximately $118.750. From Maroh 16. 2001. tn January 1>F From January 2. 2005. to December 31.1 2005, franchisees paid us or our Affiliates initial fees ranging from $0 to approximately $25,000, excluding amounts paid to MFOC<T>r for assets purchased from MFOC. 1

ITEM 6. OTHER FEES

Name of Fee

Amount

Due Date

a. Continuing fees

7% of monthly Gross Revenues (Note 1)

Payable weekly on or before the close of business on Wednesday of each week for the immediately preceding week.

-17-


Name of Fee

Amount

Due Date

(Note 2)

b. Marketing fees

1% to 3% of Gross Revenues (Note 3)

Same as continuing fees (Note 2)

c. Lease-required advertising fees (Note 4)

Will vary under circumstances (Note 4)

When due

d. Cooperative advertising

Up to 3% of Gross Revenues (Note 5)

When due (Note 5)

e. Surcharge on product (Note 6)

Will vary under circumstances (Note 6)

Upon date of invoice

f. Training fee (Note 7)

See Note 7

See Note 7

g. Refresher training (Note 8)

See Note 8

See Note 8

h. Sublease (Note 9)

See Note 9

Monthly (Note 9)

i. Special assistance (Note 10)

See Note 10

See Note 10

j. Late payment fee

$100 for each delinquent payment.

When the delinquent payment is due

k. Late reporting fee

$25 for each delinquent report

When the delinquent report is due and continuing to be due for each period that the report remains delinquent

1. Interest expenses (Note 11)

Will vary under circumstances

When due

m. Audit

Cost of financial audit plus interest at 1.5% per month or the highest legal rate on any underpayment (Note 12)

15 days after receipt of audit or inspection report

n. Operations Manuals duplicate (Note 13)

See Note 13

Upon receipt of duplicate copy

o. Transfer fee

$8,000 or the current transfer fee,

$2,000 transfer fee deposit payable

-18-


Name of Fee

Amount

Due Date

(Note 14)

whichever is greater; certain transfers qualify for reduced fee of$l,000ormore (Note 14)

upon Transfer request, with balance payable <prior to>rhefore1 or upon final closing of Transfer (Note 14)

p. Relocation Fee (Note 15)

$2,500, or more (Note 15)

Payable <prior to>rhefore1 relocation

q. Additional term (Note 16)

S<3=QQQ>[1.785] or more for each year of additional term (Note 16)

Payable <prior to>[hefore] Transfer or relocation (Note 16)

r. Advertising, marketing and promotional materials

Will vary under the circumstances (Note 17)

When the materials are ordered and/or delivered (Note 17)

s. Interim management fees (Note 18)

10% of Gross Revenues

As incurred

t. UCC filing fees (Note 19)

As set by state law; varies from state to state

Upon signing of the Franchise Agreement and at the times UCC continuation statements are filed

u. Costs and attorneys' fees, and indemnification

Will vary under circumstances (Note 20)

Upon occurrence

v. Documentation Fee for Franchisee Name Changes (Note 21)

$500 or more (Note 21)

Payable upon required notification of name change (Note 21)

w. Resale Facilitation Fee

(Note 22)

Will vary depending upon negotiations between us and the purchasing franchisee (Note 22)

Payable upon purchase of Store from existing franchisee

Service]

[Will varv under circumstances

rPavable unon purchase of Store from existing frapcjijsee ]

fNote2ftl

j* <*r-Termination Fee

Will vary under circumstances (Note <^>U4j)

When billed

-19-


General Comments:

You must pay these fees to us except as explained in Notes 4,6,9,18 and 20 below. These fees are non-refundable. If we or our Affiliates do not actually receive your payments on the due date, they will be deemed delinquent. These fees do not include any initial franchise fees that may be payable to our Affiliates if you are developing your Pretzel Time Store as a co-brand with one of their concepts.

You must pay all continuing fees, marketing fees, rental payments and other amounts owed to us or our Affiliates by pre-authorized electronic bank transfer from your general account. You must sign and complete the Authorization Agreement form attached to the Franchise Agreement as Appendix A or any other documentation we require <from time to time>fperiodicaHv] to permit the electronic transfer. The pre-authorized electronic bank transfer requirements are< further> described in Section 6.4 of the Franchise Agreement and Appendix A to the Franchise Agreement.

During the course of developing and operating your Store, you will also be required to purchase various items from designated and approved suppliers or in accordance with our standards and specifications. See Item 8 of this Offering Circular for an explanation of these requirements.

Specific Notes:

1.        See Exhibit 1 to this Offering Circular for a definition of Gross Revenues.

2.        The continuing fee and marketing fee due under the Franchise Agreement and any Non-Baking Kiosks Addendum are payable weekly on or before the close of business on Wednesday of each week for the immediately preceding week. As described in the General Comments above, these fees must be paid to us by electronic bank transfer from your general account. If you are granted the right to operate a Non-Baking Kiosk, you must submit to us a separate report of the Gross Revenues for your Non-Baking Kiosk, and make separate continuing fee and marketing fee payments based on the Gross Revenues from your Non-Baking Kiosk. See Items 1, 7 and 12 of this Offering Circular for more information on Non-Baking Kiosks.

3.        The marketing fee for <2ftO5>r20061 is 1.5% of Gross Revenues. For <3006>[2flQ2] and future years, we will notify you annually of the exact percentage you must pay as a marketing fee, except for any year in which the percentage is to remain unchanged from the preceding year. We establish the percentage of Gross Revenues you must pay as a marketing fee annually, although you will not be required to pay more than other franchisees in your market area. See Item 11 of this Offering Circular for more information on marketing.

4.        In addition to the marketing fee described in Note 3 above, you must pay all advertising fees required by your lease and/or sublease and comply with all advertising requirements of your lease or sublease. If you are a sublessee of one of our Affiliates, you must pay to our Affiliate any amounts in addition to the marketing fee necessary to meet all lease requirements. See Item 11 of this Offering Circular for more information on marketing.

5.        In addition to the marketing fee and lease-required advertising fees described in Notes 3 and 4 above, if a local or regional advertising cooperative is formed or organized for the market that includes your Store, we have the right to require you to participate in and contribute to the advertising cooperative an amount of up to 3% of your Gross Revenues. In <sa6h>rthatl case, we will notify you <frnm tirno to time>rperinriicallv1 of the amount you must pay to the advertising cooperative and the

-20-


timing of the payments, which may be as often as weekly. See Item 11 for more information on cooperative advertising.

6.        The surcharge will vary. The surcharge is payable to the designated distributor from whom Pretzel Time franchisees purchase flour or frozen dough products when payment for these items is due. We have the right to supply some of our own flour and frozen dough to certain franchisees of Pretzel Time Stores and other food service distribution points.

7.        You may not attend training <prier-te>[before] signing your Franchise Agreement. We provide training for you (or one of your Entity Owners, if you are an Entity) and the initial store manager (if different from you or your Entity Owner) free of charge at our training facility in Salt Lake City or any other location we designate. As <furthcr >described in Item 11, one of our Affiliates or an existing franchisee may also make an optional (or in the future a mandatory) in-store work experience available to you at its Pretzel Time Store. Currently, neither we or our Affiliates, nor the host franchisee plan to charge you a fee for any in-store work experience you attend, but we have the right to do so in the future. Currently, we also will provide training for any additional managers from your store free of charge. We have the right, however, to charge a tuition fee in the future for each additional manager that attends our training. In the case of a proposed Transfer, we will provide training to the proposed transferee and its attendees at our training facility in Salt Lake City or any other location we designate. The proposed transferee and its attendees may also be given the option of attending, or required to attend, an in-store work experience either at the Store being transferred or at another existing Pretzel Time Store. Currently, neither we or our Affiliates, nor the host franchisee plan to charge you or your transferee a fee for any training we provide or for the in-store work experience, but we have the right to do so in the future. See Note 6 to Item 11 of this Offering Circular for <furthor information regarding training and a description of exceptions to free training. You <are responsible for>fmust pavl all travel and living expenses for your trainees. Travel and living expenses are described in Item 7 of this Offering Circular.

8.        We have the right to require you and/or previously trained and experienced managers and employees to attend periodic refresher courses at the times and locations we designate. Your Store must at all times be managed by an individual who is certified by us as having completed our training program. You <will bo roauirod to>[must] pay the fees that we are then charging for these refresher courses.

9.        If you sublease the premises to be used as your Store from one of our Affiliates (sometimes referred to in this Offering Circular as the "Sublessor"), you must sign a standard Sublease Agreement in the form included in Exhibit 10 of this Offering Circular. If you are an Entity, the Sublessor has the right to require that each of your Entity Owners sign a Guaranty in the form attached to the Sublease Agreement. The rent and other amounts due under the Sublease Agreement will be the same as the rent and other amounts due from the tenant under the Sublessor's lease (the "Master Lease") of the premises from the landlord. The rent due will vary with the location of the premises. Typically, monthly rental payments will be based on factors such as the current market value of similar properties and the perceived market value of your Store based <upeft>[ojj] its location and traffic patterns, sales volumes, and so forth. You must pay the monthly rent under the Sublease Agreement directly to us or the Sublessor, as designated by the Sublessor, and we or the Sublessor will then pay the rent to the landlord under the Master Lease. However, we may require you to make the payments to us or the Sublessor at least 30 days in advance of the date the payments are due under the Master Lease (10 days in advance, for percentage rental payments). As described in the General Comments above, rental payments must be paid to us or the Sublessor by electronic bank transfer from your general account. Rental payments are typically non-refundable. Depending on our and the Sublessor's evaluation of your credit-worthiness, the Sublessor has the right to require you to pay a security deposit (typically, the equivalent of one month's rent) under the Sublease Agreement. Upon termination of the Sublease

-21-


Agreement, the Sublessor will ■ refund the security deposit to you if you have fulfilled all of your obligations under the Sublease Agreement.

10.      We make no charge for the operating assistance and guidance we customarily provide to all of our franchisees. However, we have the right to occasionally make special assistance programs available to you for which you must pay the daily fees and charges that we establish.

11.      You must pay all business debts, liens and taxes promptly when due. If you fail to do so, we have the right, at our option, to pay the same and then be entitled to immediate reimbursement from you. Unpaid debts owed to us bear interest from the due date until paid at the lesser of 1.5% per month or the maximum contract rate permitted by the law of the state in which your Store is located.

12.      You must pay the costs of the audit or inspection only if you fail to furnish us with reports, financial statements, tax returns or schedules, or if the audit results show an understatement of Gross Revenues of more than 2% or if the need for an audit was a result of your default under the Franchise Agreement in failing to provide records and reports in a timely manner.

13.      We will loan you one copy of the Operations Manuals free of charge, as< furthor> described in Item 11. If you lose your copy of the Operations Manuals, you must obtain a replacement copy from us at our then current charge for replacement copies.

14.      As noted in the table above, a $2,000 transfer fee deposit must be paid to us at the time you submit your request for Transfer, with the balance of the transfer fee payable to us no later than the closing of the Transfer. The transfer fee deposit is non-refundable, except that it will be returned to you under the following circumstances: (i) we exercise our right of first refusal; or (ii) we do not approve the proposed Transfer. In addition, we have the right to require the payment of an additional transfer fee deposit if the proposed Transfer does not occur within 12 months from the date we received the initial transfer fee deposit. To complete a Transfer, you will enter into an Assignment, Assumption and Consent with us and the transferee in the form included in Exhibit 6 of this Offering Circular, and the transferee will, at our option, either operate under your old Franchise Agreement for the remainder of its current term, or enter into our then current form of Franchise Agreement for the remainder of the current term of your old Franchise Agreement. During the effective term of this Offering Circular, we will charge a reduced transfer fee of $1,000 for the following Transfers, provided all other conditions of Transfer are satisfied: (i) Transfers to your parent, spouse<-ef>[J childf. or "kev" managerial employed, where you also remain personally liable on the Franchise Agreement; (ii) Transfers among existing Entity Owners of you, where the transferor will no longer be one of your Entity Owners following the Transfer; and (iii) Transfers involving multiple individual franchisees under your franchise agreement where one or more individuals will no longer be obligated under your franchise agreement following the Transfer. In the case of the Transfers described in (ii) and (iii) in the immediately preceding sentence, the remaining individual franchisees or Entity Owners must meet our then-current qualifications for new franchisees. We will not charge a transfer fee if the Transfer is among existing Entity Owners of you and the identity of all Entity Owners remains the same following the Transfer. During the effective term of this Offering Circular, we will waive payment of the Transfer Fee and instead charge a documentation fee of $500 for Transfers to a wholly-owned corporation under Section 12.4 of the Franchise Agreement. If you acquire an existing Pretzelmaker Store from MFOC or another franchisee, you will not pay an initial franchise fee to us, but will pay us our then current transfer fee. In addition, if you Transfer a co-branded location with 2 or more of our or our Affiliates' concepts, you <will bo required to>[must] pay the highest then current transfer fee among the concepts being transferred. These deposits will be handled in the same manner as the transfer fee deposit described

-22-


above.[_] < Further, for a period of timo> During <SQOSr>[2006.] we may allow certain existing franchisees to transfer their franchise agreements for a lower transfer fee.

15.      Should it become necessary to relocate your Store on account of the condemnation of your Store premises or the exercise of a relocation right by your landlord or for some other reason approved by us in writing, we will consent to <SM6h->[the jrelocation at a site that meets all of our then current site criteria for the development of new Pretzel Time Stores and is acceptable to us <provided that >[1L. ]you pay to us our then current relocation fee (which is $2,500 as of the date of this Offering Circular) and satisfy all of the other conditions in Section 4.7 of the Franchise Agreement, including the requirement that you have sufficient term remaining under the Franchise Agreement, or purchase from us sufficient additional term under the Franchise Agreement, to satisfy our then current policy on remaining term requirements for relocations (see Note 16 for a <further description of this requirement). We also have the right to require you to sign, in lieu of the Term Pre-Purchase Addendum, a new form of Franchise Agreement< in oonneotion> with any approved relocation where you are also required to purchase additional term.

16.      We have the right to require, as a condition of our approval of a proposed Transfer, that your transferee purchase additional term under the Franchise Agreement. Similarly, we have the right to require, as a condition of our approval of a proposed relocation of your Store, that you purchase additional term under the Franchise Agreement. Currently, we will not require your transferee or you to purchase additional term if there are 4 or more years of term remaining under the Franchise Agreement at the time of a proposed Transfer or relocation. If, however, there are less than 4 years of term remaining under the Franchise Agreement at the time of a proposed Transfer or a proposed relocation of your Store, we have the right to require your transferee (in the case of a Transfer) or you (in the case of a relocation) to buy additional term under the Franchise Agreement. We will not require your transferee or you to purchase more additional term than necessary to make the term remaining under the Franchise Agreement equal 7 years. For the purposes of this Offering Circular, "term remaining under the Franchise Agreement" means the remainder of any initial term plus the remainder of any renewal term under the Franchise Agreement. For example, if you have 5 years left on your initial term and a renewal term of 10 years, the term remaining under the Franchise Agreement is 15 years. Similarly, if you have already renewed and have 2 years remaining on your renewal term, the term remaining under the Franchise Agreement is 2 years.

Even if we do not require the purchase of additional term upon a proposed Transfer or a proposed relocation of your Store, we may, at our option, allow your transferee or you to purchase additional term from us as part of the Transfer or relocation. The purchase of any additional term by your transferee or you, however, may not result in the term remaining under the Franchise Agreement to be more than 14 years.

Upon the purchase of additional term, your transferee or you will enter into our then current form of Term Pre-Purchase Addendum to the Franchise Agreement ("Term Pre-Purchase Addendum"). A copy of our current Term Pre-Purchase Addendum is attached as Exhibit 7 to this Offering Circular. As <further >described under the Term Pre-Purchase Addendum, any additional term your transferee or you purchase from us will become effective upon the expiration of any term remaining under the Franchise Agreement, <provided that>[ifl your transferee or you meet all of our then current conditions for renewal, except for the payment of a fee.

We have the right to change the fees we charge for additional term and our requirements for when and how much additional term must be purchased upon a proposed Transfer or relocation. In addition, although the current requirements for when additional term must be purchased are the same for Transfers and relocations, we have the right to have different requirements in the future for these

-23-


situations. We also have the right to require you or your transferee to sign a new form of franchise agreement for a term equal to the term remaining under the Franchise Agreement, plus any prepurchased term, in lieu of having you or your transferee sign the Term Pre-Purchase Addendum.

17.      We may provide you with copies of advertising, marketing and promotional formats and materials for use in your store, which we have prepared using the marketing fees described in Item 11 of this Offering Circular. You are only required to pay shipping and handling costs for these items or, if you want additional or replacement copies, our direct cost of producing <sueh>[those] items together with any related shipping, handling and storage charges. In addition to these items, we may offer you the option of purchasing other advertising, marketing and promotional formats and materials that we have prepared and that are suitable for use at local Pretzel Time Stores. We may provide samples, copies or information explaining these items to you <from timo to timorperiodicallvl. If you elect to purchase any <sueh>[flLlhttfi] items from us, we will provide them to you at our direct cost of producing them plus any related shipping, handling and storage charges. In addition, we have the right to develop and market special mandatory promotional items for Pretzel Time Stores and require you to maintain a representative inventory of these promotional items to meet public demand. In <sueh>fthat1 case, we will make these items available to you at our cost plus a reasonable mark-up and any shipping, handling and storage charges.

