UFOC

The original documents were scanned as an image. The original file can be downloaded at the link above.

Sample UFOC

RECEIVED DEPT OF COSPCkATIONS

FRANCHISE OFFERIN6^h<fift&&L&R

'06 APR 10 A 8 55 ROTELLI PIZZA AND PASTA, INC. 4611 Johnson Road Suite 1 Coconut Creek, FL 33073

954-601-0500

Phone: 1-877-ROTELLI

(1-877-768-3554)

The franchise is for the operation of a ROTELLI PIZZA & PASTA restaurant, which offers, delivers and serves pizza, pasta, sandwiches, salads, desserts, beverages and related products.

The initial franchise fee is $25,000.00 due at the execution of your Franchise Agreement and $10,000 Grand Opening Marketing contribution also due at the execution of the Franchise Agreement. The estimated initial investment required, including the initial unit franchise fee and Grand Opening Marketing contribution, but excluding real estate, ranges from $300,000 to $674,000.

RISK FACTORS:

1. THE FRANCHISE AGREEMENT REQUIRES ARBITRATION AND LITIGATION IN FLORIDA. OUT OF STATE ARBITRATION AND LITIGATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST MORE TO ARBITRATE AND LITIGATE WITH US IN FLORIDA THAN IN YOUR HOME STATE. STATE FRANCHISE REGISTRATION AND RELATIONSHIP LAWS MAY AFFECT THE ENFORCEABLITIY OF CHOICE OF VENUE PROVISIONS (SEE UNIFORM UFOC ADDENDUM, STATE UFOC ADDENDUMS AND STATE AMENDMENTS TO THE FRANCHISE AGREEMENTS IN EXHIBIT G).

2. THE FRANCHISE AGREEMENT STATES THAT FLORIDA LAW GOVERNS THE AGREEMENT AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTION AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS. STATE FRANCHISE REGISTRATION AND RELATIONSHIP LAWS OFTEN PROVIDE THAT CHOICE OF LAW PROVISIONS ARE VOID OR SUPERSEDED TO THE EXTENT THAT THE CHOICE OF A DIFFERENT STATE'S LAW WOULD DENY A FRANCHISEE THE PROTECTIONS IT WOULD BE ENTITLED TO UNDER LOCAL LAW. YOU SHOULD INVESTIGATE WHETHER YOUR PURCHASE OF THE FRANCHISE FALLS UNDER THE JURISDICTION OF A STATE FRANCHISE REGISTRATION OR RELATIONSHIP LAW (SEE UNIFORM UFOC ADDENDUM, STATE UFOC ADDENDUMS AND STATE AMENDMENTS TO THE FRANCHISE AGREEMENT IN EXHIBIT G).

3. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

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

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

Effective Date: March 31, 20065

ROTELLI PIZZA AND PASTA, INC.

oL%}jL_t t>Aft*~f otrhtt

A Florida Corporation _D _E p j y p CORPORATIONS

4611 Johnson Road Suite 1 SAN FRANC.SCO

Coconut Creek, FL 33073

Phone: 1-877-ROTELLI -Q6 APR 10 A 8 55

(1-877-768-3554)

INFORMATION FOR PROSPECTIVE FRANCHISEES REQUIRED BY THE FEDERAL TRADE COMMISSION

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

CALIFORNIA, HAWAII, ILLINOIS, INDIANA, MARYLAND, MICHIGAN, MINNESOTA, NEW YORK, NORTH DAKOTA, RHODE ISLAND, SOUTH DAKOTA, VIRGINIA, AND WASHINGTON REQUIRE FRANCHISORS TO MAKE ADDITIONAL DISCLOSURES RELATED TO THE INFORMATION CONTAINED IN THIS OFFERING CIRCULAR. THESE ADDITIONAL DISCLOSURES ARE FURNISHED TO YOU IN EXHIBIT G.

IN ACCORDANCE WITH THE REQUIREMENTS OF THE FEDERAL TRADE COMMISSION, THIS OFFERING CIRCULAR WAS ISSUED ON MARCH 31, 2005. IF THIS OFFERING CIRCULAR IS REGISTERED IN A STATE LISTED ABOVE, THE EFFECTIVE DATE OF THIS OFFERING CIRCULAR WILL BE DISCLOSED IN EXHIBIT G.

Effective Date: MARCH 31, 20065.

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TABLE OF CONTENTS

ITEM PAGE

1 The Franchisor, Its Predecessors And Affiliates ................................................................5

2 Business Experience...........................................................................................................6

3 Litigation ............................................................................................................................7

4 Bankruptcy..........................................................................................................................7

5 Initial Franchise Fee ...........................................................................................................7

6 Other Fees...........................................................................................................................8

7 Initial Investment..............................................................................................................10

8 Restrictions on Sources of Products and Services............................................................13

9 Franchisee's Obligations...................................................................................................15

10 Financing..........................................................................................................................17

11 Franchisor's Obligations ...................................................................................................18

12 Territory............................................................................................................................23

13 Trademarks.......................................................................................................................24

14 Patents, Copyrights and Proprietary Information .............................................................25

15 Obligation to Participate In the Actual Operation Of

The Franchise Business ....................................................................................................26

16 Restrictions on What the Franchisee May Sell.................................................................27

17 Renewal, Termination, Transfer And Dispute Resolution ...............................................28

18 Public Figures...................................................................................................................30

19 Earnings Claims ...............................................................................................................31

20 List Of Outlets ..................................................................................................................31

21 Financial Statements.........................................................................................................33

22 Contracts...........................................................................................................................33

