franchise disclosure document zoyo franchising, llc 450 …franservesupport.com/files/fdd/zoyo...

GP:3610821 v3Zoyo Franchising, LLC – FDD

FRANCHISE DISCLOSURE DOCUMENT

Zoyo Franchising, LLC450 N. McClintock DriveChandler, Arizona 85226Telephone: (602) 337-7090Fax: (602) [email protected]

Zoyo Franchising, LLC grants single-unit franchises (Zoyo Unit Franchises) for the operation of frozen yogurtshops under the name “Zoyo Neighborhood Yogurt.” Zoyo Neighborhood Yogurt shops are self-servicefrozen yogurt shops that provide a wide variety of delicious frozen yogurt flavors, toppings and sauces, andother related products and services. We also grant Zoyo regional developer franchises (“Regional DeveloperFranchises”) which recruit prospective Zoyo Unit Franchises in designated development areas, provide certainsales and support services to Zoyo Unit Franchises located in the development areas, and may establish andoperate one Zoyo Unit Franchise as a Pilot Franchise in their development areas.

The total investment necessary to begin operation of a Zoyo Unit Franchise ranges from $150,200 to $315,500.This includes $35,000 that must be paid to us or our affiliates. The total investment necessary to beginoperation of a Zoyo Regional Developer Franchise ranges from $253,050 to $616,000, if you choose to operatea Pilot Franchise and from $140,050 to $353,000 if you operate a Zoyo Regional Developer Franchise withouta Pilot Franchise. This includes between $136,000 and $335,000 that must be paid to us or our affiliates.

This franchise disclosure document (“Disclosure Document” or “FDD”) summarizes certain provisions of yourfranchise agreement and other information in plain English. Read this disclosure document and allaccompanying agreements carefully. You must receive this disclosure document at least fourteen (14)calendar days before you sign a binding agreement with, or make any payment to, us or an affiliate inconnection with the proposed franchise sale. Note, however that no government agency has verified theinformation contained in this document.

You may wish to receive your Disclosure Document in another format that is more convenient for you. Todiscuss the availability of disclosures in different formats, contact Aaron Klusman, Zoyo Franchising, LLC,450 N. McClintock Drive, Chandler, Arizona, 85226, (602) 337-7090.

The terms of your contract will govern your franchise relationship. Don’t rely on the FDD alone to understandyour contract. Read your entire contract carefully. Show your contract and this FDD to an advisor, like alawyer or accountant.

Buying a franchise is a complex investment. The information in this Disclosure Document can help you makeup your mind. More information on franchising, such as “Buying a Franchise, A Consumer Guide” which canhelp you understand how to use this disclosure document is available from the Federal Trade Commission.You can contact the FTC at 1-877-FTC-HELP or by writing to the FTC at 600 Pennsylvania Avenue NW,Washington, DC 20580. You can also visit the FTC’s home page at www.ftc.gov for additional informationon franchising. Call your state agency or visit your public library for other sources of information onfranchising.

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

Issuance Date: April 30, 2014


STATE COVER PAGE

Your state may have a franchise law that requires a franchise to register or file with a state franchiseadministrator before offering or selling in your state. REGISTRATION OF A FRANCHISE BY ASTATE DOES NOT MEAN THAT THE STATE RECOMMENDS THE FRANCHISE OR HASVERIFIED THE INFORMATION IN THIS DISCLOSURE DOCUMENT.

Call the state franchise administrator listed in EXHIBIT A for information about the franchisor, aboutother franchisors, or about franchising in your state.

MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEWUNCONDITIONALLY AFTER THE INITIAL TERM EXPIRES. YOU MAY HAVE TO SIGN ANEW AGREEMENT WITH DIFFERENT TERMS AND CONDITIONS IN ORDER TOCONTINUE TO OPERATE YOUR BUSINESS. BEFORE YOU BUY, CONSIDER WHATRIGHTS YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY, AND WHAT TERMS YOUMIGHT HAVE TO ACCEPT IN ORDER TO RENEW.

Please consider the following RISK FACTORS before you buy this franchise.

1. THE FRANCHISE AGREEMENT AND THE REGIONAL DEVELOPERAGREEMENT REQUIRE YOU TO RESOLVE DISPUTES WITH US BYMEDIATION OR LITIGATION IN ARIZONA ONLY. OUT OF STATEMEDIATION OR LITIGATION MAY FORCE YOU TO ACCEPT A LESSFAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORETO ENGAGE IN MEDIATION OR LITIGATION WITH US IN ARIZONA THAN INYOUR OWN STATE.

2. THE FRANCHISE AGREEMENT AND THE REGIONAL DEVELOPERAGREEMENT STATE THAT ARIZONA LAW GOVERNS THE AGREEMENT,AND THIS LAWMAY NOT PROVIDE THE SAME PROTECTION AND BENEFITSAS LOCAL LAW. YOUMAYWANT TO COMPARE THESE LAWS.

3. THE FRANCHISEE’S SPOUSE MUST SIGN A PERSONAL GUARANTY MAKINGSUCH SPOUSE JOINTLY AND SEVERALLY LIABLE FOR THE OBLIGATIONSUNDER THE FRANCHISE AGREEMENT WHICH ALSO PLACES THE SPOUSE’SPERSONAL ASSETS AT RISK. YOU MAY WANT TO CONSIDER THIS WHENMAKING A DECISION TO PURCHASE THIS FRANCHISE OPPORTUNITY.

4. THE FRANCHISEE WILL BE REQUIRED TO MAKE AN ESTIMATED INITIALINVESTMENT RANGING FROM $140,050 TO $616,000. THIS AMOUNTEXCEEDS THE FRANCHISOR’S STOCKHOLDERS EQUITY AS OFDECEMBER 31, 2013, WHICH IS $45,554.

5. WE ARE A DEVELOPMENT STAGE COMPANY. OUR LIMITED OPERATINGHISTORY WILL BE OF LITTLE ASSISTANCE TO PROSPECTIVEFRANCHISEES IN DETERMININGWHETHER TO INVEST.

6. THE FRANCHISOR HAS LIMITED FINANCIAL RESOURCES WHICHMIGHT NOT BE ADEQUATE TO FUND THE FRANCHISOR'S PRE-OPENINGOBLIGATIONS TO EACH FRANCHISEE AND PAY OPERATING EXPENSES.

7. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.


We use the services of one or more franchise brokers or referral sources to assist us in selling ourfranchise. A franchise broker or referral source is our agent and represents us, not you. We pay thisperson a fee for selling our franchise or referring you to us. You should be sure to do your owninvestigation of the franchise.

Please refer to the following “State Effective Dates” page for state-specific effective dates.


STATE EFFECTIVE DATES

The following states require that the Disclosure Document be registered or filed with the state, or beexempt from registration: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, NewYork, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.

This Franchise Disclosure Document is registered, on file or exempt from registration in thefollowing states having franchise registration and disclosure laws, with the following effective dates:

California Pending

Hawaii Pending

Illinois April 30, 2014

Indiana April 30, 2014

Michigan April 30, 2014

Minnesota Pending

New York Pending

North Dakota Pending

Rhode Island Pending

South Dakota April 30, 2014

Virginia Pending

Washington Pending

Wisconsin April 30, 2014


NOTICE REQUIREDBY

STATE OFMICHIGAN

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

Each of the following provisions is void and unenforceable if contained in any documentsrelating 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, orestoppel which deprives a franchisee of rights and protections provided in this act. This shall notpreclude 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 expirationof its term except for good cause. Good cause shall include the failure of the franchisee to complywith any lawful provision of the franchise agreement and to cure such failure after being givenwritten 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 fairlycompensating the franchisee by repurchase or other means for the fair market value at the time ofexpiration 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 notsubject to compensation. This subsection applies only if: (i) the term of the franchise is less than 5years and (ii) the franchisee is prohibited by the franchise or other agreement from continuing toconduct 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 ofthe franchise or the franchisee does not receive at least 6 months advance notice of franchisor’sintent not to renew the franchise.

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

THIS MICHIGAN NOTICE APPLIES ONLY TO FRANCHISEES WHO ARERESIDENTS OFMICHIGAN OR LOCATE THEIR FRANCHISES IN MICHIGAN.

(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, toconduct arbitration at a location outside this state.


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

(i) The failure of the proposed transferee to meet the franchisor’s then-currentreasonable qualifications or standards.

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

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

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

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

(i) A provision which permits the franchisor to directly or indirectly convey, assign, orotherwise transfer its obligations to fulfill contractual obligations to the franchisee unless provisionhas 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 notconstitute approval, recommendation, or endorsement by the attorney general.

Any questions regarding this notice should be directed to the Department of AttorneyGeneral, State of Michigan, 670 Law Building, Lansing, Michigan 48913, telephone (517)373-7117.


TABLE OF CONTENTSITEM PAGE

Item 1 THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS ANDAFFILIATES.............................................................................................................................1

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

Item 3 LITIGATION ............................................................................................................................3

Item 4 BANKRUPTCY........................................................................................................................3

Item 5 INITIAL FEES ..........................................................................................................................3

Item 6 OTHER FEES ...........................................................................................................................4

Item 7 ESTIMATED INITIAL INVESTMENT ..................................................................................9

Item 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES..................................15

Item 9 FRANCHISEE’S OBLIGATION ...........................................................................................18

Item 10 FINANCING ...........................................................................................................................20

Item 11 FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS ANDTRAINING..............................................................................................................................20

Item 12 TERRITORY...........................................................................................................................30

Item 13 TRADEMARKS......................................................................................................................33

Item 14 PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION..................................34

Item 15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THEFRANCHISE BUSINESS .......................................................................................................35

Item 16 RESTRICTIONS ONWHAT THE FRANCHISEE MAY SELL ..........................................36

Item 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION.....................36

Item 18 PUBLIC FIGURES .................................................................................................................42

Item 19 FINANCIAL PERFORMANCE REPRESENTATIONS .......................................................42

Item 20 OUTLETS AND FRANCHISEE INFORMATION ...............................................................44

Item 21 FINANCIAL STATEMENTS.................................................................................................47

Item 22 CONTRACTS .........................................................................................................................47

Item 23 RECEIPT.................................................................................................................................48

Exhibits to Disclosure Document:

A. State Administrators/Agents for Service of ProcessB. Franchise AgreementC. Regional Developer AgreementD. Operations Manual Table of ContentsE. Financial Statements of FranchisorF. Confidentiality/Nondisclosure AgreementG. List of Franchise OwnersH. General Release AgreementsI. Form UCC-1 Financing StatementJ. Acknowledgement AgreementK. Receipts

GP:3610821 v3Zoyo Franchising, LLC – FDD 1

Item 1THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS AND

AFFILIATES

Zoyo Franchising, LLC, doing business as “Zoyo,” is offering prospective franchises the opportunity to operateZoyo Unit Franchises or Regional Developer Franchises in accordance with the terms described in thisDisclosure Document. To simplify the language in this Disclosure Document, the terms “we” or “us” meanZoyo Franchising, LLC. “You” means the person who buys a franchise from us. The term “Zoyo UnitFranchise” means a franchise for a single Zoyo Neighborhood Yogurt shop and “Unit Franchisee” means anowner of a Zoyo Unit Franchise. The term “Regional Developer Franchise” means a franchise that solicits orsupports Zoyo Unit Franchises and “Regional Developer” means an owner of a Regional Developer Franchise.The term “Pilot Franchise” means a Zoyo Unit Franchise owned and operated by a Regional Developer. Unlessotherwise indicated, the term “Zoyo Unit Franchise” includes a Pilot Franchise. The term “Franchises” refers toboth Zoyo Unit Franchises and Regional Developer Franchises. If you are a corporation, partnership or otherentity, the Zoyo Unit Franchise Agreement or Regional Developer Agreement also will apply to your owners,officers and directors.

The Franchisor, and any Parents Predecessors and Affiliates. We are an Arizona limited liability companycreated in August 2011. We have no predecessor. We began offering Zoyo Unit Franchises and RegionalDeveloper Franchises in January 2012. We have not offered franchises in other lines of businesses. Ourprincipal business and mailing address is 450 N. McClintock Drive, Chandler, Arizona 85226. Our telephonenumber is (602) 337-7090 and our facsimile number is (602) 337-7099. Our agent for service of process isdisclosed in Exhibit A.

Our parent company is Zoyo, LLC. We have 9 affiliates who each operate a Zoyo Neighborhood Yogurt shopin the Phoenix, Arizona, area. The affiliates are: Zoyo ASU Vista Commons, LLC, Zoyo Chandler & 48th,LLC, Zoyo Guadalupe & McClintock, LLC, Zoyo 12th & Glendale, LLC, Zoyo Ray & Rural, LLC, Zoyo 7th &McDowell, LLC, Zoyo Tatum & Shea, LLC, Zoyo Gilbert & Brown, LLC, Zoyo 24th & Baseline, LLC. Ourparent company and all affiliates share our principal business address of 450 N. McClintock Drive, Chandler,AZ 85226. Neither our parent company nor any of our affiliates have ever offered any franchises for sale inany lines of business.

In addition the 9 Zoyo Neighborhood Yogurt shops operated by our affiliates, we have one licensed ZoyoNeighborhood Yogurt shop at a university in Arizona. This shop is not substantially similar to a Zoyo UnitFranchise.

The Franchise. We offer two different types of franchises: (1) Zoyo Unit Franchises for a single ZoyoNeighborhood Yogurt shop within a defined territory (“Territory”); and (2) Regional Developer Franchises forthe right to recruit and support Zoyo Unit Franchises in a defined geographic area (“Development Area”).

Zoyo Unit Franchises: We offer and sell Zoyo Unit Franchises that develop and operate self-service frozenyogurt shops which offer a wide variety of delicious frozen yogurt flavors, toppings and sauces. ZoyoNeighborhood Yogurt frozen yogurt is specially made to promote healthy benefits for the body, including astronger immune system and a better digestion. Zoyo Neighborhood Yogurt frozen yogurt meets the NationalYogurt Association criteria for live and active culture yogurt. You will operate your Zoyo Unit Franchise usingour proprietary System (as defined below) and under the “Zoyo Neighborhood Yogurt” name and mark, andother marks we designate periodically (referred to as the “Marks”). If you purchase a Zoyo Unit Franchise, youwill sign our Franchise Agreement (the “Franchise Agreement”), attached as Exhibit B.

Regional Developer Franchises: We also offer Regional Developer Franchises granting you the right, within aDevelopment Area, to (i) solicit, recruit, screen, and interview prospective franchisees for us (the “SalesServices”); and (ii) provide support and assistance to the Zoyo Unit Franchises in a Development Area (the


“Support Services”). You may also, but do not have to, establish and operate in your Development Area a PilotFranchise. A Pilot Franchise is a typical Zoyo Unit Franchise owned and operated by a Regional Developer thatcan also be used as a training facility. The Pilot Franchise is operated under a separate Franchise Agreement.You will operate your Regional Developer Franchise under the Regional Developer Agreement, attached asExhibit C. You and we will mutually agree on the number of Zoyo Unit Franchises that must be established andoperated in your Development Area during specific time periods. While you will offer Zoyo Unit Franchises toprospective franchisees, both the final decision of whether to grant a Zoyo Unit Franchise, and the actual grantof a Zoyo Unit Franchise, will be made solely by us. As compensation for your services under the RegionalDeveloper Agreement, you will receive a percentage of the initial franchise fee and continuing royalty fees paidby the Zoyo Unit Franchisees in your Development Area.

You must operate your Zoyo Unit Franchise or Regional Developer Franchise in accordance with the standardsand procedures we designate (the “System”), and according to our operations manuals (the “Manuals”).

Market and Competition. The market for products offered at the Zoyo Neighborhood Yogurt shops areprimarily businesses and individuals who are in search of frozen yogurt or ice cream shops, whetherindependently owned or a chain, and other related products and services. If you open a Zoyo Unit Franchise,your competition will include other businesses offering similar products and services to individuals andbusinesses. If you are a Regional Developer, you will compete with other similar franchises and businessesoffering franchise opportunities to individuals or small and medium-size business owners.

Laws and Regulations. Other than as described below, there are no specific federal laws relating to theoperation of a Zoyo Unit Franchise or Regional Developer Franchise. In addition to laws and regulations thatapply to businesses generally, the Franchise may be subject to federal, state and local occupational safety andhealth regulations, Equal Employment Opportunity and Americans with Disabilities Act rules and regulations.Some jurisdictions may choose to regulate vigorously these and other laws that may adversely affect your abilityto obtain the proper permits needed in order to open a Franchise Business. Before signing a FranchiseAgreement or Regional Developer Agreement, we strongly recommend that you make sure that you will be ableto obtain all necessary permits and licenses in order to operate the Franchise Business in your Territory orDevelopment Area. We will not accept any liability or responsibility, nor will we refund any fees paid by you tous, if you realize after the signature of the Franchise Agreement of Regional Developer Agreement that you areunable to open your Franchise for business because of your failure to comply with local or state laws orregulations.

Regional Developers should be aware that both the Federal Trade Commission and many states regulate the saleof franchises and the relationship between franchisors and franchisees. You must comply with these laws whenyou act as our agent in soliciting prospective franchisees in your Development Area and in providing initial andongoing Sales Services, and Support Services. Certain states may require you to register as a franchisor to offerfranchises within your Development Area. If we ask you to help us with the disclosure obligations under stateand federal law as part of your Sales Services, you must comply with the timing requirements of the FederalTrade Commission and applicable state law when providing our disclosure document to prospective franchisees.

Item 2BUSINESS EXPERIENCE

Aaron Klusman – Founder, Managing Partner

Aaron Klusman has been one of our Managing Partners since August 2011 and a Managing Partner of Zoyo,LLC since January 2010. Mr. Klusman also has been Managing Partner of Camelback Partners Group, LLC inChandler, Arizona, since March 2004.


Bert Hayenga – Founder, Managing Partner

Bert Hayenga has been one of our Managing Partners since August 2011 and a Managing Partner of Zoyo, LLCsince January 2010. Mr. Hayenga has been Managing Partner of Camelback Partners Group, LLC in Chandler,Arizona, since March 2004. Mr. Hayenga also has been Chief Executive Officer of First Cup, LLC (d/b/aDunkin Donuts) in Chandler, Arizona, since January 2008.

Alex Apodaca – Founder, Chief Operating Officer

Alex Apodaca has been our Chief Operating Officer since August 2011 and the Chief Operating Officer ofZoyo, LLC since January 2010. Mr. Apodaca also has been Chief Operating Officer of First Cup, LLC (d/b/aDunkin Donuts) in Chandler, Arizona, since January 2008.

Michael Barth – Director of Operations

Michael Barth has been our Director of Operations since August 2011 and the Director of Operations of Zoyo,LLC since March 2010. Mr. Barth was previously an Assistant Branch Manager for Enterprise Rent-a-Car fromMay 2009 to January 2010 in Tempe, Arizona and Director of Player Services for Mirabel Golf Club fromOctober 2007 to May 2009 in Scottsdale, Arizona.

Sharon Mettra – Business Development Manager

Sharon Mettra has been our Business Development Manager since June 2012. In addition, Ms. Mettra was afranchise seller for Franchise Growth in Phoenix, Arizona from January 2012 through January 2013. Ms.Mettra was previously an assistant at Sheldon Good and Company based in Scottsdale, Arizona from March2010 to April 2011. Ms. Mettra was retired prior to March 2010.

Item 3LITIGATION

No litigation is required to be disclosed in this Item.

Item 4BANKRUPTCY

No bankruptcy information is required to be disclosed in this Item.

Item 5INITIAL FEES

Zoyo Unit Franchises

If you are granted a Zoyo Unit Franchise, you must pay to us a lump sum initial franchise fee of $35,000 whenyou sign the Franchise Agreement (“Initial Franchise Fee”). The Initial Franchise Fee is fully earned by us atthe time you sign the Franchise Agreement, and is not refundable in whole or in part under any circumstances.

Regional Developer Franchises

If you are granted a Regional Developer Franchise, you must pay to us a development fee ranging from$136,000 to $335,000 (“Development Fee”) when you sign your Regional Developer Agreement, and whetheryou choose to operate a Pilot Franchise or not. The amount of your Development Fee will depend upon thepopulation and income demographics of your Development Area, and the number of Zoyo Unit Franchises that


must be established during your development period. Your Development Fee includes the initial franchise feefor a Pilot Franchise. The Development Fee is not refundable under any circumstances. During our fiscal yearended December 31, 2013, we collected Development Fees ranging from $136,000 to $335,000.

Item 6OTHER FEES


Fee (1), (2), (3) Amount Due Date RemarksRoyalty 6% of Gross Revenues

(4)Due on Tuesday ofeach week

Based on Gross Revenues (4) during the previousweek.

Advertising Fund 2% of your weeklyGross Revenues

Due on Tuesday ofeach week

Based on weekly Gross Revenues (4).

Local Advertising Currently 0%; Up to 2%of Gross Revenues

On demand You must spend up to 2% of Gross Revenues onlocal advertising

Local or RegionalAdvertisingCooperatives

Varies up to a maximumof 3% of your weeklyGross Revenues; basedon a majority vote of thecooperative

As required by thecooperative

We or the Regional Developer over your territorymay establish an advertising cooperative for thebenefit of the Zoyo Unit Franchises in your area.Any cooperative contributions will be creditedtowards your local advertising requirements.

Interest Lesser of 18% perannum, or the highestcommercial contractinterest rate permitted bylaw

From the datepayments are due, andcontinues untiloutstanding balanceand accrued interestare paid in full

Charged on any late payments of fees, amounts duefor product purchases, or any other amounts due usor our affiliates.

Audit Expenses Cost of audit andinspection, plus interestand any reasonableaccounting and legalexpenses

On demand Payable if fees are understated by 2% or more, oryou fail to submit required reports.

Late Fee $50 per day From the datepayments are due, andcontinues untiloutstanding balanceand accrued interestare paid in full

Charged on any late payments of fees, amounts duefor product purchases, or any other amounts due usor our affiliates.

Non-Sufficient FundsFee

Lessor of $100 peroccurrence or maximumamount permitted bystate law

As incurred Payable for any of your payments by check that arenot honored by the bank upon which they aredrawn.

Unauthorized ProductUsage Fee

$100 per day As incurred Payable if you use, sell or distribute unauthorizedproducts or services, and do not cease the use, saleor distribution of unauthorized products or serviceswithin ten days after written notice is given to you.

Accounting Fee $100 per occurrence As incurred Payable in a lump sum if it is determined that youfailed to accurately input information in anySoftware Report.

Additional TrainingFee

Actual costs incurred On demand Payable for each person who attends anymandatory or optional additional training programor owners meeting held by us.

Insurance Amount of unpaidpremiums and relatedcosts

On demand Payable if you fail to maintain required insurancecoverage and we obtain coverage for you.


Fee (1), (2), (3) Amount Due Date RemarksReplacement ofManuals

$500 On demand Payable if your copy of the Manuals is lost,destroyed, or significantly damaged.

Management Fee Up to 10% of GrossRevenues, plus costs andexpenses

As incurred Payable if we manage the franchise after youmaterially breach the Franchise Agreement, orpayable before closing if we choose to manage thefranchise before purchasing the franchise upon theexpiration or termination of the FranchiseAgreement. Costs and expenses include legal andother professional services.

Renewal Fee 50% of the then currentInitial Franchise Fee

Upon renewal Payable upon renewal of the Franchise Agreement.

Transfer Fee 25% of the then currentinitial franchise fee, pluscost of training

Before transfercompleted

Applies to any transfer of the FranchiseAgreement, the franchise, or a controlling interestin the franchise.

Legal Costs andAttorney’s Fees

All legal costs andattorneys’ fees incurredby us

As incurred Payable if we must enforce, or defend our actionsrelated to your breach of, the Franchise Agreement.

Indemnification All amounts (includingattorneys’ fees) incurredby us or otherwiserequired to be paid

As incurred Payable to indemnify us, our affiliates, and our andtheir respective owners, officers, directors,employees, agents, successors, and assigns againstall claims, liabilities, costs, and expenses related toyour ownership and operation of your franchise.

Relocation Fee $2,500 Upon Relocation Payable to us if you change the location of yourfranchise, to cover the administrative costs we willincur to update all our information to reflect yournew address.

De-Identification All amounts incurred byus

As incurred Payable if we de-identify the franchise upon itstermination, relocation, or expiration.

Evaluation Fee (5) All amounts incurred byus

As incurred Payable if you request that we approve additionalsuppliers and we incur costs to evaluate and inspectthe proposed supplier’s products and facilities toensure that they meet our high standards.

Termination Fee (6) 50% of the then-currentInitial Franchise Fee,plus our attorney feesand costs

On demand If you or we terminate your franchise before yourfranchise term expires.

Initial Training Feesfor AdditionalAttendees (7)

$2,500 As incurred We do not charge for the initial training of you andtwo other employees of the Franchise (one ofwhich must be the General Manager if you chooseto hire one). You must pay us a fee of $2,500 peradditional attendee.

Opening AssistanceFee (8)

Actual costs incurred As incurred You will need to reimburse us for the costs weincur to provide you with opening assistance.

Improvements andRemodels

Actual costs incurred As incurred We may require you to spend up to $10,000 everyfour years on improvements or total remodels uponnotice.

Explanatory Notes:

(1) The above table and accompanying notes describe the nature and amount of all other payments that youmust pay to us or our affiliates, or that we or our affiliates collect on behalf of third parties, on arecurring basis, in developing or operating a Zoyo Unit Franchise.

(2) All fees are uniform and are imposed by, collected by, and payable to, us, unless otherwise noted below.All fees are non-refundable.


(3) You must pay all amounts due by automatic debit. You will be required to execute an ACHAuthorization Form permitting us to electronically debit your designated bank account for payment ofall fees payable to us as well as any amounts that you owe to us or our affiliates for the purchase ofgoods or services. You must ensure that there are sufficient funds available in your account forwithdrawal before each due date.

If you do not report your Franchise‘s Gross Revenues for any week, then we may debit your account for120% of the amount that we debited during the previous week. If the amount we debit is less than thefees you actually owe us (once we determine the franchise’s actual gross revenues for the week), thenwe will debit your account for the balance on the day we specify. If the fee amount we debit is greaterthan the fee amount you actually owe us, then we will credit the excess amount, without interest, againstthe amount we otherwise would debit from your account during the following reporting period.

(4) The term “Gross Revenues” generally means the amount of all receipts for the sale of any products orservices in connection with the Zoyo Unit Franchise and income of every other kind and nature relatedto the Zoyo Unit Franchise, whether for products or services, cash, exchange, or credit, regardless ofcollection in a case of credit, less any refunds; provided, however, that “Gross Revenues” shall notinclude any sales taxes or other taxes you collect for transmittal to the appropriate taxing authorities.

(5) You may request that we add vendors to our list of approved vendors. We may inspect the proposedsupplier’s facilities, and require that product samples from the proposed supplier be delivered for testingeither directly to us or any independent certified laboratory that we designate. See Item 8 for additionalinformation.

(6) You must pay the termination fee, plus any costs and attorneys’ fees incurred by us, if you improperlyattempt to terminate or close your franchise before your term expires, or we terminate your FranchiseAgreement for any reason described in the Franchise Agreement. We may also recover from you anydamages suffered by us (e.g., lost future revenues) resulting from your improper or wrongfultermination of the franchise.

(7) We do not charge a fee for the initial training for up to three attendees designated by us or theFranchisee. The persons attending the initial training must include you and the General Manager if youchoose to hire a General Manager. If you want to have more than three attendees at the initial training,you will have to pay us a fee in the amount of $2,500 per additional attendee before the training begins.However, we may, in our sole discretion, refuse to train additional attendees depending on trainingspace and availability. You will be responsible for all out-of-pocket expenses in connection with theinitial training program including costs and expenses of transportation, lodging, meals, wages andemployee benefits.

(8) We may, at your request, provide you assistance with the opening of your Zoyo Unit Franchise for aperiod of one or two weeks after the opening date of the Zoyo Unit Franchise. If we provide thisopening assistance, you will be responsible to reimburse us for the costs incurred by us for thisassistance (including but not limited to the costs of travel, lodging and meals for our trainer(s) oremployee(s) and our trainer(s) or employee(s)’ salary).