18.      If we elect to manage your Store pending our purchase of that store, as permitted by Section 14.5(e) of the Franchise Agreement or we assume management of your Store in the case of your voluntary abandonment, as permitted by Section 13.5 of the Franchise Agreement, we have the right to charge a management fee of 10% of the Gross Revenues of that store during the period of management.

19.      Article 16 of the Franchise Agreement grants us a security interest in the collateral described in that Section. Upon your signing of the Franchise Agreement, you must sign the necessary Uniform Commercial Code financing statements and reimburse us for the costs of filing those statements with the appropriate government agencies. You must also sign continuation statements when required by law and reimburse us for the costs of filing those continuation statements.

20.      If we or our Affiliates prevail in any arbitration proceeding or litigation against you, you must pay the costs and attorneys' fees incurred. You and each of your Entity Owners also have certain indemnification obligations to us and our Affiliates, as referenced in Item 9 of this Offering Circular.

21.      If you change your name, or your Entity changes its name or entity type, but no Transfer occurs as a result, you must notify us promptly following the change, provide us with any documentation we reasonably request to verify the name change, and pay us our then-current documentation fee (which is $500 as of the date of this Offering Circular) to defray our costs associated with documenting the change.

22.      We offer an optional Resale Facilitation Program to existing franchisees who want to sell their Pretzel Time Stores, If an existing franchisee (the "Selling Franchisee") desires to participate in the Resale Facilitation Program as a possible way of selling its Pretzel Time Store, the Selling Franchisee must notify us in writing. We will then attempt to negotiate with the Selling Franchisee an exclusive option (the "Purchase Option") to purchase its Pretzel Time Store for a particular price (the "Purchase Price") during a particular period of time (the "Option Period"). If we and the Selling Franchisee agree on the details of a Purchase Option for the Selling Franchisee's Pretzel Time Store (including the Purchase Price and Option Period), we will enter into a purchase option agreement ("Option Agreement") with the Selling Franchisee. A copy of our current Option Agreement is attached to this Offering Circular as Exhibit 9. Under the Option Agreement, we have the right, but not the obligation, during the Option Period to exercise the Purchase Option and purchase the Selling Franchisee's Pretzel

-24-


Time Store for the Purchase Price. We also have the right to assign the Option Agreement to a third party (the "Buying Franchisee"), pursuant to the form of option assignment agreement ("Option Assignment Agreement") attached to the Option Agreement and included in Exhibit 9 of this Offering Circular. If we enter into an Option Assignment Agreement with a Buying Franchisee, the Buying Franchisee will then have the right, but not the obligation, during the Option Period to exercise the Purchase Option and purchase the Selling Franchisee's Pretzel Time Store for the Purchase Price. Under the terms of the Option Assignment Agreement, the Buying Franchisee must also pay to us a Resale Facilitation Fee if it exercises the Purchase Option. The Resale Facilitation Fee is due to us upon the Buying Franchisee's purchase of the Selling Franchisee's Pretzel Time Store and is in addition to the Purchase Price payable to the Selling Franchisee. The Resale Facilitation Fee is consideration for the Option Assignment Agreement, the resale facilitation services and any other services we provide to the Buying Franchisee, and any other value-added products or benefits we provide to the Buying Franchisee.

Under the Resale Facilitation Program, we do not represent any Selling Franchisee or Buying Franchisee, nor do we have an obligation to purchase or find a purchaser for a Selling Franchisee's Pretzel Time Store. The Resale Facilitation Program is just one of the possible options that may be available to an existing franchisee that wants to sell its Pretzel Time Store and a prospective franchisee that wants to buy a Pretzel Time Store. See the Option Agreement and Option Assignment Agreement for <further information regarding the rights and obligations of us, the Selling Franchisee and Buying Franchisee under these documents.

[         23. Oiir Brokerage Service mav he another option available to an existing franchisee that

wants to sell its Pretzel Time Store and a prospective franchisee that wants to biiv a Pretzel Time Store. Tn exchange for a fee, we will provide certain services ta a selling franchisee that wants to sign a non-exclusive listing agreement with us. These services mav include (al listing the store on one or more websites sponsored or affiliated with us. (K\ introducing the selling franchisee tn nntential hiivers. (c\ providing advice about marketing the store for sale, or advertising it ourselves, and (d^ offering incentives to the buver in the form of reduced term purchase, future franchise fees, development rights, or similar items. The fee will only be paid to us if we successfully complete a sale of the store, and the transfer is subject to all other transfer procedures as more fullv described in paragraph 15 of this Ttem 6.1

<2^->[24«JIf we terminate the Franchise Agreement with cause, or you terminate the Franchise Agreement without cause, you must pay us a termination fee equal to the present value (using the then current 30 year Treasury Bond rate) of the continuing fees you would have paid us on the product of your Store's average monthly Gross Revenues during its most recent 12 months of operation (or shorter period if open less than 12 months) before the termination multiplied by the number of months remaining in the Franchise Agreement's current term had we or you not terminated it. The termination fee is compensation to us for anticipated and reasonably estimated lost profits.

-25-


ITEM 7. INITIAL INVESTMENT

Description

Amount

Method of Payment

When Due

To Whom Payment Is to Be Made

a. Initial franchise fee (Note 1)

Initial fee for Non-Baking

Kiosk

(General Comments)

25,000 (Note 1)

$5,000 if granted right to operate a Non-Baking Kiosk (General Comments)

Lump sum

Upon signing Franchise Agreement, or Non-Baking Kiosk Addendum in the case of a Non-Baking Kiosk

Us

b. Travel and living expenses while training (Note 2)

$1,500-53,000

Lump sum, as incurred

As incurred during training

Airlines, hotels, and restaurants

c. Real estate lease

Note 3

Note 3

Note 3

Note 3

d. I Improvements and

equipment, if constructing a new [j,n-line ]store (Note 4)

[____Improvements and

Eouinment. if installing a modular, prefabricated

As agreed with the contractors and suppliers providing labor, materials, or equipment

As incurred

Various independent contractors and suppliers

$175,000

srms.ooo-si 60.0001

[]4,000 to $45, 000

bakinp kiosk fNnte 4YI

Equipment if granted right

to operate a Non-Baking

Kiosk

(General Comments)

d.2 Improvements and equipment, if acquiring the assets of an existing store from MFOC (Note 5)

$0-$250,000

Lump sum

Upon acquisition

MFOC

e. Opening Product and Soft Goods Inventory (Note 6)

$1,000-$5,000

As agreed with suppliers or lump sum if to MFOC

As incurred or upon acquisition of the store assets if you purchase an existing store from MFOC

Suppliers, including MFOC if you purchase an existing store from MFOC

f. Grand opening promotion,

$5,000

Lump sum

As incurred

Us, and various vendors and

-26-


Description

Amount

Method of Payment

When Due

To Whom Payment Is to Be Made

if opening a new store

(Note 7)

suppliers; may not be required if you purchase an existing store from MFOC

Security deposits, utility deposits, business licenses, and other deposits and prepaid expenses (Note 8)

$1,000-55,000

Lump sum

Before opening

Landlord, utility companies, suppliers, and government agencies

h.

Professional fees (Note 9)

$500-$1,500

Lump sum

As incurred

Attorneys, accountants, and other consultants

Insurance (3 months) (Note 10)

$2,500-53,500

Lump sum or installments, as determined by insurance carriers

Before or upon signing of Franchise Agreement

Insurance carriers

j. Computer hardware and software (Note 11)

$<0>r3.5001 -$<?^6Q>f5.5001

Lump sum

As incurred<,--if-we require you to purehase computer hardware

Various vendors and suppliers

ond software or-if you do not have the required access to the' Internet>

k. Additional funds (3 months) (Note 12)

$8,000-512,000

Lump sum, as incurred

As incurred

Employees, suppliers, utilities and other vendors

Totals

$<-14^500>fiMflfl] -

$<343?$0©;>[m5PA] if building a new fin-line "|Store (not including real estate lease costs); $-011,500

S225.50Q if installing anew modular, prefabricated baking kiosk fnot including real estate lease costs^: if

acquiring the assets of an existing Pretzel Time Store from MFOC (not including real

-27-


Description

Amount

Method of Payment

When Due

To Whom Payment Is to Be Made

estate lease costs); [qflfl ]$9,000 to $50,000 if granted right to operate a Non-Baking Kiosk (not including real estate and lease costs)

-28-


General Comments:

We have based the estimates provided in the chart above upon our past experience in establishing and operating [in-line ]Pretzel Time Stores; however, we do not guarantee that your costs will not be higher than described above. You should review these figures carefully with a business advisor before making any decision to purchase the Franchise.

These estimates assume that you are developing a traditional Pretzel Time Store operated independently of any co-branded concept, such as one offered by one of our Affiliates. Therefore, the estimates do not include any initial franchise fees, continuing fees, buildouts, labor, equipment, or any other costs or expenses associated with any co-branded concept that you might seek to develop at your Pretzel Time Store.

All payments you make to us or our Affiliates are non-refundable unless otherwise stated. Payments you make to parties other than us or our Affiliates may be refundable at the option of the other party. Because we do not know who these third parties are, we cannot state when or if payments made to these third parties will be refundable.

Neither we nor our Affiliates finance any portion of the initial franchise fee. In addition, except as described in Item 10, neither we nor our Affiliates offer any other financing, directly or indirectly.

The estimates in the above chart do not include continuing fees or marketing fees payable to us during the operation of your Store since these fees are payable out of the Gross Revenues of your Store. See the information in Item 6 for an explanation of the continuing fees and marketing fees.

We also may grant you the right to operate a Non-Baking Kiosk in the same shopping mall or center as a Host Store for an initial fee of $5,000. (See Item 5 of this Offering Circular.) In <s«6h->fthat ]case. you must acquire the necessary equipment for a Non-Baking Kiosk. We estimate the cost for this additional equipment to range from $4,000 (for example, for a small display cart) to $45,000 (for example, for a semi-permanent kiosk or large cookie cart). Your costs will depend on the type of Non-Baking Kiosk you operate and your equipment source. You will pay for this equipment according to the terms you work out with the supplier. Based on this information, we estimate that the initial investment required for a Non-Baking Kiosk, including the initial fee and equipment, but excluding real estate lease costs, ranges from $9,000 to $50,000.

Specific Notes:

1.          $25,000 is the standard initial franchise fee for a new Pretzel Time franchise. If you purchase the assets of an existing store from MFOC, there is no initial franchise fee, but you will pay a transfer fee. See Item 5 of this Offering Circular for an explanation of the range of initial franchise fee, the transfer fee, and the conditions when a portion of the initial franchise fee may be refundable. As further described in Item 5 of this Offering Circular, we may be contractually obligated to pay 25% of the initial franchise fee you pay to us to an Area Developer.

2.          You <aro rosponsible>[must pay] for< paying> any incidental expenses that you and your manager and any other trainees incur while attending our initial training program, including car rental, gas, airline tickets, meals, hotel room, entertainment, and salaries.

3.          If you do not currently own adequate space, you must lease the space for your Store. Typical locations are in shopping malls and strip shopping centers. The average QikliafiJPretzel Time Store[ or modular, prefabricated baking kiosk] requires between 400 to 800 square feet of space. A

-29-


typical Non-Baking Kiosk will use between 50 and 150 square feet. We cannot estimate the amount of your monthly rental payments, since rental amounts vary greatly from site to site and are affected by a number of factors, including location, size, visibility, accessibility, and competitive market conditions. In addition to rental payments, your lease may obligate you to make other payments to the landlord, such as payments for shopping center or building operating expenses, common area maintenance expenses, food court expenses, merchants' association assessments, assessment for shopping center promotion and advertising, and the like. Your lease may also require you to spend a certain amount on advertising and promotion for your particular store. Again, because these payments vary widely from lease to lease, we cannot estimate the amount you may be required to pay for these or other similar items. You will make rental payments to the landlord, unless you sublease the premises from one of our Affiliates. In that case, you will make rental payments to our Affiliate, as explained in Note 9, under Item 6 of this Offering Circular.

4.         These estimates include construction costs (labor and material) for typical tenant

improvements and remodeling necessary to prepare a site for operation of a Pretzel Time Store, as well as the estimated costs for necessary trade fixtures, such as display cases, menu board and signage, counters and work tables, and equipment, such as ovens, refrigerators, beverage dispensers, smallwares and cash registers. The estimates also include construction management costs, general conditions, builders risk/liability insurance and financing costs. If you develop a new store, you must also employ and pay an architect or engineer to prepare a site plan and other construction documents. Although we will provide you with prototypical plans and specifications at no additional cost to you, you must pay an architect or engineer to adapt these plans and specifications to city, state and local building codes and to the specific site chosen for your Store. These estimates do not include lease costs. Your actual construction costs will depend on numerous factors, such as the condition of the premises, duration of the building process (delays), union labor requirements, contractors' fees, signage, availability of materials and equipment, interest rates, and the insurance coverage you choose.

itore that is

[                    A modular, prefabricated baking kiosk is a free-stai

operated within a mall, shopping center or other site.

mallv operated under a long-term lease, as opposed to a short-term or month-to-lav be available for a Non-Baking Kiosk. The modular unit is assembled using many prefabricated components that are built off-site, often at a savings over traditional construction methods. Tt is tvnicallv most appropriate for high-traffic center court or corridors within larger metropolitan malls. If vou find a site that we approve for installation of this tvne of unit, vou will pav the same initial franchise fee as vou would for an in-line Pretzel Time Store, and vnu must purchase the prefabricated components from a vendor or vendors we designate, as

5.        As explained in Item 5 of this Offering Circular, you may have the opportunity to acquire the assets of an existing Pretzel Time Store from MFOC. In that case, you would pay the purchase price for the store assets and would not incur the construction and development expenses described in Note 4 above. The method of determining the purchase price for the assets of an existing store is described in Item 5 of this Offering Circular; however, the range of prices is typically as disclosed in the chart above. A portion of the price is attributable to goodwill and going concern value of the store.

6.        This estimate includes supplies, opening inventory, accounting forms and systems, soft goods, such as napkins, cups, and other paper goods, utensils, packaging materials, and other items required to operate under the Pretzel Time System. The costs will vary depending upon your inventory levels and storage space. If you purchase the assets of an existing store from MFOC, MFOC may require you to pay $1,500 toward the purchase price of the Product and Soft Goods Inventory at your closing. Once a physical count of the Product and Soft Goods Inventory is completed, you must pay the balance

-30-


of the purchase price. However, if the actual purchase price of the Product and Soft Goods Inventory is less than $1,500, MFOC will refund the difference to you.

7.          As explained in more detail in Item 5 of this Offering Circular, if you are opening a newly developed Pretzel Time Store, you <arc required to>[must] spend at least $5,000 on a grand opening promotional program. At least a portion of this amount must be paid to us or our Affiliates to cover the cost of the materials that we or our Affiliates develop and provide to you for the grand opening programs. You may also incur expenses from other vendors and suppliers in conducting your grand opening promotion.

8.          You may be required to pay a security deposit under your real estate lease and other deposits for utilities and insurance premiums. Lease security deposits are typically due upon signing the lease and are typically refundable if you do not default on your lease. Your lease may also require you to pay the last month's rent in advance. Deposits for utility services are typically required at the time the service is applied for, and may or may not be refundable. You must confirm all of the specific deposits required. The amount for licenses and permits can vary significantly in different areas, and you should verify specific amounts with local authorities.

9.          You may find it necessary to retain an attorney to review the real estate lease or sublease, the franchise documents, or to assist in forming a corporation, partnership, or limited liability company. You may also retain an accountant for advice in establishing and operating your franchise business and filing necessary tax forms and returns.

10.        We require you to obtain and keep in force the following insurance coverages on a primary non-contributory basis, with us and our affiliates named as an additional insured on each policy:

(a)         Property Insurance. Property insurance for all of your goods, fixtures, furniture, equipment, and other personal property located on your Store premises providing insurance to the extent of 100% of the full replacement cost against loss or damage from fire and other risks normally insured against in special cause of loss coverage. You will also maintain business income and extra expense coverage to cover loss of income and extra expenses for at least one year.

(b)         Liability Insurance. Liability insurance on an occurrence basis, insuring against all liability resulting from damage, injury, or death occurring to persons or property in or about your Store premises (including products liability insurance and broad form contractual liability coverage), the liability under this insurance to be at least $1,000,000 for one person injured, $1,000,000 for any one accident, and $1,000,000 for property damage.

(c)         Workers' Compensation and Employers' Liability Insurance. You must maintain and keep in force all workers' compensation insurance on your employees that is required under applicable workers' compensation laws of the state where your Store is located. You must also maintain and keep in force employers' liability insurance on your employees, with liability limits of no less than $100,000 per accident for bodily injury by accident, and $100,000 per employee for bodily injury by disease, with no less than a $500,000 policy limit for bodily injury by disease.

(d)         Other Insurance Policies. Any additional insurance policies that a prudent franchisee in your position would maintain or as we may reasonably require.

-31-


Your real estate lease may also impose requirements for insurance coverage ■ in addition to the requirements that we impose. The chart contains the estimated cost of required insurance coverage for a 3 month start-up period; however, the cost of insurance varies, depending upon the insurance company you select, lease requirements, variances in the cost of insurance from city to city and state to state, and other factors. Whether or not amounts paid for insurance premiums are refundable will be determined by individual insurance carriers and the terms of the insurance policies.