23 Receipt..............................................................................................................................33

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EXHIBITS

A Franchise Agreement with Exhibits

B Franchise Disclosure Questionnaire

C Federal and State Agencies and Agents for Service of Process

D Audited Financial Statements

E Franchise Outlets and Area Developers

F Pre-Authorized ACH Form

G State Addenda

RECEIPT

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ITEM1

THE FRANCHISOR, ITS PREDECESSORS, AND AFFILIATES

To simplify the language in this Offering Circular, "we," "us," or "our' means ROTELLI PIZZA AND PASTA, INC., the Franchisor. "You" means the individual or Corporation who buys the franchise. We typically enter into franchise agreements with individuals. You may, with our consent, assign your rights under the Franchise Agreement to a corporation, but you will remain personally responsible for all obligations imposed on you under the Franchise Agreement (see Item 15).

The Franchisor, Its Predecessors, and Its Affiliates. We are a Florida corporation, incorporated on March 20, 1999 under the name PERFETTO PIZZA & PASTA, INC. The name of the corporation was changed and amended, in the State of Florida on August 4, 1999, to ROTELLI PIZZA & PASTA, INC. We do business under the name "ROTELLI PIZZA AND PASTA." We do not do business under any other name. Our Address is 4611 Johnson Road, Suite 1, Coconut Creek, FL 33073. Our registered agent(s) for service of process is disclosed in Exhibit "C."

We are affiliated with the following companies s:

RHINO HOLDINGS, INC. is a management company incorporated in September, 1997. It had not done business since December 31, 2004. Rhino Holdings, Inc. is 100% owned and operated by Joseph J. Bilotti, Jr. the CEO and President of ROTELLI. It operates out of the same place of business as ROTELLI and it does not now, nor has it ever, offered franchises for sale.

BLUE STREAK HOLDINGS, INC. is a management company replacing RHINO HOLDINGS incorporated in DECEMBER, 2004 100% owned and operated by Joseph J. Bilotti, Jr. the CEO and President of ROTELLI. It operates out of the same place of business as ROTELLI and it does not now, nor has it ever offered franchise's for sale.

FIRST JET HOLDINGS, INC. is a financing entity incorporated in November, 2004. It is 100% owned and operated by Joseph J. Bilotti, Jr. the CEO and President of ROTELLI. It operates out of the same place of business as ROTELLI and it does not now, nor has it ever offered franchise's for sale.

The ROTELLI Franchise:

We authorize qualified individuals to operate restaurants under the name and service mark "ROTELLI PIZZA & PASTA" (the "System"); at a specific location utilizing our business systems and proprietary rights (the "Franchised Business"). You, as an independent businessperson, assume all of the risks of the business venture. You must rely on your own business judgment in deciding whether or not to purchase a ROTELLI franchise. A ROTELLI restaurant features the sale of pizza, pasta, sandwiches, salads, desserts, beverages, and related products. The System includes: the name "ROTELLI PIZZA AND PASTA;" readily recognized color schemes; designs and layouts for the restaurant; specialized paper products, menus, signs, logos, trade names, trademarks and service marks identifying the restaurant (the "Proprietary Marks"); proprietary pizza, pasta, sandwiches, salads, desserts, beverages and related products; confidential recipes; and methods for preparing, serving and merchandising the food products, and for operating the restaurant.

Each ROTELLI restaurant has the distinctive appearance, menu, and method of operation identified with the System. ROTELLI restaurants will be primarily located in strip shopping centers and highly concentrated

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business and residential demographic areas. Guests are served their food by a waitperson. A typical ROTELLI restaurant can be operated within a space containing approximately 1500-3500 square feet (although in some test situations we have and do allowed- units that are larger). Each ROTELLI restaurant will be designed in accordance with plans developed by us. Each restaurant will be constructed in similar design to the extent permitted by local law.

You are not restricted in any way regarding the retail guest to whom you may sell food products and other items.

Competition

The market for restaurant food service is well established. The restaurant food service business is highly competitive in the areas of price, service, restaurant location, and food quality, and is often affected by changes in consumer tastes, economic conditions, population, and travel patterns. There is also active competition for management personnel, as well as for attractive space suitable for ROTELLI restaurants. We compete within each market with locally owned restaurants, as well as national and regional restaurant chains, many of which operate more restaurants and have greater financial resources and a longer operating history than we have. The specific make-up of our guest will vary from location to location.

Regulation

There are no laws and regulations specific to ROTELLI restaurants, although you will be required to comply with those laws and regulations that apply to businesses generally and to the food service industry, including: zoning; occupational licenses; health; sanitation; food handling and storage; environmental; and alcoholic beverage laws.

Item 2

BUSINESS EXPERIENCE

The following is a list of the directors, principal officers, and executives who have management responsibility in connection with our franchises offered by this Offering Circular. See exhibit "E" for a list of our independent contractors ("Area Developers").

Joseph J. Bilotti, Jr. - President and Chief Executive Officer

Mr. Bilotti has twenty plus years of experience in the food service industry. From May, 1999 to December 31,2001 he served as a Director and Vice President of Store Development for ROTELLI PIZZA AND PASTA, INC. He was appointed to his current position as President and Chief Executive Officer by the Board of Directors on January 1, 2002. Mr. Bilotti is President of Blue Streak Holdings, Inc., a management company, First Jet Holdings, Inc. a financing company, and previously served as President of Rhino Holdings, Inc., a management company and Bilotti's Italian restaurant chain consisting of 8 restaurants (all Bilotti Restaurants were converted and franchised as Rotelli Pizza and Pasta restaurants in October 2002 see Exhibit E). Mr. Bilotti is a former commercial airline pilot and a graduate of Embry Riddle Aeronautical University. He holds a bachelor's degree in Aeronautical Science.