Fee (1), (2), (3) Amount Due Date RemarksAdvertising andRecruiting Costs

A minimum of $1,000 perquarter (4)

As incurred This amount may be increased to $1,500 atany time.

Interest Lesser of 18% per annum,or the highest commercialcontract interest ratepermitted by law

From the date paymentsare due, and continuesuntil outstanding balanceand accrued interest arepaid in full

Charged on any late payments of anyamounts due us or our affiliates.

Audit Expenses Cost of audit andinspection, plus interestand any reasonableaccounting and legalexpenses

On demand Payable if 2% or more discrepancy inamounts owed, or if you fail to submitrequired reports.

Late Fee $50 per day From the date paymentsare due, and continuesuntil outstanding balanceand accrued interest arepaid in full

Charged on any late payments of fees,amounts due for product purchases, or anyother amounts due us or our affiliates.

Non-SufficientFunds Fee

$100 per occurrence As incurred Payable for any of your payments by checkthat are not honored by the bank uponwhich they are drawn.

Accounting Fee $100 per occurrence As incurred Payable in a lump sum if it is determinedthat you failed to accurately inputinformation in any Software Report.

ManualReplacement Fee

$500 per Manual On demand Payable if your Manuals are lost, destroyed,or significantly damaged. You must obtaina replacement copy at our then-applicablecharge.

Additional TrainingFee

Actual costs incurred On demand Payable for each person who attends anymandatory or optional additional trainingprogram or owners meeting held by us.

Management Fee Up to 10% of GrossRevenues (7), plus costsand expenses

As incurred Payable if we manage the franchise afteryou materially breach the RegionalDeveloper Agreement, or payable beforeclosing if we choose to manage thefranchise before purchasing the franchiseupon the expiration or termination of theRegional Developer Agreement. Costs andexpenses include legal and otherprofessional services.

Renewal Fee The greater of (i)$20,000; or (ii) $1,000per Zoyo Unit Franchiseoperating in yourDevelopment Area

Upon renewal Payable upon renewal of your RegionalDeveloper Agreement.

Transfer Fee $30,000 for theDevelopment Area

At the time of transfer Applies to any transfer of the RegionalDeveloper Agreement, the franchise, or itsassets, except transfers to a legal entityprincipally controlled by you.

Termination Fee (5) One-half of our highestthen-current DevelopmentFee, plus our attorneys’fees and costs.

On demand Payable if you or we terminate yourfranchise before your franchise term expires


Fee (1), (2), (3) Amount Due Date RemarksInsurance Amount of unpaid

premiums and relatedcosts

On demand Payable only if you fail to maintain requiredinsurance coverage and we pay premiumsfor you.

Legal Costs andAttorneys’ Fees

All legal costs andattorneys’ fees incurredby us

On demand Payable if we must enforce, or defend ouractions related to your breach of, theRegional Developer Agreement.

Indemnification All amounts (includingattorneys’ fees and costs)incurred by us orotherwise required to bepaid

On demand Payable to indemnify us, our affiliates, andour and their respective owners, officers,directors, employees, agents, successors,and assigns against all claims, liabilities,costs, and expenses related to yourownership and operation of the franchise,your breach of the Regional DeveloperAgreement, or your non-compliance withany law or regulation.

Fee for Operatingthe Franchise AfterTermination

$25,000, plus all costsand attorneys’ feesincurred by us

As incurred Payable if you continue to operate theFranchise after termination of theAgreement.

Initial TrainingFees for AdditionalAttendees (6)

$750 As incurred The initial training fee is free for the first 2participants designated by Franchisee. Foreach additional participant, if applicable,Franchisor will charge a $750 training fee.

Explanatory Notes:

(1) The above table and accompanying notes describe the nature and amount of all other payments that youmust pay to us on a recurring basis, whether on a regular periodic basis or as infrequent anticipatedexpenses, in developing and operating your Regional Developer Franchise:

(2) Unless noted, all fees are uniform, and are imposed by, collected by, and payable to, us. All fees arenon-refundable.

(3) You must pay all amounts due by automatic debit. You will be required to execute an ACHAuthorization Form permitting us to electronically debit your designated bank account for payment ofall fees payable to us as well as any amounts that you owe to us or our affiliates for the purchase ofgoods or services. You must ensure that there are sufficient funds available in your account forwithdrawal before each due date.

(4) Regional Developers must spend a minimum amount of $1,000 each quarter on recruiting andadvertising for prospective franchisees in the Development Area. These amounts will be paid directly tothird-party providers of advertising services or to us if we sell you advertising materials. We reserve theright to increase this amount to a minimum of $1,500 per quarter. See Item 11.

(5) You must pay the termination fee, plus any costs and attorneys’ fees incurred by us, if you improperlyattempt to terminate or close your franchise before your term expires, or we terminate your RegionalDeveloper Agreement for any reason set forth in the Regional Developer Agreement. We may alsorecover from you any damages suffered by us (e.g., lost future revenues) resulting from your improperor wrongful termination of the franchise. Termination fees may be unenforceable in certain states. SeeItem 17 for additional information

(6) While we do not charge for training of up to two participants you designate, you or your employees willbe responsible for all out-of-pocket expenses in connection with all training programs, including costsand expenses of transportation, lodging, meals, wages and employee benefits. We reserve the right to


impose reasonable charges for training classes and materials in connection with such training courses.We will notify you of any additional charges before you or your employees enroll in a course.

(7) The term “Gross Revenues” generally means the amount of all receipts for the sale of any products orservices in connection with the Zoyo Regional Developer Franchise and income of every other kind andnature related to the Zoyo Regional Developer Franchise, whether for products or services, cash,exchange, or credit, regardless of collection in a case of credit, less any refunds; provided, however, that“Gross Revenues” shall not include any sales taxes or other taxes you collect for transmittal to theappropriate taxing authorities.

Item 7ESTIMATED INITIAL INVESTMENT


YOUR ESTIMATED INITIAL INVESTMENT

Expenditures

Amount

When DueMethod ofPayment To Whom Paid

Low High

Initial Franchise Fee (1) $35,000 $35,000 Due upon executionof the franchiseagreement

As agreed Franchisor

Travel and livingexpenses while training(2)

$600 $6,000 Prior to opening Lump sum Third party

3 Months’ Lease/Rent(3) (4)

$3,000 $9,000 As incurred As agreed Landlord

Leasehold improvements(5)

$15,000 $125,000 As incurred As agreed Landlord

Security Deposits (6) $0 $3,000 As incurred As agreed Landlord, UtilityProviders

Equipment (7) $80,000 $100,000 Before opening Lump sum Third party

Signs (8) $3,000 $6,000 Before opening As agreed Contractor

Opening inventory (9) $1,000 $4,000 Before opening Lump sum Third party

Advertising – 3 months(10)

$500 $3,000 As incurred As agreed Third party

Licenses and Permits(11)

$500 $1,000 Before opening As required Governmentalagencies

Insurance (12) $400 $1,500 Before opening Lump sum Third party

Materials andSupplies (13)

$500 $2,000 Before opening Lump sum Third party

P.O.S. and ComputerSystem (14)

$6,000 $9,000 Before opening Lump sum Third party

Professional Fees (15) $3,000 $5,000 As incurred As agreed Third PartyTelecommunicationsSystems (16)

$200 $1,000 As incurred As agreed Telephonecompany or vendor



Expenditures

Amount

When DueMethod ofPayment To Whom Paid

Low High

Additional funds – 3months (17)

$1,500 $5,000 As incurred As agreed Vendors

TOTAL ESTIMATEDINITIALINVESTMENT (18)

$150,200 $315,500

Explanatory Notes:

*These estimated initial expenses are our best estimate of the costs you may incur in establishing and operatingyour franchise. Our estimates are based on our and our affiliates’ experience in franchising and operating ZoyoUnit Franchises. The factors underlying our estimates may vary depending on a number of variables, and theactual investment you make in developing and opening your Zoyo Unit Franchise may be greater or less than theestimates given depending upon the location of your Zoyo Unit Franchise, and current relevant marketconditions. Your costs will also depend on factors such as how well you follow our methods and procedures;your management skills; your business experience and capabilities; local economic conditions; the local marketfor our products and services; the prevailing wage rates; competition; and sales levels reached during your initialphase of business operations.

(1) The Initial Franchise Fee is non-refundable.

(2) We estimate that your travel and lodging expenses for initial training will range from $600 to $6,000.While we do not charge for the initial training for up to three (3) attendees, you must pay fortransportation to and from our training site and pay for living arrangements and food during the time oftraining for you and any of your employees who attend the training. We estimate costs of $150 per day,per person, for lodging, food and other miscellaneous expenses, plus travel expenses to and from eachattendee’s personal residence. However, if the attendee lives near the training location, the travelexpenses will be minimal. This amount does not include any wages or salary for you or your employeesduring training.

(3) Your actual rent payments may vary, depending upon your location and your market’s retail lease rates.We estimate, but do not require, that the site where you operate your Zoyo Unit Franchise will be atleast 1,200-1,400 square feet in size. Zoyo Unit Franchises are typically located and operated in stripmalls, shopping centers, or other suitable retail locations.

(4) If you purchase instead of lease the premises for your Zoyo Unit Franchise, then the purchase price,down payment, interest rates, and other financing terms will determine the amount of your monthlymortgage payments.

(5) This estimate does not include any construction allowances that may be offered by your landlord.Building and construction costs will vary depending upon the condition of the premises for the ZoyoUnit Franchise, the size of the premises and local construction costs. If the location was previouslyequipped with commercial freezers and other ice cream or food service material, the modifications youneed to make may be minimal.

(6) This estimate includes security deposits required by the landlord and utility companies but not yourtelecommunications service, and varies depending on where you decide to operate your Zoyo UnitFranchise.


(7) You will need to furnish your Zoyo Unit Franchise with equipment that we require as described in theManuals. The equipment includes 6 Taylor yogurt machines, 1 reach in fridge and reach in freezer,shelving, and 3 sinks.

(8) We estimate that the cost for signage will range from $3,000 to $6,000 depending on the signagerequirements imposed by your landlord.

(9) You will be required to purchase a certain amount of Zoyo branded products for your Zoyo UnitFranchise. Our estimate includes the costs to purchase Zoyo products and other inventory to supportyour franchise for the first three months of operation.

(10) You must conduct grand opening advertising and spend between $500 and $3,000 in advertising duringa 90 day period beginning 30 days before you open your Zoyo Unit Franchise and ending 60 days afteryou open your Zoyo Unit Franchise.

(11) You may be required to obtain business licenses from the local government agencies to operate yourZoyo Unit Franchise. We estimate these costs will range from $500 to $1,000 depending upon thejurisdiction.

(12) You must obtain and maintain, at your own expense, insurance coverage for the buildings and vehiclesyou use or operate in connection with your franchise. Insurance costs depend on a variety of factors.Annual premiums are typically paid to the insurer immediately, with refunds being issued if you cancelthe insurance. The cost of your premiums will depend on coverage amounts, the insurance carrier’scharges, terms of payment, and your insurance and payment history. Our insurance requirements arecontained in Item 8.

(13) You may need other small material and supplies to operate your Zoyo Unit Franchise in addition to yourinventory and equipment.

(14) Currently, the upfront cost to purchase our required computer system, including our point of sale system(POS) and other computer hardware and software to keep track of your business records isapproximately $6,000. Based on this, we estimate that your initial investment for your computer systemwill be between $6,000 and $9,000 depending on whether you must purchase additional computerequipment and the type of computer equipment you purchase. See the Manuals and Item 11 for moredetails about computer systems and software. This figure does not include the monthly costs tomaintain an internet connection.

(15) You may incur legal fees, accounting fees and other professional fees in order to incorporate yourbusiness, perform all necessary tax filings and to set up a small business including a general ledger, taxreports, payroll deposits, etc.

(16) We estimate that the telecommunications system for your Zoyo Unit Franchise will cost between $200and $2,000. This cost includes the cost of at least one telephone line and monthly service. Your costwill vary depending on the type of equipment and monthly service plan you select.

(17) The estimate of additional funds is based on an owner-operated business and does not include anyallowance for an owner’s draw. The estimate is for a period of three months. We estimate that, ingeneral, you may expect to put additional cash into the business during at least the first three months,and sometimes longer, but we cannot estimate or promise when or whether you will achieve a positivecash flow or profits.


(18) We have relied on our experience in this industry in compiling these estimates. You should reviewthese figures carefully with a business advisor before making any decision to purchase this franchiseopportunity.



Expenditures

AmountRegional Developer Sales

Office WithoutPilot Franchise

AmountRegional DeveloperSales Office WithPilot Franchise

When DueMethod ofPayment To Whom PaidLow High Low High

Development Fee (1) $136,000 $335,000 $136,000 $335,000 When yousign theRegionalDeveloperAgreement

Lump sum Franchisor

Travel and livingexpenses while training(2)

$0 $2,000 $600 $6,000 Beforeopening

Lump sum Third Party

3 Months’ Lease/Rent (3)(4)

$0 $0 $3,000 $9,000 As incurred As agreed Landlord

Leasehold improvements(5)

$0 $0 $15,000 $125,000 As incurred As agreed Landlord

Security Deposits (6) $0 $0 $0 $3,000 As incurred As agreed Landlord, Utilityproviders

Equipment (7) $0 $0 $80,000 $100,000 Beforeopening

Lump sum Vendors

Signs (8) $0 $0 $3,000 $6,000 Beforeopening

As agreed Contractor

Opening Inventory (9) $0 $0 $1,000 $4,000 Beforeopening

Lump sum Third party

Advertising fee – 3months (10)

$3,000 $3,000 $3,500 $3,500 As incurred As agreed Third party

Licenses and Permits (11) $0 $0 $500 $1,000 Beforeopening

As required GovernmentalAgencies

Insurance (12) $2,000 $2,000 $2,000 $2,000 Beforeopening


Materials and Supplies(13)

$500 $2,000 $500 $2,000 Beforeopening


P.O.S. and computerSystem (14)

$0 $0 $6,000 $9,000 Beforeopening


Professional Fees (15) $0 $5,000 $3,000 $5,000 As incurred As agreed Third partyTelecommunicationsSystems (16)

$50 $1,000 $50 $1,000 As incurred As agreed Telephonecompany orvendor

Demographic Analysis(17)

$0 $0 $0 $0 Beforeopening

As agreed Designatedsupplier

Additional Funds – 3months (18)

$500 $5,000 $500 $5,000 As incurred As agreed Vendors

TOTAL ESTIMATEDINITIALINVESTMENT (19)

$140,050 $353,000 $253,050 $616,000


Explanatory Notes:

*These estimated initial expenses are our best estimate of the costs you may incur in establishing and operatingyour franchise. Our estimates are based on our experience (see Items 1 and 2), and our current requirements forFranchise Businesses. The factors underlying our estimates may vary depending on a number of variables, andthe actual investment you make in developing and opening your franchise may be greater or less than theestimates given depending upon the location of your franchise, and current relevant market conditions. Yourcosts will also depend on factors such as how well you follow our methods and procedures; your managementskills; your business experience and capabilities; local economic conditions; the local market for our productsand services; the prevailing wage rates; competition; and sales levels reached during your initial phase ofbusiness operations.

(1) See Item 5 for additional information about your Development Fee. The Development Fee includes theInitial Fee for one Pilot Franchise, if you choose to operate a Pilot Franchise. The Development Fee isnon-refundable.

(2) While we do not charge for the Regional Developer initial training, you are required to pay fortransportation to and from our training site and pay for living arrangements and food during the time oftraining for you and any of the Franchise’s employees who attend the training. We estimate costs of$150 per day, per person, for lodging, food and other miscellaneous expenses, plus travel expenses toand from each attendee’s personal residence. However, if the attendee lives near the training location,the travel expenses will be none or minimal. This amount does not include any wages or salary for youor your employees during training.

(3) This estimate includes three months’ rent for your Regional Developer sales office. Your actual rentpayments may vary depending upon your location and depending on whether you decide to operate yoursales office out of a residence or an executive or commercial office. We estimate that you will need asales office of at least 500 square feet in size.

(4) If you do not operate a Pilot Franchise, we anticipate that you will operate your Regional Developersales office from your residence and incur no lease costs.

(5) This estimate includes the cost of any leasehold improvements for your Regional Developer sales officeor Pilot Franchise. The estimate does not include any construction allowances that may be offered byyour landlord. Building and construction costs will vary depending upon the condition of the premisesfor the Zoyo Unit Franchise and the Regional Developer sales office. If you do not operate a PilotFranchise, we anticipate that you will not incur any leasehold improvements.

(6) This estimate includes security deposits required by the landlord and utility companies but not yourtelecommunications service and varies depending on where you decide to operate your RegionalDeveloper sales office. If you do not operate a Pilot Franchise and operate your Regional DeveloperSales office out of your house, you will not incur any additional security deposit for landlord and utilitycompanies.

(7) You will be required to purchase a certain amount of Zoyo equipment and products for your RegionalDeveloper Franchise if you want to develop a Pilot Office. The equipment includes 6 Taylor yogurtmachines, 1 reach in fridge and reach in freezer, shelving, and 3 sinks.

(8) We estimate that the cost for signage will range from $3,000 to $6,000, if you choose to operate a PilotFranchise. You do not have to purchase any signage if you do not operate a Pilot Franchise.


(9) If you operate a Pilot Franchise, our estimate includes the cost to purchase Zoyo products and otherinventory to support your franchise for the first three months of operation. You will not need topurchase products or other inventory if you do not operate a Pilot Franchise.

(10) This estimate includes your costs in purchasing three months of advertising, marketing and promotionalmaterials to market the Zoyo Unit Franchise opportunities in your Development Area or to operate aPilot Franchise. You must spend at least $1,000 per quarter to market Zoyo Unit Franchiseopportunities. If you operate a Pilot Franchise, you also must conduct grand opening advertising andspend between $500 and $3,000 in advertising during a 90 day period beginning 30 days before youopen your Pilot Franchise and ending 60 days after you open your Pilot Franchise. We anticipate thatyou will spend additional amounts in marketing Zoyo Unit Franchise opportunities and your PilotFranchise as described in table above. See Item 11 for additional information about your advertisingrelated obligations.

(11) You may be required to obtain business licenses from the local government agencies to operate yourFranchise. We estimate these costs will be between $500 and $1,000 depending upon the jurisdiction.If you do not operate a Pilot Franchise, we anticipate that you will operate your Regional Developersales office from your residence and not be required to obtain any business licenses.

(12) You must obtain and maintain, at your own expense, insurance coverage for the vehicle(s) and anybuildings you use or operate in connection with your franchise. Insurance costs depend on a variety offactors. Annual premiums are typically paid to the insurer immediately, with refunds being issued ifyou cancel the insurance. The cost of your premiums will depend on the insurance carrier’s charges,terms of payment, and your insurance and payment history. Our insurance requirements are describedin Item 8.

(13) You may need other small materials and supplies to operate your Zoyo Unit Franchise in addition toyour inventory and equipment.

(14) Currently, the upfront cost to purchase our required computer system for a Pilot Franchise, includingour point of sale system (POS) and other computer hardware and software to keep track of yourbusiness records, is approximately $6,000. Based on this, we estimate that your initial investment foryour computer system will be between $6,000 and $9,000 if you operate a Pilot Franchise. If you do notoperate a Pilot Franchise, we assume that you already own a computer that you can use in yourFranchise. See Manuals and Item 11 for more details about computer systems and software. This figuredoes not include the monthly costs to maintain an internet connection.

(15) You may incur legal fees, accounting fees and other professional fees in order to incorporate yourbusiness, perform all necessary tax filings and to set up a business including a general ledger, taxreports, payroll deposits, etc. You may incur additional legal fees if you are required to register yourRegional Developer Franchise business before you can sell franchises in your Development Area.

(16) We estimate that the telecommunications system for your Franchise will cost between $50 and $1,000.This cost includes the cost of at least one telephone line and monthly service. Your cost will varydepending on the type of equipment and monthly service plan you select.

(17) Before you begin operating your Regional Developer Franchise, you must obtain a demographicanalysis for your Development Area. We assume that a real estate broker will provide you with thedemographic analysis at no charge. The demographic analysis includes a detailed, geographicbreakdown of your Development Area by gender, age, income, and population. You will use thedemographic analysis to determine Zoyo franchise boundaries and evaluate specific proposed Zoyo UnitFranchises in your Development Area.


(18) This item estimates three months of initial start-up expenses (other than the items identified separatelyin the table) for your Regional Developer sales office or Pilot Franchise. These expenses do not includepayroll costs or any draw or salary for you. These figures are estimates, and we cannot guarantee thatyou will not have additional expenses starting your Regional Developer Franchise. Your actual costsfor initial start-up expenses during this three-month period will depend on how closely you follow ourmethods and procedures; your management skill, experience, and business acumen; local economicconditions; the local market for Zoyo Unit Franchises; the prevailing wage rate; competition; and thesales level reached during the initial three-month period.

(19) We relied on our experience in this industry in compiling these estimates. You should review thesefigures carefully with a business advisor before making any decision to purchase this franchiseopportunity.

Item 8RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

Lease and Purchase Specifications and Requirements

You must lease or purchase the location for your Zoyo Unit Franchise or any other office location (if you are aRegional Developer), and, where applicable, leasehold improvements, computer and office equipment(including computer hardware and software), fixtures, furnishings and decor, signage, insurance, inventory,demographic analysis (if you are a Regional Developer), advertising and marketing materials, and certainsupplies under our specifications as set forth in our Manuals. These specifications include standards forappearance, delivery, performance, quality control, or design.

We reserve the right to require that you lease or purchase your leasehold improvements, furnishings, inventory,and certain supplies and products only from suppliers approved by us. Our Manuals list our approved suppliers.There may be items for which we or our affiliates are approved suppliers (see below).

Issuance and Modification of our Specifications

Our Manuals set forth our specifications, standards, and guidelines for all real estate, goods, and services that werequire you to obtain in establishing and operating your franchise, and additional guidelines and requirementsfor operating your franchise. We will notify you of new or modified specifications, standards, and guidelinesthrough periodic amendments or supplements to the Manuals, or other written materials. Such modificationsand supplements shall be effective and binding 15 days after notices thereof are mailed to franchisees. SeeItem 11 for additional information about our Manuals. We will issue written copies of our standards andspecifications to you and approved and proposed suppliers, unless these standards and specifications contain ourconfidential information (see Item 14).

Approved Products, Distributors and Suppliers

We have developed standards and specifications for the equipment, materials, goods and services used tooperate your Zoyo franchise. We have approved, and will continue to periodically approve, specifications forsuppliers and distributors of the above items and products, which may include us or any affiliates we may have,that meet our standards and requirements. These specifications include standards and requirements relating toproduct quality, prices, consistency, reliability, financial capability, labor relations and customer relations.Currently these specifications are not available to franchisees. You must (1) purchase products for sale by yourZoyo franchise in the quantities we designate; (2) use those formats, formulas, and containers for products thatwe prescribe; and (3) purchase all products and other materials only from distributors and other suppliers wehave approved.


We may approve a single distributor or other suppliers (collectively, “supplier”) for any product, and mayapprove a supplier only as to certain products. We may concentrate purchases with one or more suppliers toobtain lower prices or the best advertising support or services for any group of Zoyo franchises. Our approval ofa supplier may be conditioned on requirements relating to the frequency of delivery, concentration of purchases,standards of service (including prompt attention to complaints), and other similar criteria, and may betemporary, pending our continued evaluation of the supplier.

If you would like to purchase or lease any items from any unapproved supplier, then you must submit to us awritten request for approval of the proposed supplier (or the proposed supplier may submit its own request). Wemay inspect the proposed supplier’s facilities, and require that product samples from the proposed supplier bedelivered for testing either directly to us or any independent certified laboratory that we designate. We also mayrequire you (or the proposed supplier requesting the evaluation) to pay us an evaluation fee to make theevaluation (not to exceed the reasonable cost of the inspection and the actual cost of the test); see Item 6. Wewill approve or disapprove your proposed supplier within 60 days of receiving all of the information that werequire for the evaluation. We reserve the right to periodically re-inspect the facilities and products of anyapproved supplier, and revoke our approval if the supplier does not continue to meet any of our criteria. We willnotify you in writing immediately when our approval of a supplier is revoked. Upon receipt of our notice ofrevocation, you will immediately stop using the services or products of the revoked supplier. We will notreimburse you for any remaining products or services purchased from the revoked supplier that you are unableto use as a result of our revocation of the supplier’s approval.

We may negotiate price terms and other purchase arrangements with suppliers for you for some items that werequire you to lease or purchase in developing and operating your Zoyo franchise. There currently are nopurchasing and distribution cooperatives.

Our only approved supplier for the frozen yogurt equipment you are required to purchase to equip your ZoyoUnit Franchise is Taylor. Our only approved supplier for the yogurt you are required to purchase for your ZoyoUnit Franchise is YOCREAM.

Additionally, we estimate that the proportion of the required purchases and leases by a Zoyo Unit Franchise toall purchases and leases by a Zoyo Unit Franchise of goods and services in establishing and operating theFranchise is about 50%.

Our officers do not own an interest in any supplier.

Us, Affiliates, and Regional Developers as Approved Suppliers

We may designate ourselves, our affiliates, or our Regional Developers, as approved suppliers, or the onlyapproved suppliers, from which you may or must lease or purchase certain products or services in developingand operating your Zoyo franchise. We, our affiliates, or our Regional Developers may derive revenue fromthese sales, and may sell these items at prices exceeding our or their costs in order to make a profit on the sale.

We currently are not, but reserve the right to become in the future, an approved supplier for Zoyo products orother categories of products and supplies offered or used by your Zoyo franchise, including any additionalproprietary software that we develop and require you to use in operating your franchise. To date, we have madeno sales of products or services to Zoyo franchisees, and have received no revenues from any sales. Wecurrently do not, but reserve the right in the future, to designate our affiliates as approved suppliers, or the onlysuppliers, from whom you may purchase or lease certain other categories of products, services, and equipment.

If you are a Regional Developer Franchise, we may request that you cooperate with us in identifying suppliers todeliver Zoyo products to Zoyo Unit Franchise customers within Development Areas.


While we or our affiliates currently have received no revenue or other consideration for goods or services thatwe require or advise you to obtain from us, our affiliates or any approved suppliers, we reserve the right to do soin the future. In addition, we and our affiliates reserve the right to receive rebates based on products or servicesyou purchase from us ranging from 1% to 10% or more.

Effects of Compliance and Noncompliance

You must comply with our requirements to purchase or lease real estate, goods, and services according to ourspecifications or from approved suppliers to be eligible to renew your franchise. Failure to comply with theserequirements will render you ineligible for renewal, and may be a default allowing us to terminate yourfranchise. We do not provide any other benefits to you because of your use of designated or approved servicesand products, or suppliers.

Insurance Specifications

Before you open your Zoyo franchise, you must obtain certain minimum insurance coverage, naming us and ouraffiliates as an additional insured. We may increase these limits or have new types of coverage added at anytime after giving you notice. You must maintain this insurance coverage, as required by your FranchiseAgreement or Regional Developer Agreement, from a responsible carrier. Currently we require you tomaintain: (a) comprehensive public, professional, product, errors and omission and motor vehicle liabilityinsurance with coverage of at least $2,000,0000; (b) general casualty insurance with coverage of at least$2,000,0000; (c) workers’ compensation and employer’s liability insurance with coverage required by law;(d) business interruption insurance for at least 6 months of coverage; (e) any other insurance required by law;and (f) umbrella liability insurance with coverage of at least $1,000,000 per occurrence and $3,000,000aggregate. We may change these requirements at any time. You must name us and others we designate asadditional insureds.

Advertising Specifications

You must obtain our approval before you use any advertising and promotional materials, signs, forms andstationary unless we have prepared or approved them during the 12 months before their proposed use. You mustpurchase certain advertising and promotional materials, brochures, fliers, forms, business cards and letterheadfrom approved vendors only. Further, you must not engage in any advertising of your Franchise unless we havepreviously approved the medium, content and method.