11.        As of the date of this Offering Circular, we <do not require you to use any computer hardware or software in the operation of your Store and, therefore, your initial investment for this item may be $0. If we do, however, require you in the future to purohose, install and use computer hardware and software which meet our specifications and standards, wo estimate that you will incur costs of $1,250 to $7.500 or moro>[have designated the Treatware point of sale software system hv Tnnovative Computer Systems. Inc. f"ICS»^ and Dell Optinlex 1701, Computers with Windows XP Professional. PC Anywhere 11.5 Software and a Dell Photo Printer - A922. as the required point of sale and computer system for use in vour Store. The Dell Computers also act as vour registers-operating with the ICS Treatware software. We estimate that the initial cost of this POS software and computer system is from $3.500 to $4.500. In addition to this initial cost, vou will be required to pav to ICS or its designee a monthly maintenance and subscriber fee of from $65 to $75.1 We also currently require that you have <access to the>[wireless] Internet <from>f access in] your Store premises Ifor use hv vour customers and lin order to submit reportsf for vour Store], including Gross <Rovonue>IRevenuesl reports and financial statements, <for your Store >to us electronicallv[. and to allow us to access information directly from vour POS svsteml We also require you to establish and maintain a valid email address and authorize us to communicate with you by that method at the address. IThe initial cost for wireless Internet installation is annroyimatelv $150 with a subscription rate of $200 per year or more, depending on vour service provider, and these fees are not included in the $3.500 to $4.500 initial costs described above in this Note 11. though thev are included in the ranpes in the table. lSee Item 11 of this Offering Circular for more information on our right to require you to purchase, install and use computer hardware and software in the future.U

12.        This amount represents the range of your initial start-up expenses over the first 3 months of operation. These figures include estimated payroll costs. However, they do not include the salary for the store manager, on the assumption that you will manage the store. The figures also do not include inventory. These figures are estimates and we cannot guarantee that you will not have additional expenses starting your business. Your costs will depend upon factors such as how well you follow our methods and procedures; your management skill, experience, and business acumen; local economic conditions; the demand for specialty food and snack goods and services in your area; the prevailing wage rates; competition; the time of the year your Store is opened; and the sales level reached during the initial period.

ITEM 8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

Purchases of Pretzel Products and Other Items.

Pretzel Time Products:

You must use only the Products, materials, equipment, smallwares, paper products, and supplies that we require and have approved for Pretzel Time Stores as meeting our specifications and standards for quality, design, appearance, function and performance. You must purchase Products, materials, equipment, smallwares, paper products and supplies from suppliers and distributors designated or approved by us as detailed in the Operations Manuals.

-32-


The recipes, formulations, and specifications for all Pretzel Time Products are trade secrets belonging exclusively to us and our Affiliates. We or our Affiliates have the right to license manufacturers <from timo to time>[periodicaHv] to manufacture Pretzel Time Premix Flour and other Pretzel Time Products following our secret recipes, formulations, and specifications. We or our Affiliates may also license with various paper manufacturers or distributors to produce branded or proprietary paper products that you must purchase for your Store. You must purchase all of your Pretzel Time Premix Flour from us or our Affiliates, or our designated supplier or suppliers. We have currently licensed Pizza Blends, Inc. to manufacture Pretzel Time Premix Flour, and have designated Dawn Food Products and Kaleel Bros., Inc. as our current [primary ]distributors[. though we mav designate new or additional distributors in the future (collectively. "Distributors^!

We and our Affiliates participate in a nationwide marketing program sponsored by Coca-Cola Fountain or its affiliates. You must participate in the program and purchase Coca-Cola products for use at your Pretzel Time Store. You may purchase Coca-Cola products from any authorized Coca-Cola distributor. Coca-Cola Fountain or its affiliates currently pays us or our Affiliates amounts based upon purchases by each franchisee. These funds may be used to develop and implement marketing and promotional activities designed to benefit the entire Pretzel Time System, and to increase the sale of Coca-Cola products at all Pretzel Time Stores. Any amounts received by us or our Affiliates from Coca-Cola Fountain or its affiliates will not reduce the payments you are required to make to us under the Franchise Agreement.

In addition to purchasing Pretzel Time Premix Flour and other Pretzel Time Products from us or our Affiliates, or our designated supplier or suppliers and Coca-Cola products from any authorized Coca-Cola distributor, you are also obligated to purchase or lease all other products, services, materials, equipment, smallwares, paper products and supplies required for the operation of your Store from manufacturers, suppliers or distributors either designated by us or approved by us as meeting all of our System Standards. We approve suppliers based on their ability to meet our System Standards as to quality, composition, taste, finish, appearance and service, ability to demonstrate their capacity and facilities to supply your needs in the quantities, at the times and with the reliability required for an efficient operation.

Except as described above in this Item 8, if you wish to buy from a supplier or distributor not approved by us or purchase materials or supplies not approved by us as meeting our System Standards, then you must first submit a written request to us. We may require submission of sufficient information and samples to determine if the materials, supplies, suppliers or distributors meet our System Standards. Upon your submission of a written request to us and any sufficient information and samples we require, we will evaluate whether the materials, supplies, suppliers or distributors meet our System Standards and advise you of our decision within 90 days of your submission. We do not charge any fee for evaluating the materials, supplies, suppliers or distributors described in this paragraph that you propose to us.

During 2004, we and our Affiliates recognized approximately <^1.'100.0QO>[3.899.0001 received from our suppliers and vendors based <upen>[on] arrangements for purchases by us, our Affiliates, and our and their respective franchisees and licensees, and/or referrals from us and our Affiliates of franchisees and licensees to suppliers and vendors (excluding amounts received by our Affiliates from suppliers and vendors based <upen>[flnj purchases of required yogurt and ice cream products by TCBY franchisees, and excluding amounts received by our Affiliates for purchases of required cookie batter by Great American Cookie Company franchisees). This amount represents approximately <5r4>[4.41%r ] of MFFB and its subsidiaries' total revenues for <3O04r>[2flfl5J

-33-


We and our Affiliates had the right in the past, and we and our Affiliates have the right in the future, in addition to the amounts received from distributors and suppliers as described above in this Item 8, to receive rebates or other payments from distributors and suppliers, based (directly or indirectly) on sales to franchisees and company-owned stores, and from other service providers. These payments have ranged or may range from less than 1% up to 15% or more of the amount of those purchases by franchisees. We do not negotiate purchase arrangements from suppliers or service providers for the benefit of franchisees. We do not participate in any purchasing or distribution cooperatives.

Location of your Store: Real Estate Lease

You must locate a site for your Store that is approved by us, and you may not sign a lease for the site until we have given our approval in writing. When you sign your lease, we may also require that you and your landlord sign a Lease Addendum in the form included in Exhibit 8 of this Offering Circular. We approve locations on a case-by-case basis, considering items such as size, appearance, and other physical characteristics of the site, demographic characteristics, traffic patterns, competition from other businesses in the area (including other Pretzel Time Retail Outlets) and other commercial characteristics, such as purchase price, rental obligations and other lease terms. In certain circumstances, you may be able to lease a site from one of our Affiliates, but you are not required to sublease premises from any of our Affiliates. In <sueh>[that1 case, you must enter into a Sublease Agreement with the Sublessor. Rent received under a Sublease Agreement is passed through to the landlord. Neither we nor our Affiliates recognize revenues as a result of a sublease arrangement.

Development of your Store

You must construct and develop your Store. We will furnish you with prototypical plans and specifications for your Store, including requirements for exterior and interior materials and finishes, dimensions, design, image, interior layout, decor, fixtures, furnishings, equipment, color schemes and signs. You must develop your Store in accordance with these plans and specifications. You must prepare all required construction plans and specifications to suit the shape and dimensions of your site and to ensure that the plans and specifications comply with applicable ordinances, building codes and permit requirements and with lease requirements and restrictions. You must submit construction plans and specifications to us for our approval before you begin construction of your Store, and you must submit all revised and "as built" plans and specifications to us during the course of construction.

ITf voii purchase a modular, prefabricated hairing kiosk, which is assembled using many prefabricated components that are built off-site, vou must purchase these prefabricated components from the vendor or vendors we designate. 1

Fixtures. Furnishings. Equipment and Signs

In developing and operating your Store, you must use only the fixtures, furnishings, equipment (which <may in tho future >include computer hardware and software, as< further> described in Item 11) and signs that we require and have approved as meeting our specifications and standards for quality, design, appearance, function and performance. You may only display at your Store the signs, emblems, lettering, logos and display materials that we approve in writing. We have the right to install all required signs at the Store premises at your expense, although our current practice is to allow you to install the signs. You may purchase these items from any supplier who can satisfy our standards and specifications. Currently, Bintz Equipment Company, an unaffiliated entity, is an equipment and smallwares supplier that meets our standards and specifications. Bintz offers equipment and smallwares to our and our Affiliates' franchisees. In some instances, Bintz may be the only source of supply for certain items of equipment and smallwares that satisfy our standards and specifications. You are not obligated, however,

-34-


to purchase equipment or smallwares from Bintz if, as described above, you propose, and we approve, an alternative supplier.[_]

lis Offering Circular, we have designated the Treatware Point of Sale system bv ICS. and Dell Qptinlex 170L Computers with Windows XP Professional. PC Anywhere 11.5 Software and a Dell Photo Printer - A922. as the required point of sale and computer system for use in vour Store. See Items 7 and 11 for more information. While von mav obtain this software and equipment from anv authorized dealer who sells them, we mav periodically negotiate with one or more vendors to provide discounts or incentives that mav reduce vonr cost of purchasing the equipment. We will provide vou with details on anv discount or preferred provider program as part of our process for approving plans for constructing or remodeling vour Store.1

Proportion of Designated Purchases

The estimated proportion of the required purchases from designated vendors to all purchases by you of goods and services in establishing and operating the franchised business (except for construction and build-out costs) exceeds 90%.

For purposes of this Item 8, references to your Store include any [modular, prefabricate^! baking kiosk, and anv INon-Baking Kiosk you operate under a Non-Baking Kiosks Addendum. You must purchase your Non-Baking Kiosk and related signage from an approved supplier, and <sueh>[those] items must meet our then current standards and specifications.

ITEM 9. FRANCHISEE'S OBLIGATIONS

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

Obligation

Section in Franchise Agreement(l)

Item in Offering Circular

a. Site selection and acquisition/lease

Sections 4.1 and 4.2; also see Sublease Agreement; Option Agreement

Items 6, 7, 8, 11 and 12

b. Pre-opening purchases/leases

Sections 4.2,4.3,4.4, 4.6 and 7.1; also see Asset Purchase Agreement

Items 5, 6, 7, and 8

c. Site development and other pre-opening requirements

Sections 4.3,4.4,4.5, 7.1 and 7.8

Items 6, 7 and 11

d. Initial and on-going training

Article 5

Items 6, 7 and 11

e. Opening

Sections 4.5 and 4.6

Items 5,6, 7 and 11

f. Fees

Sections 3.2,4.6,4.7, 5.1, 5.2, 5.3, 6.1,6.2,6.3,6.4,6.5,8.3,9.1,9.3,

Items 5, 6, 7, 11, and 17

-35-


Obligation

Section in Franchise

Agreement(l)

Item in Offering Circular

12.3(0, 13-5, 14.2, 14.6 and 16.2; Sections 1.4, 2.5, 3.4, Article 4, Article 5, and Sections 12.3, 12.4, and 12.5 of Sublease Agreement; Option Agreement

g. Compliance with System Standards and other standards and policies/operating manual

Article 4 and Sections 5.1, 5.2, 7.1, 7.2,7.3, 7.4, 7.5, 8.1, 8.2, 9.2 and Article 10

Items 6, 7, 8, 11, 13, 14, 15, and 16

h. Trademarks and proprietary information

Section 4.7, Article 10 and Sections 12.3(1), 13.1(d), 14.3 and 14.4; Article 7 of Asset Purchase Agreement; see also Confidentiality Agreement and Option Agreement

Items 8, 13, 14, and 17

i. Restrictions on products/services offered

Sections 2.1, 7.1, 7.3, 9.2 and 10.7

Items 1,8, 14, and 16

j. Warranty and customer service requirements

Sections 4.1,4.2(d), 5.3, 7.1, 7.5, 15.2 and 15.6; Acknowledgment Addendum to Franchise Agreement; Article 5 of Asset Purchase Agreement

Item 11

k. Territorial

Development and Sales Quotas

None

None

1. Ongoing

product/service purchases

Sections 4.4 and 7.1

Items 8 and 11

m. Maintenance, appearance and remodeling requirements

Sections 3.2,4.4,4.6, 7.1, 9.2 and 14.6; Article 2 and Article 8 of Sublease Agreement

Items 11,13, and 17

n. Insurance

Sections 4.5(e), 7.9 and 14.5(e); Article 8 of Sublease Agreement

Items 6, 7 and 11

o. Advertising

Sections 4.6, 7.1, Article 9 and Article 10

Items 5, 6, 7, 11, and 13

-36-


Obligation

Section in Franchise

Agreement(l)

Item in Offering Circular

p. Indemnification

Sections 7.8, 10.5 and 15.6; Sections 2.5(a), 3.4, 6.7, 6.9 and 8.1 of Sublease Agreement; Sections 7.3 and 7.4 of Asset Purchase Agreement; Section 5.3 and Exhibit B of Option Agreement; Section 7 of Assignment, Assumption and Consent

Item 6

q. Owner's participation/ management/staffing

Sections 5.1, 7.1, 7.2, 7.7, 7.8 and 13.5

Items 11 and 15

r. Records and reports

Sections 7.1, 7.4, 7.6, 7.7, 8.1, 8.2 and 10.4

None

s. Inspections and audits

Sections 7.5 and 8.3; Section 2.6 of Sublease Agreement

Item 6

t. Transfer

Section 4.7, Article 12 and Section 13.1(b); Article 11 of Sublease Agreement; Section 8.1 of Asset Purchase Agreement; see also Option Agreement, Assignment, Assumption and Consent and Term Pre-Purchase Addendum

Item 17

u. Renewal

Section 3.2; Renewal Addendum

v. Post-termination obligations

Sections 6.5, 7.8, 8.2, 8.3, 10.5, 10.8, 11.2 and 12.3(1), Article 14, Section 15.6, Article 16 and Article 18; Sections 2.5(a), 3.2, 3.3, 3.4, 6.7, 6.9, 8.1 and 13.12 of Sublease Agreement; Sections 7.3,7.4 and 8.10 of Asset Purchase Agreement

Item 17

w. Non-competition covenants

Article 11 and Sections 12.3(j) and 12.5(c)

Item 17

x. Dispute resolution

Article 16 and Sections 17.1, 17.2, 17.3, 17.4,17.5, 17.6 and 17.7; Section 7.2 of Option Agreement

Item 17

(1) Unless otherwise noted, Section references are to the Franchise Agreement.

-37-


ITEM 10. FINANCING

Except as described below, neither we nor our Affiliates offer direct or indirect financing to franchisees. Neither we nor our Affiliates guarantee any note, lease or other obligation which you may enter into or incur.

As explained in Item 6 of this Offering Circular, one of our Affiliates (sometimes referred to in this Offering Circular as the "Sublessor") may sublease the premises for your Store to you. In <sueh>[that] case, you must sign a standard form of Sublease Agreement included in Exhibit 10 to this Offering Circular. If you are an Entity, the Sublessor has the right to require that each of your Entity Owners guaranty payment and performance of your obligations under the Sublease Agreement by signing a Guaranty in the form attached to the Sublease Agreement.

You must pay rent and other amounts due under the Sublease Agreement in the same amounts as the rent and other amounts due from the tenant under the Master Lease of the premises from the landlord (Article 1 and Article 4 of the Sublease Agreement). You must always pay us or the Sublessor, as directed by the Sublessor, the full amount of all rental payments due. You may not deduct any amount for any claim you may have against us, the Sublessor or any of our other Affiliates. The rent due will vary with the location of the premises, and neither we nor our Affiliates can estimate that amount. Typically, monthly rental payments will be based on factors such as the current market value of similar properties, the perceived market value of your Store based <upen>[flnj its location and traffic patterns, sales volumes, and so forth.

The Sublessor has the right to require you to pay a security deposit under the Sublease Agreement (Section 1.4(c) and Section 5.1 of the Sublease Agreement). Typically, a security deposit will be the equivalent of one month's rent.

The Sublease Agreement does not contain any prepayment penalties.

If you do not make your rental payments within 10 days of the due date or if you commit another breach of the Sublease Agreement or the Master Lease and do not remedy the breach within the time periods specified in the Sublease Agreement, the Sublessor has the right to re-enter the premises and relet the premises either with or without terminating the Sublease Agreement, and the Sublessor has the right to sue you to collect any unpaid rent or other amounts due (Section 12.2 of the Sublease Agreement). The Sublessor can collect our costs of enforcement and collection, including court costs and attorneys' fees (Section 13.2 of the Sublease Agreement). The Sublessor also has the right to charge a $100 late fee for each delinquent payment (Section 12.4 of the Sublease Agreement). In addition, late payments will bear interest from the due date until paid at a rate equal to the lesser of the highest applicable legal rate for open account business credit, or 1.5% per month (Section 12.3 of the Sublease Agreement).

Your breach of the Sublease Agreement and loss of possession of the premises is also a default under the Franchise Agreement and would permit us to terminate the Franchise Agreement (Section 13.1(f) of the Franchise Agreement).