Jeffery R. Smith-Chief Operating Officer/Chief Financial Officer

Mr. Smith has over 25 years of experience in senior and middle management positions in the restaurant industry. He joined ROTELLI PIZZA AND PASTA, INC. as Director of Operations on April 1, 2001 and served in that position until December 31, 2001. He was appointed to the position he currently holds as Chief Operating Officer/Chief Financial Officer and corporate Vice-President by the Board of Directors on January 1, 2002. Mr. Smith's experience includes serving as Director of Operations for Ala-Flora Deli, LLC d/b/a Schlotzsky's Deli from

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July 1999 through January 2001. Prior to that, Mr. Smith was a Franchise Business Consultant for Schlotzsky's Deli, Inc. from May 1997 through August 1999.

Item 3

LITIGATION

RO~~TELLI has no material litigation to be disclosed in this Item of the Offering Circular. How~~eve~~r, s~~e~~e Item 13 for~~ i~~nformation regarding any litigation involving our Proprietary Mark~~s.

(1) Rotelli Pizza & Pasta. Inc. v. Timothy M. Sheerer and Mitnee. Inc. fCase No. 06-60138-CIV-Moreno/Simonton. U. S. District Court for the Southern District of Florida). On February 1. 2006, Rotelli Filed an action for injunctive relief and damages against Timothy M. Sheerer and Mitnee. Inc. arising out of their wrongful termination of the franchise agreement and continued use of Rotellrs trademarks, trade dress and other proprietary information. Rotelli alleged the following six claims against defendants: (i) breach of contract; (ii) Lanham Act infringement; (ni) Lanham Act false designations; (iv) common law trademark infringement: and (V) common law unfair competition. Because of defendants' continued infringement of Rotelli's proprietary marks. Rotelli also filed a Motion for Preliminary Injunction. Defendants agreed to the entry of a Consent Order by the Court pursuant to which they agreed to cease all use of Rotellrs trade name, service marks, trademarks, color schemes, formulas, confidential recipes, training manuals, training films, videos and all other proprietary property of Rotelli. Defendants also agreed to change the recipe of a number of food items, as well as cease to offer certain food products that were proprietary property. Prior to the entry of the Consent Order. Defendants moved to compel arbitration under the terms of the franchise agreement to which Rotelli agreed. The parties are currently addressing their dispute before the American Arbitration Association, wherein Rotelli seeks to enforce its non-compete agreement against Defendants and force them to cease operations as an Italian restaurant-Other than this case, no litigation is required to be disclosed in this Offering Circular.

Item 4 BANKRUPTCY The Franchisor has no knowledge of any bankruptcy to be disclosed in this Item of the Offering Circular.

Item 5 INITIAL FRANCHISE FEE Initial Franchise Fee

The Franchise Fee for a single-unit ROTELLI Franchise is $25,000. The Franchise Fee is fully earned upon execution of the Franchise Agreement and is non-refundable. We fully earn the Franchise Fee when paid. The Franchise Fee is uniform as to all franchisees currently purchasing a ROTELLI Franchise. If you do not submit an acceptable site for the Franchised Business within 180 days after the date you sign the Franchise Agreement, the Franchise Agreement shall be deemed terminated. Should that occur, we will retain the Franchise Fee. The Franchise Fee is uniform for the first location of a ROTELLI Franchise. If you purchase rights for additional ROTELLI locations, the Franchise Fee is as follows:

Secondary Franchise Fee $20,000

Additional Franchise Fees $ 15,000

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We reserve the right to waive the Franchise Fee for our, our affiliates' or Franchisees' employees who have successfully completed our "Owner in Training" Program. The initial franchise fee during the last fiscal year for a ROTELLI Restaurant franchise ranged from $0 to $25,000.

When a franchise is sold through our Area Developer, the Area Developer will receive a commission equal to 20% to 25% of the total Franchise Fee paid by a Franchisee who purchases a ROTELLI Restaurant franchise within that Area Developer's Territory, subject to the following conditions: (i) the Franchisee executed a Franchise Agreement with us and we have received the Initial Franchise Fee, (ii) the sale for which the Franchise Fee has been paid is not a resale of any existing ROTELLI restaurant, and (iii) the Area Developer has complied with all of its other obligations. This commission will be paid to the Area Developer on the 20th day of the following month once all conditions of the sale have been satisfied. When an Area Developer has performed all of its site services for a Franchisee, the Area Developer will be paid an Opening Commission equal to 20% of the Franchise Fee paid to us, payable on the 20^th day of the month following the opening of the ROTELLI Restaurant. On the 20^th day of the month following the completion of a transfer, Area Developers are paid a commission of 40% to 45% of any transfer fee we actually receive from the transfer of a franchise within the Area Developer's territory. An Area Developer also is paid, on the 20^th day of the month following the end of each 4 to 5 week period, 40% to 45% of the royalty fees (excluding certain fees) received from each Franchisee (with some exceptions) located in the Territory.

Grand Opening Marketing Fund.

A Grand Opening Advertising Fee of $10,000 is due at the time you execute your Franchise Agreement. The Grand Opening Marketing Fund is held for your benefit to fund the special "grand opening" marketing events to be held within the first 60 days of opening your business.

Item 6

OTHER FEES

In addition to the Initial Franchise Fee, you must pay us the fees described in the following chart.