Computer Equipment and Software

You must also purchase the computer system that we require, including our point of sale system (POS) andother computer hardware and software to keep track of your business records from our designated supplierMicros. See Manuals and Item 11 for more details about computer systems and software.

We do not presently require you to purchase or lease any specific computer hardware or software directly fromus but we may in the future establish proprietary sales reporting systems as we consider appropriate for theaccurate and expeditious reporting of Gross Revenues, and you must fully cooperate with us in implementingany such system at each Zoyo Unit Franchise location or Regional Developer sales office, and at your expense,equip the offices with such sales recording devices as we may require, which may include sales recording cashregisters or devices which will telecommunicate Gross Revenues to us on a daily basis.

We may require additional items to be purchased by you from certain manufacturers or suppliers in the future.We will notify you of such requirements by sending to you such changes by modifying the Manuals or sendingto you other written forms of communication.


Item 9FRANCHISEE’S OBLIGATION


This table lists your principal obligations under the franchise and other agreements. It will help you findmore detailed information about your obligations in these agreements and in other items of this disclosuredocument.

ObligationSection

in Franchise AgreementItem in Disclosure

Documenta. Site selection andacquisition/lease

Section 4.1 Items 7, 11

b. Pre-opening purchases/leases Sections 4.1, 4.2, 4.4 and 4.5 Items 5, 7 and 8c. Site development and otherpre-opening requirements

Sections 4.2, 4.3, 4.4 and 4.5 Items 7, 8 and 11

d. Initial and ongoing training Sections 5.2, 6.1 and 10.7 Items 7 and 11e. Opening Sections 4.2, 4.3 and 4.6 Items 7 and 11f. Fees Sections 2, 3.4, 4.4, 5.2, 6.1, 6.2, 8.3, 10.1,

10.2, 10.3, 10.8, 11.1, 11.2, 11.3, 12, 13.2,14.5, 15.3, 16.1, 16.3, 16.5, 16.7, 17.9 and17.10

Items 5, 6, 7, 8 and 11

g. Compliance with standardsand policies/operating manual

Sections 3.4, 4.1, 4.3, 4.4, 4.5, 6.2, 6.3, 7.1,10 and 13.1

Items 8, 11, 14, 15 and 16

h. Trademarks and proprietaryinformation

Sections 7 and 9 Items 13 and 14

i. Restrictions onproducts/services offered

Section 10.2, 10.3 Items 8 and 16

j. Warranty and customerservice requirements

Section 10.3, 10.6 and 10.7 Not applicable

k. Territorial development andsales quotas

Section 4 Item 12

l. On-going product/servicepurchases

Sections 4.4, 4.5, 6.1, 10.2, 10.3, 10.8, 10.9and 11

Items 6, 8 and 11

m. Maintenance, appearance,and remodeling requirements

Sections 3.4, 4.2, 10.1 and 10.5 Items 7 and 11

n. Insurance Section 10.8 Items 6, 7 and 8o. Advertising Section 11 Items 6, 7, and 11p. Indemnification Section 8.3, 10.8 and 16.5 Items 6 and 13q. Owner’s participation/management/ staffing

Sections 5.1 and 10.7 Items 11 and 15

r. Records and reports Sections 12, 13.2 Item 6s. Inspections and audits Section 13 Item 6t. Transfer Section 14 Items 6 and 17u. Renewal Section 3.4 Items 6 and 17v. Post-termination obligations Sections 9.2, 9.3 and 16 Item 17w. Non-competition covenants Sections 5.1, 9.3, 14.5, 16, 17.1 and 17.9 Item 17x. Dispute resolution Sections 17.8, 17.9, 17.10, 17.11 and 17.12 Item 17y. Other Not applicable Not applicable



This table lists your principal obligations under the franchise and other agreements. It will help you findmore detailed information about your obligations in these agreements and in other items of this disclosuredocument.

Obligation

Sectionin Regional Developer Agreement

(“RDA”)Item in Disclosure

Documenta. Site selection andacquisition/lease

Sections 3.2 and 3.3 of RDA Item 11

b. Pre-opening purchases/leases Sections 6 and 7 of RDA Items 5, 7 and 8c. Site development and otherpre-opening requirements

Not applicable Items 7, 8, and 11

d. Initial and ongoing training Sections 6.1, 6.2, and 6.4 of RDA Items 7 and 11e. Opening Section 3.2 of RDA Items 7 and 11f. Fees Sections 2, 5, 6.2, 6.3(c), 6.4, 6.5, 7.6,

7.7, 7.8, 11.3(i), 14.1, 14.2, 15.2 and15.15 of RDA

Items 5, 6, 7, 8 and 11

g. Compliance with standards andpolicies/operating manual

Sections 6 and 7 of RDA Items 11, 14, 15 and 16

h. Trademarks and proprietaryinformation

Sections 9 and 10 of RDA; andConfidentiality Agreement

Items 13 and 14

i. Restrictions onproducts/services offered

Section 1 of RDA Items 8 and 16

j. Warranty and customer servicerequirements

Sections 6.7(g) and 7.1 of RDA Not applicable

k. Territorial development andsales quotas

Section 3.1 of RDA Item 12

l. On-going product/servicepurchases

Sections 6 and 7 of RDA Items 6, 8 and 11

m. Maintenance, appearance, andremodeling requirements

Not applicable Items 7 and 11

n. Insurance Section 7.5 and 7.6 of RDA Items 6, 7 and 8o. Advertising Sections 6.6, 7.7 and 7.8 of RDA Items 6, 7, and 11p. Indemnification Section 15.2 of RDA Items 6 and 13q. Owner’s participation/management and staffing

Not applicable Items 11 and 15

r. Records/reports Sections 7.9 and 7.10 of RDA Item 6s. Inspections/audits Section 6.9 of RDA Item 6t. Transfer Section 11 of RDA Items 6 and 17u. Renewal Section 5 of RDA Items 6 and 17v. Post-termination obligations Section 13.2 of RDA Item 17w. Non-competition covenants Section 12 of RDA Item 17x. Dispute resolution Sections 14, 15.7, 15.8, 15.9 and 15.10

of RDAItem 17

y. Other Not applicable Not applicable


Item 10FINANCING

We do not offer direct or indirect financing. We do not guarantee your note, lease or obligation.

Item 11FRANCHISOR’S ASSISTANCE, ADVERTISING,

COMPUTER SYSTEMS AND TRAININGIf you are a Unit Franchisee and you locate your Zoyo Unit Franchise in a Regional Developer’s

Development Area or if we appoint a Regional Developer for an area that encompasses your Zoyo UnitFranchise after you open, our area developer will perform some or all of the obligations that we describe in thisItem 11 for us. The Franchise Agreement allows us to delegate these responsibilities. The term “we” in thisItem 11 (and in other items of this disclosure document describing our obligations under the FranchiseAgreement) refers interchangeably to us and to the Regional Developer whom we may appoint to service ageographic area that includes your Zoyo Unit Franchise.

Except as listed below, we are not required to provide you with any assistance.

Pre-Opening Assistance:


Before you open your Zoyo Unit Franchise for business, we, the Regional Developer, or our designeewill:

1. Designate your Territory (Franchise Agreement – Section 3.3).

2. Review and approve or disapprove your proposed Zoyo Unit Franchise site (see FranchiseAgreement – Section 3.3 and 4.1). Our approval of a location for your Zoyo Unit Franchise is in no way to beconsidered as any kind of guarantee by us as to the success of your Franchise location.

3. Identify the products, materials, supplies, and services you must use to develop and operateyour Zoyo Unit Franchise, the minimum standards and specifications that you must satisfy in developing andoperating the Zoyo Unit Franchise, and the designated and approved suppliers from whom you must or maybuy or lease these items (which might be limited to or include us or our affiliates) (Franchise Agreement –Section 6.1).

4. Provide you access to our Manuals, which contains our mandatory and suggested specifications,standards and procedures for operating your Franchise (Franchise Agreement – Sections 6.1-6.2).

5. Provide you with specifications for the computer system for your Zoyo Unit Franchise(Franchise Agreement – Section 4.4). See below for additional information about these specifications.

6. Provide you with guidance and assistance in the following areas: (a) the products and servicesauthorized for sale by the Zoyo Unit Franchise, and specifications, standards, and operating procedures used byZoyo Unit Franchises; (b) purchasing approved equipment, furniture, furnishings, signs, products, operatingmaterials, and supplies; (c) development and implementation of local advertising and promotional programs;(d) administrative, bookkeeping, accounting, inventory control and general operating and managementprocedures; (e) establishing and conducting employee training programs at the Zoyo Unit Franchise; (f) changesin any of the above that occur from time to time; and (g) specify any approved brands, types or models ofequipment, furniture, fixtures, and signs (Franchise Agreement – Section 6.1).


7. Provide you with an initial training program as described below (Franchise Agreement –Section 5.2)


Before your Regional Developer Franchise opens for business, we or our designee will:

1. After you sign the Regional Developer Agreement, and not later than 45 days before you openyour Regional Developer Franchise for business, provide the initial training program for our RegionalDeveloper Franchises as described below (Regional Developer Agreement – Section 6.2).

2. Lend to you one copy of our Manuals, which contains our mandatory and suggestedspecifications, standards and procedures for operating your Regional Developer Franchise (Regional DeveloperAgreement – Section 6.3).

3. Prepare or register any disclosure documents or other documentation that must be prepared,amended, or registered for you to fulfill your responsibilities to solicit, recruit, and screen prospectivefranchisees (Regional Developer Agreement – Section 6.5).

4. Review and approve or disapprove your advertising, marketing, and promotional or websitematerials (Regional Developer Agreement – Sections 7.8). See the remainder of this Item 11 for additionalinformation about our advertising-related requirements and approval process.

5. If you are a Regional Developer who chooses to open a Pilot Franchise for business, we or ourdesignee will review and approve or disapprove your proposed Pilot Franchise site (see Regional DeveloperAgreement – Section 3.2). Prior to the opening of a Pilot Franchise, we will provide the Regional Developerwith our initial training program and opening assistance for Zoyo Unit Franchises pursuant to the terms of aFranchise Agreement for the Pilot Franchise. The Franchise Agreement for each Zoyo Unit Franchise openedby Regional Developer after the Pilot Franchise will provide that the Regional Developer will receive from usonly the classroom training portion of our initial training program, and will not provide on-site assistance to theRegional Developer (see Regional Developer Agreement – Section 6.1). Our approval of a location for yourPilot Franchise is in no way to be considered as any kind of guarantee by us as to the success of your PilotFranchise location.

Post-Opening Assistance:

Zoyo Unit Franchise

After your Zoyo Unit Franchise opens for business, we or our designee will:

1. Continue to provide you with guidance and assistance in the following areas: (a) the productsand services authorized for sale by the Zoyo Unit Franchises, and specifications, standards, and operatingprocedures used by Zoyo Unit Franchises; (b) purchasing approved equipment, furniture, furnishings, signs,products, operating materials, and supplies, where applicable; (c) development and implementation of localadvertising and promotional programs; (d) administrative, bookkeeping, accounting, inventory control andgeneral operating and management procedures; (e) establishing and conducting employee training programs atthe Zoyo Unit Franchise; (f) changes in any of the above that occur from time to time; and (g) specify anyapproved brands, types or models of equipment, furniture, fixtures, and signs (Franchise Agreement – Section6.1).

2. Continue lending to you a copy of our Manuals (Franchise Agreement – Sections 6.1-6.3).


3. Allow you to use our Marks and confidential information in operating your Zoyo Unit Franchise(Franchise Agreement – Sections 7 and 9). You must use the Marks and confidential information only asauthorized in the Franchise Agreement and Manuals.

4. Review and approve suppliers and distributors you would like to use (Franchise Agreement –Section 10.3).

5. As we deem appropriate, provide you with additional, on-going, and supplemental trainingprograms (Franchise Agreement – Section 5.2).

7. Review and approve or disapprove your advertising, marketing, and promotional materials(Franchise Agreement – Section 11.2).

8. As we deem advisable, conduct inspections or audits of your Franchise, including evaluations ofits training methods, techniques, and equipment; its staff; and the services rendered to its customers (FranchiseAgreement – Section 13.1-13.2). We may provide you with additional guidance and training based on theresults of these inspections or audits.

9. At your request, provide you with one or two weeks opening and post-opening assistancestarting on the day your Zoyo Unit Franchise opens for business. If you request our opening and post openingassistance, you will be responsible to reimburse us for the costs incurred by us for this assistance (including butnot limited to the costs of travel, lodging and meals for our trainer(s) or employee(s) and our trainer(s) oremployee(s)’ salary).

Regional Developer Franchise

After your Regional Developer Franchise opens for business, we or our designee will:

1. As we deem appropriate, and in our sole discretion, provide you with additional or refreshertraining programs (Regional Developer Agreement – Section 6.2).

2. Continue lending to you a copy of our Manuals (Regional Developer Agreement – Section 6.3).

3. Provide you with general guidance though bulletins or other written materials (RegionalDeveloper Agreement – Section 6.4).

4. If we agree to do so, provide you with additional or special guidance, training, or assistance thatyou request (Regional Developer Agreement – Section 6.4). If we provide this training, you must pay all of ourthen-applicable charges, including all per-diem fees and travel, lodging, meal, and living expenses of ourpersonnel.

5. As necessary, amend, maintain, or renew any documentation or registrations necessary for youto continue to solicit prospective franchisees (Regional Developer Agreement – Section 6.5).

6. Approve or disapprove prospective Zoyo Unit Franchisees (“Prospective Franchisees”)recommended by you, and their proposed franchise locations (Regional Developer Agreement – Section 6.6).You must advertise for, solicit, recruit, and screen Prospective Franchisees to purchase Zoyo Unit Franchises inyour Development Area. You must investigate each Prospective Franchisee and its proposed Zoyo UnitFranchise site to determine if they meet our standards and policies. After ensuring that a Prospective Franchiseemeets our standards, you may recommend to us the approval of the Prospective Franchisee. You must provideus with all information that we may request to evaluate your recommendation. We may approve or reject aProspective Franchisee for any reason. If we disapprove any Prospective Franchisee, we will notify you of ourreasons for the disapproval. If we approve the Prospective Franchisee, you must provide the Prospective


Franchisee with a copy of our then-current Franchise Disclosure Document and of our Franchise Agreement forthe Prospective Franchisee to sign.

7. Review and approve or disapprove your advertising, marketing, and promotional or websitematerials as described below (Regional Developer Agreement – Sections 7.7-7.8).

8. Pay you any compensation that you are owed under Section 8 of the Regional DeveloperAgreement, summarized in the table below:

Commission Amount When PaidSection of Area

Developer AgreementInitial FeeCommission

We will pay you 50% of the total initialfranchise fee paid to us for Zoyo UnitFranchises in your Development Area,minus any applicable broker’s fees orsales commissions

On the last day of the month following themonth in which all conditions of paymenthave been met and you have provided therequired services

8.1(a)

Royalty FeesCommission

We will pay you 40% of Royalty feeswe receive from Zoyo Unit Franchisesin your Development Area

On the last day of the month following themonth after all conditions of payment havebeen met and you have provided therequired services and reports

8.1(b)

9. Allow you to continue using our Marks and confidential information in operating your RegionalDeveloper Franchise (Regional Developer Agreement – Sections 9-10).

Site Selection/Time to Open

Zoyo Unit Franchise

If you are a Zoyo Unit Franchise, you must obtain our approval of the proposed franchise site within 120 daysafter the signature of the Franchise Agreement. You must then obtain legal possession of the proposed sitewithin 30 days of its approval by us. Finally, you must open your Zoyo Unit Franchise no later than 120 daysafter obtaining legal possession of a location we approve. We estimate that Zoyo Unit Franchises will typicallyopen for business approximately 3 to 9 months after signing the Franchise Agreement. Factors affecting thislength of time include locating a site and signing a lease, obtaining business and construction permits,construction or remodeling of the site, completion of required training, financing arrangements, local ordinanceand building code compliance, delivery and installation of equipment or supplies, and hiring and training of yourstaff.

We will provide you with our general site selection and evaluation criteria. You are solely responsible,however, for locating and obtaining a site which meets our standards and criteria and that is acceptable to us.The general site and evaluation criteria which you should consider include demographic characteristics of theproposed location, traffic patterns, parking, the predominant character of the neighborhood, the proximity toother businesses, and other commercial characteristics, and the proposed location, size of premises, appearanceand other physical characteristics. We will notify you in writing within 30 days after we receive your completesite report and other materials we request whether the proposed site satisfies our site selection criteria. Ourreview of a site for the Zoyo Unit Franchise does not represent any recommendation or guaranty as to thesuccess of the proposed site.


If you are a Regional Developer Franchise, you must open your Regional Developer Franchise within 45 daysafter you receive your initial training from us or 90 days after signing your Regional Developer Agreement,whichever occurs first. We estimate that Regional Developer Franchises will typically open for businessapproximately 2 to 3 months after signing the Regional Developer Agreement if you choose not to operate a


Pilot Franchise, or approximately 3 to 9 months if you choose to operate a Pilot Franchise. Factors affecting thislength of time include locating a site and signing a lease, obtaining business and construction permits,construction or remodeling of the site, completion of required training, financing arrangements, local ordinanceand building code compliance, delivery and installation of equipment or supplies, and hiring and training of yourstaff. You may operate your Regional Developer Franchise from any location within the Development Area thatwe approve.

Advertising and Marketing

Advertising by You

You may develop, at your cost, advertising and promotional materials for use by your Zoyo Unit Franchise orRegional Developer Franchise, but may not use them until after we have approved them in writing. You mustsubmit to us for our approval samples of all advertising and promotional materials not prepared or previouslyapproved by us that you wish to use. We will not unreasonably withhold our approval. If you do not receiveour written disapproval within 15 days from the date we receive the materials, the materials will be deemed tohave been approved. Any materials submitted to us for approval will become our intellectual property.

You must conduct grand opening advertising and spend between $500 and $3,000 in advertising during a 90 dayperiod beginning 30 days before you open your Zoyo Unit Franchise and ending 60 days after you open yourZoyo Unit Franchise.

You must spend up to 2% of Gross Revenues each year on approved local advertising and promotions in yourlocal geographic area. Currently, we do not require you to spend any amount on local advertising.

If we decide to establish one, then you are also required to join and participate in the Zoyo AdvertisingCooperative (“Co-op”), which is an association of all other Franchises whose Franchises are located within yourArea of Dominant Influence (“ADI”). An ADI is a geographic market designation that defines a broadcastmedia market, consisting of all counties in which the home market stations receive a preponderance of viewing.One function of the Co-op is to establish a local advertising pool, of which the funds must be used for Zoyo UnitFranchise or Regional Developer Franchise advertising only and for the mutual benefit of each Co-op member.The Franchise must contribute to the Co-op in accordance with the rules and regulations of the Co-op, asdetermined by its members by a majority vote. Amounts contributed to the advertising pool by a Franchise(which may not, under any circumstances, exceed 3% of the Franchise’s Gross Revenues) may be considered asspent for local advertising, and therefore toward the minimum local advertising requirement that we determineduring each calendar year. Our affiliates located in an ADI with a Co-op will contribute to the Co-op in thesame amount as other Franchises in the ADI. Members of the Co-op will administer the Co-op. We reserve theright to require the Co-op to prepare financial statements. We have the power to form, change, dissolve, ormerge a Co-op.

Advertising by Us

We will establish and operate an advertising and promotional fund (the “Ad Fund”) to advertise and promoteZoyo Unit Franchises. You must contribute 2% of your weekly Gross Revenues to the Ad Fund. Any ZoyoUnit Franchise owned by us must contribute to the Ad Fund on the same basis as the majority of franchisees.We will direct all marketing programs financed by any Ad Fund, and will have sole discretion over the creativeconcepts, materials and endorsements used by the Ad Fund, and the geographic, market, and media placementand allocation of the Ad Fund.

The Ad Fund may be used to pay for the expenses we incur in connection with the general promotion of the Marksand the System, including the cost of formulating, developing and implementing advertising, marketing,promotional and public relations campaigns; and the reasonable costs of administering the Ad Fund, including thecost of employing advertising, public relations and other third party agencies to assist us and providing


promotional brochures and advertising materials to Zoyo Neighborhood Yogurt® shops and to regional and localadvertising cooperatives, as well as accounting expenses and the actual costs of salaries and fringe benefits paid toour employees engaged in administration of the Ad Fund. We will not use Ad Fund contributions for advertisingthat is principally a solicitation for the sale of franchises. As of our last fiscal year ended December 31, 2013,the Ad Fund was spent as follows: 80% on internet advertising; 10% on promotional activities; and 10% onadministrative expenses.

We may spend in any fiscal year an amount greater or less than the aggregate contributions to the Ad Fund inthat year, and the Ad Fund may borrow from us or other lenders to cover the Ad Fund’s deficits. If not all thecontributions to the Ad Fund are spent in the fiscal year in which they accrue, we will invest the surplus forfuture use by the Ad Fund. We will prepare an annual statement of monies collected and costs incurred by anAd Fund, and will provide a copy of the previous fiscal year’s statement to you upon written request. At thistime we do not intend to have the Ad Fund audited but may choose to do so in the future.

We do not have to ensure that the Ad Fund’s expenditures in or affecting any geographic area are proportionateor equivalent to the contributions made by Zoyo Unit Franchises in that geographic area, or that any Zoyo UnitFranchise will benefit from the development of advertising and marketing materials or the placement ofadvertising by the Ad Fund directly or in proportion to the franchise’s contribution to the Ad Fund. We assumeno direct or indirect liability or obligation to you or any other Zoyo Unit Franchise in connection with theestablishment of an Ad Fund, or the collection, administration, or disbursement of monies paid into an Ad Fund.

We currently do not have an advertising council composed of franchisees that advises us on advertising policies.


We require you to spend at least $1,000 per quarter to market and promote the sale of new Zoyo Unit Franchisesin your Development Area. We reserve the right to increase this amount up to a maximum of $1,500, beginningafter year 2 of the Regional Developer Agreement. Although we may provide you with promotional andrecruiting materials to solicit prospects, you are responsible for arranging media placement and for all mediaexpenses. All advertising which you conduct is subject to our prior approval.

Website and Social Media

You must obtain our prior written approval to operate a website separate from our website. You must submit tous for our approval (in our sole discretion) samples of the proposed website’s domain name, format, and visibleand non-visible content before using or changing the website. Your website must include all information orhyperlinks that we require. We may revoke our approval of a previously approved website at any time bysending you notice of the revocation. You must cease to use the revoked advertising immediately upon receiptof our notice. Any activities on the internet, including social and professional networking sites, must complywith our social media policy.

Computer System

You must use our required computer hardware and software and our required POS material (“ComputerSystem”) to operate your Zoyo Unit Franchise or Regional Developer Franchise. We may require that youobtain the Computer System, software licenses, maintenance and support services, and other related servicesfrom the suppliers we specify (which may include or be limited to us or our affiliates). We may periodicallymodify the specifications for, and components of, the Computer System. These modifications or othertechnological developments may require you to purchase, lease, or obtain by license new or modified computerhardware or software, and obtain service and support for the Computer System. The Franchise Agreement andRegional Developer Agreement do not limit the frequency or cost of these changes, upgrades, or updates. Wehave no obligation to reimburse you for any Computer System costs. Within 60 days after you receive notice


from us, you must obtain the components of the Computer System that we designate and ensure that yourComputer System, as modified, is functioning properly.

We may charge you a reasonable fee for (i) installing, providing, supporting, modifying, and enhancing anyproprietary software or hardware that we develop and license to you; and (ii) other Computer System-relatedmaintenance and support services that we or our affiliates provide to you. If we or our affiliates license anyproprietary software to you or otherwise allow you to use similar technology that we develop or maintain, thenyou must sign any software license agreement or similar instrument that we or our affiliates may require.

You will have sole responsibility for: (1) the acquisition, operation, maintenance, and upgrading of yourComputer System; (2) the manner in which your Computer System interfaces with our computer system andthose of other third parties; and (3) any and all consequences that may arise if your Computer System is notproperly operated, maintained and upgraded.

We reserve the right to require you to purchase our proprietary software. If we do, your Computer System mustbe capable of supporting our required software, with internet capability, and accessible by us remotely. Youmay also be required to purchase certain customer contact software and financial software, and to pay monthlycharges associated with your Computer System. The specification regarding the required hardware and softwarefor your Computer System is contained in the Manuals. We reserve the right to have independent access to allinformation generated and stored in your Computer System at any time, and reserve the right to access yourComputer System without prior notice to you.

Currently, we require a desktop, iPad, point-of-sale system and a scale. You will purchase a desktop from anysupplier who meets our specification’s and the rest of the Computer System from M9 Creations. We estimatethe cost of purchasing the Computer System and related software, including the Software, will range from$6,000 to $9,000. We estimate that the annual costs of any optional or required maintenance update, upgradingor support contract for your Computer System will range from $500 to $3,000, including the M9 optionalmaintenance coverage. We do not presently require you to purchase or lease computer hardware from us. Youwill also be required to pay the monthly cost of maintaining high speed internet access at your site. We estimatethat this cost will be approximately $75/month.

Also, you must review, understand and comply with the Payment Card Industry (PCI) Data Security Standards:https://www.pcisecuritystandards.org/. As part of your compliance obligations with PCI Data SecurityStandards, we may require you to participate in our PCI compliance program and pay us our then-currentcompliance fee.

We have independent access to certain operational and financial information and data produced by yourComputer System. There are no contractual limitations on our right to access the information and data.

Manuals

Exhibit D to this Disclosure Document contains the Table of Contents for our Manuals. The total number ofpage of the Manuals is 167. The Manuals may be composed of or include audiotapes, videotapes, computerdisks, compact disks, or other written or intangible materials. We may make all or part of the Manuals availableto you through various means, including the Internet. The Manuals contains our System Standards andinformation about your other obligations under the Franchise Agreement or Regional Developer Agreement.We may modify the Manuals periodically to reflect changes in System Standards. You must keep your copy ofthe Manuals current, and in a secure location. If you and we have a dispute over the contents of the Manuals,then our master copy of the Manuals will control. The Manuals are confidential, and you may not copy,duplicate, record or otherwise reproduce any part of it. If your copy of the Manuals are lost, destroyed orsignificantly damaged, then you must obtain a replacement copy at our then-applicable charge.


Training Program

Zoyo Unit Franchise

Two weeks before your Zoyo Unit Franchise opens for business, we will provide to you, other members of yourmanagement team, and any agents you employ our initial training program for Zoyo Unit Franchises at ourtraining location in Phoenix, Arizona or another location we designate. The persons enrolled in the initialtraining must complete this initial training program to our satisfaction. The training program includes classroominstruction and Zoyo Unit Franchise operation training. We do not charge a fee for the initial training for up tothree attendees designated by you or us. The persons attending the initial training must include you and theGeneral Manager if you choose to hire a General Manager. If you want to have more than three attendees at theinitial training, you will have to pay us a fee in the amount of $2,500 per additional attendee before the trainingbegins. However, we may, in our sole discretion, refuse to train additional attendees depending on trainingspace and availability. You are responsible for all out-of-pocket expenses in connection with the initial trainingprogram including costs and expenses of transportation, lodging, meals, wages and employee benefits.All persons who attend our initial training program must complete it to our satisfaction, which will be decidedthrough observation and a written test. If we, in our sole discretion, determine that you are unable tosatisfactorily complete such program, then we may, at our sole discretion, either (1) require you to attendadditional training at your expense, or (2) terminate the Franchise Agreement.

If we, in our sole discretion, determine that any General Manager or employee whom we require to attend anyInitial Training program is unable to satisfactorily complete such program, then you must not hire that person,and must hire a substitute General Manager or employee (as the case may be), who must enroll in the InitialTraining program within 15 days thereafter, and complete the Initial Training to our satisfaction.