In Section 8.7 of the Sublease Agreement, the Sublessor and you mutually waive our respective rights of recovery against each other and the "Related Parties" (as defined in Section 2.5(a) of the Sublease Agreement) for losses or damage insured against under the insurance required to be maintained under Article 8 of the Sublease Agreement, even if the loss or damage is caused by negligence.

In Sections 12.5 and 12.6 of the Sublease Agreement, you waive any right to claim that certain actions by the Sublessor, such as making payments on your behalf to cure a default, the Sublessor's

-38-


waiver of a previous breach, or the Sublessor's course of conduct in accepting rental payments or partial rental payments during periods of default constitute a waiver of any of the Sublessor's legal rights. Even though you make a payment to us or our Affiliates accompanied by a statement that acceptance of the payment will constitute an accord and satisfaction of the full amount due, we or our Affiliates may accept the payment without the payment being deemed to be an accord and satisfaction and without waiving any of the Sublessor's rights to recover the balance of any amount due or to pursue other remedies for your breach of the Sublease Agreement.

Neither we nor our Affiliates have any past or present practice or intention to sell, assign or discount all or part of any financing arrangement to any third party. Neither we nor our Affiliates receive any payments for the placement of financing.

ITEM 11. FRANCHISOR'S OBLIGATIONS

Except as described below, neither we nor our Affiliates need provide any assistance to you. Our obligations relating to Pretzel Time Stores. Before Opening:

Before you open your Store, we or our Affiliates will:

1.          We will approve or disapprove a site proposed by you for your Store within a reasonable period of time determined by us. We are not obligated to approve or disapprove a site within any specified time period. You must have selected the site for your Store and obtained our approval for the site before signing of the Franchise Agreement. We may refer you to a recommended broker in your geographic area to assist you in finding a site, although you are not required to use the broker. In evaluating a proposed site, we or our Affiliates may inspect the site and may consider a variety of factors, including demographic characteristics, traffic patterns, parking, character of the neighborhood, competition from other dessert, snack food and bakery outlets in the area, the proximity to other businesses (including other Pretzel Time Retail Outlets, the nature of other businesses in proximity to the site and other commercial characteristics (including the purchase price, rental obligations and other lease terms for the proposed site), and the size, appearance and other physical characteristics of the proposed site (Franchise Agreement, Section 4.1). Our approval of a site and any information given to you regarding proposed sites do not constitute an express or implied representation or warranty of any kind as to the suitability of the proposed sites for your Store or for any other purpose. Our approval indicates only that we believe that the particular site falls within our criteria as of the time period encompassing the evaluation. Application of site criteria that have been effective for other sites may not be predictive of the potential for any specific site and after our approval of a site, demographic and economic factors, including competition from other dessert, snack food and bakery businesses, included in or excluded from our site criteria could change, altering the potential of a site. The uncertainty and instability of the factors included in these criteria are beyond our control, and we will not be responsible for the failure of a site approved by us to meet expectations as to potential revenue or operational criteria (Franchise Agreement, Section 4.1).

2.          One of our Affiliates will sublease your Store site to you or assign an existing lease for the site to you if the site approved by us for your Store is a site currently being operated by our Affiliates as a Pretzel Time Store and you purchase the assets of that store, as explained in Item 5 of this Offering Circular. The terms of the Sublease Agreement are explained in Item 6 of this Offering Circular, under Note 9, and in Item 10 of this Offering Circular. If one of our Affiliates elects to assign an existing lease to you, you must obtain the release of our Affiliate from its obligations under the lease, and the lease

-39-


must comply with the requirements in the Franchise Agreement for third party leases generally (Franchise Agreement, Section 4.2(b)). If one of our Affiliates is not currently leasing the site, you must negotiate an acceptable lease for the site from an independent third party, sign the Lease Addendum attached as Exhibit 8 to this Offering Circular, obtain our approval of the lease (Franchise Agreement, Section 4.2(a)). Neither we nor any of our Affiliates own the real property of any existing Pretzel Time Stores.

3.          If you are developing a new Pretzel Time Store, we will provide you with prototypical plans and specifications, including requirements for exterior and interior materials and finishes, dimensions, design, image, interior layout, decor, fixtures, furnishings, equipment, color schemes and signs. We will provide these materials to you following your signing of the Franchise Agreement (Franchise Agreement, Section 4.3(a) and Item 8 of this Offering Circular).

4.          We will provide you, through the Operations Manuals and other materials to be furnished or made available to you after you sign the Franchise Agreement, the standards and specifications for the fixtures, furnishings, equipment (which may in the future include computer hardware and software) and signs that we require and have approved as meeting our specifications and standards for quality, design, appearance, function and performance and which you must use (Franchise Agreement, Sections 4.4 and 5.2 and also Item 8 of this Offering Circular). At our option, we will furnish or make available to you these items in the form of paper copies, electronic copies on computer diskette or CD Rom, or electronic copies accessed through the Internet or other communication systems.

5.          If you are developing a new store, we will provide our standard grand opening marketing and public relations programs and media and advertising materials to you at least 10 days before store opening, upon your payment to us for those materials, as explained in Item 5 of this Offering Circular (Franchise Agreement, Section 4.6).

6.           You may not attend training until you have signed your franchise agreement. We will provide an initial training program for you (or if you are an Entity, for one of your Entity Owners) and for your initial store manager (if different from you). You (or one of your Entity Owners) and any manager of your Store must successfully complete all phases of the training program. rAII of voiir training attendees (including vou and anv Entity Owners or proposed managers!, must he sufficiently proficient in the English language to successfully complete our training program (which we offer only in the English language!, tn adequately communicate and correspond with us and vour employees. customers, manufacturers, suppliers, vendors and distributors, and to effectively fulfill their responsibilities to manage and/or oversee the management of vour Store. ]A11 training occurs at our facilities in Salt Lake City, Utah, or any other location designated by us. The initial training program lasts 5 days. Training classes are offered about once each month. In.addition to the in-class training described below, a typical trainee will spend between 6 and 10 hours during the course on recommended homework. We distribute training materials, which include our Operations Manuals and laminated job aids, at various times during the training course. All of the training sessions are supervised or taught by Susan Stewart, our Training Specialist. Ms. Stewart has 5 years of experience working with franchisees in our training department, the last 2 years as a Training Specialist for our pretzel concepts. One of our Affiliates or an existing franchisee may also make an optional (or in the future a mandatory) 7-10 day in-store work experience available to you at its Pretzel Time Store. Currently, neither we or our Affiliates, nor the host franchisee plan to charge you a fee for any in-store work experience you attend, but we have the right to do so in the future. In the case of a proposed Transfer, we will provide training to the proposed transferee and its attendees at our training facility in Salt Lake City or any other location we designate. fThe transferee and its attendees must attend training before a proposed Transfer is completed, and before thev can assume operations of the transferring Pretzel Time Store. TThe proposed transferee and its attendees may also be given the

-40-


option of attending, or in the future required to attend, an in-store work experience at the Store being transferred. Currently, neither we or our Affiliates, nor the host franchisee plan to charge you or your transferee a fee for any training we provide or for the in-store work experience, but we have the right to do so in the future.

The Pretzel Time training program will cover the following areas:

<

Subject>

<Hows-o Training>

<Instruction> <Materials>

<Instructor>

<Marketing >

<4>

Communications Packet, Merchandising Guide>

<Marketing Department' &-Trainer>

<Real Estate/Leas ing>

<m>

<Handout>

<Real Estate

Department &

Trainers>

<Waste Management, Financial Management, Food Cost>

<4>

<CD Rom>

<Director of Training & Outside speaker>

<Staffing/Human Resources>

<4>

<Effective Leadership Reference Manual>

<Director of Training & Trainers>

<Store Operations, Customer Service, Equipment Repair, Safoty>

<46>

<Operatk>ns-Manuals,-Product Procedures, Videos, Register Laboratory>

<Trainers>

<Produot Preparation >

<43>

<Operations Manuals, Product Procedures>

<Trainers>

;dures>

<2>

<Purchasing>

<m>

<Handouts>

<Purchasing Departmeat>

<Tetafc>

<40>

[ Time]

T Subiectl

[H ftwrs ttfl

[Instruction]

rLocationl

mav 1 1

flntroduction and Training Core Product

EZ25]

fDav2]

[Review Homework; Franchisee

Company Vision & Missior Purchasing Presentation. ]

&5]

fPav 31

fReview

Reviewing Orders. Waste Control-Drink Station. Building a Strong Retail Team. Vendor Prt

[2,25]

TTraining Facility!

-41-


Timel

f Subject!

instruction]

[kffcaliftn]

TDav 41

TReview Homework: Customer Service]

[15]

mav SI

TFinancial Management. Loss Prevention. Marketing Presentation. POS System Training!

[IS

[EayJU

rTonroftt Center. Insurance Presentation-Construction Presentation. Credit/Debit Cai Prepare foi

\&2S\

[Training Facility;

Franchisee Support

Center!

mav 7!

TFinal Exam. In-Store Graduation!

[M]

Facility: Local Pr<

Store!

irters of these hours are spent conducting hands-( the Training Facility "Store/Kitchen" setting, with the other one quarter consisting of classroom instruction. ]We provide training for you (or one of your Equity Owners, if you are an Entity) and the initial store manager (if different from you) free of charge; however, you <aro responsible>[must pav] for all travel and living expenses incurred during the training program. Store manager training is mandatory and must be completed before store opening. All training must be completed to our satisfaction and must be completed no more than 45 days before the opening of your Store. In rare cases, we may in our sole discretion, agree to provide training on-site. If we do so, we may charge a reasonable fee to cover our costs of providing any on-site training, including living expenses for our employees or agents who provide the training. Replacement store managers must also complete the initial training; however, you may be required to pay a tuition fee for that training, as explained in Item 6 of this Offering Circular (Franchise Agreement, Section 5.1). Replacement store managers are also responsible for living and travel expenses during training. Under no circumstances should you permit your Store to be managed by a person who has not been certified by us as having completed all phases of your training program to our satisfaction (Franchise Agreement, Section 5.1).

During Operation:

During the operation of your franchised business, we or our Affiliates will:

1.          Loan you one copy of our store operating standards manual and one copy of our product

procedures manual (the "Operations Manuals"), as described in Section 5.2 of the Franchise Agreement. We have the right, at our option, to furnish or make available to you the Operations Manuals in the form of a paper copy, an electronic copy on computer diskette or CD Rom, or an electronic copy accessed through the Internet or other communication systems. The Operations Manuals will contain mandatory and suggested specifications, standards and operating procedures that we require for your Store and information about your other obligations. We may modify the Operations Manuals to reflect changes in the image, specifications, standards, procedures, Pretzel Time Products and "System Standards" (as defined in Section 1.2(n) of the Franchise Agreement and discussed in Section 7.1 of the Franchise Agreement). However, we will not make any addition or modification that will alter your fundamental status and rights as a franchisee. The Operations Manuals are confidential and will remain

-42-


our property. You may not copy any part of the Operations Manuals, either physically or electronically. If your copy of the Operations Manuals is lost, destroyed or significantly damaged, we will provide you with a replacement copy, at our then applicable charge (Franchise Agreement, Section 5.2). The Tables of Contents of the Operations Manuals and the number of pages devoted to each subject as of <January 3 20Qf1>[Deceinher 31. 2005.1 as well as the total number of pages in the Operations Manuals, are included in Exhibit 11 to this Offering Circular.

2.          Provide training for any replacement store managers, as explained above (Franchise Agreement, Section 5.1).

3.          Furnish you guidance and operating assistance, at your request, about (a) methods, standards, specifications and operating procedures to be utilized in your Store; (b) purchasing required fixtures, furnishings, equipment, signs, materials, supplies, Pretzel Time Products; and (c) advertising and promotional programs. Although we do not have an obligation to do so, we may advise you of operating problems of your Store that come to our attention. We may furnish or make available this guidance and assistance in the form of references to the Operations Manuals, bulletins and other written materials, electronic computer messages, telephonic conversations or consultations at our offices or at your Store. We will not be liable to you or any other person, and you waive all claims for liability or damages of any type (whether direct, indirect, incidental, consequential, or exemplary), on account of any guidance or operating assistance offered by us, except <to the oxtont>Qfl caused by our gross negligence or intentional misconduct. We will make no separate charge to you for the operating assistance and guidance we customarily provide to our franchisees generally. Occasionally, we may make special assistance programs available to you, however, for which you <will ho required to>rmust] pay the daily fees and charges that we establish (Franchise Agreement, Section 5.3).

4.          Provide you with the System Standards referred to above. We may modify the System Standards periodically and the modifications may obligate you to invest additional capital in your Store and to incur higher operating costs. We will not obligate you to invest additional capital at a time when the investment cannot in our reasonable judgment be amortized during the remaining term of the Franchise Agreement (Franchise Agreement, Section 7.1). We may furnish System Standards in the form of references to the Operations Manuals, bulletins and other written and electronic materials.

5.          Provide advertising and marketing services to you as explained below.

We and our Affiliates currently utilize point of purchase printed advertising for the sale of Pretzel Time Products, goods and services at Pretzel Time Retail Outlets. We do not currently utilize electronic media such as radio or television. Our advertising is done at the local store level, although the materials used are produced for national distribution at all Pretzel Time Retail Outlets including those owned and operated by our Affiliates. We may also conduct coupon promotions. In <saeh>rthat] case, we may require you to accept coupons that are issued by us or our Affiliates and presented at your Store by your customers. You will receive certain compensation for these coupons when you tender them to us in accordance with our System Standards. We typically conduct coupon promotions on a regional basis. We currently use national advertising firms for the production of advertising materials.

We are not required to spend any particular amount on advertising in the area in which your Store is located.

You may use advertising materials prepared by you if the materials (a) comply with the requirements of Articles 8 and 10 of the Franchise Agreement, (b) are completely clear and factual and not misleading, and (c) conform to the highest standards of ethical marketing and promotion policies which we have the right to prescribe. Before use, you must submit to us for approval all press releases

-43-


and policy statements and samples of all local advertising, marketing and related materials not prepared or previously approved by us. We will not unreasonably withhold our approval. You may not advertise your Store or the Pretzel Time Products over the Internet (or any other form of electronic commerce) or establish a related World Wide Web Site without our prior written consent. In addition, you may only use pamphlets, brochures, cards or other promotional materials offering free Pretzel Time Products, if prepared by us, unless otherwise approved in advance by us. However, we will give favorable consideration to your use of free product cards developed by you, if the cards clearly state that they may only be redeemed at stores owned by you. If we do not give you written approval of any advertising or other promotional materials within 15 days from the date of receipt by us of the materials, we will be deemed to have disapproved the submission. You may not use any advertising, marketing or related materials that we have disapproved. You must list your Store in the principal telephone directories distributed in your metropolitan area (Franchise Agreement, Section 9.2).

You must pay to us a weekly marketing fee of 1% to 3% of your Store's Gross Revenues. The marketing fee for 2005 is 1.5% of Gross Revenues. For 2006 and future years, we will notify you annually of the exact percentage you must pay as a marketing fee, except for any year in which the percentage is to remain unchanged from the preceding year. With the possible exception of[ franchisees that entered into franchise agreements with PTI that provided for a lower, fixed marketing fee. and] 1 franchisee with 2 Pretzel Time Stores in New York who does not contribute marketing fees, you will not be required to pay more than other franchisees in your market area. You must pay marketing fees weekly by pre-authorized electronic bank transfer, at the same time that you pay continuing fees (Franchise Agreement, Sections 6.3, 6.4 and 9.1(a)). Pretzel Time Stores owned by us or our Affiliates in the same market area as you will contribute marketing fees on the same basis as you (Franchise Agreement, Section 9.1(a)).

As of the date of this Offering Circular, we do not form, organize, maintain or otherwise make use of advertising cooperatives, nor do we require you to join one. We have the right, however, in the future to form, organize, maintain and otherwise make use of local or regional advertising cooperatives. As< further> described in Item 6 of this Offering Circular, if a local or regional advertising cooperative is formed or organized for the market that includes your Store, we have the right to require you to participate in and contribute to the advertising cooperative an amount of up to 3% of your Gross Revenues, which is in addition to your marketing fees and any lease-required advertising fees. Each <Mrn. Fioldfl CoolciorPretzel Timel Store located within an advertising cooperative, including <Mrs. Fields Cookie Stnrer,>[Pretze,H Timf?] owned by us or our Affiliates, will be a member of the advertising cooperative and have one vote per Store. Each advertising cooperative will be required to adopt written governing documents that meet our approval. A copy of the governing documents for your local advertising cooperative (if one has been established) is available upon your request. The members of each advertising cooperative and their elected officers will be responsible for all administration of the advertising cooperative. Each advertising cooperative will engage the services of a professional advertising agency, public relations firm or similar service that meets with our approval and has expertise in their market. Each advertising cooperative will be required to have an independent CPA prepare quarterly and annual financial statements, which will be made available to us and all <Mrs. Fields Goak4e> [Pretzel Time] Store franchisees in the advertising cooperative. We have the right to require local and regional advertising cooperatives to be formed, changed, dissolved or merged.

We will administer the marketing fees we collect and direct all marketing programs financed by the marketing fees, and have the right to determine the creative concepts, materials and endorsements used and the geographic, market and media placement and allocation. We have the right to use the marketing fees we collect to meet any and all costs of maintaining, administering directing and preparing advertising materials and marketing programs, including: purchasing direct mail and other media marketing; employing advertising, promotion and marketing agencies; supporting public relations;

-44-


conducting market research; implementing and testing Trade Dress and design prototypes; and other advertising, promotion and marketing activities. We have the right, at our option, to use marketing fees to prepare, furnish and/or offer for sale to you advertising, marketing and promotional formats and materials, as <further >described below.