NAME OF FEE	AMOUNT	DUE DATE	REMARKS
Royalty	Greater of 6% of Gross Sales or $240 per week	Payable electronically, in Florida, weekly, each Monday	See Note 1
Marketing Fund	Greater of 3% of Gross Sales or $120 per week	Payable electronically, in Florida, weekly, each Monday	See Notes 1 & 2
Late Payment	Greater of 5% of the amount due or $10 if any royalty or marketing fee is not paid when due	Upon Demand
Interest	1.5% per month (18% per year)	Upon Demand	See Note 3
Bookkeeping Services	$100 per week		See Note 1
Bookkeeping Services	$100 per week	Florida, weekly, each Monday	See Note 1

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Additional Assistance	Costs incurred by us in providing assistance requested by you.	Upon invoice or electronically if not paid within 30 days of invoice date.
Renewal	$5,000	Before Renewal is Effective
Offering Fee	Our reasonable costs to review offering materials, but no less than $2,000	Prior to Review of Offering Materials	See Note 5
Late Opening Fee	$50 per day	Upon invoice or electronically if not paid within 30 days of invoice date.	See Note 6
Indemnification	Will vary under circumstances	As incurred	See Note 7
Transfer Fee	$5,000	Prior to the transfer of the license.
Costs & Attorney's Fees	Will vary under circumstances	As Incurred	See Note 8

All of the fees listed above are imposed by and payable to us, unless otherwise noted. All fees are non-refundable.

Note (1) "Gross Sales" means the total revenues received in and from the restaurant, excluding discounts, credits, refunds, or sales taxes. You must prepare, sign, and submit a written sales report to us in a form and manner as we specify by no later than 5 pm on the Monday following the previous week's business. The weekly minimum royalty is subject to annual adjustment to reflect increases in the Consumer Price Index ("CPI") (see Franchise Agreement).

Note (2) In addition to the payment to the Marketing Fund, you may be required to spend at least two percent (2%) of Gross Sales for local advertising (See Item 11 -Advertising). The weekly minimum Marketing Fund payment is subject to annual adjustment to reflect increases in the CPI Index (see Franchise Agreement).

Note (3) Payable if we audit your books and records and find that you have under reported Gross Sales by 2% or more, and/or you fail to furnish the required sales reports. You must submit a balance sheet and profit and loss statement within thirty (30) days after the end of each calendar quarter, and an annual financial statement prepared in accordance with generally accepted accounting principles consistently applied within sixty (60) days after the close of your fiscal year. The profit and loss statements and balance sheets are to be in the form specified by us and will be signed and certified in writing by you as being true and correct.

~~Note (~~4)-------~~You will b~~e re~~quir~~e~~d to use a designated v~~e~~ndor (w~~hi~~ch m~~a~~y b~~e ~~us or one of our affiliates) to provide~~

~~bookkeeping servic~~e~~s for you for the first 12 months that your first restaurant or business related entity is operating. After that, you may discontinue the service 90 days after you retain a full time prof~~essional accountant (approved by us in writing) to provide bookkeeping services and that accountant agrees in writing (on a form acceptable to us) to provide timely financial statements we require. If you fail to provide those financial stateme~~nts more than 2 times in any 12 month period, we may require you to use our designated bookk~~ee~~ping s~~e~~rvic~~e~~s at the then current fee. We can tcrminotc th~~e ~~service upon 90 days notice.~~

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Note (45) If you undertake a public or private offering of securities, we must review all offering materials at | least 60 days in advance of any offering.

Note (56) If you do not open the restaurant for business within 180 days from the date we approve the location | for your restaurant (unless landlord delivery of the site is greater than the 180 days), you must pay $50 per day until the restaurant opens. We may also terminate the Franchise Agreement if you are not open for business within this period.

Note (6?) You must reimburse us if we are held liable for claims arising from your operation of the Franchised | Business.

Note (7) You are responsible for our costs and attorney's fees if we incur them in any arbitration or litigation | proceeding in which we prevail or if we obtain an injunction against you.

Item 7 INITIAL INVESTMENT

Initial Investment (Note 1)	Estimated Amount		Method of Payment	When is payment due?	To who is payment
Initial Investment (Note 1)	Low	High	Method of Payment	When is payment due?	made?
Initial Franchise Fee (Note 2)	$15,000	$25,000	Lump Sum	At the execution of Franchise Agreement	Us
Real Estate Development (Note 3)	$8,000	$20,000	Lump Sum or Financed	Prior to Opening	Your Landlord and/or Contractor
Tenant Improvements (Note 4)	$118,000	$275,000	Lump Sum or Financed	Per your agreement with General Contractor	Approved Contractors
Furniture, Fixtures, Smallwares and Equipment (Note 5)	$115,000	$175,000	Lump Sum or Financed	As Incurred Prior to Opening	Approved Supplier
Opening Inventory	$7,000	$18,000	Vendor Terms	Vendor Terms	Approved Supplier
Miscellaneous Opening Costs (Note 6)	$5,000	$15,000	As Incurred	As Incurred Prior to Opening	Suppliers, Lawyer, CPA, etc.
Licenses, Permits and Deposits (Note 7)	$1,000	$75,000	As Incurred	As Incurred Prior to Opening	Liquor Licenses, Municipalities, Utility Companies, Lessor, etc.
Insurance (Note 8)	$4,000	$12,000	Insurance Company Terms	Per Insurance Carrier	Insurance Company
Grand Opening Advertising (Note 9)	$10,000	$10,000	Lump Sum	At the execution of the Franchise Aereement	Us

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Travel and Living

Expense while in

Training

(Note 10)

$2,000

$15,000

As Incurred

Managers Salaries,

Airlines, Rental Car

Agencies, Restaurants,

Hotels, Etc.