Our initial training program currently includes the following:

TRAINING PROGRAM

SubjectHours of Classroom

TrainingHours of On the Job

Training LocationP.O.S./RegisterKnowledge 6 hours 4 hours Designated certified management

store, or other designated location

Equipment 2 hours 2 hours Designated certified managementstore, or other designated location

Product 1 hour 1 hour Designated certified managementstore, or other designated location

Profit & Loss 2 hours 2 hours Designated certified managementstore, or other designated location

Food Cost 2 hours 2 hours Designated certified managementstore, or other designated location

Ordering Inventory 2 hours 2 hours Designated certified managementstore, or other designated location

Labor/Schedule 2 hours 2 hours Designated certified managementstore, or other designated location

Mixology 1 hour 1 hour Designated certified managementstore, or other designated location

Prep 1 hour 1 hour Designated certified managementstore, or other designated location

Customer Service 1 hour 1 hour Designated certified managementstore, or other designated location


SubjectHours of Classroom

TrainingHours of On the Job

Training Location

Travel Path 1 hour 1 hour Designated certified managementstore, or other designated location

Cash Manage 1 hour 2 hours Designated certified managementstore, or other designated location

Total Hours 22.0 hours 21.0 hours

Explanatory Notes:

x Most of these subjects are integrated throughout the two-week training program, comprised of 22 hoursof classroom training, 21 hours of on-the-job training and an additional 37 hours of personalizedtraining customized to the specific needs of each attendee. This personalized training will cover someor all of the same subjects and training that was provided in the 22 hours of classroom training and inthe 21 hours of on-the-job training. We plan to be flexible in scheduling training. There currently areno fixed (i.e., monthly or bi-monthly) training schedules.

x Although the individuals instructing the training program may vary, our instructors will include some ofthe persons listed in Item 2, other representatives or any other persons with experience in the subjectmatters included in the training. Michael Barth is in charge of the training program. Michael has beenour Director of Operations since August 2011 and has over 5 years of management experience operatingbusinesses.

x We also may offer additional or refresher training courses periodically. Some of these courses may bemandatory, and some may be optional. These courses may be conducted at our headquarters or at anyother locations we select.

x You are responsible for all out-of-pocket expenses in connection with all training programs, includingcosts and expenses of transportation, lodging, meals, wages and employee benefits. We reserve theright to impose reasonable charges for training classes and materials in connection with such trainingcourses. We will notify you of any additional charges before you or your employees enroll in a course.

x All classes are scheduled by advance written notice to all franchisees. Our class cancellation policieswill be included in the written notice of class schedules.

x The instruction materials for our training programs include handouts, the Manuals, and lectures.

We may hold mandatory and optional training programs for you and your staff regarding new techniques,services or products, and other appropriate subjects. We may decide to hold these training programs at our owninitiative, or in response to your request for additional or special training. We will determine the location,frequency, and instructors of these training programs. We may charge you a daily attendance fee in an amountto be set by us for each owner, officer, director, manager, or employee of yours who attends any mandatory oroptional training program (see Item 6). You must pay this fee to us in a lump sum before the training programbegins. You must pay for all travel, lodging, meal, and personal expenses related to your attendance and theattendance of your personnel. You must attend a minimum of 75% of any mandatory ongoing training programsthat we may offer. At this time, we do not know the number of training sessions or the amount of time ourtraining program will require annually.


Our initial training program is available to all Regional Developer Owners and one additional person. Beforeopening for business, the Regional Developer Owner must attend and complete the initial franchisemanagement-training program to our satisfaction. This initial training program is in addition to the initial


training program for any Pilot Franchise you open. We provide this initial training free of charge to up to twopersons; however, you must pay the wages, food, lodging and travel expenses for all of your attendees. Youmust pay a training fee of $750 per person for each additional member, representative or employee of yourfranchise that requires initial training. The initial training program will last for approximately 3 days, and willbe conducted by us or our designee in Chandler, Arizona, or another location we designate. All persons whoattend our initial training program must complete it to our satisfaction. If we determine that Regional Developercannot complete initial training to our satisfaction, we may, at our option, either (1) require Regional Developerto attend additional training at Regional Developer’s expense (for which we may charge reasonable fees), or (2)terminate this Agreement.

If we, in our sole discretion, determine that any General Manager or employee whom we require to attend anyInitial Training program is unable to satisfactorily complete such program, then you must not hire that person,and must hire a substitute General Manager or employee (as the case may be), who must enroll in the InitialTraining program within 15 days thereafter, and complete the Initial Training to our satisfaction.

Our initial training program currently includes the following:

TRAINING PROGRAM

Subject (1)Hours of Classroom

Training (2)Hours of On theJob Training Location

Introduction to Zoyo 0.5 hours 0 hours Chandler, AZ, or otherdesignated location

The Power of Franchising 1.5 hours 0 hours Chandler, AZ, or otherdesignated location

Franchisee Profile 1.5 hours 0 hours Chandler, AZ, or otherdesignated location

Legal Issues & TheFranchise Sales Process 1.5 hours 0 hours Chandler, AZ, or other

designated locationDeveloping a ComplianceSystem 1.0 hour 1.0 hours Chandler, AZ, or other

designated locationFinancing the Franchise 1.5 hours 0 hours Chandler, AZ, or other

designated locationLead Generation 1.0 hour 0 hours Chandler, AZ, or other

designated locationBusiness Brokers 1.0 hour 0 hours Chandler, AZ, or other

designated locationFour-Step Sales Process 1.5 hours 0 hours Chandler, AZ, or other

designated locationSales Techniques / BuildingRelationships / Rapport 1.0 hour 1.0 hours Chandler, AZ, or other

designated locationBuilding and Maintaining aStrong Region 1.0 hour 1.0 hours Chandler, AZ, or other

designated locationQuestions andAnswers/Review 1.0 hours 0 hours Chandler, AZ, or other

designated locationTotal Hours: 14.0 hours 3.0 hours

Explanatory Notes:

x Supplemental training may be completed through a series of webinars or other technology where theRegional Developer can be trained online and in its own office without the need to travel to the centraltraining location. We plan to be flexible in scheduling training. There currently are no fixed (i.e.,monthly or bi-monthly) training schedules.


x On the job training may be provided, at our sole discretion, on an “as needed” basis as the RegionalDevelopers return to their offices, and may be conducted primarily by telephone, internet or othertechnology.

x Michael Barth is in charge of our training program. Michael has been our Director of Operations sinceAugust 2011 and has over 5 years of management experience operating businesses. Alex Apodaca alsowill participate in training. Alex has been our Chief Operating Officer since August 2011 and the ChiefOperating Officer of Zoyo, LLC since January 2010. Mr. Apodaca also has been Chief OperatingOfficer of First Cup, LLC (d/b/a Dunkin Donuts) in Chandler, Arizona, since January 2008. In addition,the persons listed in Item 2 or other representatives with relevant work experience in the designatedsubject area may assist in the training.

x We also may offer additional or refresher training courses from time to time. Some of these coursesmay be mandatory, and some may be optional. These courses may be conducted at our headquarters orat any other locations we select.

x You will be responsible for all out-of-pocket expenses in connection with all training programs,including costs and expenses of transportation, lodging, meals, wages, telephone costs, webinar costsand employee benefits. We reserve the right to impose reasonable charges for training classes andmaterials in connection with such training courses. We will notify you of any additional charges beforeyou or your employees enroll in a course.

x All classes are scheduled by advance written notice to all franchisees. Our class cancellation policieswill be included in the written notice of class schedules.

x The instruction materials for our training programs include handouts, the Manuals, and lectures.

x Training materials for The Lifepilot Program will be provided to Regional Developers, who areencouraged to study the materials on their own time.

In addition, if you develop and open a Pilot Franchise, we will provide you with on-site assistance in openingthe Pilot Franchise as we determine.

As we deem appropriate and in our sole discretion, we will provide you with additional or refresher trainingprograms. You will be required to participate in periodic webinars and sales calls scheduled by us for RegionalDeveloper Franchises. You may also be required to attend a national business meeting or convention of up to 3days each year. We may require you to attend up to 7 days of additional or refresher training courses each year.We will determine the location, frequency, and instructors of these training programs. We may chargereasonable fees for any courses, conventions, webinars, sales calls, and programs (see Item 6). You must alsopay for all travel, lodging, meal, and personal expenses related to your attendance and the attendance of yourpersonnel.

Item 12TERRITORY


Your Franchise Agreement grants you protected territory composed of a circular area having a 1.5 mile radiusaround your premises (the “Territory”). You will have the right to solicit, sell, market or distribute Zoyoproducts and services to individuals and businesses both inside and outside of the Territory, but you may notopen or operate any additional outlet within or outside of the Territory. As long as you remain in compliancewith your Franchise Agreement, we will not establish additional Zoyo Unit Franchises owned by us, our


affiliates or other Unit Franchisees in your Territory except for “Captive Market Locations.” The term “CaptiveMarket Locations” includes regional, enclosed or similarly situated shopping centers or malls, airports or othertransportation terminals, sports facilities, hospitals, college and university campuses, corporate campuses, adepartment within an existing retail store, hotels, grocery stores and other locations that do not have direct streetaccess. You will not receive an exclusive territory because your Protected Territory does not include any“Captive Market Locations.” You will face competition from other franchises, from outlets that we own, orfrom other channels of distribution or competitive brands that we control.

Your Territory may not be changed unless you and we both agree to the change in writing. You may relocateyour Zoyo Unit Franchise only with our prior written consent, which will not unreasonably be withheld. Youwill need to build out the Zoyo Unit Franchise consistent with our then-current standards for new Zoyo UnitFranchises.

We and our affiliates reserve the right to do the following without compensation to you:

(a) establish and operate Zoyo Unit Franchises and grant rights to other persons to establish andoperate Zoyo Unit Franchises, on any terms and conditions we deem appropriate and at any locations other thanin your Territory;

(b) provide and grant rights to other persons to provide goods and services similar to or competitivewith those provided by Zoyo Unit Franchises to customers located within or outside a Territory, whetheridentified by the Marks or other trademarks or service marks, through any distribution channel other than ZoyoUnit Franchises located within a Territory (including sales of products via mail order, catalogs, toll-freetelephone numbers and electronic means including the Internet);

(c) acquire the assets or ownership interest of one or more businesses providing products andservices similar to those provided at Zoyo Unit Franchises, and franchising, licensing or creating similararrangements with respect to these businesses once acquired, wherever these businesses (or the franchisees orlicensees of these businesses) are located or operating, including within your Territory;

(d) be acquired (regardless of the form of transaction) by a business providing products andservices similar to those provided at Zoyo Unit Franchises, or by another business, even if such businessoperates, franchises or licenses competitive businesses within a Territory;

(e) provide or offer Zoyo products and services to customers within or outside of a Territorythrough Zoyo affiliates or dealers of Zoyo products and services; and

(f) operate or grant franchises to operate Zoyo Neighborhood Yogurt shops at Captive MarketLocations.

We do not grant to you any options, rights of first refusal or similar rights to acquire additionalfranchises within a particular territory.

Neither we nor any affiliate operates, franchises, or has any current plans to operate orfranchise any business selling the products and services authorized for sale at a Zoyo NeighborhoodYogurt shop under any other trademark or service mark.


Your Regional Developer Agreement grants you the non-exclusive right to operate in a defined DevelopmentArea, the specific size and location of which depend on population demographics, your capacity to recruitprospective Zoyo Unit Franchisees and provide Support Services in the Development Area, and the number ofZoyo Unit Franchises we believe the Development Area can sustain. You and we will mutually agree on your


Development Area when you sign the Regional Developer Agreement. There is no specific minimum ormaximum area that we must include in your Development Area. Your Development Area may not be changedunless you and we both agree to the change in writing. You may not operate a physical office outside of theDevelopment Area. You will not receive an exclusive territory. You may face competition from otherfranchisees, from outlets that we own, or from other channels of distribution or competitive brands that wecontrol.

If you are in compliance with your Regional Developer Agreement and the Franchise Agreement for your PilotFranchise (if any), then we and our affiliates will not operate, establish, grant, or operate in your DevelopmentArea another Regional Developer Franchise offering Zoyo Unit Franchises, or any Zoyo Unit Franchises notrequired to be developed under your Regional Developer Agreement. The continuation of your right to operatea Regional Developer franchise in your Development Area, or to receive royalties for any Zoyo Unit Franchisesoperating in your Development Area, depend upon your compliance with your Regional Developer Agreement.

You may solicit prospective Zoyo Unit Franchisees residing outside your Development Area but interested inopening a franchise within your Development Area without having to pay any special compensation to us or anyother Zoyo Regional Developer. Likewise, Regional Developer outlets owned by us, our affiliates (ifapplicable), or other Developers may solicit prospective franchisees residing in your Development Area butinterested in opening a franchise in another Development Area without having to pay you any specialcompensation. You may not solicit prospective franchisees for a Zoyo Unit Franchise located outside of yourDevelopment Area. We will forward to you any leads or referrals that we receive from prospective franchiseesinterested in purchasing a Zoyo Unit Franchise in your Development Area, and you will be entitled to thecompensation referred to in Item 11 only if these prospective franchisees purchase a Zoyo Unit Franchise inyour Development Area.

We and our affiliates reserve the right to do the following without compensation to you:

(a) establish and operate Regional Developer Franchises, and granting rights to other persons toestablish and operate Regional Developer Franchises, on any terms and conditions we deem appropriate and atany locations other than in your Development Area;

(b) establish Zoyo Unit Franchises and grant rights to other persons to establish and operate ZoyoUnit Franchises, on any terms and conditions we deem appropriate and at any locations within a DevelopmentArea, provided that we will pay you for any commissions earned under the Regional Developer Agreement;

(c) provide and grant rights to other persons to provide goods and services similar to or competitivewith those provided by Zoyo Unit Franchises to customers located within the Development Area, whetheridentified by the Marks or other trademarks or service marks, through any distribution channel other than ZoyoUnit Franchises located within a Development Area (including, but not limited to, sales of products via mailorder, catalogs, toll-free telephone numbers and electronic means including the Internet);

(d) acquire the assets or ownership interest of one or more businesses providing products andservices similar to those provided at Zoyo Unit Franchises, and franchising, licensing or creating similararrangements with respect to these businesses once acquired, wherever these businesses (or the franchisees orlicensees of these businesses) are located or operating, including within a Development Area;

(e) be acquired (regardless of the form of transaction) by a business providing products andservices similar to those provided at Zoyo Unit Franchises, or by another business, even if such businessoperates, franchises or licenses competitive businesses within a Development Area; and

(f) provide or offer Zoyo products and services to customers within or outside of a Territory orDevelopment Area through Zoyo affiliates or dealers of Zoyo products and services.


We do not grant to you any options, rights of first refusal or similar rights to acquire additionalfranchises within a particular territory.

Neither we nor any affiliate operates, franchises, or has any current plans to operate or franchise anybusiness selling the products and services authorized for sale at a Zoyo Neighborhood Yogurt shop under anyother trademark or service mark.

Item 13TRADEMARKS

We grant you the right to operate your Zoyo Unit Franchise or Regional Developer Franchise using ourprincipal Marks, including the name “Zoyo Neighborhood Yogurt” as set forth on the first page of thisDisclosure Document. You may also use other future trademarks, service marks, and logos we approve toidentify your Zoyo franchise. However, you are not to use the Zoyo Neighborhood Yogurt Mark as part of yourFranchise Business’s corporate or trade name.

You may use the following trademark which has been registered on the Principal Register of the United StatesPatent and Trademark Office (“PTO”):

Principal TrademarksRegistration Numberor Serial Number

Registration orApplication Date Principal/Supplemental Register

ZOYO NEIGHBORHOODYOGURT

Reg. No.3954094

Reg. Date:May 3, 2011 Principal

ZOYO NEIGHBORHOODYOGURT and Design

Serial No.86038731

Application Date:August 15, 2013 Principal

We do not have a federal registration for the logo on the front cover of this disclosure document, although we dohave a pending application for one. Until this logo is registered, it does not have many legal benefits and rightsas a federally registered trademark. If our right to use the logo is challenged, you may have to change to analternative logo, which may increase your expenses.

There are currently no effective material determinations of the PTO, the Trademark Trial and Appeal Board, thetrademark administrator of any state, or any court, and no pending infringement, opposition, or cancellationproceedings or material litigation, involving the Marks. No agreement significantly limits our right to use orlicense the Marks in a manner material to your franchise. We do not know of either superior prior rights orinfringing uses that could materially affect your use of the Marks in any state.

Your right to use the Marks is derived solely from your Franchise Agreement or Regional DeveloperAgreement, and is limited to your conduct of business in compliance with the Franchise Agreement or RegionalDeveloper Agreement and all applicable specifications, standards, and operating procedures we prescribe duringthe term of your franchise. Any unauthorized use of the Marks by you will constitute an infringement of ourrights in and to the Marks. Your use of the Marks and any goodwill established by them will be for ourexclusive benefit, and your Franchise Agreement or Regional Developer Agreement does not confer anygoodwill or other interests in the Marks upon you. All provisions of your Franchise Agreement or RegionalDeveloper Agreement applicable to the Marks will apply to any additional proprietary trade and service marksand commercial symbols authorized for use by, and licensed to you under, your Franchise Agreement orRegional Developer Agreement. You may not at any time during or after the term of your franchise contest, orassist any other person in contesting, the validity or ownership of any of the Marks.

You must use the Marks as the sole identification of your franchise, but must also identify yourself as theindependent owner of the franchise in the manner we prescribe. You may not use any Marks as part of any


corporate or trade name, or with any prefix, suffix, or other modifying words, terms, designs or symbols, or inany modified form. You also may not use any Marks with the sale of any unauthorized service or in any mannerwe have not expressly authorized in writing. You must prominently display the Marks on or with franchiseposters and displays, service contracts, stationery, other forms we designate, and in the manner we prescribe;give any notices of trade and service mark registrations and copyrights that we specify; and obtain any fictitiousor assumed name registrations that may be required under applicable law.

You must immediately notify us of any apparent infringement of, or challenge to, your use of any Marks, or anyclaim by any person of any rights in any Marks. You may not communicate with any person other than us andour counsel about the apparent infringement, challenge, or claim. We and our affiliates will have sole discretionto take any action as we deem appropriate in, and the exclusive right to control any litigation or PTO or otherproceeding arising out of any apparent infringement, challenge, or claim, or otherwise relating to any Marks.You must sign any instruments and documents, render any assistance, and perform any acts that our or ouraffiliates’ counsel deems necessary or advisable to protect and maintain our or our affiliates’ interests in anylitigation or PTO or other proceeding related to any Marks, or otherwise protect and maintain our interests in theMarks.

If we decide that it is advisable for us or you to modify or discontinue use of any Mark or use one or moreadditional or substitute trade or service marks, then you must comply with our instructions to do so within areasonable time after receiving written notice from us. If a new trade name or Mark is registered by us with theU.S. Patent and Trademark Office, you must change, at your expense, all signs, marketing literature and othermaterials when you have been notified by us that a new trade name and Mark has been registered within 90 daysafter our notice to you.

We will indemnify you against, and reimburse you for, (1) all damages for which you are held liable in anyjudicial or administrative proceeding arising out of your use of any Mark in compliance with your FranchiseAgreement or Regional Developer Agreement; and (2) all costs you reasonably incur in defending against anyclaim brought against you or in any proceeding in which you are named as a party, provided that you havetimely notified us of the claim or proceeding, and have complied with the Franchise Agreement or RegionalDeveloper Agreement. We may defend any proceeding arising out of your use of any Mark under yourFranchise Agreement or Regional Developer Agreement, and have no obligation to indemnify or reimburse youfor any attorneys’ fees or disbursements you incur if we defend the proceeding.

Item 14PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION

No patents or registered copyrights are material to the franchise, nor do we have any pending applications forpatents or copyrights that are material to the franchise.

We or our affiliates may file or acquire the rights to certain patents that are material to the franchise. Thesepatents would pertain to the Zoyo franchises or Zoyo products which you will be offering as part of yourFranchise. You are not licensed to manufacture or sell any inventions in any pending patent applications. Youmerely receive the right to own and use equipment or products covered by such patents or patent applications.

You also have the right to use proprietary information in our Manuals. See Item 11 for additional informationabout our Manuals. Although we have not filed an application for copyright registration of our Manuals, weclaim copyright protection in them, and they are proprietary. We do not have to take any action forunauthorized uses of the information in our Manuals, but we intend to do so in circumstances we deemappropriate. We do not have to indemnify you for losses brought by a third party concerning your use of thisinformation, but intend to do so under circumstances we deem appropriate. We are not aware of any infringinguses of this information. There are no agreements in effect affecting our right to use this information.


We or our affiliates have developed proprietary confidential information comprising methods, techniques,procedures, information, systems, and knowledge of and experience in the design and operation of Zoyofranchises, including (1) knowledge of test programs, concepts, or results relating to new services and products;(2) sources of products sold from Zoyo franchises; (3) advertising and promotional programs; (4) Zoyofranchise image and decor; (5) methods, techniques, formats, specifications, procedures, information, systemsand knowledge of, and experience in, the development, operation, and franchising of Zoyo franchises; and(6) the selection and methods of training employees (collectively, the “Confidential Information”). We willdisclose the Confidential Information to you in the initial training program described in Item 11, the Manualslent to you, and guidance furnished to you during the term of your franchise. You will not acquire any interestin the Confidential Information other than the right to use it in the development and operation of your franchiseduring the term of the franchise.

The Confidential Information is proprietary, and, except to the extent that it is or becomes generally known inthe industry or trade, is our trade secret, and is disclosed to you solely for your use in the operation of yourfranchise during the term of the franchise. You (1) must not use the Confidential Information in any otherbusiness or capacity; (2) must maintain the confidentiality of the Confidential Information during and after theterm of the franchise; (3) must not make unauthorized copies of any portion of the Confidential Informationdisclosed in written form; and (4) must adopt and implement all reasonable procedures that we may prescribeperiodically to prevent the unauthorized use or disclosure of any of the Confidential Information, includingrestrictions on disclosure to your employees and the use of nondisclosure clauses in employment agreementswith your employees. See Item 15 below concerning your obligation to obtain confidentiality and non-competition agreements from persons involved in the Franchise.

Under the Franchise and Regional Developer Agreements, you must operate the franchise in accordance withthe standards, methods, policies, and procedures specified in the Manuals. You will be lent a copy of theManuals for the term of the Franchise Agreement, when you have completed the initial training program to oursatisfaction. You must operate your Zoyo Unit Franchise or Regional Developer Franchise strictly inaccordance with the Manuals, as they may be revised by you from time to time.

You must treat as confidential the Manuals and any other materials created for, or approved by, us for theoperation of your Franchise. You must use all reasonable efforts to maintain this information as secret andconfidential. You must not copy, duplicate, record or otherwise make them available to any unauthorizedperson. The Manuals will remain our sole property and must be returned in the event that you cease to be aZoyo Unit Franchise or Regional Developer Franchise.

We may from time to time revise the contents of the Manuals, and you must comply with each new or changedprovision as soon as possible and in any case within 15 days of our notice to you, unless otherwise provided forin this Franchise Disclosure Document, the Franchise Agreement or the Regional Developer Agreement. Youmust ensure that the Manuals are kept current at all times. In the event of any dispute as to the contents of theManuals, the terms of the master copies maintained by us at our home office will be controlling.

Item 15OBLIGATION TO PARTICIPATE IN THE

ACTUAL OPERATION OF THE FRANCHISE BUSINESS

You must personally participate in the direct operation of your Zoyo franchise. If you do not personallyparticipate in the direct operation of your franchise on a full-time basis, then you are obligated to have a fullytrained Manager operate the franchise. We believe that only a person with an equity interest can adequatelyensure that our standards of quality and competence are maintained. Your Manager and employees, however,are not required to own any equity interest in the Franchise. The Agreement requires that you be directlyinvolved in the day-to-day operations and utilize your best efforts to promote and enhance the performance ofthe franchise.


Any Manager you employ at the launching of your franchise operations must complete the initial management-training course we require to our satisfaction. You may not continue to employ a Manager who has failed tosatisfactorily complete our training program. All subsequent Managers must be trained fully according to ourstandards by either us or you. However, we may charge a fee for this additional training.

Each individual who holds an ownership interest in you must personally guarantee all of your obligations underthe Franchise Agreement or Regional Developer Agreement. (See the Franchise Agreement or RegionalDeveloper Agreement for the form of Guaranty of Franchise Owner’s Undertakings.)

At our request, you must obtain and deliver executed covenants of confidentiality and non-competition from anypersons who have or may have an ownership interest in you or the franchise, or who receive or have access totraining and other confidential information under the System. (See Exhibit F for the form ofConfidentiality/Nondisclosure Agreement.) The covenants must be in a form satisfactory to us, and mustprovide that we are a third party beneficiary of, and have the independent right to enforce the covenants.

Item 16RESTRICTIONS ONWHAT

THE FRANCHISEE MAY SELL

You must operate your Zoyo franchise in strict conformity with all prescribed methods, procedures, policies,standards, and specifications of the System, as set forth in the Manuals and in other writings by us from time totime. You must use your Zoyo Unit Franchise or Regional Developer Franchise sales office only for theoperation of the Franchise and may not operate any other business at or from such offices without our expressprior written consent.

We require you to offer and sell only those goods and services that we have approved. We maintain a writtenlist of approved goods and services in its Manuals, which we may change periodically.

You must offer all goods and services that the company designates as required for all franchises. In addition, wemay require you to comply with other requirements (such as state or local licenses, training, marketing,insurance) before we will allow you to offer certain optional services.

In our sole and absolute discretion and without limitations, we reserve the right to designate additional requiredor optional services in the future and to withdraw any of our previous approvals. In that case, you must complywith the new requirements within 15 days of your receipt of our written notice.

Item 17RENEWAL, TERMINATION, TRANSFER

AND DISPUTE RESOLUTION


THE FRANCHISE RELATIONSHIPThis table lists important provisions of the Franchise Agreement and related agreements. You should read theseprovisions in the agreements attached to this Disclosure Document.