We will account for the marketing fees we collect separately from our other funds, although we are not required to establish a separate marketing fund or bank account for <sueh>rthosel fees. We have the right to use the marketing fees we collect to defray the salaries, employee benefits, administrative costs and overhead we or our Affiliates may incur in activities related to our marketing programs, including conducting market research, preparing advertising, promotion and marketing materials and collecting and accounting for the marketing fees we collect. On your prior written request made within the first quarter of any calendar year, we will make available to you no later than 120 days after the end of each calendar year, an annual statement of moneys collected and costs incurred for our marketing programs. No independent audit is required< in oonneotion>[J with this statement or the marketing fees we collect. We have the right in the future to create a marketing fund to be operated by us or through another form of entity separate from us (Franchise Agreement, Section 9.1(c)). Any marketing fees we collect but do not spend in the fiscal year in which they were accrued will be carried forward to the following fiscal year.

We intend to use the marketing fees we collect to maximize recognition of the Pretzel Time Trademarks as well as to increase patronage of Pretzel Time Stores. Although we will endeavor to utilize the marketing fees to develop advertising and marketing materials and programs and to place advertising that will benefit all Pretzel Time Stores, we cannot ensure you that our expenditure of marketing fees in or affecting any geographic area will be proportionate or equivalent to the marketing fees paid to us by Pretzel Time Stores operating in that geographic area or that any Pretzel Time Store will benefit directly or in proportion to the marketing fees it pays to us from the development of advertising and marketing materials or the placement of advertising (Franchise Agreement, Section 9.1(d)).

We may provide you with copies of advertising, marketing and promotional formats and materials for use in your Store, which we have prepared. You are only required to pay the shipping and handling costs for these items. We may also offer you the option of purchasing other advertising, marketing and promotional formats and materials prepared by us that are suitable for use at local Pretzel Time Stores. If you elect to purchase such items from us, we will provide them to you at our cost plus a reasonable mark-up and any shipping, handling and storage charges. Finally, we may develop and market special mandatory promotional items for Pretzel Time Stores. You may be required to maintain a representative inventory of these promotional items to meet public demand. We will make these items available to you at our cost plus a reasonable mark-up and any shipping, handling and storage charges. You will have the right to purchase alternative promotional items if the alternative items conform to the specifications and quality standards we establish and you obtain our prior written approval. All payments to us for the items described in this paragraph are nonrefundable and cannot be applied against the weekly marketing fees that you are required to pay to us, as further described in Item 6 of this Offering Circular and above (Franchise Agreement, Section 9.3).

In <3004?>[2fifl5»] marketing fee contributions have been used as follows: (i)

production/<merohandising:50%;and (ii) administration:50%.-----In 2QQ4>[meflfa; 44%: fii)

administration: 52%: and fiin other. Including product development, store design and amounts repaid to us for amounts we spent on advertising and related expenses in prior years in excess of the marketing fees we collected during those vears. In 2005.1 we did not spend any of the marketing

-45-


fee contributions that we received for advertising that was primarily a solicitation for the sale of franchises, nor do we intend to do so in <3QQ5t>[2Q06. ]

In addition to the marketing fees you pay to us, you must also spend on advertising any amount required under your lease or sublease. Those amounts typically vary from lease to lease, and therefore, franchisees are not obligated to spend the same amount on local advertising and marketing<-> (Franchise Agreement, Section 9.2). If you are developing a new Pretzel Time Store, you must also conduct a grand opening advertising and promotion program as explained above in this Item 11 and in Item 5 of this Offering Circular.

In addition to the information provided in this Item 11 about advertising and marketing, you should review the material in Items 6, 8 and 9 of this Offering Circular.

<6t In operating your Store, you must purchase and uoe the number of electronic cash registers necessary for the size of your store. Currently, wo do not require that you purchase a particular brand or model of electronic cash register, although any electronic cash register you use must be capable oollooting and generating sales data and oategory totals and transaction count totals. In the future, you will be responsible for any and all upgrades to your electronic cash registers, as we determine to be necessary. In addition, we have the right to independently aooess the information and data you oolloot

and gather.----We currently require that you have access to the Internet in order to submit reports,

inoluding Gross Revenue reports and financial statements, for your Store to us electronically via the Internot>

6.         <?r-As of the date of this Offering Circular, we <do not require you to use any computer

hardware or r,oftwnro>[require vou to use the Treatware point of sale software system hv ICS ^Innovative Computer Systems) as the point of sale system in vour Store. In addition, we currently require vou to purchase and use two Dell Optiplex 170X Computers with Windows XP Professional. PC Anywhere 11.5 Software and a Dell Photo Printer - A9221 in the operation of your Store< although vou must have the capability tn nooenn the Internet as described in Note 6 above>l. The Dell Computers also act as vour registers, operating with the ICS Treatware software. We also currently require that vou have wireless Internet access in vour Store premises for use hv vour customers and in order to suhmit reports for vour Store, including Gross Revenues reports and financial statements, to us electronically, and to allow us to access information directly from vour POS system. In addition, we require vou to establish and maintain a valid email address and authorize us to communicate with you by that method at the address]. Currently, you may use any Internet service provider <and any computer hardware and software >that allows you to access the Internet. [See Item 7 for an estimate of the costs associated with the POS software and computer system, and wireless Internet access. ]We have the right<, howevcr,> to require you in the future to purchase, install and usef different] computer hardware and software which meet our specifications and standards, as modified by us. You must purchase, install and begin using any required computer hardware and software in your Store within 60 days of our notice to you. You will be allowed to purchase any required computer hardware and software from any supplier who can satisfy our standards and specifications. The principal function of any required computer hardware and software will be to facilitate the reporting requirements under the Franchise Agreement. <As of the date of this Offering Cireular, we have not established any specifications or standards for computer hardware or software. Consequently, we are unable to designate a brand or type of computer that meets our specifications and standards. >We have the right to require you, at your sole expense to upgrade any required computer hardware and software<, onoe established,> to meet our then<->[Jcurrent standards and specifications. There is no limitation on the frequency and cost of this requirement. We also have the right to

-46-


independently access the information and data you collect and gather using any required computer hardware and software.

<&7>[2J            If you are developing a new Pretzel Time Store, we estimate that there will be an

interval of between 60 to 180 days between the signing of the Franchise Agreement and the opening of your Store. The interval may vary depending upon factors such as the weather, the location and condition of the site, your ability to obtain any necessary financing and building, zoning or other permits and approvals, construction delays, and so forth. If you are acquiring the assets of an existing Store, the interval between your signing of the Franchise Agreement and opening your Store is typically 30 to 120 days. Also, you may not open your Store for business until: (a) we approve the store for opening; (b) pre-opening training of you and the store personnel has been completed to our satisfaction; (c) the initial franchise fee and all other amounts then due to us have been paid in full; (d) the lease documentation has been signed and all other documentation for development of your Store has been completed; and (e) we have been furnished with copies of all required insurance policies or other evidence of insurance coverage and payment of premiums as we require. Subject to your compliance with these conditions, you must open your Store for business within 180 days after the Franchise Agreement is signed or on or before the date specified in any lease or sublease for the Store premises, whichever is earlier (Franchise Agreement, Section 4.5). Because Pretzel Time Franchises are granted for a specific location and the specific location is designated in the Franchise Agreement before it is signed, the Franchise Agreement does not have any provision that addresses the consequences if a site is not agreed upon.

Area Developer obligations relating to Pretzel Time Stores.

If your Store is located within an Area Developer's Territory, the Area Developer may be contractually obligated, under the applicable area development agreement with us, to provide certain services to you. Depending on the form of area development agreement, these services may include assisting with site selection, providing store opening assistance, periodically visiting and evaluating the operations of each Store, providing additional training, marketing the Pretzel Time System in the Area Developer's Territory, providing System Standards and furnishing guidance and operating assistance. For providing these services to franchisees within their Territories, Area Developers typically receive a percentage of the initial franchise fee and the continuing fees paid to us by such franchisees. If an Area Developer fails to perform any of our obligations listed in this Item 11, however, we will perform <seeh>[those] obligations. Except for our agreement to perform any of our obligations listed in its Item 11 if an Area Developer fails to do so, we are not responsible or liable for any actions, errors, omissions, fraud or negligence of our Area Developers. See Items 1 and 2 of this Offering Circular for a further description of our Area Developers and their respective Territories.

ITEM 12. TERRITORY

Right Granted to Pretzel Time Franchisees

Franchises are granted for a specific location and are NOT exclusive. You may not operate your Store at any other site without our prior written consent. In addition, you may only offer and sell finished, approved Pretzel Time Products over the counter to retail customers from your Store, and may not sell approved Pretzel Time Products or any materials, supplies, or inventory bearing the Pretzel Time Trademarks at any other location or through any alternative channel of distribution without our prior written consent. Alternative channels of distribution include the operation of a food cart or kiosk, sales through the Internet (or any other form of electronic commerce), and mail order and telephone sales. You may, however, offer and sell approved Pretzel Time Products as part of off-site catering events and may offer samples of approved Pretzel Time Products at or directly in front of your Store.

-47-


You may not relocate your Store unless you relocate your Store as a result of condemnation, the exercise of a relocation right by your landlord or for some other reason approved by us in writing (Franchise Agreement, Section 4.7). If you lose the right to possess the premises where you are operating your Store and do not have the right to relocate, we have the right to terminate your Franchise Agreement. Also, as a franchisee, you do not have any right to acquire additional Pretzel Time Stores or franchises.

As <furthcr >described in Items 1, 5 and 7 of this Offering Circular, we may grant you the right to sell some or all of the products that you produce at the Host Store from a Non-Baking Kiosk, provided you enter into our Non-Baking Kiosks Addendum with us. As <further >described in the Non-Baking Kiosks Addendum, you may only operate a Non-Baking Kiosk< in conneotion> with, and in the same shopping mall or center as, the Host Store. Your right to operate a Non-Baking Kiosk, however, always will be subject to the primary landlord's consent and any conditions it imposes. If the landlord withdraws its consent, you must stop operating the Non-Baking Kiosk immediately. Except as provided in the Non-Baking Kiosks Addendum, the Franchise Agreement controls your operation of Non-Baking Kiosks. You may not begin operating a Non-Baking Kiosk until we notify you in writing that it meets our standards and specifications. We may terminate the Non-Baking Kiosks Addendum if we decide to establish or allow you or others to establish other <Mrs. Fields CookioMPretzel Time! Stores in the same shopping mall or center as the Host Store. (See Item 17.)

Rights Reserved to Us and Our Affiliates

We and our Affiliates have the right to do the following: (1) franchise, license and/or own and operate Pretzel Time Retail Outlets (including Pretzel Time Stores), Pretzelmaker Stores, Hot Sam Pretzel Stores, Mrs. Fields Cookie Stores, Mrs. Fields Bakery Cookie Cafes, Great American Cookie Company Stores, Original Cookie Company Stores, <and->TCBY Stores<-raite->[. Test Stores and Yovana Stores lat any locations, including locations near your Storef or in the same malll and on any terms and conditions as we or our Affiliates deem appropriate; (2) sell and license and franchise others to sell Pretzel Time Products and any other products or services under the Pretzel Time Trademarks, or any trade names, trademarks, service marks, trade dress or other commercial symbols of our Affiliates, through alternative channels of distribution (including Internet, mail-order and telephone sales, the sale of refrigerated ready-to-bake pretzel dough to retail outlets, the sale of refrigerated ready-to-bake cookie dough and proprietary batter, dough and other ingredients for making cookies to retail outlets, and the sale of frozen yogurt, frozen yogurt mix, premium ice cream and ice cream specialty products to a variety of customers, including hotels, restaurants, clubs, independent ice cream stores, department stores, supermarkets and grocery stores); and (3) franchise, license and/or own and operate businesses (including dessert and snack food businesses) at any locations, including locations near your Store, and on any terms and conditions as we or our Affiliates deem appropriate, or distribute products or services through alternative channels of distribution which are similar to the Pretzel Time Products under trade names, trademarks, service marks, trade dress or other commercial symbols other than the Pretzel Time or those owned by us or our Affiliates. These activities may compete with you.

Further, as discussed in Item 1, we or one of our Affiliates may acquire or actively seek to acquire businesses or franchise systems that are your competitors and <sHeh>rthosel competitors may have locations near your Store, including locations within the same shopping mall. In addition, as discussed in Item 1, we or one of our Affiliates may enter into co-branding arrangements. These activities may compete with you.

We enter into licensing and franchising arrangements with other individuals and entities, granting those individuals and entities exclusive territorial rights which may restrict your rights to locate

-48-


your Store in certain locations. Any restrictions in effect will be explained to you as part of the site selection process for your Store.

Rights Granted and Reserved to Pretzel Time Area Developers

As further described in Items 1 and 2 of this Offering Circular, we have granted certain Area Developers the right to develop, own and operate a specified number of Pretzel Time Stores at certain approved locations within a defined Territory. If an Area Developer has the rights to the Territory in which your Store is located or if an Area Developer's Territory is close to the location of your Store, the Stores developed in such Territory, either by the Area Developer, us or some other third-party, may compete with you.

ITEM 13. TRADEMARKS

Under the Franchise Agreement, we license you to use the Pretzel Time Trademarks, as defined in Exhibit 1, in the operation of your Store. The following is a summary of the principal Pretzel Time Trademarks, all of which are registered on the Principal Register of the U.S. Patent and Trademark Office.

MARK

REGISTRATION NO.

REGISTRATION DATE

COMMENTS

Pretzel Time (and Design)

1,778,178

June 22,1993

Renewed

>June 22,2003

As< further> described in Item 1 of this Offering Circular, as part of the Contributions which took place on March 16, 2004, PTI contributed the Pretzel Time Trademarks to MFFB and, ultimately, to us, the new owner of the Pretzel Time Trademarks.

There are no currently effective material determinations of the U.S. Patent and Trademark Office, trademark trial and appeal board, the trademark administrator of any state, or any court, nor are there any pending interference, opposition or cancellation proceedings or any pending material litigation, involving any of the registered Pretzel Time Trademarks described above. There are no agreements currently in effect which significantly limit our rights to use or franchise the use of any of the Pretzel Time Trademarks.

Your right to use the Pretzel Time Trademarks is derived solely from the Franchise Agreement and is limited to your conduct of business in compliance with the Franchise Agreement and all applicable standards, specifications, operating procedures and rules that we require. Your unauthorized use of the Pretzel Time Trademarks will constitute a breach of the Franchise Agreement and an infringement of our rights in the Pretzel Time Trademarks. Your use of the Pretzel Time Trademarks and any goodwill established by your use will benefit us and our Affiliates exclusively. The Franchise Agreement does not confer any goodwill or other interests in the Pretzel Time Trademarks on you other than the right to operate your Store in compliance with the Franchise Agreement. All rights in and goodwill from the use of our trademarks accrue solely to us and our Affiliates. All provisions of the Franchise Agreement applicable to the Pretzel Time Trademarks will apply to any additional proprietary trade and service marks and commercial symbols that we authorize for use by you in the future.

You must use the applicable Pretzel Time Trademarks as the sole identification of your Store, and you must identify yourself as the independent owner in the manner we require. You may not use any Pretzel Time Trademark as part of any corporate or trade name or with any prefix, suffix or other

-49-


modifying words, terms, designs or symbols (other than logos franchised to you under the Franchise Agreement), or in any modified form, nor may you use any Pretzel Time Trademark in performing or selling any unauthorized services or products or in any other manner not expressly authorized in writing by us. You may not use any Pretzel Time Trademark as part of an electronic mail address or on any sites on the Internet or World Wide Web. You may not use or register any of the Pretzel Time Trademarks as an Internet domain name. You must display the applicable Pretzel Time Trademarks prominently at your Store, on supplies or materials designated by us, and on packaging materials, forms, labels and advertising and marketing materials. You must display all applicable Pretzel Time Trademarks in the manner we require, and you must use the registration symbol "©"<-> in using any of the registered Pretzel Time Trademarks. You must refrain from any business or marketing practice which may be injurious to our business and the good will associated with the Pretzel Time Trademarks or Pretzel Time Stores.

We have the right to require you to modify or discontinue use of any Pretzel Time Trademark or use one or more additional or substitute trade or service marks if we determine that it becomes advisable at any time. In <sueh>rthat] case, you must comply with our directions to modify or discontinue the use of the Pretzel Time Trademark or use one or more additional or substitute trade or service marks within a reasonable time after notice from us. We will reimburse you for your reasonable direct expenses in modifying or discontinuing the use of a Pretzel Time Trademark and substituting a different trademark or service mark. However, we are not obligated to reimburse you for any loss of goodwill associated with any modified or discontinued Pretzel Time Trademark or for any expenditures made by you to promote a modified or substitute trademark or service mark.

You must immediately notify us of any apparent infringement of or challenge to your use of any Pretzel Time Trademark or claim by any person of any rights in any Pretzel Time Trademark, and you must not communicate with any person other than us or our counsel about the infringement, challenge or claim. We or our Affiliates have the right to take the action we deem appropriate and control exclusively any litigation, U.S. Patent and Trademark Office proceeding or any other administrative or court proceeding concerning any Pretzel Time Trademark. You must sign any instruments and documents, render assistance and do those things as, in the opinion of our legal counsel, may be necessary or advisable to protect and maintain our interests in any litigation or U.S. Patent and Trademark Office or other proceeding or otherwise to protect and maintain our interests in the Pretzel Time Trademarks.