Additional Funds for

First 3 months of

Operations

(Note 11)

$15,000

$40,000

As Incurred

Us, Third Parties and Employees

TOTAL ESTIMATED INITIAL INVESTMENT (NOTE 12 & 13) $300,000 TO $674,000

Note 1: Your initial investment for a new restaurant depends upon (1) the number of restaurants you acquire;

(2) their size; (3) their configuration; (4) their location; (5) who pays the cost of developing the real estate and/or construction of the restaurant; and (6) the amount and terms of financing. The initial funds required must be estimated since most costs are not within our control and may change at frequent intervals. These figures are estimates only. We cannot and do not guarantee that your costs will fall within the stated ranges. These estimated ranges are based on our limited experience and knowledge from the opening and conversion of over fortyt~~wcnty eight~~ (4028) franchise restaurants. The costs are constantly changing and you should obtain current cost information as part of your due diligence prior to the time you purchase execute your Franchise Agreement.

Note 2: The Franchise Fee is non-refundable. We do not currently, nor do we have any future plans to,

finance any part of the Franchise Fee.

Note 3: Real Estate costs, vary considerably according to the type of restaurant, fair market values in your

area, your real estate interest (leasehold or ownership), location, and whether you or your landlord develops the location. Your costs can very depending on the size of the site and municipal requirements. The restaurant will usually occupy leased space, and will typically contain 1,800 to 3,5700 square feet (although in some test situations we have allowed units that are larger). Lease rates usually range from $13 to $45^8 per square foot, or more. Although we do not recommend it, some leases may obligate the tenant to pay the landlord an additional "percentage rent" amount, equal to the amount by which the rent per square foot is exceeded by a percentage of "gross sales." Leases are usually "triple net," requiring the tenant to reimburse the landlord for all of the landlord's costs of operation. These triple net costs and Common Area Maintenance ("CAM") charges are determined by negotiation with the landlord and will vary from location to location. This item also includes the layout, design and architectural drawings to fit the actual restaurant in your leased space. Our architect's fee is generally lower because of the work being accomplished by the designer and the repetition in the equipment layout and restaurant design. Our Architect will need to complete detailed plans and specifications in order to allow your General Contractor to bid accurately and apply for permits.

Note 4: This estimate assumes you pay the entire cost of construction with no tenant improvement allowance

or contribution by the landlord for construction and assumes the premises are delivered with four bare walls and ceiling, electric in place, gas in place and that non-union labor will be employed. If the premises are not so delivered, these costs may increase, and if union labor is used, these costs may additionally increase. In some instances, the space can be a bare dirt floor pad, with no utilities supplied. Certain locations may require special design criteria, such as "self cleaning" hood systems, which could add to the estimated cost. The cost associated with extensive

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build outs and/or special design criteria are not included in the estimate.

Note 5: This estimate includes estimated costs associated with furniture, furnishings, installations, equipment,

trade fixtures, small-wares, and point of sale register system, office equipment, ventilation and exhaust systems, and certain items on the restaurant premises. The amount of specific items will vary depending upon the location, size and condition of a particular restaurant. You will be required to use a designated point of sale electronic cash register system and install a designated telephone line and/or cable/DSL Modem for downloading information and credit card confirmation. (See Item 11).

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

Note 6: Incorporation and related fees include complying with fictitious, assumed, or trade name statutes of

the state in which the restaurant is located. The estimate varies from state to state depending on state law, the prevailing rate of attorneys' fees and the scope of legal services requested. Costs such as additional licenses and permits, professional fees for accountants and architects, miscellaneous supplies, and other items are also included in this estimate.

Note 7: The telephone, gas, water and electric companies, and/or others supplying services to your restaurant

may require deposits. The deposits may be refunded to you at a later date. In most cases, your lease will require you to pay electric, gas, water and other utilities directly; however, some landlords cover some utility charges through CAM fees or operating fees (see Note 3 above). In addition, some areas require tap fees in order for you to tap into their utility and these are included in this estimate. Also contained in this estimate is the cost associated with the purchase of a beer, wine and liquor license. Each state has different requirements, and the cost associated with the purchase of this license, as well as regulations relating to such license, can and will vary state to state.

Note 8: You are obligated under the Franchise Agreement to obtain and maintain commercial general liability

insurance in the amount of $ 1,000,000 aggregate single coverage, business interruption insurance, fire and extended coverage insurance, workers' compensation, delivery driver coverage and any other insurance required under the terms of the lease or in accordance with your state's laws for the restaurant or business.

Note 9: You are required to deposit $10,000 with us for your "Grand Opening Marketing Activities." (See

Item 5).

Note 10: The Franchisee will incur all costs and expenses associated with the mandatory training program.

These costs include transportation, lodging, compensation of employees and meals. Generally, these costs will vary as a function of the distance traveled, the lodging selected, the restaurant used for training, the distance between the lodging and training center and the type of transportation selected. This estimate contemplates attendance of two (2) persons traveling to our training facility in Florida (or a destination or restaurant location as designated by us) and attending training as required by the Franchise Agreement. You must also maintain worker's compensation insurance coverage for trainees in your employment.

Note 11: This is an estimate of the funds needed only for opening expenses and working capital to operate the

restaurant for a minimum of three months after opening. The actual amount of additional funds you will need depends on a variety of factors, including: how closely you follow methods and procedures; your management skill, experience and business acumen; local economic conditions; the local market for restaurant services; prevailing

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wage rate; and the sales level achieved during the initial period.