ProvisionSection in Franchise orOther Agreement Summary

a. Length of the franchise term Section 3.1 10 years




b. Renewal or extension of theterm

Section 3.4 Your renewal rights permit you to remain a franchiseeafter the initial term of your Franchise Agreementexpires. If you wish to do so, and you satisfy therequired pre-conditions to renewal, we will offer youthe right to two renewal terms of 5 years each.

c. Requirements for franchisee torenew or extend

Section 3.4 You must: have substantially complied with yourFranchise Agreement; given notice of your intent torenew at least 9 months before expiration; refurbishand decorate the Premises to our then currentspecifications; sign a new Franchise Agreement in ourthen-current form which may include terms andconditions materially different from those in theoriginal Franchise Agreement (including, e.g., nofurther renewals, higher fees, etc.); sign generalrelease of claims against us and related parties (seeExhibit H); pay the applicable renewal fee (see Item6); cure any defaults; and pay all amounts owed to us.

d. Termination by franchisee Not applicable Not applicablee. Termination by franchisorwithout cause

Not applicable Not applicable

f. Termination by franchisor withcause

Section 15 Various breaches of Franchise Agreement

g. “Cause” defined – curabledefaults

Section 15 You do not pay us within 10 days after written notice;you do not cease the use, sale, distribution ofunauthorized services or products within 10 days afternotice; you fail to remedy any violation of any healthor safety law or ordinance or regulation, or operate thefranchise in a way that creates a health or safetyhazard, within 72 hours after written notice; you donot comply with any other provision of the FranchiseAgreement or specification, standard, or operatingprocedure and do not correct such failure within 30days after written notice.

h. “Cause” defined – non-curabledefaults

Section 15 You fail to timely develop or open the franchise; youabandon, surrender, transfer control of or do notactively operate the franchise or lose the right tooccupy the franchise location; you or any PrincipalOwner make an unauthorized transfer or assignmentof the franchise or its assets; you are adjudged abankrupt, become insolvent, or make an assignmentfor the benefit of creditors; you or your PrincipalOwners are convicted of a felony, or are convicted orplead no contest to any crime or offense, or you areinvolved in any action, that adversely affects thereputation of the franchise and the goodwill of ourMarks; your breach by nature is uncurable; youdeceive customers relative to the goods sold; youwillfully and materially falsify reports, statements ordata to us, including underestimate of Gross Revenuesby 5%; or you fail on 3 or more occasions within any12 month period to comply with the FranchiseAgreement regardless of whether or not such failuresto comply are corrected.




i. Franchisee’s obligations ontermination/non-renewal

Section 16 Includes payment of money owed to us, returnConfidential Information and Manual for Zoyo UnitFranchises, cancellation of assumed names and transferof phone numbers, cease using Proprietary Marks,cease operating Franchise Business, no confusion withProprietary Marks, our option to purchase your tangibleassets and take an assignment of your lease, yourmodification of the premises and compliance with non-competition covenant (see paragraph r).

j. Assignment of contract byfranchisor

Section 14.3 No restriction on right to transfer.

k. “Transfer” by franchisee-defined

Section 14 Includes assignment of Franchise Agreement, sale ormerger of business entities, transfer of corporate stock,death of franchise owner or majority owner of franchiseowner.

l. Franchisor approval of transferby franchisee

Section 14.4 We have the right to approve all transfers.

m. Conditions for franchisorapproval of transfer

Section 14.5 New owner must have sufficient business experience,aptitude and financial resources to operate thefranchise; you must pay all amounts due us or ouraffiliates; new owner and its director must successfullycomplete our initial training program; your landlordmust consent to transfer of the lease, if any; you mustpay us a transfer fee (see Item 6); you and yourPrincipal Owners must sign a general release in favor ofus, our affiliates, and our and their officers, directors,employees and agents; if applicable, the new ownermust agree to remodel to bring the franchise to currentstandards; new owner must assume all obligationsunder your Franchise Agreement or, at our option, signa new Franchise Agreement using our then-currentform; you and your Principal Owners must sign a non-competition agreement agreeing not to engage in acompetitive business for 1 year and within 5 miles ofyour franchise or any other Zoyo franchise. We musthave failed to exercise our right of first refusal. Wealso may approve the material terms of the transfer, andrequire that you subordinate any installment paymentsto the new owners’ obligation to pay us.

n. Franchisor’s right of firstrefusal to acquire franchisee’sbusiness

Section 14.6 We have the option to match any offer for yourFranchise Business.

o. Franchisor’s option to purchasefranchisee’s business

Section 16.5 We have the option to purchase your FranchiseBusiness upon termination or non-renewal.

p. Death or disability of franchisee Section 14.7 Franchise must be assigned by estate to approved buyerwithin 3 months.

q. Non-competition covenantsduring the term of the franchise

Section 9.3 You cannot be involved in a competitive businessduring the term of the Agreement.

r. Non-competition covenants afterthe franchise is terminated orexpires

Section 9.3 No involvement in competing business for 12 monthswithin a 5-mile radius of the location of your FranchiseBusiness or any other Zoyo Neighborhood YogurtShop.




s. Modification of agreement Section 20 Must be in writing by both sides.t. Integration/merger clause Section 19 Only the terms of the Franchise Agreement are binding

(subject to state law). Any representations or promisesoutside of the disclosure document and franchiseagreement may not be enforceable.

u. Dispute resolution by mediation Section 17.10 Except for certain claims, we and you must mediateall disputes in Maricopa County, Arizona (subject tostate law).

v. Choice of forum Section 17.12 Maricopa County, Arizona (subject to state law)

w. Choice of law Section 17.12 Arizona law applies, except for matters regulated bythe United States Trademark Act (subject to statelaw).


THE REGIONAL DEVELOPER RELATIONSHIPThis table lists important provisions of the Regional Developer Agreement. You should read these provisions in theagreements attached to this Disclosure Document.

Provision

Section in RegionalDeveloper or Other

Agreement Summarya. Length of the franchise term Section 5 15 yearsb. Renewal or extension Section 5 Your renewal rights permit you to remain a franchisee after

the initial term of your Franchise Agreement expires. If youwish to do so, and you satisfy the required pre-conditions torenewal, we will offer you the right two renewal terms of 5years each.

c. Requirements for franchisee torenew or extend

Section 5 You must: have substantially complied with RegionalDeveloper Agreement; give at least 9 months notice ofintent to renew; we and you agree on new developmentobligations; sign new Regional Developer Agreement in ourthen current form which may include terms and conditionsmaterially different from those in the original RegionalDeveloper Agreement, (including, e.g., no further renewals,higher fees, etc.); sign general release of claims against usand related parties; pay the applicable renewal fee (see Item6); cure any defaults; and pay all amounts owed to us.

d. Termination by franchisee Not applicable Not applicablee. Termination by franchisorwithout cause


f. Termination by franchisor withcause

Section 13.1 Only upon written notice to you.

g. “Cause” defined – curabledefaults

Section 13.1 You do not pay us amounts due within 10 days after writtennotice; or you do not comply with any other provision of theRegional Developer Agreement within 30 days after writtennotice of default.



Provision


Agreement Summaryh. “Cause” defined – non-curabledefaults

Section 13.1 You make an unauthorized transfer; you fail to meet yourminimum development obligation for any developmentperiod; you make a material misrepresentation or omissionin acquiring or operating the franchise; you do notsatisfactorily complete initial training; you are convicted ofor plead guilty to a felony; you fail to maintain requiredinsurance; you engage in dishonest, unethical, or illegalconduct, or any conduct that we believe adversely affectsthe reputation of us, our franchises, or goodwill of theMarks; you knowingly make unauthorized use or disclosureof the Manuals or Confidential Information; you fail on 2 ormore occasions in any 12-month period or 3 or moreseparate occasions in any 24-month period to timely payamounts due or submit required reports, or comply with theRegional Developer Agreement; you become insolvent, ormake an assignment for the benefit of creditors; or anyattachment or seizure of the franchise assets is not vacatedwithin 30 days.

i. Franchisee’s obligations ontermination/non-renewal

Section 13.2 You must cease using our Marks and ConfidentialInformation; cease identifying yourself as our franchisee;cancel fictitious or assumed names related to your use of theMarks; deliver to us within 30 days all advertising, forms,and other materials containing the Marks or related to thefranchise; notify search engines of termination and yourright to use domain names, websites, or other searchengines related to the Marks or our franchises; and provideus with evidence of your compliance with the aboveobligations within 30 days of termination.

j. Assignment of contract byfranchisor

Section 11.1 Fully transferable by us.

k. “Transfer” by franchisee -defined

Section 11.2(b) Transfer includes: any voluntary, involuntary, direct orindirect assignment, sale, or gift of the franchise; transfer ofownership, merger, exchange, issuance of additionalownership interests, redemption of ownership interests, orsale of exchange of voting interests in you (if you are alegal entity); transfer of interest in the Regional DeveloperAgreement, you, the franchise, or its assets because ofdivorce, insolvency or dissolution, or operation of law;transfer because of the death of you or an owner of you; orany pledge of the Regional Developer Agreement orownership interest in you.

l. Franchisor approval of transferby franchisee

Section 11.2(a) We have the right to approve all transfers.



Provision


Agreement Summarym. Conditions for franchisorapproval of transfer

Section 11.3 and11.4

You must pay all amounts owed to us; new owner assumesyour obligations; new owner, its affiliates, and its owners donot have any interest in or work for a competitive business;new owner completes or agrees to complete initial training;new owners signs our then-current Regional DeveloperAgreement and ancillary agreements; you have strictlycomplied with obligations to us and is not in default ofthose obligations; you pay us a transfer fee (see Item 6); yousign a general release; you do not identify yourself ascurrent or former franchisee of ours, or use any Mark. Youmay transfer the franchise and its assets to a newly formedlegal entity principally controlled by you and yourprincipals if the new entity operates the franchise andcomplies with the Regional Developer Agreement, and youprovide to us information about the transfer and the entity’sowners.

n. Franchisor’s right of firstrefusal to acquire franchisee’sbusiness

Section 11.6 We have 30 days to match any offer.

o. Franchisor’s option to purchasefranchisee’s business


p. Death or disability of franchisee Section 11.5 Executor, administrator, or other representative musttransfer interest of franchisee or owner within 9 months ofyour or an owner’s death or disability. All transfers aresubject to provisions in Regional Developer Agreementregulating transfers.

q. Non-competition covenantsduring the term of the franchise

Section 12.1 Neither you, your principals, nor any immediate familymembers of you or them may perform services for or haveany interest in any competitive business.

r. Non-competition covenants afterthe franchise is terminated orexpires

Section 12.2 Neither you, your principals, nor any immediate familymembers of you or them may perform services for or haveany interest in any competitive business within theDevelopment Area, the Development Area of any otherZoyo Regional Developer, within 5 miles of any Zoyofranchise, or within 5 miles of any unsold Zoyodevelopment areas, for 12 months.

s. Modification of agreement Section 15.11 No modifications unless you and we both sign; we mayamend the Manuals at any time.

t. Integration/merger clause Section 15.11 Only the terms of the Regional Developer Agreement arebinding (subject to state law). Any representations orpromises outside of the disclosure document and franchiseagreement may not be enforceable.

u. Dispute resolution by mediation Section 14 Except for certain claims, you and we must mediate alldisputes in Maricopa County, Arizona (subject to state law).

v. Choice of forum Section 15.8 Maricopa County, Arizona (subject to state law).w. Choice of law Section 15.7 Arizona law governs, except for matters regulated by the

United States Trademark Act (subject to state law).


Item 18PUBLIC FIGURES

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

Item 19FINANCIAL PERFORMANCE REPRESENTATIONS

The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential financialperformance of its franchise and /or franchisor-owned outlets, if there is a reasonable basis for the information,and if the information is included in the disclosure document. Financial performance information that differsfrom that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existingoutlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, forexample, by providing information about possible performance at a particular location or under particularcircumstances.

We recommend that prospective franchisees make their own independent investigation to determine whether ornot the franchise may be profitable, and consult with an attorney and other advisors before signing the FranchiseAgreement.

The figures presented below are historical representations based upon the financial results achieved by afranchised Zoyo® Neighborhood Yogurt shop and some Zoyo Neighborhood Yogurt® affiliate-owned shops.The affiliate-owned shops offer the same products and services that Zoyo Unit Franchises outlets will offer, butthey do not pay a Royalty or Advertising Fund contribution. Zoyo Unit Franchises will pay us a Royalty feeequal to 6% of Gross Revenue and an Advertising Fund Contribution equal to 2% of Gross Revenue.

The figures presented in the tables below are the actual financial results of 1 franchised Zoyo NeighborhoodYogurt® shop in Indiana and 8 Zoyo Neighborhood Yogurt® affiliate-owned shops in the Phoenix, Arizonaarea (collectively the “Shops”) from March 1, 2013 through February 28, 2014 (the “Reporting Period”). As ofFebruary 28, 2014 there were 3 Zoyo Neighborhood Yogurt® franchised shops and 9 Zoyo NeighborhoodYogurt® affiliate-owned shops. The other 2 Zoyo Neighborhood Yogurt® franchised shops were not includedbecause the shops had not been in operation for the entire Reporting Period and the other Zoyo NeighborhoodYogurt® affiliate-owned shop was not included because the shop is not operated in a traditional location.

Table A includes the average Gross Revenues of all 9 Shops divided into thirds. The first third includes theaverage Gross Revenues of the 3 Zoyo Neighborhood Yogurt® shops with the highest Gross Revenue for theReporting Period. The second third includes the average Gross Revenues of the 3 Zoyo Neighborhood Yogurt®shops with the second highest Gross Revenue for the Reporting Period. The final third includes the averageGross Revenues of the 3 Zoyo Neighborhood Yogurt® shops with the lowest Gross Revenue for the ReportingPeriod.

Table AAverage Gross Revenues of 9 Zoyo Neighborhood Yogurt Shops by thirds for the

Period from March 1, 2013 through February 28, 2014

ThirdAverage Gross Revenues(1)

Per ThirdNumber of Businesses in

Each Third

Number and Percentage ofBusinesses Per Third That Metor Exceeded the Average

1st (2) $421,033 3 1 (33%)2nd (3) $336,816 3 1 (33%)3rd (4) $249,072 3 1 (33%)


Table B includes the Gross Revenues, cost of goods sold, crew wages and gross profit for each of the 9 Shopsfor the Reporting Period.

Table BGross Revenues, Cost of Goods Sold, Crew Wages and Adjusted Gross Profit for 9 Zoyo Neighborhood

Yogurt Shops for Period from March 1, 2013 through February 28, 2014

Shop 1 Shop 2 Shop 3 Shop 4 Shop 5 Shop 6 Shop 7 Shop 8 Shop 9 Average(5)Gross Revenue(1) $224,399 $526,375 $339,321 $376,464 $360,259 $205,166 $317,652 $332,671 $338,456 335,640

Cost of GoodsSold(2) $74,744 $155,603 $102,818 $115,441 $116,419 $70,838 $102,182 $104,822 $84,765

$103,070

Crew Wages(3) $40,806 $79,538 $41,676 $59,986 $56,940 $38,629 $59,081 $52,488 $45,399 $52,727Gross Profit(4)(6) $108,849 $291,234 $194,827 $201,037 $186,900 $95,699 $156,389 $175,360 $208,292 $179,843

1. “Gross Revenue” means the amount of all receipts for the sale of any products or services in connectionwith the Shop and income of every other kind and nature related to the Shop, whether for products or services,cash, exchange, or credit, regardless of collection in a case of credit; provided, however, that Gross Revenuedoes not include any discounts, refunds, or sales taxes or other taxes collected for transmittal to the appropriatetaxing authorities.

2. “Cost of Goods Sold” means the costs of the products and inventory shrinkage only, including the costof food and paper. Cost of Goods Sold does not include freight or warranty expenses, or the cost of smallwaresor supplies.

3. “Crew Wages” includes hourly personnel, payroll tax, worker’s compensation, and relatedadministrative expenses. The hourly personnel are employed from 10 to 30 hours per week which fluctuates withthe volume of the store. We did not include any amounts spent on manager’s salaries as we anticipate that youwill manage Zoyo Unit Franchise yourself. All other payroll expense is included in that line item.

4. “Gross Profit” is the Gross Revenues less Cost of Goods Sold and CrewWages.

5. Of the 9 Shops, 5 Shops (56%) met or exceed the average Gross Revenue and 5 Shops (56%) met orexceed the average Gross Profit.

6. The information above does not include all other expenses that you will incur in operating a ZoyoNeighborhood Yogurt® shop. These other expenses include Royalty fees, Advertising Fund contributions, rent,marketing and advertising, automobiles, bank fees, delivery expenses, insurance, interest expenses, licenses andpermits, meals and entertainment, office supplies, professional fees, laundry, telephone, and utilities.

MATERIAL ASSUMPTIONS

A. All of the Shops operated by our affiliates are located in the Phoenix, Arizona area which has acompetitive market for frozen yogurt. The characteristics of your Zoyo Unit Franchise may differ materiallydepending on your geographic location, competition, the market for the product, your ability to operate the ZoyoUnit Franchise and how long you have been in business.

B. Many factors, including those described in the preceding paragraph, are unique to each ZoyoNeighborhood Yogurt® shop and may significantly impact the financial performance of your Zoyo UnitFranchise.

C. You are responsible for developing your own business plan for your Zoyo Unit Franchise, includingcapital budgets, financial statements, projections, pro forma financial statements and other elements appropriateto your particular circumstances. In preparing your business plan, we encourage you to consult with your ownaccounting, business and legal advisors to assist you to identify the expenses you likely will incur in connection


with your Zoyo Unit Franchise, to prepare your budgets, and to assess the likely or potential financialperformance of your Zoyo Unit Franchise.

D. In developing the business plan for your Zoyo Unit Franchise, you are cautioned to make necessaryallowance for changes in financial results to income, expenses or both that may result from operation of yourZoyo Unit Franchise during periods of, or in geographic areas suffering from, economic downturns, inflation,unemployment, or other negative economic influences.

Some Zoyo Neighborhood Yogurt® shops have earned this amount. Your individual results may differ. There isno assurance that you will achieve the same or similar results.

Written substantiation of the data used in preparing this earnings claim will be made available to you uponreasonable request.

Other than the preceding financial performance representation, we do not make any financial performancerepresentations. We also do not authorize our employees or representatives to make any such representationseither orally or in writing. If you are purchasing an existing outlet, however, we may provide you with theactual records of that outlet. If you receive any other financial performance information or projections of yourfuture income, you should report it to the franchisor’s management by contacting Aaron Klusman, ZoyoFranchising, LLC, 450 N. McClintock Drive, Chandler, Arizona, 85226, (602) 337-7090, the Federal TradeCommission, and the appropriate state regulatory agencies.

Item 20OUTLETS AND FRANCHISEE INFORMATION


Table No. 1Systemwide Outlet SummaryFor Years 2011 to 2013

Outlet Type YearOutlets at the Start of

the YearOutlets at the End of

the Year Net ChangeFranchisee 2011 0 0 0

2012 0 0 02013 0 1 +1

Company-Owned 2011 2 7 +52012 7 9 +22013 9 9 0

Total Outlets 2011 2 7 +52012 7 9 +22013 9 10 +1

Table No. 2 Transfers of Outlets From Franchises to New Owners(Other than the Franchisor)For Years 2011 to 2013

State Year Number of TransfersTotal 2011 0

2012 02013 0


Table No. 3Status of Franchise OutletsFor Years 2011 to 2013(1)

State Year

Outlets atStart ofYear

OutletsOpened Terminations

Non-Renewals

Reacquired byFranchisor

CeasedOperationsOther Reasons

Outlets atEnd of theYear

Indiana 2011 0 0 0 0 0 0 02012 0 0 0 0 0 0 02013 0 1 0 0 0 0 1

Total 2011 0 0 0 0 0 0 02012 0 0 0 0 0 0 02013 0 1 0 0 0 0 1

(1) As described in Item 1, there is one Zoyo Neighborhood Yogurt location at an university in Arizona.This location is not substantial similar to a Zoyo Unit Franchise.

Table No. 4Status of Company-Owned Outlets For

Year 2011 to 2013

State YearOutlets atStart of Year

OutletsOpened

Outlets Reacquiredfrom Franchisees

OutletsClosed

Outlets Sold toFranchisees

Outlets at Endof the Year

Arizona 2011 2 5 0 0 0 72012 7 2 0 0 0 92013 9 0 0 0 0 9

Total 2011 2 5 0 0 0 72012 7 2 0 0 0 92013 9 0 0 0 0 9

Table No. 5Projected Openings as of December 31, 2013

StateFranchise Agreements SignedBut Outlet Not Opened

Projected New FranchiseOutlets in the Next Fiscal Year

Projected New Company-OwnedOutlets in the Next Fiscal Year

Arizona 0 3 3Indiana 0 0 0Georgia 1 1 0Michigan 1 2 0New York 0 1 0Oklahoma 1 1 0Texas 1 1 0Virginia 1 1 0Total 5 10 3


For Regional Developer Franchises:

Table No. 1Systemwide Regional Developer Outlet Summary

For Years 2011 to 2013

Outlet Type YearOutlets at theStart of the Year

Outlets at theEnd of the Year Net Change

Franchisee 2011 0 0 02012 0 3 +32013 3 5 +2

Company-Owned 2011 0 0 02012 0 0 02013 0 0 0

Total Outlets 2011 0 0 02012 0 3 +32013 3 5 +2

Table No. 2 Transfers of Regional Developer Outlets From Franchises to New Owners(Other than the Franchisor)For Years 2011 to 2013

State/Region Year Number of TransfersTotal 2011 0

2012 02013 0

Table No. 3Status of Franchised Regional Developer Outlets

For Years 2011 to 2013*

State/ Region Year

Outlets atStart ofYear

OutletsOpened Terminations Non-Renewals

Reacquired byFranchisor

CeasedOperationsOther Reasons

Outlets at End ofthe Year

Indiana 2011 0 0 0 0 0 0 02012 0 1 0 0 0 0 12013 1 0 0 0 0 0 1

Oklahoma 2011 0 0 0 0 0 0 02012 0 1 0 0 0 0 12013 1 0 0 0 0 0 1

Texas 2011 0 0 0 0 0 0 02012 0 1 0 0 0 0 12013 1 0 0 0 0 0 1

Total 2011 0 0 0 0 0 0 02012 0 3 0 0 0 0 32013 3 2 0 0 0 0 5

* If multiple events occurred affecting an outlet, this table shows the event that occurred last in time.

Table No. 4Status of Company-Owned Regional Developer Outlets For

Year 2011 to 2013


State/Region YearOutlets atStart of Year

OutletsOpened

Outlets Requiredfrom Franchisees

OutletsClosed

Outlets Sold toFranchisees

Outlets at End ofthe Year

Total 2011 0 0 0 0 0 02012 0 0 0 0 0 02013 0 0 0 0 0 0

Table No. 5Projected Openings of Regional Developer Outlets as of December 31, 2013

State/RegionRegional Developer AgreementsSigned But Outlet Not Opened

Projected New FranchiseOutlets in the Next Fiscal Year

Projected New Company-OwnedOutlets in the Next Fiscal Year

Arizona 0 0 0Georgia 0 1 0Houston, Texas 0 1 0Indiana 0 0 0Michigan 0 2 0New York 0 1 0Oklahoma 0 1 0Virginia 0 1 0Total 0 3 0

Exhibit G lists the names of all current Zoyo Unit Franchisees and Regional Developer Franchisees, and theaddress and telephone numbers of each of their outlets as of December 31, 2013.

Exhibit G also lists name, city and state, and the current business telephone number (or, if unknown, the lastknown home telephone number) of every franchisee who had an outlet terminated, canceled, not renewed, orotherwise voluntarily or involuntarily ceased to do business under the franchise agreement during our mostrecently completed fiscal year or who had not communicated with us within ten (10) weeks of the issuance dateof this Disclosure Document. If you buy this franchise, your contact information may be disclosed to otherbuyers when you lease the franchise system.

No franchisees have signed confidentiality clauses with us during the last three (3) years which would restricttheir ability to speak openly about their experience with us.

We do not have any trademark specific franchisee associations.

Item 21FINANCIAL STATEMENTS

Attached as Exhibit E to this Disclosure Document are our audited financial statements as of December 31, 2013and December 31, 2012, and our unaudited financial statements as of December 31, 2011. We have not been inbusiness for 3 years or more and cannot include all financial statements required by 16 C.F.R. § 436.5(u)(1)(i)and (ii).

Item 22CONTRACTS

Attached are copies of the following agreements relating to the offer of the franchise:

Exhibit B Franchise AgreementExhibit C Regional Developer Agreement


Exhibit F Confidentiality/Nondisclosure AgreementExhibit H General Release Agreements

Exhibit I Form UCC-1 Financing StatementExhibit J Acknowledgement Agreement

Item 23RECEIPT

Two copies of an acknowledgement of your receipt of this Disclosure Document are attached at the end of all ofthe Exhibits. The receipts are detachable and one copy must be signed by you and given to us. The other copymay be retained by you for your records. If the acknowledgement page or any other pages or exhibits aremissing from your copy, please contact us at the address or phone number noted in Item 1.


STATE OF CALIFORNIA’S SPECIFIC DISCLOSURE APPENDIX

THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSEDAGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITHTHE DISCLOSURE DOCUMENT.

Section 31125 of the California Franchise Investment Law requires us to give to you a disclosure documentapproved by the Commissioner of the Department of Business Oversight before we ask you to consider amaterial modification of your Franchise Agreement or Regional Developer Franchise Agreement.

Our website address is provided to you on the Cover Page of the Franchise Disclosure Document. OURWEBSITE HAS NOT BEEN REVIEWED OR APPROVED BY THE CALIFORNIA DEPARTMENT OFBUSINESS OVERSIGHT. ANY COMPLAINTS CONCERNING THE CONTENT OF THIS WEBSITEMAY BE DIRECTED TO THE CALIFORNIA DEPARTMENT OF BUSINESS OVERSIGHT atwww.dpo.ca.gov.

Item 3 (The disclosures required to be made in Item 3 of this Disclosure Document are supplemented asfollows):

Franchisor, persons or franchise brokers disclosed in Item 2 who are subject to any currently effective order ofany national securities association or national securities exchange as defined in the Securities Exchange Act of1934, 15 U.S.C.A. 78 a et seq., suspending or expelling such persons from membership in such association orexchange: None – (end of item 3 supplement).


California Business and Professions Code Sections 20000 through 20043 provide rights to the franchiseeconcerning termination or non-renewal of a franchise. If the franchise agreement contains a provision that isinconsistent with the law, the law will control.

The franchise agreement provides for termination upon bankruptcy. This provision may not be enforceableunder federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.).

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

The franchise agreement contains a liquidated damage clause. Under California Civil Code Section 1671,certain liquidated damages clauses are unenforceable.

Prospective franchisees are encouraged to consult private legal counsel to determine the applicability ofCalifornia and federal laws (such as Business and Professions Code Section 20040.5, Code of Civil ProcedureSection 1281, and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to aforum outside the State of California.

The franchise agreement requires application of the laws of a state other than the State of California. Thisprovision may not be enforceable under California law.

You must sign a general release of claims if you transfer your franchise. California Corporations Code Section31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code Section31000 through 31516). Business and Professions Code Section 30010 voids a waiver of your rights under theFranchise Relations Act (Business and Professions Code Sections 20000 through 20043) – (end of item 17supplement).



The earnings claims figures may not reflect all costs or expenses that you will have to deduct from the grossrevenue or gross sales figures of your franchise to obtain your net income or profit. You should conduct anindependent investigation of the costs and expenses you will incur in operating your franchise. Franchisees orformer franchisees, listed in the Disclosure document, may be one source of this information – (end of item 19supplement).


STATE OF ILLINOIS’ SPECIFIC DISCLOSURE APPENDIX

The conditions under which your franchise can be terminated and your rights upon non-renewal may be affectedby Illinois law, 815 ILCS 705/19 and 705/20.

The choice of forum and law may be different as provided by the Illinois Franchise Disclosure Act (815 ILCS705/4). In these cases Illinois, forum and law shall control.

Regional Developers are considered subfranchisors in the State of Illinois, and therefore must register with theState before offering, training, and assisting prospective Subfranchisees, only if they participate in thenegotiations of the sale of franchises. Otherwise they are franchise brokers and are not required to register withthe Illinois Attorney General’s Office.

For curable defaults, a 30-day time frame generally is considered a reasonable time period for all such cureperiods unless the default deals with health or safety issues.

Because of our financial condition, the Illinois Attorney General’s Office has imposed that we defer thepayment by you of all initial franchise fees owed to us, or our affiliate, until such time as all initial obligationsowed to you under the franchise agreement or other agreements have been fulfilled by us and you havecommenced doing business pursuant to the franchise agreement.

Pursuant to Section 41 of the Illinois Franchise Disclosure Act, “[a]ny condition, stipulation, or provisionpurporting to bind any person acquiring any franchise to waive compliance with any provision of this Act or anyother law of this State is void. This Section shall not prevent any person from entering into a settlementagreement or executing a general release regarding a potential or actual lawsuit filed under any of the provisionsof this Act, nor shall it prevent the arbitration of any claim pursuant to the provisions of Title 9 of the UnitedStates Code.”

Any provision in a franchise agreement that designates jurisdiction or venue in a forum outside of this State isvoid, provided that a franchise agreement may provide for arbitration in a forum outside of this State.

Any condition, stipulation, or provision purporting to bind any person acquiring any franchise to waivecompliance with any provision of this Act or any other law of this State is void. This Section shall not preventany person from entering into a settlement agreement or executing a general release regarding a potential oractual lawsuit filed under any of the provisions of this Act, nor shall it prevent the arbitration of any claimpursuant to the provisions of Title 9 of the United States Code.


STATE OFMINNESOTA’S SPECIFIC DISCLOSURE APPENDIX

Minn. Stat. §80C.21 and Minn. Rule 2860.4400J prohibit us from requiring litigation to be conducted outsideMinnesota. In addition, nothing in the disclosure document or Regional Developer Franchise Agreement canabrogate or reduce any of your rights as provided for in Minnesota Statutes, Chapter 80C, or your rights to anyprocedure, forum, or remedies provided for by the laws of the jurisdiction.