We will indemnify you against and reimburse you for all damages for which you are held liable in any proceeding arising out of your authorized use of any Pretzel Time Trademark and for all costs you reasonably incur in defending any claim brought against you or any proceeding in which you are named as a party, if you have timely notified us of the claim or proceeding and have otherwise complied with the requirements of the Franchise Agreement. At our option, we and our Affiliates are entitled to defend and control the defense of any proceeding arising out of your authorized use of any Pretzel Time Trademark.

To our actual knowledge, there are no superior prior rights or infringing uses which could materially affect your use of any Pretzel Time Trademark in any state.

ITEM 14. PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION

Except as noted below, we and our Affiliates do not own any patents or copyrights which are material to the Franchise.

We claim copyrights in the Operations Manuals, construction plans, specifications and materials, printed advertising, promotional, sales, training and management materials and in related items you will use in operating your Franchise. We have not registered these copyrights with the U.S. Registrar of

-50-


Copyrights. You may use the Operations Manuals and other materials during the term of the Franchise Agreement.

There are currently no effective determinations of the U.S. Copyright Office or any court regarding any of the copyrights. There are no agreements currently in effect which significantly limit our rights to use or franchise the copyrighted materials. Also, there are no superior prior rights or infringing uses actually known to us which could materially affect your use of the copyrighted materials in any state.

Your right to use the copyrights is derived solely from the Franchise Agreement and is limited to your conduct of business in compliance with the Franchise Agreement and all applicable standards, specifications, operating procedures and rules that we require. Your unauthorized use of the copyrights will constitute a breach of the Franchise Agreement and an infringement of our rights in the copyrights. Your use of the copyrights and any goodwill established by your use will benefit us exclusively. The Franchise Agreement does not confer any goodwill or other interests in the copyrights upon you other than the right to operate your Store in compliance with the Franchise Agreement. All rights in and goodwill from the use of the copyrights will accrue solely to us. All provisions of the Franchise Agreement applicable to the copyrights will apply to any additional copyrighted materials that we authorize for use by you in the future.

We have the right to require you to modify or discontinue use of any of the materials in which we claim copyrights if we determine that it becomes advisable at any time. In <sueh>[that] case, you must comply with our directions to modify or discontinue the use of those materials within a reasonable time after notice from us. We will reimburse you for your reasonable direct expenses in modifying or discontinuing the use of those materials and in substituting different materials specified by us. However, we are not obligated to reimburse you for any loss of goodwill associated with the modification or discontinuation of any materials in which we claim copyrights or for any expenditures made by you <in-connoction >with your use of those materials.

You must immediately notify us if you learn that any person may be using our copyrighted materials without our consent or authorization. You must also immediately notify us of any challenge to your use of any copyright or claim by any person of any rights in any copyright. You must not communicate with any person other than us or our counsel about any challenge or claim to any copyright. We and our Affiliates have the right to take the action we deem appropriate and the right to control exclusively any litigation, U.S. Copyright Office proceeding or any other administrative proceeding concerning any copyright. You must sign any instruments and documents, render assistance and do those things as, in the opinion of our legal counsel, may be necessary or advisable to protect and maintain our interests in any litigation or Copyright Office or other proceeding or otherwise to protect and maintain our interests in the copyrights.

We will compensate and reimburse you for all damages for which you are held liable in any proceeding arising out of your authorized use of any copyright and for all costs you reasonably incur in defending any claim brought against you or any proceeding in which you are named as a party, if you have timely notified us of the claim or proceeding and have complied with your obligations under the Franchise Agreement. At our option, we or our Affiliates are entitled to defend and control the defense of any proceeding arising out of your use of any copyright.

We also own the Confidential Information and claim copyrights in the Confidential Information. The Confidential Information includes trade secrets and is our proprietary information. Portions of the Confidential Information required in the operation of your business will be communicated to you. However, you will not acquire any interest in any Confidential Information, other than the right to utilize

-51-


Confidential Information disclosed to you in operating your Store during the term of the Franchise Agreement. The use or duplication of any Confidential Information in any other business will constitute an unfair method of competition and a violation of your Franchise Agreement. We only disclose the Confidential Information to you on the condition that you agree:

(i) Not to use Confidential Information in any other business or capacity;

(ii) To maintain the absolute confidentiality of Confidential Information during and after the term of the Franchise Agreement;

(iii) Not to make unauthorized copies of any portion of Confidential Information disclosed in written or other tangible form; and

(iv) To adopt and implement all reasonable procedures that we require to prevent unauthorized use or disclosure of Confidential Information, including restrictions on disclosure of Confidential Information to your employees and to comply with requirements that we may impose that certain key employees sign confidentiality agreements as a condition of employment.

We and our Affiliates will own and have the perpetual right to use and authorize other Pretzel Time Stores to use, and you must fully and promptly disclose to us, all ideas, concepts, formulas, recipes, methods and techniques about the development or operation of a pretzel bakery, dessert or retail snack food business conceived or developed by you or your employees during the term of the Franchise Agreement. You must not, however, test, offer or sell any new products without our prior written consent.

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

We recommend that you participate personally in the direct operation of your Store, although you are not specifically obligated to do so by the Franchise Agreement. However, you must either manage your Store yourself, or use a full time "on premises" manager. The manager need not have an ownership interest in a franchisee that is an Entity. [Both vou for one of vour Entity Owners, if vou are an Entity^ and lthe manager of your Store must be certified by us as having completed all phases of our training program to our satisfaction and must participate in all other activities required to open your Store. We also require all replacement managers to satisfactorily complete all phases of our training program.

If you are an Entity, each Entity Owner must guarantee your obligations under the Franchise Agreement by signing the Guaranty attached to the Franchise Agreement, a copy of which is included in Exhibit 3.

We have the right to require <cach manager of a Protzol Timo Storc>[ (including vou and anv Entity Owner or manager^] to sign a Confidentiality Agreement in of Exhibit 5 in lour favor as a condition of <emplnymont as q store manager>[attendii program]. In addition, we have the right to require each manager of a Pretzel Time Store to agree to the non-competition covenants described in Item 17 of this Offering Circular.

You and each other Restricted Person will be bound by the non-competition covenants described in Item 17.q. and Item 17.r. of this Offering Circular.

-52-


fDuring the term of the Franchise Agreement, vou (or if vou are an entity, an Kntitv Owner who manages or oversees the management of vour Stored must he sufficiently proficient in the English language to adequately communicate and correspond with us and vour employees. customers, manufacturers, suppliers, vendors and distributors, and to effectively manage and/or oversee the management of vour Store. During the term of the Franchise Agreement, von (or if vou are an entity, an Entity Owner who manages or oversees the management of vour Stored also must be authorized to work in the TLS. without sponsorship hv us or one of our Affiliates. As a condition of entering into a Franchise Agreement, vou (or if vou are an entity, the Entity Owner who will manage or oversee the management of vnur Stored will he required to successfully pass a workplace appraisal test in the English language, and to provide proof satisfactory to us of vour (or vour Entity Owner's^ authority to work in the U.S. without sponsorship hv us or one of our Affiliates.]

ITEM 16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL

In operating your Store, you may offer for sale only those Pretzel Time Products that we approve for you to sell at the Premises. The Operations Manuals explain the Pretzel Time Products that you initially are authorized to offer at your Store. In the future, we have the right to change or add'to the Pretzel Time Products that you are authorized to offer at the Premises. We typically base our determination of whether to allow you to offer an expanded line of Pretzel Time Products on our evaluation of your compliance, over time, with the System Standards described in Section 7,1 of the Franchise Agreement, with particular emphasis on those related to quality. We do not base our determinations on sales or marketing quotas, volumes or results. You should also refer to Item 8 of this Offering Circular for information <with ronpoot to>[regarflingl required purchases of certain items.

Your lease may also impose other obligations or restrictions <with rcGPoet to>[on] the types of products that you may offer from your premises, and you must comply with those restrictions and obligations even if they would prevent you from offering certain Pretzel Time Products that we have approved for you to offer.

There is no limitation on our right to require you to offer or refrain from offering certain products and services, except that we will not obligate you to invest additional capital at a time when the investment cannot in our reasonable judgment be amortized during the remaining term of the Franchise Agreement. You must offer all Pretzel Time Products that we authorize you to sell. However, we are not required to authorize you to sell all available Pretzel Time Products.

You are generally not restricted in the retail customers to whom you may sell products and services. However, without our prior written consent, you may not offer Pretzel Time Products approved for sale or services of your Store or any materials, supplies, or inventory bearing the Trademarks at any site other than your Store premises (other than catering events and the offering of Pretzel Time Product samples at or directly in front of your Store) or through any alternative channel of distribution (as<-furthcr>[J described in Item 12). In addition, you may not offer for sale any materials, supplies or inventory used in the preparation of any of the Pretzel Time Products. You may only sell finished Pretzel Time Products that have been approved for sale at your Store and only to retail customers, and you may not sell any Pretzel Time Products to any person or entity purchasing the Pretzel Time Products for resale. In addition, you may not use the site of your Store for any purpose other than the operation of a Pretzel Time Store.

You may use only pamphlets, brochures, cards or other promotional materials offering free Pretzel Time Products that we have prepared, unless otherwise approved by us in advance. However, we

-53-


will give favorable consideration to your use of free product cards developed by you, if the cards clearly state that they may only be redeemed at Pretzel Time Stores owned by you.

We and our Affiliates will have the perpetual right to own and use and authorize other Pretzel Time Stores to use, and you will fully and promptly disclose to us, all ideas, concepts, formulas, recipes, methods and techniques about the development or operation of a bakery, dessert or snack food business conceived or developed by you or your employees during the term of your Franchise Agreement. You may not test, offer, or sell any new products without our prior written consent.

ITEM 17. RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION

The following table lists important provisions of the Franchise Agreement and other related agreements pertaining to renewal, termination, transfer and dispute resolution. You should read these provisions in the Franchise Agreement and other agreements attached to this Offering Circular.

Provision

Section in Franchise Agreement(l)

Summary(l)

a. Term of the Franchise Agreement

Sections 3.1; Sections 3.1, 3.2 and 3.4 of Sublease Agreement;

Initial term is 7 years. Unless renewed, Franchise Agreement will terminate on expiration of initial term.

Unless otherwise terminated under its terms, the term of the Sublease Agreement will continue until expiration of Franchise Agreement or one day before termination of Master Lease.

b. Renewal or extension of the term

Section 3.2; Renewal Addendum to Franchise Agreement; Term Pre-Purchase Addendum; Section 3.1(b) of Sublease Agreement

You have the right to renew for 1 additional 7-year term if you are not in default. In certain circumstances, you may also be required or allowed to pre-purchase additional term under the Franchise Agreement.

If you are not in default of Sublease Agreement and Master Lease would expire before the Franchise Term ends and Master Lease contains renewal options, Sublessor will exercise the renewal options at your request.

c. Requirements for you to extend or renew

Section 3.2

You give us at least 180 days prior notice; you sign new Franchise Agreement (which may include different or additional fees and

-54-


Provision

Section in Franchise Agreement(l)

Summary(l)

performance criteria) and our then current Renewal Addendum (which will establish that you have no additional renewal rights and contain a general release); at our request, you refurbish and remodel the premises; you have complied with all agreements with us during the initial term; you have satisfied all monetary obligations; you retain the premises for the renewal term; and follow our then current renewal process, which may require additional training and delivery of certain financial statements and records.

d. Termination by you

Section 13.4

You have the right to terminate if we are in default.

e. Termination by us without cause

Section 13.3; Section 6.1 of Asset Purchase Agreement

We have the right to terminate if you fail to satisfactorily complete the required training or if you fail to begin your Store operations within 180 days after signing of Franchise Agreement; see also "17.a." above.

MFOC has the right to terminate Asset Purchase Agreement if you do not enter into the Franchise Agreement.

f. Termination by us with cause

Sections 13.1 and 13.2; Section 12.2 of Sublease Agreement

We have the right to terminate if you are in default of Franchise Agreement or any other agreement with us or our Affiliates; see also "17.o." below.

Sublessor has the right to terminate Sublease Agreement if you are in default.

g. "Cause" defineddefaults which can be cured

Sections 13.1 and 13.2; Section 12.1 of Sublease Agreement

Curable defaults: (1) failure to comply with certain System Standards and health requirements must be cured within 48 hours of notice; (2) failure to make payments may be cured within 10 days of notice of nonpayment; and

-55-


Provision

Section in Franchise Agreement(l)

Summary(l)

(3) any other default of Franchise Agreement or any other agreement with us or our Affiliates not listed above or in "17.h." below may be cured within 30 days after written notice of default. Involuntary bankruptcy or other involuntary insolvency events are defaults if not discharged within 60 days.

Curable defaults under Sublease Agreement: (1) monetary defaults maybe cured within 10 days of due date; (2) involuntary bankruptcy or other involuntary insolvency events are defaults if not discharged within 60 days; and (3) any other default of Sublease Agreement not listed above or in "17.h." below may be cured within 15 days after written notice.

h. "Cause" defineddefaults which cannot be cured

Sections 13.1 and 13.2; Section 12.1 of Sublease Agreement

Non-curable defaults:

(I) voluntary bankruptcy or other voluntary insolvency events; (2) unauthorized transfers; (3) material misstatements or omissions; (4) you are convicted or plead no contest to a felony; (5) you engage in detrimental conduct; (6) unauthorized use of the Pretzel Time Trademarks or Confidential Information; (7) abandonment of or failure to actively operate your Store; (8) you are in breach of your obligations under your lease or sublease of the Store premises or you lose the right of possession of your Store premises; (9) failure to pay uncontested taxes; (10) repeated defaults, even if cured; or

(II) you default on any financing obligations.

Non-curable defaults under Sublease Agreement: (1) voluntary bankruptcy or other voluntary insolvency events; (2) unauthorized assignment of Sublease Agreement or granting of subleases<-

-56-


Provision

Section in Franchise Agreement(l)

Summary(l)

thereunder>; (3) abandonment of or failure to actively operate your Store; (4) breach of Master Lease or Franchise Agreement; or (5) repeated defaults, even if cured.

i. Your obligations on termination/nonrenewal

Sections 6.5, 7.8, 8.2, 8.3, 10.5, 10.8, 12.3(1), 14.2, 14.3, 14.4, 14.6, 14.7, 15.6 and Article 18; Sections 3.2 and 3.3 of Sublease Agreement

Pay all amounts due, including any late charges and interest; pay termination fee; continue to honor all guarantees, releases and waivers; retain records and permit audits; not disclose Confidential Information; discontinue use of Pretzel Time Trademarks; deliver to us all signs, equipment, supplies and materials displaying the Pretzel Time Trademarks; cancel any fictitious or assumed name certificates; make required changes to premises; assign telephone listings; dispose of non-returnable supplies and materials; honor indemnification requirements; and continue to honor and be bound by general provisions; see also "17.o." and "17.r." below.

Upon termination or nonrenewal of Sublease Agreement, you must surrender the Store premises and repair damage caused by removal of personal property.

j. Assignment of contract by us

Section 12.1; Article 6 of Option Agreement; Section 11.3 of Sublease Agreement

No restriction on our right to assign Franchise Agreement and Option Agreement, Sublessor's right to assign Sublease Agreement and MFOC's right to assign Asset Purchase Agreement.

k. "Transfer" by you definition

Section 1.2(p); Sections 11.1 and 11.2 of Sublease Agreement

Includes transfer of Franchise Agreement or ownership change.

No assignment of Sublease Agreement or sublease of Store premises without Sublessor's consent.

1. Our approval of transfer by you

Sections 4.7, 12.2, 12.3 and 12.4; Assignment, Assumption and

We have the right to approve all transfers but will not unreasonably

-57-


Provision

Section in Franchise Agreement(l)

Summary(l)

Consent; Section 8.1 of Asset Purchase Agreement; Sections 11.1 and 11.2 of Sublease Agreement

withhold approval if specified requirements are met. Transfers to a wholly-owned corporation do not require our consent. You may not, however, transfer interest in Franchise Agreement during any period of time your Store is closed for relocation.

MFOC has the right to approve all transfers of Asset Purchase Agreement.