The estimate of additional funds also includes salaries and benefits for employees, but does not include any allowance for an owner's draw. You may have to put additional cash into the business, but we cannot and will not estimate or promise when, or whether, any restaurant, including yours, will achieve positive cash flow or profits. In addition, we recommend that you have sufficient additional funds available to cover your living expenses for one year. The amount will vary substantially depending on your situation and must be determined by you. These figures should be reviewed with a business advisor before making a decision to purchase a franchise.

Note 12: Other than as part of our "Owner in Training Program", we do not offer financing indirectly or

directly for any part of the initial investment. The availability and terms of financing you can obtain will depend on factors such as the availability of financing in general, your credit worthiness, collateral you may have and lending policies of financial institutions. The estimate does not include any finance charge, interest or debt service obligation.

Note 13: We relied on the business experience of our principal officers (see Item 2) to compile these estimates.

As of the date of this offering, there are thirty (30) franchised units in operation. You should review these figures carefully with a business advisor before making any decision to purchase a franchise. If you are considering a Rotelli restaurant, we strongly advise you to visit as many locations as you can and call as many franchise owners as you can, particularly if any exist in the market in which you are interested. A current list of Rotelli Pizza & Pasta restaurants is available in Exhibit "E" of this Offering Circular.

Item 8

RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

The goodwill, public acceptance, and recognition of the ROTELLI Operating System is based to a significant degree upon uniformity. To ensure that this uniformity is maintained, you will be required to comply with all standards and specifications for equipment, fixtures, furnishings, ingredients, signs, supplies, and food items to be used or sold at ROTELLI restaurants, as specified by us from time to time. Specifications exist regarding construction, fixturization, design, signage, displays, promotional materials, operational procedures, production methods, equipment, smallwares, paper goods and other items bearing our Proprietary Marks. All specifications are contained in the Confidential Operating Manual and Confidential Recipe Manual ("Manuals"). Modified specifications based on research, development and testing at ROTELLI restaurants will be communicated to you by changes to the Manual, electronic mail, regular mail or the Franchisor's proprietary website found at . You are responsible for any costs associated with complying with such changes. Additionally, you must comply with the changes within the time period we prescribe upon communicating the change to you.

You will not install, purchase or use any equipment, fixtures, furnishings, ingredients, commodities, supplies, or other items or perform any services in operating your Franchised Business which fall below or deviate from the standards and specifications set forth in the Manuals, or as we may otherwise direct in writing. You must construct, decorate, and equip your restaurant in accordance with our requirements, at your sole expense. We must approve all final plans and specifications before you begin construction. All responsibility for the work of independent contractors, including delays and/or construction losses, is solely the responsibility of the independent contractors, and you and not Rotelliofus. Al! material and substantial changes are to be approved by us in writing prior to the changes being made. You must replace and modernize the furniture, fixtures, supplies, and equipment in your restaurant in accordance with our plans and specifications, which we may change in order to reflect the common image intended to be portrayed by ROTELLI restaurants.

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You may sell only food items and non-food products we designate, and your menu may only list these designated items. All pizza, pasta, sandwiches, salads, desserts, beverages, and related products are to be prepared solely from our proprietary recipes, or as made available through our preferred suppliers.

All labels, containers, paper and plastic goods must meet our specifications, bear our Proprietary Marks with the appropriate trademark or service mark notices, and be in the form, color, and substance as we prescribe.

We will furnish you in the Manuals and in other written materials, an approved supplier list, setting forth approved brands, models, suppliers, and/or distributors.

You will be required to purchase point-of-sale cash registers/computer hardware, dedicated telephone and power lines, modem(s), printer(s) and other computer-related equipment necessary to be online with our computer system, to provide point-of-sale information.

You may recommend suppliers for any item or hems. We will test these items and evaluate your recommended sources with reasonable promptness and will approve or disapprove these items and/or sources within thirty (30) business days of completion of the following conditions:

A. You must submit a written request for approval on the proper form and agree to bear the costs of our tests and evaluations- (fFhe supplier may also bear these costs).

B. The supplier demonstrates to our reasonable satisfaction that it is able to supply the item or product in conformity with our whole system, not just your restaurant or market, using our specifications for this item or product.

C. The supplier demonstrates to our reasonable satisfaction that the supplier is of good standing in the business community with respect to its financial capabilities and the reliability of its products and service.

D. Our representatives are allowed to inspect the supplier's facilities and samples are available for testing.

Your employees will be required to wear uniforms while at work at your ROTELLI restaurant. Uniforms will be in accordance with our design and specifications, which we may modify from time to time.

B~~ookkeeping.~~ ~~As described in It~~e~~m 6, you must us~~e ~~us or our designated vendor to provide all bookkeeping services for your first restaurant or company for~~ your firs~~t 12 months of op~~e~~ration. According to our 200~~4 ~~Audit~~e~~d Financial Statement, we received no r~~evenue ~~during that fiscal year or any preceding fiscal year due to this requirement-~~P~~ayroll. You must use our designated v~~e~~ndor~~ to provide p~~ayroll services. According to our 2001 Audited Financial Statement ROTELLI received no revenue during that or any preceding fiscal year due to this requirement.~~

All marketing and promotion by you in any manner or medium must be conducted in a professional and dignified manner, and must conform to our specified standards and requirements. You must submit to us, for our prior approval (except for prices to be charged), samples of all advertising or promotional plans and materials that

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you desire to use, which have not been prepared or previously approved by us. You may not use any marketing or promotional materials before obtaining our written approval.