With respect to franchises governed by Minnesota law, we will comply with Minn. Stat. Sec. 80C.14,Subdivisions 3, 4, and 5 which require, except in certain specified cases, that a franchisee be given 90 daysnotice of termination (with 60 days to cure) and 180 days notice for non-renewal of the Regional DeveloperFranchise Agreement.

You do not consent to us obtaining injunctive relief. However, you agree that we may seek injunctive relief.

Minnesota Rule part 2860.4400D prohibits requiring a franchisee to assent to a release, assignment, novation, orwaiver that would relieve any person of liability imposed by the Minnesota Franchise Law, provided that thisrule shall not bar the voluntary settlement of disputes.

Minn. Rule Part 2860.4400J prohibits you from waiving your rights to any procedure, forum, or remediesprovided for by the laws of the jurisdiction.

Minn. Rule 2860.4400J prohibits waiver of a jury trial. If any portion of the Franchise Agreement or RegionalDeveloper Franchise Agreement provides for a waiver of jury trial, Minnesota law will control.


STATE OF NEW YORK’S SPECIFIC DISCLOSURE APPENDIX

Zoyo Franchising, LLC hereby expressly acknowledges that this Franchise Disclosure Statement does notknowingly omit a material fact or contain any untrue statement of material fact.

Item 3 (The disclosures in Item 3 of the Disclosure Document are amended to include the following):

Except as disclosed in Item 3, either the persons identified in Item 2, nor any predecessor or affiliate of ours: (A)has an administrative, criminal, or civil action pending against that person alleging a felony; a violation of afranchise, antitrust, or securities law; fraud, embezzlement; fraudulent conversion; misappropriate of property;unfair or deceptive trade practices; or comparable civil of misdemeanor allegations; (B) has been convicted of afelony or pleaded nolo contendere to a felony charge or, within the 10-year period immediately preceding ourapplication for registration, has been convicted of or pleaded nolo contendere to a misdemeanor charge or hasbeen the subject of a civil action alleging violation of a franchise, antifraud, or securities law; fraud;embezzlement; fraudulent conversion or misappropriation of property; or unfair or deceptive practices orcomparable allegations; or (C) is subject to a currently effective injunctive or restrictive order or decree relatingto the franchise, or under a federal, state, or Canadian franchise, securities, antitrust, trade regulation or tradepractice law, resulting from a concluded or pending action or proceeding brought by a public agency; or issubject to any currently effective order of any national securities association or national securities exchange, asdefined in the Securities and Exchange Act of 1934, suspending or expelling that person from membership inthe association or exchange; or is subject to a currently effective injunction or restrictive order relating to anyother business activity as a result of an action brought by a public agency or department, including withoutlimitation actions affecting a license as a real estate broker or sales agent – (end of item 3)

Item 4 (The disclosures in Item 4 of the Disclosure Document are amended to include the following):

Except as disclosed in Item 4, neither we, any predecessor or affiliate of ours, or our officers and directors,during the 10-year period immediately before the date of this Disclosure Document, (A) filed as debtor, or hadfiled against it, a petition to start an action under the U.S. Bankruptcy Code; (B) obtained a discharge of its debtsunder the bankruptcy code; or (C) was a principal officer of a company or a general partner in a partnership thateither filed as debtor, or had filed against it, a petition to start an action under the U.S. Bankruptcy Code, or thatobtained a discharge of its debts under the U.S. Bankruptcy Code during or within 1 year after the officer orgeneral partner of ours held this position in the company or partnership – (end of item 4).


STATE OF NORTH DAKOTA’S SPECIFIC DISCLOSURE APPENDIX

Liquidated damage provisions are void.

THE SECURITIES COMMISSIONER HAS HELD THE FOLLOWING TO BE UNFAIR, UNJUST ORINEQUITABLE TO NORTH DAKOTA FRANCHISEES (SECTION 51-19-09, N.D.C.C.):

x Restrictive Covenants: Franchise Disclosure Documents which disclose the existence of covenantsrestricting competition contrary to Section 9-08-06, N.D.C.C., without further disclosing that suchcovenants will be subject to the statute.

x Situs of Arbitration Proceedings: Franchise agreements providing that the parties must agree to thearbitration of disputes at a location that is remote from the site of the franchisee's business.

x Restrictions on Forum: Requiring North Dakota franchisees to consent to the jurisdiction of courtsoutside of North Dakota.

x Liquidated Damages and Termination Penalties: Requiring North Dakota franchisees to consent toliquidated damages or termination penalties.

x Applicable Laws: Franchise agreements that specify that they are to be governed by the laws of a stateother than North Dakota.

x Waiver of Trial by Jury: Requiring North Dakota franchises to consent to the waiver of a trial by jury.

x Waiver of Exemplary and Punitive Damages: Requiring North Dakota franchisees to consent to awaiver of exemplary and punitive damage.

x General Release: Franchise agreements that require the franchisee to sign a general release uponrenewal of the franchise agreement.

x Limitation of Claims: Franchise agreements that require the franchisee to consent to a limitation ofclaims. The statute of limitations under North Dakota law applies.

x Enforcement of Agreement: Franchise agreements that require the franchisee to pay all costs andexpenses incurred by the franchisor in enforcing the agreement. The prevailing party in anyenforcement action is entitled to recover all costs and expenses including attorney's fees.

Because of some financial requirements or regulations that may exist in your state, we have opted or havebeen required to defer the payment by you of all initial franchise fees owed to us, or our affiliate, until suchtime as all initial obligations owed to you under the franchise agreement or other agreements have beenfulfilled by us and you have commenced doing business pursuant to the franchise agreement.


STATE OF RHODE ISLAND’S SPECIFIC DISCLOSURE APPENDIX

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


STATE OF VIRGINIA’S SPECIFIC DISCLOSURE APPENDIX

Additional Disclosure. The following statements are added to Item 17.h.

Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel afranchise without reasonable cause. If any grounds for default or termination stated in the Franchise Agreementdoes not constitute “reasonable cause,” as that term may be defined in the Virginia Retail Franchising Act or thelaws of Virginia, that provision may not be enforceable.


STATE OFWASHINGTON’S SPECIFIC DISCLOSURE APPENDIX

The state of Washington has a statute, RCW 19.100.180 that may supersede the Franchise Agreement orRegional Developer Franchise Agreement in your relationship with us, including the areas of termination andrenewal of your franchise. There may also be court decisions that may supersede the Franchise Agreement orRegional Developer Franchise Agreement in your relationship with us, including the areas of termination andrenewal of your franchise.

We will defer the payment by you of all initial franchise fees owed to us, or our affiliate, until such time as allinitial obligations owed to you under the franchise agreement or other agreements have been fulfilled by us andyou have commenced doing business pursuant to the franchise agreement.

If any of the provisions of the Franchise Agreement or Regional Developer Agreement are inconsistent with therelationship provisions of RCW 19.100.180 or other requirements of the Washington Franchise InvestorProtection Act (the “Act”), the provisions of the Act will prevail over the inconsistent provisions of theFranchise Agreement or Regional Developer Agreement with regard to any franchise sold in Washington.

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

In the event of a conflict of law, the provision of the Washington Franchise Investment Protection Act, Chapter19.100 RCW shall prevail.

A release or waiver of rights executed by you shall not include rights under the Washington FranchiseInvestment Protection Act except when executed pursuant to a negotiated settlement after the franchiseagreement is in effect and where the parties are represented by independent counsel. Provisions such as thosethat unreasonably restrict or limit the statute of limitations period for claims under the Act, rights or remediesunder the Act such as a right to a jury trial may not be enforceable.

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

GP:3610821 v3ZOYO FRANCHISING FDD – Exhibit A –State Administrators/Agents for Service of Process

EXHIBIT ASTATE ADMINISTRATORS AND

AGENTS FOR SERVICE OF PROCESS

STATE STATE ADMINISTRATOR/AGENT ADDRESS

California Commissioner of Business OversightDepartment of Business Oversight

320 West 4th Street, Suite 750Los Angeles, CA 90013-23441-866-275-2677

Hawaii(State

Administrator)

Commissioner of SecuritiesDept. of Commerce and Consumer AffairsBusiness Registration DivisionSecurities Compliance Branch

335 Merchant StreetRoom 203Honolulu, HI 96813

Illinois Illinois Attorney General 500 South Second StreetSpringfield, IL 62706

Indiana(State

Administrator)

Indiana Securities CommissionerSecurities Division

302 West Washington Street, Room E111Indianapolis, IN 46204

Indiana(Agent)

Indiana Secretary of State 302 West Washington Street, Room E018Indianapolis, IN 46204

Maryland(State

Administrator)

Office of the Attorney GeneralDivision of Securities

200 St. Paul PlaceBaltimore, MD 21202-2020

Maryland(Agent)

Maryland Securities Commissioner 200 St. Paul PlaceBaltimore, MD 21202-2020

Michigan Michigan Department of Attorney GeneralConsumer Protection Division

G. Mennen Williams Building, 1st Floor525 West Ottawa StreetLansing, MI 48933

Minnesota Commissioner of CommerceMinnesota Department of Commerce

85 7th Place East, Suite 500St. Paul, MN 55101-2198

New York(State

Administrator)

New York State Department of LawBureau of Investor Protection and Securities

120 Broadway, 23rd FloorNew York, NY 10271

New York(Agent)

Secretary of State of the State of New York 41 State Street, Second FloorAlbany, NY 12231

North Dakota Securities CommissionerNorth Dakota Securities Department

600 East Boulevard AvenueState Capitol, Fifth Floor, Dept. 414Bismarck, ND 58505-0510

Rhode Island Director, Department of Business Regulation,Securities Division

1511 Pontiac AvenueJohn O. Pastore Complex – Building 69-1Cranston, RI 02920

South Dakota Department of Labor and RegulationDivision of Securities

445 East Capitol AvenuePierre, SD 57501-3185

Virginia(State

Administrator)

State Corporation CommissionDivision of Securities and Retail Franchising

1300 East Main Street, 9th FloorRichmond, VA 23219

Virginia(Agent)

Clerk of the State Corporation Commission 1300 East Main Street, 1st FloorRichmond, VA 23219-3630

Washington Department of Financial InstitutionsSecurities Division

150 Israel Road SWTumwater, WA 98501360-902-8760

Wisconsin Commissioner of Securities Department of Financial InstitutionsDivision of Securities201 W. Washington Avenue, Suite 300Madison, WI 53703

EXHIBIT B

FRANCHISE AGREEMENT

Zoyo Franchising, LLC FDD – Exhibit B – Franchise AgreementGP:3611127 v2

GP:3611127 v2Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement

ZOYO FRANCHISING, LLC

FRANCHISE AGREEMENT

TABLE OF CONTENTS

SECTION PAGE

1. INTRODUCTION..............................................................................................................12. FEES AND COSTS............................................................................................................1

2.1 Initial Franchise Fee. .............................................................................................12.2 Royalty Fee. ............................................................................................................22.3 Regional and National Advertising Fee. ..............................................................22.4 Regional Advertising Cooperative........................................................................22.5 Grand Opening Costs. ...........................................................................................22.6 Relocation Fee. .......................................................................................................32.7 Late Payments. .......................................................................................................32.8 Electronic Funds Transfer. ...................................................................................32.9 Application of Payments........................................................................................3

3. GRANT OF FRANCHISE. ...............................................................................................43.1 Term. .......................................................................................................................43.2 Full Term Performance. ........................................................................................43.3 Protected Territory; Selection of Premises; Reservation of Rights. .................43.4 Renewal of Franchise.............................................................................................53.5 Personal Guaranty by Principal Owners.............................................................6

4. DEVELOPMENT AND OPENING OF THE FRANCHISE ........................................64.1 Site Approval; Lease or Purchase of Premises; Opening Timeline ..................64.2 Prototype and Construction Plans and Specifications. ......................................74.3 Development of the Franchise...............................................................................74.4 Computer System...................................................................................................74.5 Equipment, Furniture, Fixtures, Furnishings and Signs. ..................................84.6 Franchise Opening. ................................................................................................8

5. TRAINING. ........................................................................................................................85.1 General Manager. ..................................................................................................85.2 Training. .................................................................................................................9

6. GUIDANCE; OPERATIONS MANUAL. .....................................................................106.1 Guidance and Assistance. ....................................................................................106.2 Operations Manual. .............................................................................................106.3 Modifications to System. .....................................................................................10

7. MARKS.............................................................................................................................117.1 Ownership and Goodwill of Marks. ...................................................................117.2 Limitations on Franchise Owner’s Use of Marks. ............................................117.3 Restrictions on Internet and Website Use. ........................................................117.4 Notification of Infringements and Claims. ........................................................127.5 Discontinuance of Use of Marks. ........................................................................127.6 Indemnification of Franchise Owner. ................................................................12

8. RELATIONSHIP OF THE PARTIES; INDEMNIFICATION. .................................128.1 Independent Contractor; No Fiduciary Relationship. .....................................128.2 No Liability, No Warranties................................................................................128.3 Indemnification. ...................................................................................................13

Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement iGP:3611127 v2

9. CONFIDENTIAL INFORMATION; NON-COMPETITION....................................139.1 Types of Confidential Information.....................................................................139.2 Non-Disclosure Agreement. ................................................................................149.3 Non-Competition Agreement. .............................................................................14

10. Zoyo UNIT FRANCHISE OPERATING STANDARDS.............................................1510.1 Condition and Appearance of the Franchise.....................................................1510.2 Franchise Services and Products. .......................................................................1610.3 Approved Products, Distributors and Suppliers...............................................1610.4 Hours of Operation. .............................................................................................1710.5 Specifications, Standards and Procedures.........................................................1710.6 Compliance with Laws and Good Business Practices. .....................................1810.7 Personnel of the Franchise. .................................................................................1810.8 Insurance. .............................................................................................................1810.9 Credit Cards and Other Methods of Payment. .................................................19

11. ADVERTISING. ..............................................................................................................2011.1 By Us. ....................................................................................................................2011.2 By Franchise Owner. ...........................................................................................2011.3 Regional Advertising Cooperatives. ...................................................................21

12. ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS. ............................2113. INSPECTIONS AND AUDITS.......................................................................................22

13.1 Our Right to Inspect the Franchise. ...................................................................2213.2 Our Right to Audit...............................................................................................22

14. TRANSFER REQUIREMENTS. ...................................................................................2214.1 Organization. ........................................................................................................2214.2 Interests in Franchise Owner; Reference to Exhibit 4. ....................................2314.3 Transfer by Us......................................................................................................2314.4 No Transfer Without Approval. .........................................................................2314.5 Conditions for Approval of Transfer. ................................................................2414.6 Right of First Refusal...........................................................................................2514.7 Death and Disability. ...........................................................................................2614.8 Effect of Consent to Transfer..............................................................................26

15. TERMINATION OF THE FRANCHISE. ....................................................................2616. RIGHTS AND OBLIGATIONS OF COMPANY AND FRANCHISE OWNER

UPON TERMINATION OR EXPIRATION OF THE FRANCHISE........................2816.1 Payment of Amounts Owed to Us.......................................................................2816.2 Marks. ...................................................................................................................2816.3 De-Identification. .................................................................................................2816.4 Confidential Information. ...................................................................................2816.5 Our Option to Purchase the Franchise. .............................................................2816.6 Continuing Obligations. ......................................................................................2916.7 Management of the Franchise.............................................................................29

17. ENFORCEMENT. ...........................................................................................................3017.1 Invalid Provisions; Substitution of Valid Provisions........................................3017.2 Reasonable Business Judgment ..........................................................................3017.3 Unilateral Waiver of Obligations. ......................................................................3017.4 Our Written Consent. ..........................................................................................30

Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement iiGP:3611127 v2

17.5 Lien........................................................................................................................3017.6 No Guarantees. .....................................................................................................3117.7 No Waiver. ............................................................................................................3117.8 Cumulative Remedies. .........................................................................................3117.9 Specific Performance; Injunctive Relief. ...........................................................3117.10 Mediation. .............................................................................................................3217.11 Waiver of Punitive Damages and Jury Trial; Limitations of Actions. ...........3217.12 Governing Law/Consent To Jurisdiction...........................................................3217.13 Binding Effect.......................................................................................................3317.14 No Liability to Others; No Other Beneficiaries. ...............................................3317.15 Construction. ........................................................................................................3317.16 Joint and Several Liability. .................................................................................3317.17 Multiple Originals................................................................................................3317.18 Timing Is Important. ...........................................................................................3317.19 Independent Provisions. ......................................................................................33

18. NOTICES AND PAYMENTS. .......................................................................................3419. ENTIRE AGREEMENT. ................................................................................................34EXHIBIT 1.......................................................................................................................................1EXHIBIT 2.......................................................................................................................................1EXHIBIT 3.......................................................................................................................................1EXHIBIT 4.......................................................................................................................................1EXHIBIT 5.......................................................................................................................................1

Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement iiiGP:3611127 v2

GP:3611127 v2Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement i


FRANCHISE AGREEMENT

This Franchise Agreement (this or the “Agreement”) is being entered into effective as of the_____ day of _______________, 20__ (the “Agreement Date”). The parties to this Agreement are ZoyoFranchising, LCC, an Arizona limited liability company (“we” or “us”) and_________________________________________ (“you”), and, if you are a partnership, corporation, orlimited liability company, any person or entity who directly or indirectly owns a ten percent (10%) ormore interest in you (a “Principal Owners”).

1. INTRODUCTION.

Through the expenditure of considerable time, effort and money, we and our affiliates havedevised a system for the establishment and operation of a Zoyo Neighborhood Yogurt® business model, afranchise that specializes in the sale of self-service frozen yogurt, and other related products and services.All of these characteristics are referred to in this Agreement as the “System”. This business modelincludes a franchise model offering all of our franchised services and products. We identify the Systemby the use of certain trademarks, service marks and other commercial symbols, including the mark “ZoyoNeighborhood Yogurt” and certain associated designs, artwork and logos, which we may change, or addto, from time to time (the “Marks”).

From time to time we grant to persons who meet our qualifications a franchise to own and operatea Zoyo Neighborhood Yogurt® franchise in accordance with the System. This Agreement is beingpresented to you because of the desire you have expressed to obtain the right to develop, own, and befranchised to operate a Zoyo Neighborhood Yogurt® franchise. The Zoyo Neighborhood Yogurt®franchise you will operate under this Agreement is referred to as the “Franchise.” In signing thisAgreement, you acknowledge that you have conducted an independent investigation of the Franchise, andrecognize that, like any other business, the nature of it may evolve and change over time, that aninvestment in your Zoyo Neighborhood Yogurt® franchise involves business risks, and that the successof this business venture is primarily dependent on your business abilities and efforts.

2. FEES AND COSTS.

2.1 Initial Franchise Fee. You agree to pay us the full amount of the initial franchise fee ofThirty-Five Thousand Dollars ($35,000) (the “Initial Franchise Fee”) when you sign this Agreement. In

recognition of the expenses we incur in furnishing assistance and services to you, you agree that we will have fully earned the Initial Franchise Fee, and that is due and non-refundable when you sign this Agreement.

2.2 Royalty Fee.

You agree to pay us a continuing franchise royalty fee (“Royalty Fee”) in the amount of sixpercent (6%) of the Gross Revenues of the Franchise. This fee will be payable weekly on the Tuesday of the week following the reporting week and is based on the Franchise’s Gross Revenues for the preceding week. The term ”Gross Revenues” means the total of all revenue and receipts derived from the operationof the Franchise, including all amounts received at or away from the site of the Franchise, or through thebusiness the Franchise conducts (such as fees for consultations, fees for the sale of any service or product,gift certificate sales, and revenue derived from product sales, whether in cash or by check, credit card,debit card, barter or exchange, or other credit transactions); and excludes only sales taxes collected fromcustomers and paid to the appropriate taxing authority, and all customer refunds and credits you actually make.

2.3 Regional and National Advertising Fee.

Recognizing the value of advertising to the goodwill and public image of Zoyo Neighborhood Yogurt® shop, we may, in our sole discretion, establish, maintain and administer an advertising fund (the“Ad Fund”) for such advertising as we may deem necessary or appropriate in our sole discretion. Youagree to contribute to the Ad Fund two percent (2%) of the Gross Revenues (the “Advertising Fee”). The Advertising Fee is payable to us monthly with and at the same time as your Royalty Fees payable under Section 2.2 above. A further description of the Ad Fund and your obligations with respect to advertising and promoting the Franchise is found in Section 11 of this Agreement.

2.4 Regional Advertising Cooperative.

In the event that more than one Zoyo Neighborhood Yogurt® franchise is located in an area of dominant influence (“ADI”), we reserve the right to form a regional advertising cooperative (the “Regional Ad Co-op”), require you to join the Regional Ad Co-op and contribute to its funding. An ADI is a geographic market designation that defines a broadcast media market, consisting of all countiesin which the home market stations receive a preponderance of viewing. We reserve the right to determinethe amount to be contributed by each member of the Regional Ad Co-op as necessary, up to a maximum of 3% of your Gross Revenues. We have the power to form, change, dissolve and merge the Regional Ad Co-op and set the by-laws.

2.5 Grand Opening Costs.

During the ninety (90) day period that begins thirty (30) days prior to the opening of your Franchise, and ending sixty (60) days after the opening of your Franchise (the “Grand Opening Period”), you must spend between Five Hundred Dollars ($500) and Three Thousand Dollars ($3,000) in verifiablemarketing costs to publicize the grand opening of your Franchise. These costs may include localadvertising, flyers, promotions, and giveaways. Upon conclusion of the Grand Opening Period, you mustsend to us a report detailing the amounts spent to publicize the grand opening of your franchise during the Grand Opening Period. All proposed grand opening advertising must be submitted to and approved by usin advance.

Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement 2GP:3611127 v2

2.6 Relocation Fee.

If you must relocate the Premises of your Franchise for any reason, your new location must be approved by us following the same approval procedures as your original location. In addition, you must pay to us a relocation fee (the “Relocation Fee”) of Two Thousand Five Hundred Dollars ($2,500). The Relocation Fee is to defray our costs of approving a new location, reviewing and approving plans for thenew location, and updating our records and marketing materials to reflect the new location.

2.7 Late Payments.

All Royalty Fees, Advertising Fees, amounts due from you for purchases from us or our affiliates,and other amounts which you owe us or our affiliates (unless otherwise provided for in a separate agreement between us or our affiliates) will begin to accrue interest after their respective due dates at the lesser of (i) the highest commercial contract interest rate permitted by state law, and (ii) the rate of eighteen percent (18%) per annum. In addition to any accruing interest, all late payments will incur a late charge of Fifty Dollars ($50) per day until the payment is made. Payments due us or our affiliates will not be deemed received until such time as funds from the deposit of any check by us or our affiliates is collected from your account. You acknowledge that the inclusion of this paragraph in this Agreement does not mean we agree to accept or condone late payments, nor does it indicate that we have any intention to extend credit to, or otherwise finance your operation of the Franchise. We have the right to require that any payments due to us or our affiliates be made by certified or cashier’s check in the event that any payment by check is not honored by the bank upon which the check is drawn. We also reserve the right to charge you a fee of One Hundred and No/100 Dollars ($100.00) for any payment by check that is not honored by the bank upon which it is drawn.

2.8 Electronic Funds Transfer.

We have the right to require you to participate in an electronic funds transfer program underwhich Royalty Fees, Advertising Fees, and any other amounts payable to us or our affiliates are deductedor paid electronically from your bank account (the “Account”). In the event you are required to authorize us to initiate debit entries, you agree to make the funds available in the Account for withdrawal by electronic transfer no later than the payment due date. The amount actually transferred from the Account to pay Royalty Fees and Advertising Fees will be based on your Gross Revenues as you report to us. If you have not properly inputted the Gross Revenues for any reporting period, then we will be authorized todebit the Account in an amount equal to one hundred twenty percent (120%) of the Royalty Fee,Advertising Fee, and other amounts transferred from the Account for the last reporting period for whichthe Gross Revenues report was provided to us. If at any time we determine that you have under-reported your Gross Revenues or underpaid any Royalty Fee or Advertising Fee due us under this Agreement, thenwe will be authorized to initiate immediately a debit to the Account in the appropriate amount, plus applicable interest, in accordance with the foregoing procedure. Any overpayment will be credited, without interest, against the Royalty Fee, Advertising Fee, and other amounts we otherwise would debit from your account during the following reporting period. Our use of electronic funds transfers as a method of collecting Royalty Fees and Advertising Fees due us does not constitute a waiver of any ofyour obligations to provide us with weekly reports as provided in Section 12, nor is it a waiver of any ofthe rights and remedies available to us under this Agreement.

2.9 Application of Payments.

When we receive a payment from you, we have the right in our sole discretion to apply it as wesee fit to any past due indebtedness of yours due to us or our affiliates, whether for Royalty Fees,


Advertising Fees, purchases, interest, or for any other reason, regardless of how you may designate aparticular payment should be applied.

3. GRANT OF FRANCHISE.

3.1 Term.

You have applied for a franchise to own and operate the Franchise under this Agreement, and wehave approved your application in reliance on all of the representations you made in that application. Asa result, and subject to the provisions of this Agreement, we grant to you a franchise to operate the Franchise offering all products, services, and proprietary programs of ours, in accordance with all elements of the System, that we may require for Zoyo Neighborhood Yogurt® franchises.

You must operate the Franchise using the System and the Marks in the operation of that Franchise, for a term of ten (10) years (the “Initial Term”). The Initial Term will begin on the Agreement Date. (For convenience, the expiration date of the Initial Term is listed on Exhibit 1.) All references tothe “term” of this Agreement refer to the period from the Agreement Date to the date on which thisAgreement actually terminates or expires.

3.2 Full Term Performance.

You specifically agree to be obligated to operate the Franchise, perform the obligations of this Agreement, and continuously exert your best efforts to promote and enhance the business of the Franchisefor the full term of this Agreement.

3.3 Protected Territory; Selection of Premises; Reservation of Rights.

You must operate your Franchise at a location we approve, as described in Section 4.1 (the “Premises”). The Premises are identified on Exhibit 1. If the Premises have not been identified as of the Agreement Date, you and we agree to modify Exhibit 1 to identify the Premises when identified. You will receive a protected territory equal to a one and one-half (1.5) mile radius surrounding the Premises (The “Territory”). During the term of this Agreement, if you are in compliance, we will not directly operate or franchise another to operate any other Zoyo Neighborhood Yogurt® shop within the Territory. The license granted to you under this Agreement is personal in nature, may not be used at any location other than at the Premises, and does not include the right to sell any products or services identified by the Marks at any location other than at the Premises. This Agreement does not include the right to sell any products or services identified by the Marks through any other channels of distribution, including the Internet (or any other existing or future form of electronic commerce). You will not open any other Zoyo Neighborhood Yogurt® shop in the Territory unless we permit you to do so under a separate franchiseagreement. You will not have the right to subfranchise or sublicense any of your rights under this Agreement. You also understand and agree that the Territory does not include any regional, enclosed or similarly situated shopping centers or malls, airports or other transportation terminals, sports facilities, hospitals, college and university campuses, corporate campuses, a department within an existing retail store, hotels, grocery stores, or other similar types of locations that have a restricted trade area (“Captive Market Locations”) located within the geographic boundaries of the Territory.

We retain all rights with respect to Zoyo Neighborhood Yogurt® franchisees, the Marks and the System, including the right to:


(a) establish and operate Zoyo Neighborhood Yogurt® shops and grant rights to otherpersons to establish and operate Zoyo Neighborhood Yogurt® shops, on any terms and conditions wedeem appropriate and at any locations other than in your Territory;

(b) provide and grant rights to other persons to provide goods and services similar to orcompetitive with those provided by Zoyo Neighborhood Yogurt® shops to customers located within oroutside a Territory, whether identified by the Marks or other trademarks or service marks, through any distribution channel other than Zoyo Neighborhood Yogurt® shops located within a Territory (including sales of products via mail order, catalogs, toll-free telephone numbers and electronic means including the Internet);

(c) acquire the assets or ownership interest of one or more businesses providing products andservices similar to those provided at Zoyo Neighborhood Yogurt® shops, and franchising, licensing orcreating similar arrangements with respect to these businesses once acquired, wherever these businesses (or the franchisees or licensees of these businesses) are located or operating, including within your Territory;

(d) be acquired (regardless of the form of transaction) by a business providing products andservices similar to those provided at Zoyo Neighborhood Yogurt® shops, or by another business, even ifsuch business operates, franchises or licenses competitive businesses within a Territory;

(e) provide or offer Zoyo Neighborhood Yogurt® products and services to customers withinor outside of the Territory through Zoyo Neighborhood Yogurt® affiliates or dealers of our products andservices; and

(f) operate or grant franchises to operate Zoyo Neighborhood Yogurt® shops at CaptiveMarket Locations.