Sublessor has the right to approve all proposed assignments of Sublease Agreement and any subleases of Store premises.

m. Conditions for our approval of transfer

Section 12.3; Assignment, Assumption and Consent; Term Pre-Purchase Addendum

60 days prior written notice to us in a form satisfactory to us; transferee qualifies; your obligations are paid and you are not in default; transferee completes training; you, transferee and us sign an Assignment, Assumption and Consent, which contains a release of claims against us; at our option, transferee signs our then current Franchise Agreement and guaranty (if applicable) for remaining term of Franchise Agreement being transferred; you or your transferee pays transfer fee, we approve terms of transfer; you subordinate any obligations of the transferee to you to the transferee's obligations to us; you obtain any required landlord consents; you agree not to use the Pretzel Time Trademarks; you or your transferee agrees to any refurbishment we require; you have sufficient term under the Franchise Agreement, or the transferee has agreed to purchase from us sufficient additional term under the Franchise Agreement, to meet our standard for transfers; you and transferee use a licensed escrow professional to conduct the closing of the transfer; and you comply

-58-


Provision

Section in Franchise Agreement(l)

Summary(l)

with any other conditions we reasonably require; See also "17.r." below.

n. Our right of first refusal to acquire your business

Section 12.5

We can match any offer for your business or for a Controlling Interest in you; see also "17.r." below.

o. Our option to purchase your business

Section 14.5 and Article 16; Option Agreement

We have the right, at our option, to purchase your Store upon termination of Franchise Agreement unless we are in default. Under the security agreement contained in Article 16 of the Franchise Agreement, we can foreclose and acquire the assets of your Store if you default. In addition, at your request, we may enter into an optional Option Agreement with you for the potential purchase of your business by us or our assignee.

p. Your death or disability

Section 12.6

You must transfer your interest in Franchise Agreement or your Controlling Interest in an Entity developer within 6 months, to a transferee approved by us.

q. Non-competition covenants during the term of the Franchise Agreement

Sections 11.1,11.3,11.4 and 18.1

No interest in or services for a Competitive Business within 1 mile of your Store or within 1 mile of any Pretzel Time Retail Outlet; no solicitation of employees.

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

Sections 11.2, 11.3, 11.4, 12.3(j), 12.5(c) and 18.1

No interest in or services for a Competitive Business within 1 mile of your Store or 1 mile of any Pretzel Time Retail Outlet, for 1 year, if we don't purchase your Store (see "17.o." above) or for 3 years, if we do purchase your Store (including after a transfer or exercise of your right of first refusal, for a 3 year period).

s. Modification of the Franchise Agreement

Sections 11.4, 18.1, 18.2 and 18.8; Section 13.13 of Sublease

Subject to automatic modification to conform to mandatory provisions of applicable law. Other

-59-


Provision

Section in Franchise Agreement(l)

Summary(l)

Agreement

modifications require mutual consent.

Modifications of Sublease Agreement must be in writing and signed by all parties.

t. Integration/merger clause

Section 18.15; Section 13.13 of Sublease Agreement; Section 10 of Assignment, Assumption and Consent; Section 12 of Confidentiality Agreement

Only the terms of Franchise Agreement, Assignment, Assumption and Consent, Confidentiality Agreement and Sublease Agreement are binding (subject to state law). Any other promises may be unenforceable.

u. Dispute resolution by arbitration or mediation

Section 17.4

Except for certain claims not subject to arbitration, all disputes must be arbitrated in Salt Lake City, Utah.

v. Choice of forum

Section 17.6

You consent to jurisdiction in the State of Utah for any claims brought against you which are not subject to arbitration.

w. Choice of law

Section 17.5; Section 8.5 of Asset Purchase Agreement; Section 13.9 of Sublease Agreement

Utah law applies to Franchise Agreement, Asset Purchase Agreement, Option Agreement and Confidentiality Agreement, unless governed by applicable federal law.

Sublease Agreement is governed by the law of the state in which the Store premises are located.

(1) Unless otherwise noted, Section references and summaries are to the Franchise Agreement.

These states have statutes which may supersede the Franchise Agreement, Asset Purchase Agreement, Sublease Agreement and other agreements in your relationship with us or our Affiliates, including the areas of termination and renewal of your franchise: [ALASKA fStat. Sections 45.45.700-45.45.7901. 1ARKANSAS [Code Sections 4-72-201 - 4-72-210], CALIFORNIA [Bus. & Prof. Code Sections 20000-20043], CONNECTICUT [Gen. Stat. Sections 42-133e - 42-133h], DELAWARE [Code Sections 2551 - 2556], [FLORIDA fStat. Section 542.3351. 1HAWAIT [Rev. Stat. Section 482E-6], IDAHO [Code <Se6tiens>[Sfiioj|] 29-<W0>[Ufi]], ILLINOIS [815 ILCS Sections 705/<4-and-705/17>[l] - <?©50>[44]], INDIANA [Code Sections 23-2-2.7-1 - 23-2-2.7-7], IOWA [Code Sections 523H.1 - 523H.17 and 537A.10], MICHIGAN [Stat. Section 19.854(27)], MINNESOTA [Stat. Sections 80C.14 and 80C.21], MISSISSIPPI [Code Sections 75-24-51 - 75-24-63], MISSOURI [Rev. Stat.

-60-


Sections 407.400 - 407.413 and 407.420], NEBRASKA [Rev. Stat. Sections 87-401 - 87-410], NEW JERSEY [Rev. Stat. Sections 56:10-1 - 56:10-12], [NORTH CAROT TNA fflcn. Stat. Section 22B-31. ]RHODE ISLAND [Stat. Sections 19-28.1-14 - 19-28.1-16; Section 19-28.1-14 of the Rhode Island Franchise Investment Act provides that "A provision in a franchise agreement restricting jurisdiction or venue to a forum outside this state or requiring the application of the laws of another state is void with respect to a claim enforceable under this Act"], SOUTH DAKOTA [SDCL Sections 37-5A-51 and 37-5A-51.1], VIRGINIA [Code Sections 13.1-557 - 13.1-574], WASHINGTON [Rev. Code Section 19.100.180], WISCONSIN [Stat. Sections 135.01 - 135.07]. These and other states may have court decisions which may supersede the Franchise Agreement, Asset Purchase Agreement, Sublease Agreement and other agreements in your relationship with us or our Affiliates, including the areas of termination and renewal of your franchise.

ITEM 18. PUBLIC FIGURES

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

ITEM 19. EARNINGS CLAIMS

Except as attached as Exhibit 15, we do not furnish or authorize our sales persons to furnish any oral or written information to prospective franchisees concerning the actual or potential revenues, sales, costs, income or profits of a Pretzel Time Store< or a TCBY Coneept>. Actual results vary from store to store, and we cannot estimate the results of any particular franchise.

Attached as Exhibit 15 to this Offering Circular is an Earnings Claim, which includes, as qualified in Exhibit 15, gross revenues by quartile of the <86>[2§] fully-reporting franchised Pretzel Time Stores located in the United States that were operated for the entire <2QQ4>[2QQ5] fiscal year (January <3, 2004January 1, 2005). Your finanoial results may differ from the information included in xExhibit 15. Substantiation of all data illustrated in Exhibit 15 will bo made available to you upon reasonable demand.>[2. 2005 - December 3\t 2QQ5V ]The earnings claim figures in Exhibit 15 do not reflect the cost of sales, operating expenses, or other costs or expenses that must be deducted from the gross revenue or gross sales figures to obtain your net income or profit. [We do not include data ahnut costs or expense because we do not currently have a source for this information that we feel is reliable from a broad enough sample of franchised locations.1

You should conduct an independent investigation of the costs and expenses you will incur in operating your Store. Franchisees or former franchisees, listed in this Offering Circular, may be one source of this information.

fVour financial results mav differ from the information included in Exhihit 15. Substantiation of all data illustrated in Exhihit 15 will he made available to vou upon reasnnahle demand.]

ITEM 20. LIST OF OUTLETS

PRETZEL TIME STORES - FRANCHISED STORES STATUS SUMMARY FOR YEARS 12005/12004/2003<&OQ2> (1)

-61-


State

Transfers

Cancelled or Terminated (2)

Not

RenewedL

Oil

Reacquired By

Us(<3>[4J)

Left The System Other

Total

From Left

Columns(<4>

151)

Franchises Operating at Year End(<5)-

(>6)LI(7)(8)

Alabama

[fl/J0/4<A>

[flfl0/4<4>

<0/0/4>

Arizona

ww

[I/J0/2</0>

[&]0/2</0>

5/<2>[]/3

California

<t>[fl]/l/l

[flfl5/2</3>

[fiZ]6/3<&>

riaz] n/i9<m >

Connecticut

ffiflO/l</©>

<mn->

0/<4>[fl]/l

i3/<i2>riai/i

2

Florida

mm

[2/Jl/0<4->

<©/0ft>

[&]i/o</2>

[7i]8/8^9>

Georgia

[SZ]5/2<0>

Idaho

mao/i</o>

m^o<m>

[&]i/i</o>

0/<4>[fl]/l

Illinois

mm]

B/J0/1^2->

L2flo/i<^>

[j&]2/l<^2->

Indiana

[2fll/0</l>

<0/0/2->

[&]i/o^>

[flZ]2/3<>

Kansas

4/<3>[4J/3

Kentucky

<G/ft4>

<©/9/4>

[U]0/1<A>

<Louisiana>

<0/Q/2->

<©/©/2>

<o/o/n>

Maine

imm

U/QZOl

2/2/2

Maryland

[flflO/l<0>

0/<l>[fl]/l

Umon<n>

[3Z]3/2<&>

Massachusetts

[Hflo/i</o>

Hlflo/i</o>

8/<:?>LS]/7

Michigan

i/<o>rjj/o

l/<0>[JJ/0

ri3Z112/U<A0 >

Minnesota

<o/>i/o[0]

<©/>i/o[/jj

2/2/2

Mississippi

<otm>

<0/>1/OUJJ

<©/0/4>

m]o/i</2>

<*>QU/i/i

Missouri

<o/o/0>

<3/>l/3[aj

<3>l/3[flJ

[Mflll/lKAa >

Nebraska

[IZ]0/0<A>

[i/jo/o</i->

<t>[fl]/l/l

Nevada

1/1/1

New Hampshire

[flfll/l<&>

CQfli/i</e>

3/3/3

New Jersey

[flflO/l<<0>

[lfl2/l<#>

UZfl/fi]

<0/>2/<0>B/2

]

[ft]7/7</8>

New Mexico

\Qi\on<m>

Hfli/o<w>

fflfll/l</0>

0/<4r>[fl]/l

New York

[/J0/2</4>

rizio/i<rt>

<0/0/2>

[tf]0/3</4>

[33/J29/25<m» >

North Carolina

<u>onw

Uflo/i</i>

1/1/<2>[1]

[2Z]8/6</7->

Ohio

wm

a/]i/o<^o>

[§fll/0<&>

[Ui]10/6</e>

<Qklahoma>

<0/0A->

-62-


State

Transfers

Cancelled or Terminated (2)

Not

Renewed!

Oil

Reacquired

By Us(<3>[4J)

Left The System Other

Total

From Left

Columns(<4>

1)

Franchises

Operating at

Year End(<§>-

(>6)L1(7)(8)

Pennsylvania

<0/>l/0[O]

[XQ2/2<&>

W2/3<m>

[2fl7/8</?>

South Carolina

<o/m>

n/fl/oi

UZ]0/0</i>

W2n<J4>

Tennessee

[flfl0/l</0>

[lfl2/0^0>

<0/0/t>

LU]2/i<4>

U2/4<>

Texas

[fi/]0/2</4>

<^>0/l[/fl]

n/o/oi

l/<2>[JL]/2

[U]ll/l0</6>

Utah

{4i]4/3</2>

Virginia

<0/OA->

[flao/i<^o>

o/<±>ffi]/i

3/3/<4>]

Washington

[3i]0/0</4>

[2/]0/l<^3>

[2Z]0/i<^>

[5|5/3<4>

[Wisconsin]

[2/Q/O]

Totals

LUZ]4/14^

f2QZ120/19<^8 >

<0>I2]/0/0

[]0/1<AO>

0/0/0

5fl24/34^

[195/1188/172 <A63>

(1)        The numbers are as of [December 31. 2005. ].Tanuarv 1, 2005, [and JJanuarv 3, <2001 and Dooomber 28. 2002.>[2004.] As of each of these dates, PTI was the franchisor of the Pretzel Time franchise system. As a result of the Contributions on March 16 2004 (which are further described in Item 1 of this Offering Circular), we are now the franchisor of the Pretzel Time franchise system and a party to the franchise agreements for all existing Pretzel Time Stores listed on this chart.

(2)        Includes Pretzel Time Stores that have been closed by mutual agreement between PTI and the respective franchisee. [

(3)        [The numbers in this column include both franchises not renewed hv lis and franchises not

4) <(3)-The numbers in this column indicate the Pretzel Time Stores reacquired by MFOC or PTI, the franchisor of the Pretzel Time franchise system for the 3-year period covered by this chart. As further described in Item 1 of this Offering Circular, we are now franchisor of the Pretzel Time franchise system.

5) <(4)-The numbers in the "Total" column may exceed the number of stores affected because several events may have affected the same store. For example, a store may have had multiple owners.

6) <(§)-This chart only includes Pretzel Time Stores franchised by PTI in the United States. The chart does not include the Pretzel Time Stores in the United States operated by our Affiliate, MFOC, which are included in the MFOC-Owned Store chart below, nor any Pretzel Time Stores franchised by PTI or any of our other Affiliates outside of the United States.

11 <{6}-Includes <44>[lf] Pretzel Time Stores (1 in Florida, 1 in Maryland, 5 in Michigan, <4>[\ in New York, 1 in Qhio<-afld-^>[. 1] in Texas!, and 1 in Washington H that are combo locations with Mrs. Fields Stores.

-63-


(8) <(7)-Includes <9>[S] Pretzel Time Stores (<1 in Florida, >1 in Kansas, 1 in New Jersey, 2 in North Carolina, 2 in Ohio, 1 in South Carolina and 1 in Texas) that are combo locations with Great American Cookie Company Stores.

<(8) Does not include 2 Protzol Time Stores (1 in Florida and 1 in Miohigan) that are temporarily closed for remodeling or 1 Pretzel Time Store in Kentucky that is dosed for rclocation.>

PRETZEL TIME STORES - MFOC OWNED STATUS SUMMARY FOR YEARS [2flfl5Z]2004/2003<&001> (1)

State

MFOC-

Owned

Stores

Closed

During Year

MFOC-

Owned

Stores

Opened

During Year

MFOC-Owned

Stores

Sold to

Franchisees

During

YearrOl]

MFOC-

Owned

Stores

Reacquired

from Franchisees During Year

Total MFOC-

Owned Stores

Operating at

Year

End(<2>[31)

Arizona

o/<4>rfii/i

\Q[\Q!2<&>

<W3>

<Arlcansaa>

California

\Q\V2<m>

H10/5</4>

mv2<®>

<Conncoticut>

<0/0A->

<O/0/O>

Florida

\u\vo<&>

raii/o</t>

<0/0Ar>

UZ14/6<#>

Georgia

te10/2</2>

\U\2/0<M>

r^l9/U<A^>

Idaho

rfl/10/l</0>

i/i/<2>ru

Illinois

[!Zli/o</#>

\ql\vq<&>

o/<4->rfli/i

H/12/4</3>

Indiana

\myo<A>

<mn>

0/<^>ffll/3

<fewa>

<0/0/i>

<©/0/0>

<Kcntuclcy>

<0/0/2>

<m&>

<o/e/o>

Louisiana

[fl12/0</4->

0/<2>rfll/2

<Maine>

<0/QA>

<©#A>

Maryland

rizezfti

10Zli/o<^>

UZ12/3</3>

Massachusetts

<mn>

<^>0/lf/fll

o/<+>rfli/i

Michigan

<0/0^>

\wm

<+>rfii/i/i

<Minnesota>

<0/0/3>

<m&>

<Mississippi>

<0/Q/2>

Nebraska

\Q\on<&>

<wm>

Nevada

<m&>

l/i/i

<New Hampshire>

<m&>

<mm>

New York

\Q\0/l<M>

<0/0/3>

<0/0A->

<North Carolina>

<m&>

<m&>

<ma>

<0/0/9>

Ohio

\Q\0/l<M>

T2Z13/0</0>

rfl12/5</6>

<Oklahoma>

«mm>

<Pennsylvania>

<m&>

<0/0/G>

South Carolina

rizozfti

<+>[fll/l/l

<Tcnnessee>

<wm>

<m&>

<0/0/0>

Texas

[i/10/l</6>

<m&>

14Z10/l</0>

ms/5<n>

Utah

razio/2<A->

[flll/0<^0>

mon<^>

-64-


MFOC-

MFOC-

Owned

Owned

MFOC-

MFOC-

Stores

Stores

Total MFOC-

Owned

Owned

Sold to

Reacquired

Owned Stores

Stores

Stores

Franchisees

from

Operating at

Closed

Opened

During

Franchisees

Year

State

During Year

During Year

YearrOil

During Year

End(<3>[3J)

Virginia

|W10/l</2>

U/Qflll

\HM\

\M\2/2<&>

Washington

<3/>0/2[/Ql

rfill/3</0>

[0H0/3</6>

<WoDt Virginia>

<o/fta>

Wisconsin

\2im\

<2>[fil/2/2

Wyoming

\mon<&>

<0/0/i>

TOTALS

9>

0/0/<3>[JH

[15Z]ll/ll<^

[l/]0/l<#>

[Iflfl33/54</79>

(1) The numbers are as of [December 31. 2005. Uanuarv 1, 2005, [and ]Januarv 3, <2Q0<1 and DeoombGr 28. 2002.H2004.1

(2) [Does not include 1 store in Virginia that was sold hv MFOC and is currently operating under a License.!

[(3) ]This chart only includes the Pretzel Time Stores owned and operated by MFOC in the United States, and does not include any Pretzel Time Stores owned and operated by MFOC or any of our other Affiliates outside of the United States. As of the date of this Offering Circular, we do not own or operate any Pretzel Time Stores in the United States or elsewhere.