You must provide us with a copy of the executed lease for your ROTELLI restaurant. The lease must include certain terms and conditions, either as part of the lease itself or as an addendum. These are set out in Exhibit "B" to the Franchise Agreement.

Miscellaneous

Neither we, nor persons related to us, currently derive revenue or other material consideration as a result of your required purchases or leases. There are currently no purchasing or distribution cooperatives. We currently negotiate purchase arrangements with suppliers for the benefit of franchisees. We can and may in the future negotiate purchase arrangements with suppliers on behalf of and/or for the benefit of franchisees. We may derive revenue or other material consideration from suppliers as a result of your required purchases or leases. Although we are not currently the source of any required products. wWe ~~also~~ may be the only source for certain types of promotional materials and items that you will be required to use.

We do not provide material benefits to you based on your use of designated or approved suppliers, although in considering renewal of your Franchise Agreement, we will review your compliance with our System requirements.

Item 9

FRANCHISEE'S OBLIGATIONS

THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE FRANCHISE AND OTHER AGREEMENTS, IF ANY. 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	ITEM IN OFFERING CIRCULAR
a. Site selection and acquisition/lease	IV	8 and 11
b. Pre-opening purchases/leases	IV; V; VII	7, 8 and 11
c. Site development and other pre-opening requirements	IV; VIII	7, 8 and 11

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d. Initial and ongoing training	V	7 and 11
e. Opening	IV	7 and 11
f. Fees	II; III; IV; V; XII; XIII; XIV; XV; XXII	5, 6, and 7
g. Compliance with standards and policies/ Operating Manual	VI; VII and VIII	8 and 11
h. Trademarks and proprietary information	I; VI; XVI; XVII; XX	13 and 14
i. Restrictions on products/services offered	IV; VIII	16
j. Warranty and customer service requirements	None	None
k. Territorial development and sales quotas	I	12
1. Ongoing product/service purchases	VIII	8
m. Maintenance, appearance and remodeling requirements	II; VI	11
n. Insurance	IX	7
o. Advertising	XII	7, 8 and 11

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p. Indemnification	X	None
q. Owner's participation/ management/staffing	VI; V; XV	1,11 and 15
r. Records and reports	VI; XIV	6 and 11
s. Inspections and audits	VII; XIV	6 and 11
t. Transfer	XV	6 and 17
u. Renewal	II	6 and 17
v. Post-termination	XX	17
w. Non-competition covenants	XVII	17
"x. Dispute resolution	XXII	17

Item 10

FINANCING

Other than as part of our 'Owner in Training Program" we do not offer, directly or indirectly, any arrangements for financing your initial investment or the operation of the Franchised Business. We are unable to estimate whether you will be able to obtain financing for all or any part of your investment and, if you are able to obtain financing, we cannot predict the terms of that financing. You agree that you will not, without prior written consent, borrow more than the maximum allowed debt we prescribe. We periodically may change this amount at our sole discretion. Currently, the maximum allowed debt to be serviced by your Restaurant is 75% of your actual

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investment (see item 7). We impose this requirement because excess debt will adversely affect your Restaurant's operational and financial results.

In order to secure your prompt performance of your obligations under the Franchise Agreement, you grant us a priority security interest in the franchise and the equipment, fixtures and improvements at the restaurant. You will execute our standard Security Agreement, attached to the Franchise Agreement as Exhibit "D," in order to perfect this security interest. You will also execute a standard UCC-1 Financing Statement. If you default under the terms of the Franchise Agreement, by failing to make royalty or marketing fund payments on time, we can repossess the franchise and the equipment, fixtures and improvements at the restaurant.

No contract or other instrument between us contains any waiver of defenses or similar provisions. We do not have any past or present practice, or any intent, to sell, assign, or discount to a third party, in whole or in part, any note, contract, or other instrument executed by you. We do not and will not guarantee your note, lease, or obligation.

Item 11 FRANCHISOR'S OBLIGATIONS

Except as listed below, we need not provide any assistance to you. Pre-Opening Obligations. Prior to opening the Franchised Business, we will:

A. Grant permission to proceed with the proposed site for your restaurant prior to you executing a binding lease agreement. Our permission to execute a lease of a location is not a representation or warranty of the viability or success of the location. (Section IV).

B. Provide an initial training program. (Section V).

C. Loan you a copy of the Manuals, which contain mandatory specifications, standards and procedures. The Manuals are confidential and remain our property. We will modify the Manuals from time to time to reflect changes in the standards, specifications, and procedures for operating a ROTELLI restaurant. (Section VI. B). You are responsible for all costs associated with complying with any changes we may prescribe from time to time.

D. Provide you with standard menu formats. (Section VI).

E. Prescribe standard uniforms and attire for your personnel. (Section VI).

F. Provide approved suppliers or manufacturers of supplies. (Section VIII).

G. Evaluate sources of supplies you may recommend from time to time. (Section VIII. D).

Obligations after Opening. After the opening of your Franchised Business, we will:

A. Determine the standards of quality, service, production, merchandising, and advertising. (Sections VI, VII and XII).

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B. Provide periodic inspections of the restaurant to ensure uniformity and quality control. (Section VII).

C. Develop marketing programs, public relations, and promotional campaigns, designed to promote and enhance the value of all ROTELLI restaurants, but with no obligation to advertise equally for all markets or franchisees. (Section XII).