3.4 Renewal of Franchise.

(a) Franchise Owner’s Right to Renew. If you meet the following conditions, you willhave the right to renew the Franchise for two (2) additional five (5) year terms (the “Renewal Term”):(i) you have substantially complied with all provisions of this Agreement and all other agreements between us, (ii) you are currently in compliance with this Agreement and any other agreement between you and us, including payment of all amounts owed us or any supplier; (iii) you refurbish and decorate thePremises, replace fixtures, furnishings, wall decor, furniture, equipment, and signs and otherwise modifythe Premises in compliance with specifications and standards then applicable under new or renewal franchises for Zoyo Neighborhood Yogurt® franchises; and (iv) you complete the requirements described in Section 3.4(b) below.

(b) Renewal Agreement; Releases. Should you wish to renew the Franchise, you mustprovide us with written notice of that intent between nine (9) and twelve (12) months before theexpiration of the Initial Term. To renew the Franchise, we, you and your Principal Owners must execute the form of Franchise Agreement and any ancillary agreements we are then customarily using in the grant or renewal of franchises for the operation of Zoyo Neighborhood Yogurt® franchises (with appropriate modifications to reflect the fact that the agreement relates to the grant of a renewal franchise), except thatno initial franchise fee will be payable upon renewal of the franchise. However, you must pay to us arenewal fee equal to fifty percent (50%) of our then-current initial franchise fee for new Zoyo Neighborhood Yogurt® franchises. You and your Principal Owners and your and their spouses must also


execute general releases, in a form satisfactory to us, of any and all claims against us and our affiliates, and our and their respective owners, officers, directors, employees, and agents.

3.5 Personal Guaranty by Principal Owners

Each of the Principal Owners and their spouses (where applicable), will be required to execute a personal guaranty (the “Guaranty”), guaranteeing your liabilities and obligations to us. A copy of the Guaranty is incorporated herein as Exhibit 2.

4. DEVELOPMENT AND OPENING OF THE FRANCHISE

4.1 Site Approval; Lease or Purchase of Premises; Opening Timeline

(a) You will use your best efforts to locate and select a proposed site for the Premises that isacceptable to us as suitable for the operation of the Franchise, which must be reviewed and approved byus within one hundred twenty (120) days of the Agreement Date. Our review and approval process may take up to thirty (30) days, so we recommend you submit your proposed site to us within ninety (90) days of the Agreement Date. You must submit to us, in the form we specify, a description of the site and such other information or materials as we may reasonably require. We will not unreasonably withhold approval of a site that meets our standards for general location and neighborhood, traffic patterns, parking size, layout and other physical characteristics, for Zoyo Neighborhood Yogurt® shops. Our approval of a site shall not constitute, nor be deemed, a judgment as to the likelihood of success of a Zoyo Neighborhood Yogurt® shop at such location, or a judgment as to the relative desirability of suchlocation in comparison to other locations. If you fail to identify a mutually-agreeable site within the onehundred twenty (120) day period, we may terminate this Agreement.

(b) Once we have approved the proposed site of the Premises for your Franchise, you mustobtain lawful possession of the Premises through lease or purchase within thirty (30) days of our approvalof the Premises. You agree that you will not execute a lease without our advance written approval of the lease terms. The lease for the Premises must include the Addendum to Lease, attached hereto as Exhibit 3, permitting us to take possession of the Premises under certain conditions if this Agreement is terminated or if you violate the terms of the lease.

(c) The timeline for the opening of the Franchise shall be as follows:

(i) Select a proposed site and obtain our approval of the proposed site no later thanone hundred twenty (120) days after the Agreement Date.

(ii) Obtain lawful possession of the Premises through lease or purchase within thirty(30) days of our approval of the location.

(iii) Obtain all necessary building permits and obtain our approval of all constructionplans within forty-five (45) days of obtaining lawful possession of the location.

(iv) Obtain all necessary business licenses, complete construction and hold a grandopening of the Franchise within one hundred twenty (120) days of obtaining lawful possession of the location.


4.2 Prototype and Construction Plans and Specifications.

We will furnish to you sample plans and specifications for your franchise location, reflecting our requirements for design, decoration, furnishings, furniture, layout, equipment, fixtures and signs for Zoyo Neighborhood Yogurt® shops, which may be in the form of actual plans for an existing or proposed Zoyo Neighborhood Yogurt® shop with which we are involved. It will then be your responsibility to have theplans and specifications modified to comply with all ordinances, building codes, permit requirements, and lease requirements and restrictions applicable to the Premises. You must submit final construction plans and specifications to us for our approval before you begin construction at the Premises, and must construct the Franchise location in accordance with those approved plans and specifications.

4.3 Development of the Franchise.

You agree at your own expense to do the following by the Opening Deadline defined in Exhibit1: (1) secure all financing required to fully develop the Franchise; (2) obtain all required building, utility, sign, health, sanitation and business permits and licenses and any other required permits and licenses;(3) construct the Premises according to the approved construction plans and specifications; (4) decorate the Franchise in compliance with the approved plans and specifications; (5) purchase and install all required equipment, furniture, furnishings and signs; (6) cause the training requirements of Section 5 to be completed; (7) purchase an opening inventory of products and other supplies and materials;(8) provide proof, in a form satisfactory to us, that your operation of the Franchise at the Premises doesnot violate any applicable state or local zoning or land use laws, ordinances, or regulations, or any restrictive covenants that apply to such location; (9) provide proof, in a form satisfactory to us, that you (or your General Manager, as defined in Section 5.1, if any) are legally authorized and have all licenses necessary to perform all of the services to be offered by your Franchise, and that your organizational structure is consistent with all legal requirements; (10) provide proof, in a format satisfactory to us, that you have obtained all required insurance policies; (11) do any other acts necessary to open the Franchisefor business; (12) obtain our approval to open the Franchise for business; and (13) open the Franchise forbusiness.

4.4 Computer System.

(a) General Requirements. You agree to use in the development and operation of theFranchise the computer hardware, terminals/billing systems, and operating software (“Computer System”) that we specify from time to time in this Agreement or the Operations Manual. You acknowledge that we may modify such specifications and the components of the Computer System from time to time. As partof the Computer System, we may require you to obtain specified computer hardware or software,including without limitation a license to use proprietary software developed by us or others. Ourmodification of such specifications for the components of the Computer System may require you to incurcosts to purchase, lease or obtain by license new or modified computer hardware or software, and toobtain service and support for the Computer System during the term of this Agreement. Youacknowledge that we cannot estimate the future costs of the Computer System (or additions or modifications thereto), and that the cost to you of obtaining the Computer System (or additions ormodifications thereto), including software and hardware components, may not be fully amortizable overthe remaining term of this Agreement. Nonetheless, you agree to incur such costs in connection withobtaining the computer hardware and software comprising the Computer System (or additions ormodifications thereto). Within sixty (60) days after you receive notice from us, you agree to obtain thecomponents of the Computer System that we designate and require. You further acknowledge and agreethat we and our affiliates have the right to charge a reasonable fee for software or Computer System installation services, modifications and enhancements specifically made for us or our affiliates that are licensed to you; and other maintenance and support Computer System-related services that we or our


affiliates furnish to you. You will have sole responsibility for: (1) the acquisition, operation,maintenance, and upgrading of your Computer System; (2) the manner in which your Computer Systeminterfaces with our computer system and those of third parties; and (3) any and all consequences that may arise if your Computer System is not properly operated, maintained, and upgraded. You will also be required to pay the monthly cost of maintaining high speed internet access at your site.

(b) Software. We may require you to purchase certain proprietary software which you willbe required to install onto the Computer System and use in the daily operation of the Franchise. Inaddition, we may, at any time and from time to time, contract with one or more software providers, business service providers, or other third parties (individually, a “Service Provider”) to develop, license, or otherwise provide to, or for the use and benefit of, you and other Zoyo Neighborhood Yogurt® franchises certain software, software applications, and software maintenance and support services related to the Computer System that you must or may use in accordance with our instructions with respect to your Computer System.

(c) Customer Data. We also may access financial information and customer data producedby or otherwise located on your Computer System (collectively the “Customer Data”). We own and controlthe use of the Customer Data that is stored on the POS System.

4.5 Equipment, Furniture, Fixtures, Furnishings and Signs.

You agree to use in the development and operation of the Franchise only those brands, types ormodels of equipment, furniture, fixtures, furnishings, and signs we have approved.

4.6 Franchise Opening.

You agree not to open the Franchise for business until: (1) all of your obligations under Sections 4.1 through 4.4 of this Section have been fulfilled; (2) we determine that the Franchise has been constructed, decorated, furnished, equipped, and stocked with materials and supplies in accordance with plans and specifications we have provided or approved; (3) you and any of your employees whom we require complete our pre-opening Initial Training (as defined in Section 5 of this Agreement) to our satisfaction; (4) you have furnished us with copies of all insurance policies required by Section 10.8 of this Agreement, or have provided us with appropriate alternative evidence of insurance coverage and payment of premiums as we have requested; and (5) we have approved any marketing, advertising, and promotional materials you desire to use, as provided in Section 11.2 of this Agreement.

5. TRAINING.

5.1 General Manager.

You must designate a general manager to operate the Franchise (“General Manager”). The term “General Manager” means an individual with primary day-to-day responsibility for the Franchise’s operations, and may be you (if you are an individual), a Principal Owner, officer, director, or employee of yours (if you are other than an individual) or another individual we approve. Your General Manager isnot required to own any equity interest in the Franchise. The General Manager will be obligated todevote his or her full time, best efforts, and constant personal attention to the Franchise’s operations, andmust have full authority from you to implement the System at the Franchise. You must not hire anyGeneral Manager or successor General Manager without first receiving our written approval of suchGeneral Manager’s qualifications. Our approval of your General Manager shall not constitute, nor bedeemed, a judgment as to the likelihood of success of your Franchise. We will not be liable, nor will weassume liability, if you are unhappy with, or if you are damaged in any way because of any actions or


decisions of, the General Manager we approved. Each General Manager and successor General Manager must attend and complete our Initial Training (as defined herein). No General Manager may have anyinterest in or business relationship with any business competitor of your Franchise. Each General Manager must sign a written agreement, in a form approved by us, to maintain confidential our Confidential Information described in Section 9.1, and to abide by the covenants not to compete describedin Section 9.3. You must forward to us a copy of each such signed agreement. If we determine, in oursole discretion, during or following completion of the Initial Training program, that your GeneralManager (if any) is not qualified to act as General Manager of the Franchise, then we have the right to require you to choose (and obtain our approval of) a new individual for that position.

5.2 Training.

You acknowledge that it is very important to the operation of the Franchise that you and youremployees receive appropriate training. To that end, you agree as follows:

(a) At least two (2) weeks before the Franchise opens for business, you must attend ourinitial training program (the “Initial Training”) at the time and place we designate. You (if you are anindividual) or at least one of your Principal Owners (if you are a legal entity) must complete the InitialTraining to our satisfaction. If you employ a General Manager other than yourself or one of your Principal Owners, that General Manager must also complete the Initial Training to our satisfaction. Other employees may complete the Initial Training at your sole discretion and expense, provided you first obtain our approval and subject to availability of facilities and materials. The Initial Training may include classroom instruction and Franchise operation training, and will be furnished at our training facility in Phoenix, Arizona, or at another location we designate. Our Initial Training may be different for each employee depending on their responsibilities at the Franchise. There is no tuition fee charged for the Initial Training of up to three (3) participants. For each additional participant after three, you will berequired to pay a tuition fee of Two Thousand Five Hundred Dollars ($2,500). If we determine that youor a Principal Owner cannot complete Initial Training to our satisfaction, we may, at our option, either (1)require you or the Principal Owner to attend additional training at your expense (for which we may charge reasonable fees), or (2) terminate this Agreement. If we, in our sole discretion, determine that any General Manager or employee whom we require to attend any Initial Training is unable to satisfactorily complete such program, then you must not hire that person, and must hire a substitute General Manager or employee (as the case may be), who must enroll in the Initial Training within fifteen (15) days thereafter, and complete the Initial Training to our satisfaction.

(b) You agree to have you, your General Manager or other employees who attend our InitialTraining complete additional training programs at places and times as we may request from time to time during the term of this Agreement.

(c) In addition to providing the Initial Training described above, we reserve the right to offerand hold such additional ongoing training programs and franchise owners’ meetings regarding such topicsand at such times and locations as we may deem necessary or appropriate. We also reserve the right tomake any of these training programs mandatory for you or designated owners, employees, orrepresentatives of yours. We reserve the right to charge you a daily attendance fee in an amount to be setby us for each attendee of yours who attends any mandatory or optional training program or owners meeting. If we offer any such mandatory training programs, then you or your designated personnel mustattend a minimum of seventy-five percent (75%) of the programs offered on an annual basis. At this time,we do not know the number of additional training sessions or the amount of time our training programwill require annually.


(d) You agree to pay all wages and compensation owed to, and travel, lodging, meal,transportation, and personal expenses incurred by, all of your personnel who attend our Initial Training orany mandatory or optional training we provide.

(e) Your General Manager and other employees shall obtain all certifications and licensesrequired by law in order to perform their responsibilities and duties for the Franchise.

6. GUIDANCE; OPERATIONS MANUAL.

6.1 Guidance and Assistance.

During the term of this Agreement, we may from time to time furnish you guidance and assistance with respect to: (1) specifications, standards, and operating procedures used by Zoyo Neighborhood Yogurt® franchises; (2) purchasing approved equipment, furniture, furnishings, signs,materials and supplies; (3) development and implementation of local advertising and promotionalprograms; (4) general operating and management procedures; (5) establishing and conducting employee training programs for your Franchise; and (6) changes in any of the above that occur from time to time. This guidance and assistance may, in our discretion, be furnished in the form of bulletins, written reports and recommendations, operations manuals and other written materials (the “Operations Manual”), telephone consultations or personal consultations at our offices or your Franchise. If you request—and if we agree to provide—any additional, special on-premises training of your personnel or other assistance inoperating your Franchise, then you agree to pay a daily training fee in an amount to be set by us, and allexpenses we incur in providing such training or assistance, including any wages or compensation owed to, and travel, lodging, transportation, and living expenses incurred by, our personnel.

6.2 Operations Manual.

The Operations Manual we lend to you will contain mandatory and suggested specifications, standards, and operating procedures that we prescribe from time to time for your Franchise, as well as information relative to other obligations you have in the operation of the Franchise. The Operations Manual may be composed of or include audio recordings, video recordings, computer disks, compact disks, or other written or intangible materials. We may make all or part of the Operations Manual available to you through various means, including the Internet. We may update the Operations Manual periodically to reflect changes in the specifications, standards, operating procedures and other obligations in operating the Franchise. You must keep your copy of the Operations Manual current, and if you and we have a dispute over the contents of the Operations Manual, then our master copy of the OperationsManual will control. You agree that you will not at any time copy any part of the Operations Manual,permit it to be copied, disclose it to anyone not having a need to know its contents for purposes of operating your Franchise, or remove it from the Premises without our permission. If your copy of the Operations Manual is lost, destroyed, or significantly damaged, then you must obtain a replacement copyfor us at our then-applicable charge.

6.3 Modifications to System.

We will continually be reviewing and analyzing developments in the industry, as well as developments in fields related to small-business management and franchising, and based upon our evaluation of this information, may make changes in the System, including but not limited to, adding new components to services offered and equipment used by Zoyo Neighborhood Yogurt® franchises. Moreover, changes in laws regulating the services offered by Zoyo Neighborhood Yogurt® shops may(a) require us to restructure our franchise program, (b) require your General Manager and employees to obtain additional licenses or certifications, (c) require you to retain or establish relationships with


additional professionals and specialists in the retail industry, or (d) require you to modify your ownership or organizational structure. You agree, at our request, to modify the operation of the Franchise to comply with all such changes, and to be solely responsible for all related costs.

6.4 Regional Developers

You acknowledge that we may designate a regional developer to serve as our representative inproviding training and support services to you and your Franchise.

7. MARKS.

7.1 Ownership and Goodwill of Marks.

You acknowledge that your right to use the Marks is derived solely from this Agreement, and islimited to your operation of the Franchise pursuant to and in compliance with this Agreement and allapplicable standards, specifications, and operating procedures we prescribe from time to time during theterm of the Franchise. You understand and acknowledge that our right to regulate the use of the Marks includes, without limitation, any use of the Marks in any form of electronic media, such as Websites (as defined herein) or web pages, or as a domain name or electronic media identifier. If you make any unauthorized use of the Marks, it will constitute a breach of this Agreement and an infringement of our rights in and to the Marks. You acknowledge and agree that all your usage of the Marks and any goodwill established by your use will inure exclusively to our benefit and the benefit of our affiliates, andthat this Agreement does not confer any goodwill or other interests in the Marks on you (other than theright to operate the Franchise in compliance with this Agreement). All provisions of this Agreement applicable to the Marks will apply to any additional trademarks, service marks, commercial symbols, designs, artwork, or logos we may authorize or license you to use during the term of this Agreement.

7.2 Limitations on Franchise Owner’s Use of Marks.

You agree to use the Marks as the sole trade identification of the Franchise, except that you willdisplay at the Premises a notice, in the form we prescribe, stating that you are the independent owner ofthe Franchise pursuant to a Franchise Agreement with us. You agree not to use any Marks as part of any corporate or trade name or with any prefix, suffix, or other modifying words, terms, designs, or symbols (other than logos and additional trade and service marks licensed to you under this Agreement), or in any modified form. You also shall not use any Marks or any commercial symbol similar to the Marks inconnection with the performance or sale of any unauthorized services or products, or in any other manner we have not expressly authorized in writing. You agree to display the Marks in the manner we prescribeat the Franchise and in connection with advertising and marketing materials, and to use, along with theMarks, any notices of trade and service mark registrations we specify. You further agree to obtain any fictitious or assumed name registrations as may be required under applicable law.

7.3 Restrictions on Internet and Website Use.

We retain the sole right to advertise the System on the Internet and to create, operate, maintainand modify, or discontinue the use of, a website using the Marks. You have the right to access ourwebsite. Except as we may authorize in writing, however, you will not: (1) link or frame our website;(2) conduct any business or offer to sell or advertise any products or services on the Internet (or any other existing or future form of electronic communication); (3) create or register any Internet domain name in any connection with your franchise; and (4) use any e-mail address which we have not authorized for use in operating the Franchise. You will not register, as Internet domain names, any of the Marks that we now or hereafter may own or any abbreviation, acronym or variation of the Marks, or any other name that


could be deemed confusingly similar. Further, you may not market, advertise or promote your Franchise or conduct any business on the Internet, including using social and professional networking sites to promote your Franchise, except as provided in our written social media policy (if any) or with our prior written approval.

7.4 Notification of Infringements and Claims.

You agree to immediately notify us in writing of any apparent infringement of or challenge toyour use of any Marks, or claim by any person of any rights in any Marks or similar trade name,trademark, or service mark of which you become aware. You agree not to communicate with anyone except us and our counsel in connection with any such infringement, challenge, or claim. We have the right to exclusively control any litigation or other proceeding arising out of any actual or alleged infringement, challenge, or claim relating to any Marks. You agree to sign any documents, render any assistance, and do any acts that our attorneys say is necessary or advisable in order to protect and maintain our interests in any litigation or proceeding related to the Marks, or to otherwise protect andmaintain our interests in the Marks.

7.5 Discontinuance of Use of Marks.

If it becomes advisable at any time in our sole judgment for you to modify or discontinue the useof any Marks, or use one or more additional or substitute trade or service marks, including the Marks usedas the name of the Franchise, then you agree, at your sole expense, to comply with our directions tomodify or otherwise discontinue the use of the Marks, or use one or more additional or substitute trade orservice marks, within ninety (90) days after our notice to you.

7.6 Indemnification of Franchise Owner.

We agree to indemnify you against, and reimburse you for, all damages for which you are heldliable in any trademark infringement proceeding arising out of your use of any Marks pursuant to and incompliance with this Agreement, and for all costs you reasonably incur in the defense of any such claimin which you are named as a party, so long as you have timely notified us of the claim, and have otherwise complied with this Agreement.

8. RELATIONSHIP OF THE PARTIES; INDEMNIFICATION.

8.1 Independent Contractor; No Fiduciary Relationship.

This Agreement does not create a fiduciary relationship between you and us. You and we are independent contractors, and nothing in this Agreement is intended to make either party a general or special agent, joint venture, partner, or employee of the other for any purpose whatsoever. You agree to conspicuously identify yourself in all your dealings with customers, suppliers, public officials, personnel, and others as the owner of the Franchise pursuant to a Franchise Agreement with us, and to place any other notices of independent ownership on your forms, business cards, stationery, advertising, and other materials as we may require from time to time.

8.2 No Liability, No Warranties.

We have not authorized or empowered you to use the Marks except as provided by this Agreement, and you agree not to employ any of the Marks in signing any contract, check, purchaseagreement, negotiable instrument or legal obligation, application for any license or permit, or in a manner that may result in liability to us for any indebtedness or obligation of yours. Except as expressly


authorized by this Agreement, neither you nor we will make any express or implied agreements, warranties, guarantees or representations, or incur any debt, in the name of or on behalf of the other, orrepresent that your and our relationship is other than that of franchisor and franchisee.

8.3 Indemnification.

We will not assume any liability or be deemed liable for any agreements, representations, or warranties you make that are not expressly authorized under this Agreement, nor will we be obligated forany damages to any person or property directly or indirectly arising out of the operation of the businessyou conduct pursuant to this Agreement, whether or not caused by your negligent or willful action orfailure to act. We will have no liability for any sales, use, excise, income, gross receipts, property, orother taxes levied against you or your assets, or on us, in connection with the business you conduct, orany payments you make to us pursuant to this Agreement (except for our own income taxes). You agree to indemnify, defend, and hold us, our affiliates and our and their respective owners, directors, officers, employees, agents, successors, and assigns (individually, an “Indemnified Party,” and collectively, the “Indemnified Parties”), harmless against, and to reimburse such Indemnified Parties for, all such obligations, damages, and taxes for which any Indemnified Party may be held liable, and for all costs the Indemnified Party reasonably may incur in the defense of any such claim brought against the IndemnifiedParty, or in any such action in which the Indemnified Party may be named as a party, including withoutlimitation actual and consequential damages; reasonable attorneys’, accountants’, or expert witness fees; cost of investigation and proof of facts; court costs; other litigation expenses; and travel and living expenses. Each Indemnified Party has the right to defend any such claim against the Indemnified Party. You further agree to hold us harmless and indemnify and defend us for all costs, expenses, or losses we incur in enforcing the provisions of this Agreement, defending our actions taken relating to this Agreement, or resulting from your breach of this Agreement, including without limitation reasonableattorneys’ fees (including those for appeal), unless, after legal proceedings are completed, you are foundto have fulfilled and complied with all of the terms of this Agreement. Your indemnification obligationsdescribed above will continue in full force and effect after, and notwithstanding, the expiration or termination of this Agreement.

9. CONFIDENTIAL INFORMATION; NON-COMPETITION.

9.1 Types of Confidential Information.

We possess certain unique confidential and proprietary information and trade secrets consisting ofthe following categories of information, methods, techniques, products, and knowledge developed by us,including but not limited to: (1) services and products offered and sold at Zoyo Neighborhood Yogurt® shops; (2) knowledge of sales and profit performance of any one or more Zoyo Neighborhood Yogurt® shops; (3) knowledge of sources of products sold at Zoyo Neighborhood Yogurt® shops, advertising and promotional programs, and image and decor; (4) methods, techniques, formats, specifications, procedures, information, systems, and knowledge of, and experience in, the development, operation, and franchising of Zoyo Neighborhood Yogurt® shops; and (5) the selection and methods of training employees. We will disclose much of the above-described information to you in advising you about site selection, providing our Initial Training, the Operations Manual, and providing guidance and assistance to you under this Agreement.

You must fully and promptly disclose to us all ideas, concepts, products, recipes, process methods, techniques, improvements, additions and Customer Data relating to the development oroperation of the System, or any new trade names, service marks or other commercial symbols, orassociated logos relating to the operation of the System, or any advertising or promotion ideas related to the System (collectively, the “Improvements”) that you, any Principal Owners or your employees or


agents conceive or develop during the term of this Agreement. You and your Principal Owners, agents and employees acknowledge and agree that any Improvement is our property, and you and your Principal Owners, agents or employees must sign all documents necessary to evidence the assignment of theImprovement to us without any additional compensation. You acknowledge and agree that we may usethe Improvement and disclose or license the Improvement for use by others. You must not introduce any Improvement or any additions or modifications of or to the System without our prior written consent.

9.2 Non-Disclosure Agreement.

You agree that your relationship with us does not vest in you any interest in the Confidential Information, other than the right to use it in the development and operation of the Franchise, and that theuse or duplication of the Confidential Information in any other business would constitute an unfairmethod of competition. You acknowledge and agree that the Confidential Information belongs to us, maycontain trade secrets belonging to us, and is disclosed to you or authorized for your use solely on thecondition that you agree, and you therefore do agree, that you (1) will not use the Confidential Information in any other business or capacity; (2) will maintain the absolute confidentiality of theConfidential Information during and after the term of this Agreement; (3) will not make unauthorizedcopies of any portion of the Confidential Information disclosed in written form or another form that may be copied or duplicated; and (4) will adopt and implement all reasonable procedures we may prescribe from time to time to prevent unauthorized use or disclosure of the Confidential Information, including without limitation restrictions on disclosure to your employees, and the use of non-disclosure and non-competition agreements we may prescribe or approve for your shareholders, partners, members, officers,directors, employees, independent contractors, or agents who may have access to the Confidential Information.

9.3 Non-Competition Agreement.

You agree that we would be unable to protect the Confidential Information against unauthorizeduse or disclosure, and would be unable to encourage a free exchange of ideas and information amongZoyo Neighborhood Yogurt® franchises, if owners of Zoyo Neighborhood Yogurt® franchises were permitted to participate in any Competitive Businesses. The term “Competitive Business” means any business which derives more than Ten Thousand Dollars ($10,000) of revenue per year from the sale of self-service frozen yogurt, and other related products and services (including any e-commerce or Internet- based business), or any business which grants franchises or licenses to others to operate such a business, other than a Zoyo Neighborhood Yogurt® franchise operated under a franchise agreement with us. Therefore, during the term of this Agreement, neither you, nor any Principal Owner, nor any member of your immediate family or of the immediate family of any Principal Owner, shall perform services for, orhave any direct or indirect interest as a disclosed or beneficial owner, investor, partner, director, officer, employee, manager, consultant, representative, or agent in, a Competitive Business. The ownership of one percent (1%) or less of a publicly traded company will not be deemed to be prohibited by this paragraph.

Upon expiration or termination of this Agreement for any reason, you agree not to engage in a Competitive Business for a period of twelve (12) months after the expiration or termination and withinfive (5) miles of your Premises or any other Zoyo Neighborhood Yogurt® shop. For purposes of thisSection, any form of e-commerce business or website that offers frozen yogurt or other related products and services will be in violation of this provision if such e-commerce business or website offers, sells or otherwise makes its products or services available to individuals residing within or businesses located within five (5) miles of your Premises or any other Zoyo Neighborhood Yogurt® shop. The twelve (12)month period will not run for any period during which you are in breach of this covenant.


9.4 Non-Solicitation Agreement

You agree that, during the term of this Agreement, and for a period of two (2) years thereafter,you will not, directly or indirectly employ or seek to employ any person employed by us, or any otherperson who is at that time operating or employed by or at any other Zoyo Neighborhood Yogurt®franchise, or otherwise directly or indirectly induce such persons to leave their employment.