As of<Januarv 1 .^December 31.] 2005, there were <4&8>[195] franchised Pretzel Time Stores open and operating in the United States (excluding those operated by MFOC), and <3^>ri01 Pretzel Time Stores operated by MFOC in the United States. Part 1 of Exhibit 12 to this Offering Circular discloses these Pretzel Time Stores, the franchisees (including MFOC), store addresses, and telephone numbers. Part 1 of Exhibit 12 to this Offering Circular is divided into 2 lists, one for franchised Pretzel Time Store locations (excluding MFOC-operated locations), and one for franchised Pretzel Time Store locations operated by MFOC, Although we treat the MFOC-operated locations as "company-owned" locations for the purpose of Items 1 and 20 (given that MFOC is one of our Affiliates), we have included them in Part 1 of Exhibit 12 because MFOC now operates these locations under a franchise agreement with us. (See Item 1.) Part 2 of Exhibit 12 to this Offering Circular is a list of every Pretzel Time franchisee (including MFOC) who, during PTI's <2QQ4>[2005] fiscal year (which ended <January 4-r>|Decemher 31.1 2005), had an outlet terminated, cancelled, not renewed, or otherwise voluntarily or involuntarily ceased to do business under the franchisee's franchise agreement or who has not communicated with us or our Affiliates within 10 weeks of the date of this Offering Circular.

-65-


PRETZEL TIME STORES

PROJECTED OPENINGS

For Fiscal Year Ending <January !,>[

2006

(projections as of <Jnnunrv l.>[Decemher 31.1 2005)

State

Franchise

Agreements

Signed But Store

Not Opcncd(l)

Projected

Franchised New

Stores at Fiscal

Year End(l)

Projected

MFOC-Owned

Openings at Fiscal

Year End(l)

rArjzQnal

[fil

m

rai

California

<^>rfti

<$>\Z]

0

<fdafee>rDel awarel

<±>rni

i

0

Illinois

<msi

<^>rii

0

Indiana]

rai

f21

TGI

Nevada

<o>rn

<i>rai

0

Rhiftl

mi

i rai

mi

fRhode Islandl

ffii

rn

rai

TSouth Cardinal

rai

rn

m

fleiasl

rfil

rsi

fin

Totals

<6>rn

<&>US1

0

<->(l) The projected numbers are estimates only. The actual number of openings at the end of our <2QQ4>[2006] fiscal year may be more, less, or the same number as projected in this chart. We offer franchises in a wide geographical area. We cannot predict precisely how many franchises will be granted in any particular state.

ITEM 21. FINANCIAL STATEMENTS

<Attached as part of Exhibit 14 to this Offering Circular ore the consolidated balanoe sheets of our parent NIFFB as of January 1, 2005 and January 3, 2001, and the rolatod oonaohdatod statements of operations and comprehensive income (loss), member's deficit and cash flows for the fiscal years ended January 1, 2005, January 3, 2004 and December 28, 2002, together with the Report of Independent Registered Public Aooounting Firm. >

As< furthcr> described in the accompanying notes[ to the financial statements], the consolidated financial statements of MFFB <prior to>[hefore] the formation of MFFB on March 16, 2004 <inoludo the accounts of TCBY^were, prepare^ solely to present the assets contributed and the liabilities assumed as nart of transactions related to the formation of MFFB through the combination of certain assets and liabilities of MFOC and subsidiaries, and all of the assets and

and liabilities of MFOC. include the accounts of MFF1 and the franchising, licensing and mail order segments of MFOC, and[ Accordingly, the consolidated financial statements] have been prepared as if the Contributions described in Item 1 of this Offering Circular had occurred on December <3&r

2fl&4->r29. 20021 (the beginning of fiscal <2Q02.)-----Aooordingly,theconsolidatedfinancial

r,tatoments>[2003^ and] assume that MFFB, for all periods presented, had existed as a separate legal entity with the following <fear>[three] business segments: franchising, [gifts and ]licensinp<r-fflail-ordor and retail food salos>. The consolidated financial statements, which have been carved out from the consolidated financial statements of MFOC and <TCB>fMFF prior to the Contributions! using the historical results of operations and assets and liabilities of these businesses and activities and which exclude the company-owned stores segment of MFOC, reflect the accounting policies adopted by MFOC

-66-


and <FB:>[MFF] in the preparation of their consolidated financial statements and thus do not necessarily reflect the accounting policies which MFFB might have adopted had it been an independent<r stand alonO company< for all periods presentcd>. The historical consolidated financial statements of MFFB include those accounts specifically attributable to MFFB, substantially all of the indebtedness of MFOC and <GB>(MFF1. and allocations of expenses relating to shared services and administrative functions incurred at MFOC.[_]

Separate stand-alone financial statements of us ^<Prot?.olmalcer>[f retzel Timq] Franchising, LLC) are not included in this Offering Circular. Should we fail to fulfill our obligations to our franchisees, however, MFFB absolutely and unconditionally guarantees to fulfill <sueh>[those] obligations. In states where we have registered this franchise offering, a copy of the written guarantee may be on file in the office of the administrator of the state franchise law.U

ITEM 22. CONTRACTS

The following agreements proposed for use regarding the offering of a Pretzel Time Franchise are attached to this Offering Circular:

Exhibit 3          Franchise Agreement with Acknowledgment Addendum,

Ownership Addendum, Guaranty, Appendix A - Authorization Agreement For Prearranged Payments (Direct Debits), State-Specific Addenda and Riders - California, Illinois, Maryland, Minnesota, New York, North Dakota, Rhode Island, South Dakota and Washington, and Renewal Addendum

Exhibit 4 Non-Baking Kiosks Addendum to Franchise Agreement

Exhibit 5 Confidentiality Agreement

Exhibit 6 Assignment, Assumption and Consent

Exhibit 7        Term Pre-Purchase Addendum

Exhibit 8        Lease Addendum

Exhibit 9 Purchase Option Agreement and Addenda

Exhibit 10 Asset Purchase Agreement; Sublease Agreement

ITEM 23. RECEIPT

The last page of this Offering Circular is a detachable document acknowledging your receipt of this Offering Circular. The Federal Trade Commission requires that you promptly sign and return one copy of the Receipt to us. This does not obligate you to purchase a franchise and it does not obligate us to sell you a franchise.

-67-


CALIFORNIA ADDENDUM TO THE OFFERING CIRCULAR PRETZEL TIME FRANCHISING, LLC

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

As a supplement to the information disclosed in this Offering Circular, the following additional paragraphs are added:

1.          No person identified in Item 2 of the Offering Circular is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A 78a et seq., suspending or expelling such person from membership in such association or exchange.

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

3.          The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq)

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

5.          The Franchise Agreement requires binding arbitration. This arbitration will occur at Salt Lake City, Utah, with the costs being borne by the nonprevailing party in the arbitration. You are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281, and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to a forum outside the State of California.

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

7.           IThe Franchise Agreement requires the parties to waive anv and all rights to a trial hv jury in the event of litigation. This provision mav not he enforceable under California law.            ]

[Si ]The Franchise Agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.


<&>[2J           With respect to the franchises governed by California law, we will defer

collection of all initial fees described in Item 5 until we have completed our initial obligations under the Franchise Agreement.

<^>[lflj          You must sign a general release if you transfer your franchise. California

Corporations Code 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code 31000 through 31516). Business and Professions Code 20010 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code 20000 through 20043).

<^>[JLL] THE CALIFORNIA INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE OFFERING CIRCULAR. SECTION 31125 OF THE FRANCHISE INVESTMENT LAW REQUIRES US TO GIVE TO YOU A DISCLOSURE DOCUMENT APPROVED BY THE COMMISSIONER OF CORPORATIONS BEFORE WE ASK YOU TO CONSIDER A MATERIAL MODIFICATION OF YOUR FRANCHISE AGREEMENT.

OUR WEBSITE HAS NOT BEEN REVIEWED OR APPROVED BY THE CALIFORNIA DEPARTMENT OF CORPORATIONS. ANY COMPLAINTS CONCERNING THE CONTENT OF THIS WEBSITE MAY BE DIRECTED TO THE CALIFORNIA DEPARTMENT OF CORPORATIONS AT www.corp.ca.gov.


ILLINOIS ADDENDUM TO THE OFFERING CIRCULAR PRETZEL TIME FRANCHISING, LLC

1.          The following is inserted after the third paragraph under the sub-heading "Risk Factors" at the cover page of this Offering Circular.

"The Risk Factors set forth above may be affected by Illinois law, 815 ILCS §§ 705/4 and 705/41."

2.          The following is added to Item 5:

"Based on our financial condition, the Illinois Attorney General has imposed a fee deferral requirement with respect to the franchises governed by Illinois law. We therefore will defer payment of the initial fees described in Item 5 until we have completed our initial obligations under the Franchise Agreement."

3.          The following paragraphs are inserted at the end of Item 17:

"The conditions under which your franchise can be terminated and your rights upon nonrenewal may be affected by Illinois law, 815 ELCS 705/19 and 705/20."

"Provisions regarding jurisdiction and venue and choice of law may be affected by Illinois law, 815 ILCS §§ 705/4 and 705/41, respectively.


MARYLAND ADDENDUM TO THE OFFERING CIRCULAR PRETZEL TIME FRANCHISING, LLC

As a supplement to the information disclosed in this Offering Circular, the following additional paragraphs are added to Item 5 of the Offering Circular:

1.          With respect to franchises governed by the Maryland Franchise Registration and Disclosure Law, we will defer payment of the initial fees described in Item 5 until we have completed our initial pre-opening obligations under the Franchise Agreement.

2.          With respect to the offer and sale of franchises governed by the Maryland Franchise Registration and Disclosure Law, we will not require the signing of a release or waiver as a condition of any refund of the initial franchise fee.

As a supplement to the information disclosed in this Offering Circular, the following additional paragraph is added to Item 11 of the Offering Circular:

1.         On your prior written request, we will make available to you no later than 90 days after

the end of the quarter during which you make a request, a statement of moneys collected and costs incurred for our marketing programs through the end of that quarter.

As a supplement to the information disclosed in this Offering Circular, the following additional paragraphs are added to Item 17 of the Offering Circular:

1.          Any release executed in connection with the Franchise Agreement is not intended to, nor shall it act as a release, estoppel or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law.

2.          The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 etseq.)

3.          Any claims arising under the Maryland Franchise Registration and Disclosure Law must be brought within 3 years after the grant of your franchise.

4.          Any provision in the Franchise Agreement restricting jurisdiction or venue to a forum outside of Maryland or requiring the application of the laws of another state is void with respect to a claim arising under the Maryland Franchise Registration and Disclosure Law.

5.          Any claims under the Maryland Franchise Registration and Disclosure law may be brought in the State of Maryland.

6.          Pursuant to COMAR 02.02.0816L, the general release required as a condition of renewal, sale and/or assignment/transfer will not apply to any liability under the Maryland Franchise Registration and Disclosure Law. Further, in the event of a transfer, you will sign the Assignment, Assumption and Consent included as an exhibit to our Offering Circular, which contains a release.


MINNESOTA ADDENDUM TO THE OFFERING CIRCULAR PRETZEL TIME FRANCHISING, LLC

As a supplement to the information disclosed in this Offering Circular, the following additional paragraphs are added:

1.          Any release executed in connection with the Franchise Agreement shall not apply to any claims arising under Minnesota Statutes 1973 Supplement, Sections 80C.01 to 80C.22, providing that a franchisee cannot be required to assent to a release, assignment, or waiver that would relieve any person from liability imposed by such statutes; provided, however that this shall not bar the voluntary settlement of disputes.

2.          With respect to the franchises governed by Minnesota law, we will comply with Minnesota Statute Sec. 80C.14, subdivisions 3, 4 and 5 which require, except in certain specific cases, that we give you 90 days notice of termination (with 60 days to cure) and 180 days notice for non-renewal of the franchise agreement.

3.          No action may be commenced against us pursuant to Minn. Stat. § 80C.17 more than three years after the cause of action accrues.

4.          Minnesota Statute Sec. 80C.21 and Minnesota Rule 2860.4400J prohibit us from requiring litigation to be conducted outside Minnesota. In addition, nothing in the Offering Circular or Franchise Agreement can abrogate or reduce any of your rights as provided for in Minnesota Statutes, Chapter 80C, or your rights to a jury trial or any procedure, forum, or remedies provided for by the laws of the jurisdiction.

5.          With respect to the franchises governed by Minnesota law, we will defer payment of the initial fees described in Item 5 until we have completed our initial obligations under the Franchise Agreement.


NEW YORK ADDENDUM TO THE OFFERING CIRCULAR PRETZEL TIME FRANCHISING, LLC

As a supplement to the information disclosed in this Offering Circular, the following additional paragraphs are added:

1.          Except as disclosed in Item 3 of the Offering Circular, neither we, our predecessors, affiliates or any person identified in Item 2 of this Offering Circular:

A.         Has any administrative, criminal or material civil action (or a significant number of civil actions irrespective of materiality) pending against it or him alleging a violation of any franchise law, securities law, fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, misappropriation of property or comparable allegations.

B.          Has been convicted of a felony or pleaded nolo contendere to a felony charge or within the ten (10) year period immediately preceding the application for registration, been convicted of a misdemeanor or pleaded nolo contendere to a misdemeanor charge or been held liable in a civil action by final judgment or been the subject of a material complaint or other legal proceeding if such misdemeanor conviction or charge or civil action, complaint or other legal proceeding involved violation of any franchise law, securities law, fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, misappropriation of property or comparable allegations.

C.          Is subject to any currently effective injunctive or restrictive order or decree relating to franchises or under any federal, state, or Canadian franchise, securities, antitrust, trade regulation, trade practice law, or any national securities association or national securities exchange (as defined in the Securities and Exchange Act of 1934) suspending or expelling such person from membership in such association or exchange as a result of a concluded or pending action or proceeding brought by a public agency.

2.          Except as disclosed in Item 4 of the Offering Circular, during the fifteen (15) year period immediately preceding the date of this Offering Circular, neither we, our predecessors, affiliates or any person identified in Item 2 of this Offering Circular has been adjudged bankrupt or reorganized due to insolvency or been a principal officer of any company or a general partner in any partnership at or within t year of the time that such company or partnership was adjudged bankrupt or reorganized due to insolvency or is otherwise subject to any pending bankruptcy or reorganization proceeding.

3.          You will not be required to indemnify us for any claims arising out of a breach of the Franchise Agreement by us or other civil wrongs committed by us.

4.          We will not make any changes to the Operations Manuals which would impose an unreasonable economic burden on you or unreasonably increase your obligations under the Franchise Agreement.


5.          We will not assign any of our rights under the Franchise Agreement except to an assignee who, in our good faith judgment, is willing and able to assume our obligations under the Franchise Agreement.

6.          Any release executed in connection with the Franchise Agreement is subject to the proviso that all rights enjoyed by you and any causes of action arising in your favor from the provisions of Article 33 of the General Business Law of the State of New York and the regulations issued thereunder shall remain in force; it being the intent of this proviso that the non-waiver provisions of Sections 687.4 and 687.5 of the General Business Law of New York State be satisfied.

7.          You may terminate the Franchise Agreement and any ancillary agreements upon any other grounds available by law.


NORTH DAKOTA ADDENDUM TO THE OFFERING CIRCULAR PRETZEL TIME FRANCHISING, LLC

As a supplement to the information disclosed in this Offering Circular, the following additional paragraphs are added:

1.          Covenants not to compete upon termination or expiration of a franchise agreement are generally unenforceable in North Dakota, except as provided by law.

2.          Any release executed in connection with the Franchise Agreement will not apply to any claims that may arise under the North Dakota Franchise Investment Law.

3.          Any arbitration required by the Franchise Agreement will be conducted in the state where your Store is or will be located.

4.          With respect to the franchises governed by North Dakota law, we will defer payment of the initial fees described in Item 5 until we have fulfilled all of our initial obligations under the Franchise Agreement or other documents and you have commenced doing business. pursuant to the Franchise Agreement.

5.          For franchises governed by North Dakota law, Note 23 in Item 6 is deleted in its entirety.


RHODE ISLAND ADDENDUM TO THE OFFERING CIRCULAR PRETZEL TIME FRANCHISING, LLC

I.         Item 17 of the Offering Circular is supplemented with the following:

Section 19-28.1-14 of the Rhode Island Franchise Investment Act provides that "A provision in a franchise agreement restricting jurisdiction or venue to a forum outside this state or requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under this Act."


SOUTH DAKOTA ADDENDUM TO THE OFFERING CIRCULAR PRETZEL TIME FRANCHISING, LLC

As a supplement to the information disclosed in this Offering Circular, the following additional paragraphs are added:

1.         With respect to the franchises offered to residents of, or to be located within the

State of South Dakota, we will defer payment of all of the initial fees described in Item 5 until we have completed our initial obligations under the franchise agreement and you have opened your store for business.


WASHINGTON ADDENDUM TO THE OFFERING CIRCULAR PRETZEL TIME FRANCHISING, LLC

1.          In any arbitration involving a franchise purchased in Washington, the arbitration site shall be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration, or as determined by the arbitrator.

2.          In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW, shall prevail.

3.          A release or waiver of rights executed by you shall not include rights under the Washington Franchise Investment Protection Act except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel. Provisions such as those which unreasonably restrict or limit the statute of limitations period for claims under the Act, or rights or remedies under the Act may not be enforceable.

4.          Transfer fees are collectable to the extent that they reflect our reasonable estimated or actual costs in effecting a transfer.

5.          With respect to franchises governed by the Washington Franchise Investment Protection Act, we will defer payment of the initial fees described in Item 5 until you have received our initial training and open your Store for business.