D. Provide a uniform reporting system, including standardized forms. (Section XIV).

Marketing Programs

We will maintain and administer the ROTELLI marketing fund (the "Marketing Fund"). You will pay a weekly fee, electronically, for advertising, public relations, promotional campaigns, and other marketing programs, in a sum equal to the greatest of 3% of your weekly Gross Sales or a minimum of $120 per week. (Franchise Agreement, Sec. XII.B. 1). The monies collected will be specially accounted for on our books and records. These sums are used for the benefit of all franchisees in order to promote and enhance the value of the ROTELLI System. We are not obligated, in administering the Marketing Fund, to make expenditures for you that are equivalent or proportionate to your contribution, or to ensure that any particular franchisee benefits directly or pro rata from expenditures by the Marketing Fund.

We will direct all marketing programs financed by the Marketing Fund and will have sole discretion over the creative concepts, materials, endorsements used, geographic market, media placement, and fund allocation. We will use an in-house marketing department, and/or national and/or regional advertising agencies. The Marketing Fund may be used to pay the costs of conducting marketing surveys and research; employing public relations firms; preparing and producing video, audio, and written marketing materials; administering multi-regional marketing programs, including, without limitation, purchasing television, radio, magazine, billboard, newspaper, and other media advertising, and employing advertising agencies, providing marketing materials to ROTELLI restaurants; and holding conventions and regional meetings for ROTELLI franchisees. The Marketing Fund will-may from time to time furnish you with approved marketing materials on the same terms and conditions as we furnish these materials to our other franchisees. The Marketing Fund will not use any funds for advertising that is principally and specifically a solicitation for the sale of franchises.

Under the Franchise Agreement, you authorize us to collect any advertising monies or credits due from any of your distributors or other suppliers and any advertising or other rebates or any discounts from distributors and other suppliers based upon purchases or volume purchases by us and our franchisees (including purchases by you). We have the right to negotiate with suppliers, to obtain price reductions, discounts, or rebates based on volume purchases. Unless these suppliers designate these payments specifically for advertising and promotion (in which case we will contribute them to the Marketing Fund), we can use these payments as we see fit. Any amounts contributed to the Marketing Fund will be in addition to all other amounts due or contributed under the Franchise Agreement. Any Marketing Fund contributions not spent in the fiscal year in which they accrue are carried over to the next fiscal year.

We have the right, in our sole discretion, to designate any geographic area for purposes of establishing a Co-operative Advertising Region (the "Co-op"), and to determine whether a Co-op is applicable to the Franchised Business. We also have the power to require a Co-op to be changed, dissolved, and/or merged. If a Co-op has been established for the Franchised Business at the time you begin operations under the Franchise Agreement, you must

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immediately become a member of the Co-op. (Franchise Agreement, Sec. XI.A). If a Co-op applicable to the Franchised Business is established at any time during the term of the Franchise Agreement, you must become a member of the Co-op at that time. (Franchise Agreement, Sec. XI.A).

Each Co-op must adopt written governing documents. A copy of the governing documents of the Co-op (if one has been established) for your geographic area is available upon request. The amount of your monetary contribution to the Co-op will be set by the membership. (Franchise Agreement, Sec. XI.C). The Co-op members and their elected officers are responsible for administration of the Co-op. Co-ops must prepare and submit to the company quarterly and annual financial statements.

In February 2004, the first advertising co-op was formed in the Designated Marketing Area ("DMA") know as Western Pennsylvania. The co-op has operated under specific bylaws since that date and a portion of the marketing funds collected by ROTELLI on behalf of the National Advertising Fund are returned to the Co-op on the 20^l day of the month following each 4 to 5 week preceding period.

We have the right, but not the obligation, to establish a Marketing Fund Advisory Committee, consisting of franchisees to advise and consult with us regarding the establishment, modification, continuance, or other decisions or considerations affecting marketing programs. We will determine the organizational structure and manner of operation of that Committee in our sole discretion. We will consult with the Committee and consider the Committee's input and advice concerning the use of the Marketing Fund. However, we will retain sole discretion over all aspects, including administration and use, of the Marketing Fund.

Local Marketing

You are required to spend $ 10,000 in grand opening advertising. All grand opening marketing expenditures must be approved by us in advance. Payment for such advertising shall be made from the $10,000 grand opening advertising fee you pay to us when you execute your Franchise Agreement. You may be required to spend 2% of your Gross Sales monthly, on local advertising. Local advertising must be in effect within 30 days after the opening of your ROTELLI restaurant. You are required to substantiate local advertising by supplying the information we may require, including tear sheets, paid advertising invoices, and similar documentation. (Franchise Agreement, Sec. XI.C).

You are also responsible for any lease obligations which require contribution(s) to a marketing fund, advertising fund, or any fund of a similar nature or other forms of advertising expenses. Any contributions or expenditures made by you to satisfy these lease obligations will only reduce your obligation to engage in local advertising, but not your obligation to contribute to the Marketing Fund. (Franchise Agreement, Sec. XI.C).

Prior to your use, samples of all marketing materials and descriptions of local promotional programs that you propose to use, that were not prepared or previously approved by us, are to be submitted to us for approval. You are required to receive written approval for any materials or descriptions before using in any manner. You may-will not use any marketing materials that we have disapproved. (Franchise Agreement, Sec. XI.C).

Location Selection

If, at the time the Franchise Agreement is executed, you have not obtained, and we have not given permission to proceed with a location for the Franchised Business, you must lease or acquire a location, subject to

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The original documents were scanned as an image. The original file can be downloaded at the link above.

The Free Franchise Resource Center

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