10. ZOYO UNIT FRANCHISE OPERATING STANDARDS.

10.1 Condition and Appearance of the Franchise.

You agree that:

(a) neither the Franchise nor the Premises will be used for any purpose other than theoperation of the Franchise in compliance with this Agreement;

(b) you will maintain the condition and appearance of the Franchise; its equipment,furniture, furnishings, and signs; and the Premises in accordance with our standards andconsistent with the image of a Zoyo Neighborhood Yogurt® franchise as an efficiently operated business offering high quality services, and observing the highest standards of cleanliness,sanitation, efficient, courteous service and pleasant ambiance, and for that purpose will take,without limitation, the following actions during the term of this Agreement: (1) thorough cleaning, repainting and redecorating of the interior and exterior of the Premises at reasonableintervals; (2) interior and exterior repair of the Premises; and (3) repair or replacement ofdamaged, worn out or obsolete equipment, furniture, furnishings and signs;

(c) you will not make any material alterations to the Premises or the appearance ofthe Franchise, as originally developed, without our advance written approval. If you do so, we have the right, at our option and at your expense, to rectify alterations we have not previouslyapproved;

(d) you will promptly replace or add new equipment when we reasonably specify inorder to meet changing standards or new methods of service;

(e) you will spend at least Ten Thousand Dollars ($10,000) every four (4) years inremodeling, expansion, redecorating or refurnishing of the Premises and the Franchise, if deemed necessary by us (any changes to the decoration or furnishing of the Premises must beapproved by us);

(f) on notice from us, you will engage in remodeling, expansion, redecorating orrefurnishing of the Premises and the Franchise to reflect changes in the operations of Zoyo Neighborhood Yogurt® shops that we prescribe and require of new franchisees, provided that(1) no material changes will be required unless there are at least two (2) years remaining on theInitial Term of the Franchise (any changes to the decoration or furnishing of the Premises mustbe approved by us); and (2) we have required the proposed change in at least twenty-five percent(25%) of all similarly situated affiliate-owned Zoyo Neighborhood Yogurt® shop, and have undertaken a plan to make the proposed change in the balance of such affiliate-owned shops (any


expenditures incurred pursuant to this paragraph shall apply to the requirement in Section10.1(e));

(g) you will place or display at the Premises (interior and exterior) only those signs,emblems, designs, artwork, lettering, logos, and display and advertising materials that we fromtime to time approve; and

(h) if at any time in our reasonable judgment, the general state of repair, appearance,or cleanliness of the premises of the Franchise or its fixtures, equipment, furniture, or signs do not meet our standards, then we shall have the right to notify you specifying the action you musttake to correct the deficiency. If you do not initiate action to correct such deficiencies within ten(10) days after receipt of our notice, and then continue in good faith and with due diligence, abona fide program to complete any required maintenance or refurbishing, then we shall have theright, in addition to all other remedies available to us at law or under this Agreement, to enter thePremises or the Franchise and perform any required maintenance or refurbishing on your behalf, and you agree to reimburse us on demand.

10.2 Franchise Services and Products.

You agree that (a) the Franchise will offer for sale all services and products that we from time totime specify, (b) the Franchise will offer and sell approved services and products only in the manner wehave prescribed; (c) you will not offer for sale or sell at the Franchise, the Premises, or any other location any services or products we have not approved; (d) all products will be offered at retail prices, and you will not offer or sell any products at wholesale prices; (e) you will not use the Premises for any purposeother than the operation of the Franchise; and (f) you will discontinue selling and offering for sale anyservices or products that we at any time decide (in our sole discretion) to disapprove in writing. In theevent that you use, sell or distribute unauthorized products or services, and do not cease the use, sale, or distribution of unauthorized services or products within ten (10) days after written notice is given to you, we reserve the right to terminate this agreement and/or charge you a fee of One Hundred Dollars ($100)for each day that you fail to comply with our demand to cease the use, sale or distribution of unauthorizedproducts or services, which is a reasonable estimate of the damages we would incur from your continueduse, sale or distribution of unauthorized products or services, and not a penalty. You agree to maintain an inventory of approved products sufficient in quantity and variety to realize the full potential of the Franchise. We may, from time to time, conduct market research and testing to determine consumer trends and the saleability of new services and products. You agree to cooperate by participating in our market research programs, test marketing new services and products in the Franchise, and providing us with timely reports and other relevant information regarding such market research. In connection with any such test marketing, you agree to offer a reasonable quantity of the products or services being tested, and effectively promote and make a reasonable effort to sell them.

10.3 Approved Products, Distributors and Suppliers.

We have developed or may develop various unique products or services that may be preparedaccording to our formulations. We have approved, and will continue to periodically approve,specifications for suppliers and distributors (which may include us or our affiliates) for products orservices required to be purchased by, or offered and sold at, Zoyo Neighborhood Yogurt® franchises, thatmeet our standards and requirements, including without limitation standards and requirements relating toproduct quality, prices, consistency, reliability, and customer relations. You agree that you will:(1) purchase any required products or services in such quantities as we designate; (2) utilize such formats, formulas, and packaging for products as we prescribe; and (3) purchase all designated products and


services only from distributors and other suppliers we have approved. Approved suppliers are listed in the Operations Manual.

We may approve a single distributor or other supplier (collectively “supplier”) for any product,and may approve a supplier only as to certain products. Approval of a supplier may be conditioned onrequirements relating to the frequency of delivery, concentration of purchases, standards of service (including prompt attention to complaints), or other criteria, and may be temporary, pending our continued evaluation of the supplier from time to time.

If you would like to purchase any items which we do not provide or for which we have not designated an approved supplier, then you must submit to us a written request for approval of the proposed supplier. We have the right to inspect the proposed supplier’s facilities, and require that product samples from the proposed supplier be delivered, at our option, either directly to us, or to any independent, certified laboratory that we may designate, for testing. We may charge you a supplier evaluation fee (not to exceed the reasonable cost of the inspection and the actual cost of the test) to make the evaluation. We reserve the right to periodically re-inspect the facilities and products of any approved supplier, and revoke our approval if the supplier does not continue to meet any of our criteria. We will notify you in writing immediately when our approval of a supplier is revoked. Upon receipt of our notice of revocation, you will immediately stop using the services or products of the revoked supplier. We will not reimburse you for any remaining products or services purchased from the revoked supplier that you are unable to use as a result of our revocation of the supplier’s approval.

We or our affiliates may be an approved supplier of certain products or services to be purchasedby you for use or sale by the Franchise. We and our affiliates reserve the right to charge any licensedmanufacturer engaged by us or our affiliates a royalty to manufacture products for us or our affiliates, orto receive commissions or rebates from vendors that supply goods or services to you. We or our affiliatesmay also derive income from our sale of products or services to you, and may sell these items at pricesexceeding our or their costs in order to make a profit on the sale.

WE EXPRESSLY DISCLAIM ANY WARRANTIES OR REPRESENTATIONS AS TO THE CONDITION OF THE PRODUCTS SOLD BY ANY SUPPLIER, INCLUDING, WITHOUTLIMITATION, EXPRESSED OR IMPLIED WARRANTIES AS TO MERCHANTABILITY ORFITNESS FOR ANY INTENDED PURPOSE. YOU AGREE TO LOOK SOLELY TO THE SUPPLIERFOR THE REMEDY FOR ANY DEFECT IN THE PRODUCTS.

10.4 Hours of Operation.

You agree to keep the Franchise open for business at such times and during such hours as we mayprescribe from time to time.

10.5 Specifications, Standards and Procedures.

You agree to comply with all mandatory specifications, standards, and operating proceduresrelating to the appearance, function, cleanliness, sanitation and operation of the Franchise. Anymandatory specifications, standards, operating procedures and minimum revenue requirements that weprescribe from time to time in the Operations Manual, or otherwise communicate to you in writing, willconstitute provisions of this Agreement as if fully set forth in this Agreement. All references to “this Agreement” include all such mandatory specifications, standards, and operating procedures.


10.6 Compliance with Laws and Good Business Practices.

You agree to secure and maintain in force in your name all required licenses, permits and certificates relating to the operation of the Franchise. You also agree to operate the Franchise in full compliance with all applicable laws, ordinances, and regulations, including without limitation all government regulations relating to worker’s compensation insurance, unemployment insurance, andwithholding and payment of federal and state income taxes, social security taxes, and sales taxes.

You agree to comply with all applicable governmental health and sanitary standards in operatingand maintaining your Franchise. You also agree to comply with any higher standards that we prescribe. In addition to complying with such standards, if your Franchise will be subject to any governmentalsanitary or health inspection under which it may be rated in one or more than one classification, yourFranchise will be maintained and operated so as to be rated in the highest available health and sanitary classification respecting each such inspection

All advertising you employ must be completely factual, in good taste (in our judgment), and conform to the highest standards of ethical advertising and all legal requirements. You agree that in all dealings with us, your customers, your suppliers, and public officials, you will adhere to the highest standards of honesty, integrity, fair dealing and ethical conduct. You further agree to refrain from any business or advertising practice that may be harmful to our business, the Franchise, or the goodwill associated with the Marks and other Zoyo Neighborhood Yogurt® shops.

You must notify us in writing within five (5) days of (1) the commencement of any action, suit, or proceeding, or of the issuance of any order, writ, injunction, award, or decree of any court, agency, or other governmental unit, that may adversely affect your or the Franchise’s operation, financial condition, or reputation; or (2) your receipt or knowledge of any notice of violation of any law, ordinance, or regulation relating to health or safety.

10.7 Personnel of the Franchise.

You will ensure that your employees and independent contractors of the Franchise have any licenses as may be required by law, and hold or are pursuing any licenses, certifications, or degrees required by law or by us in the Operations Manual, as updated from time to time. You will be exclusively responsible for the terms of your employees’ and independent contractors’ employment and compensation, and for the proper training of your employees and independent contractors in the operationof the Franchise. You must establish any training programs for your employees or independentcontractors that we may prescribe in writing from time to time. You must require all employees and independent contractors to maintain a neat and clean appearance, and conform to the standards of dress that we specify in the Operations Manual, as updated from time to time. Each of your employees and independent contractors must sign a written agreement, in a form approved by us, to maintain confidential our Confidential Information, proprietary information, and trade secrets as described in Section 9.1, and to abide by the covenants not to compete described in Section 9.3. You must forward to us a copy of each such signed agreement. All of your employees and independent contractors must render prompt, efficient and courteous service to all customers of the Franchise.

10.8 Insurance.

Before you open the Franchise and during any Term of this Agreement, you must maintain inforce, under policies of insurance written on an occurrence basis issued by carriers approved by us, and insuch amounts as we may determine from time to time as described in the Operations Manual or otherwise in writing. In addition, approved insurance carrier(s) are listed in the Operations Manual. We may


periodically increase or decrease the amounts of coverage required under these insurance policies, or require different or additional kinds of insurance, including excess liability insurance, to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards, or other relevant changes in circumstances.

Each insurance policy must name us (and, if we so request, our members, directors, employees,agents, and affiliates) as additional insureds, and must provide us with thirty (30) days’ advance writtennotice of any material modification, cancellation, or expiration of the policy. Deductibles must be inreasonable amounts, and are subject to review and written approval by us. You must provide us with copies of policies evidencing the existence of such insurance concurrently with execution of this Agreement and prior to each subsequent renewal date of each insurance policy, along with proof of suchinsurance in the form we require.

Prior to the expiration of the term of each insurance policy, you must furnish us with a copy of a renewal or replacement insurance policy and appropriate proof of insurance. If you at any time fail or refuse to maintain any insurance coverage required by us or to furnish satisfactory evidence thereof, then we, at our option and in addition to our other rights and remedies under this Agreement, may, but neednot, obtain such insurance coverage on your behalf, and you shall reimburse us on demand for any costsor premiums paid or incurred by us.

Notwithstanding the existence of such insurance, you are and will be responsible for all loss or damage and contractual liability to third persons originating from or in connection with the operation of the Franchise, and for all claims or demands for damages to property or for injury, illness or death of persons directly or indirectly resulting therefrom; and you agree to defend, indemnify and hold us harmless of, from, and with respect to any such claims, loss or damage, which indemnity shall survive the termination or expiration and non-renewal of this Agreement. In addition to the requirements of Section10.8, you must maintain any and all insurance coverage in such amounts and under such terms andconditions as may be required in connection with your lease or purchase of the Premises.

Your obligation to maintain insurance coverage as described in this Agreement will not be reduced in any manner by reason of any separate insurance we maintain on our own behalf, nor will our maintenance of that insurance relieve you of any obligations under Section 7 of this Agreement.

10.9 Credit Cards and Other Methods of Payment.

You must obtain a credit card merchant account through our preferred provider and you must atall times have arrangements in existence with Visa, Master Card, American Express, Discover and anyother credit and debit card issuers or sponsors, check verification services, and electronic fund transfersystems that we designate from time to time, in order that the Franchise may accept customers’ credit and debit cards, checks, and other methods of payment. We may require you to obtain such services through us or our affiliates.

10.10 Pricing and Promotions

You may advertise and sell all products and services at your Franchise at whatever prices you determine. We reserve the right to establish maximum pricing policies at any time as specified to you inwriting. You must participate in all promotional programs we establish in the manner we direct. If weestablish a gift card or gift certificate program, you must, at your expense, participate in, and honor allprovisions of such programs as directed. You also must honor all coupons, discounts and gift certificates aswe may reasonably specify in the Operations Manual or otherwise in writing.


10.11 Participation in Internet Website

You agree to participate in a Zoyo Neighborhood Yogurt® website listed on the Internet or otheronline communications and participate in any intranet system we control. We will, at our discretion, determine the content and use of such a website and intranet system and will establish rules under which you may or will participate. We will retain all rights relating to the website and intranet system and mayalter or terminate the website or intranet system upon thirty (30) days’ notice to you. Your generalconduct on the Zoyo Neighborhood Yogurt® intranet system will be subject to the provisions of thisAgreement. You acknowledge that certain information obtained through your online participation in thewebsite or intranet system is considered Confidential Information (as defined in Section 9.1 above),including access codes and identification codes. Your right to participate in the Zoyo Neighborhood Yogurt® website or intranet system will terminate when this Agreement expires or terminates.

11. ADVERTISING.

11.1 By Us.

During the term of this Agreement, you will pay to us for deposit in Ad Fund the Advertising Fee described in Section 2.3. We also will contribute to the Ad Fund for each Zoyo Neighborhood Yogurt®shops that we or our affiliates operate in the United States at the same percentage rate as a majority of ZoyoNeighborhood Yogurt® shops must pay to the Ad Fund. Reasonable disbursements from the Ad Fund willbe made solely to pay expenses we incur in connection with the general promotion of the Marks and theSystem, including the cost of formulating, developing and implementing advertising, marketing, promotional and public relations campaigns; and the reasonable costs of administering the Ad Fund,including the cost of employing advertising, public relations and other third party agencies to assist us andproviding promotional brochures and advertising materials to Zoyo Neighborhood Yogurt® shops and toregional and local advertising cooperatives, as well as accounting expenses and the actual costs of salariesand fringe benefits paid to our employees engaged in administration of the Ad Fund. The Ad Fund is not a trust or escrow account, and we have no fiduciary obligations regarding the Ad Fund. We cannot insure thatyou will benefit directly or on a pro rata basis from the future placement of any such advertising in your local market. We may spend in any fiscal year an amount greater or less than the aggregate contributions ofZoyo Neighborhood Yogurt® shops to the Ad Fund in that year. We may, through the Ad Fund, furnishyou with approved local marketing plans and materials on the same terms and conditions as plans andmaterials we furnish to other Zoyo Neighborhood Yogurt® shops. We will determine the methods ofadvertising, media employed and scope, contents, terms and conditions of advertising, marketing,promotional and public relations campaigns and programs. Upon written request, we will provide you anannual unaudited statement of the receipts and disbursements of the Ad Fund for the most recent calendaryear.

11.2 By Franchise Owner.

You agree to list and advertise the Franchise in each of the classified telephone directories distributed within your market area, in those business classifications as we prescribe from time to time, using any standard form of classified telephone directory advertisement we may provide. You also agree to spend a minimum amount we determine during each calendar year on approved advertising andpromotional activities in your local geographic area. We periodically may modify, in our absolutediscretion, the amount(s) of such fees or other obligations, provided we will not require you to spend morethan three percent (3%) of Gross Revenues in any calendar year on local marketing.

On or before February 15 of each year, you will provide us with an accounting of the funds that youhave spent for local advertising for the preceding calendar year. If you fail to spend the minimum amount


required under this Section for the calendar year for approved local advertising, you will deposit with us the difference between what you should have spent for approved advertising during the calendar year and whatyou actually spent for approved advertising during the calendar year. We will deposit that amount in the AdFund.

On each occasion before you use them, samples of all local advertising and promotional materialsnot prepared or previously approved by us must be submitted to us for approval. If you do not receive ourwritten disapproval within fifteen (15) days from the date we receive the materials, the materials will bedeemed to have been approved. You agree not to use any advertising or promotional materials that we have disapproved. You will be solely responsible and liable to ensure that all advertising, marketing, and promotional materials and activities you prepare comply with applicable federal, state, and local law, and the conditions of any agreements or orders to which you may be subject.

11.3 Regional Advertising Cooperatives.

In the event that more than one Zoyo Neighborhood Yogurt® shop is located in an area of dominant influence (“ADI”), we reserve the right to form, approve the franchisee formation of, change, dissolve, or merge a regional advertising cooperative (the “Regional Ad Co-op”), and to establish the bylaws and other rules under which the Ad Co-op will operate. We also reserve the right to require you to join the Regional Ad Co-op and to contribute to its funding. The members of the Ad Co-op will determine by a majority vote the amounts to be contributed by each member of the Regional Ad Co-op as necessary, up to a maximum of three percent (3%) of a member’s Gross Revenues. This amount is in addition to each member’s contribution to the Ad Fund.

12. ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS.

You agree to maintain, at your own expense, accounting and business-management software,which will act as a record keeping system for the Franchise (the “Software”). With respect to theoperation and financial condition of the Franchise, you agree to submit to us: (1) each Tuesday, an electronic report of the Franchise’s transactions for the preceding week, and any other data, information, and supporting records that we may require; (2) by the fifteenth (15th) day of each month, a profit and loss statement for the preceding calendar month, and a year-to-date profit and loss statement and balance sheet; (3) within ninety (90) days after the end of your fiscal year, a fiscal year-end balance sheet, and an annual profit and loss statement for that fiscal year, reflecting all year-end adjustments; and (4) such other reports as we require from time to time (collectively, the “Software Reports”). You agree to input all Franchise transactions into the Software in a timely manner to ensure that the Software Reports are accurate. If it is determined that any information was omitted from the Software or input inaccurately, we may charge a non-refundable accounting fee of One Hundred Dollars ($100), payable in a lump sum bythe fifth (5th) day of the month following the month during which the inaccurate report was submitted. You agree to maintain and furnish upon our request complete copies of federal and state income tax returns you and your Principal Owners file with the Internal Revenue Service and state tax departments, reflecting revenues and income of you, the Franchise or the corporation, partnership, or limited liability company that holds the Franchise, and your Principal Owners. We reserve the right to require you to have audited or reviewed financial statements prepared by a certified public accountant on an annual basis. You agree to retain hard copies of all records for a minimum of four (4) years.


13. INSPECTIONS AND AUDITS.

13.1 Our Right to Inspect the Franchise.

To determine whether you are complying with this Agreement and the specifications, standards,and operating procedures we prescribe for the operation of the Franchise, we or our agents have the right, at any reasonable time and without advance notice to you, to: (1) inspect the Premises; (2) observe the operations of the Franchise for such consecutive or intermittent periods as we deem necessary;(3) interview your personnel; (4) interview customers of the Franchise; and (5) inspect and copy any books, records and documents relating to the operation of the Franchise. You agree to fully cooperate with us in connection with any of those inspections, observations and interviews. You agree to present toyour customers any evaluation forms we periodically prescribe, and agree to participate in, or request thatyour customers participate in, any surveys performed by or on our behalf. Based on the results of anysuch inspections and audits and your other reports, we may provide to you such guidance and assistance in operating your Franchise as we deem appropriate.

13.2 Our Right to Audit.

We have the right at any time during business hours, and without advance notice to you, toinspect and audit, or cause to be inspected and audited, you and your Franchise business records,bookkeeping and accounting records, sales and income tax records (including tax records for each Principal Owner) and returns and other records. You agree to fully cooperate with our representatives and any independent accountants we may hire to conduct any inspection or audit. You agree to provide photocopies of any requested records at your expense in order to facilitate such inspection or audit. If the inspection or audit is necessary because of your failure to furnish any reports, supporting records, other information or financial statements as required by this Agreement, or to furnish such reports, records, information, or financial statements on a timely basis, or if an understatement of Gross Revenues for any period is determined by an audit or inspection to be greater than two percent (2%), then you agree to pay us all monies owed, plus interest of eighteen percent (18%) per annum, and reimburse us for the cost of such inspection or audit, including without limitation any attorneys’ fees or accountants’ fees we may incur, and the travel expenses, room and board, and applicable per diem charges for our employees or contractors. The above remedies are in addition to all our other remedies and rights under this Agreement or under applicable law.

14. TRANSFER REQUIREMENTS.

14.1 Organization.

If you are a corporation, partnership or limited liability company (or if this Agreement is assignedto a corporation, partnership or limited liability company with our approval), you represent and warrant to us that you are and will continue to be throughout the term of this Agreement, duly organized and validly existing in good standing under the laws of the state of your incorporation, registration or organization, that you are qualified to do business and will continue to be qualified to do business throughout the term of this Agreement in all states in which you are required to qualify, that you have the authority to execute, deliver and carry out all of the terms of this Agreement, and that during the term of this Agreement the only business you (i.e., the corporate, partnership or limited liability entity) will conduct will be the development, ownership and operation of the Franchise.


14.2 Interests in Franchise Owner; Reference to Exhibit 4.

You and each Principal Owner represent, warrant and agree that all “Interests” in you are ownedin the amount and manner described in Exhibit 4. No Interests in you will, during the term of this Agreement, be “public” securities (i.e., securities that require, for their issuance, registration with anystate or federal authority). (An “Interest” is defined to mean any shares, membership interests, orpartnership interests of you and any other equitable or legal right in any of your stock, revenues, profits, rights or assets. When referring to your rights or assets, an “Interest” means this Agreement, your rights under and interest in this Agreement, the Franchise, or the revenues, profits or assets of the Franchise.) You and each Principal Owner also represent, warrant, and agree that no Principal Owner’s Interest hasbeen given as security for any obligation (i.e., no one has a lien on or security interest in a PrincipalOwner’s Interest), and that no change will be made in the ownership of an Interest other than as expresslypermitted by this Agreement or as we may otherwise approve in writing. You and each Principal Owneragree to furnish us with such evidence as we may request from time to time to assure ourselves that your Interests and each of your Principal Owners remain as permitted by this Agreement, including a list of allpersons or entities owning any Interest, as defined above.

14.3 Transfer by Us.

This Agreement is fully transferable by us and will inure to the benefit of any person or entity to whom it is transferred, or to any other legal successor to our interests in this Agreement.

14.4 No Transfer Without Approval.

You understand and acknowledge that the rights and duties created by this Agreement are personal to you and that we have entered into this Agreement in reliance on the individual or collective character, skill, aptitude, attitude, business ability, and financial capacity of you and your Principal Owners. Accordingly, neither this Agreement nor any part of your interest in it, nor any Interest (asdefined in Section 14.2) of you or a Principal Owner, may be Transferred (see definition below) withoutour advance written approval. Any Transfer that is made without our approval will constitute a breach of this Agreement and convey no rights to or interests in this Agreement, you, the Franchise, or any other Zoyo Neighborhood Yogurt® franchisee.

As used in this Agreement the term “Transfer” means any voluntary, involuntary, direct or indirect assignment, sale, gift, exchange, grant of a security interest, or occurrence of any other event which would or might change the ownership of any Interest, and includes, without limitation: (1) theTransfer of ownership of capital stock, partnership interest or other ownership interest; (2) merger orconsolidation, or issuance of additional securities representing an ownership interest in you; (3) sale of common stock of you sold pursuant to a private placement or registered public offering; (4) Transfer of an Interest in a divorce proceeding or otherwise by operation of law; or (5) Transfer of an Interest by will,declaration of, or transfer in trust, or under the laws of intestate succession.

We will not unreasonably withhold consent to a Transfer of an Interest by a Principal Owner to a member of his or her immediate family or to your key employees, so long as all Principal Ownerstogether retain a “controlling Interest” (i.e., the minimum ownership percentage listed in Exhibit 4),although we reserve the right to impose reasonable conditions on the Transfer as a requirement for our consent.

Interests owned by persons other than the Principal Owners (“minority owners”) may be Transferred without our advance consent unless the Transfer would give that transferee, and any person or group of persons affiliated or having a common interest with the transferee, more than a collective


twenty-five percent (25%) Interest in you, in which case our advance written approval for the Transfer must be obtained. Your formal partnership, corporation or other formation documents and all stockcertificates, partnership units or other evidence of ownership must recite or bear a legend reflecting the transfer restrictions of this Paragraph.

14.5 Conditions for Approval of Transfer.

If you and your Principal Owners are in full compliance with this Agreement, we will not unreasonably withhold our approval of a Transfer that meets all the applicable requirements of this Section 14. The person or entity to whom you wish to make the Transfer, or its principal owners (“Proposed New Owner”), must be individuals of good moral character and otherwise meet our then- applicable standards for franchisees. If you propose to Transfer this Agreement, the Franchise or its assets, or any Interest; or if any of your Principal Owners proposes to Transfer a controlling Interest in you or make a Transfer that is one of a series of Transfers which taken together would constitute theTransfer of a controlling Interest in you, then all of the following conditions must be met before or at the time of the Transfer:

(a) the Proposed New Owner must have sufficient business experience, aptitude, andfinancial resources to operate the Franchise;

(b) you must pay any amounts owed for purchases from us and our affiliates, and any otheramounts owed to us or our affiliates which are unpaid;

(c) the Proposed New Owner’s directors and such other personnel as we may designate musthave successfully completed our Initial Training program, and will be legally authorized and have alllicenses necessary to perform the services offered by the Franchise. The Proposed New Owner shall be responsible for any wages and compensation owed to, and the travel and living expenses (including all transportation costs, room, board and meals) incurred by, the attendees who attend the Initial Training program;

(d) if your lease for the Premises requires it, the lessor must have consented to theassignment of the lease of the Premises to the Proposed New Owner;

(e) you (or the Proposed New Owner) must pay us a Transfer Fee of Twenty-Five Percent(25%) of the then-current initial franchise fee, plus the cost of training that we charge to new Franchises, as determined by us in our reasonable discretion, and must reimburse us for any reasonable expenses incurred by us in investigating and processing any Proposed New Owner where the Transfer is not consummated for any reason;

(f) you and your Principal Owners and your and their spouses must execute a general release(in a form satisfactory to us) of any and all claims you or they may have against us, our affiliates, and our and our affiliates’ respective officers, directors, employees, and agents;

(g) we must approve the material terms and conditions of the proposed Transfer, includingwithout limitation that the price and terms of payment are not so burdensome as to adversely affect theoperation of the Franchise;

(h) the Franchise and the Premises shall have been placed in an attractive, neat and sanitarycondition;


(i) you and your Principal Owners must enter into an agreement with us providing that allobligations of the Proposed New Owner to make installment payments of the purchase price (and anyinterest on it) to you or your Principal Owners will be subordinate to the obligations of the Proposed New Owner to pay any amounts payable under this Agreement or any new Franchise Agreement that we mayrequire the Proposed New Owner to sign in connection with the Transfer;

(j) you and your Principal Owners must enter into a non-competition agreement wherein youagree not to engage in a competitive business for a period of twelve (12) months after the Transfer andwithin five (5) miles of your Franchise Premises or any other Zoyo Neighborhood Yogurt® shop;

(k) the Franchise must contain all equipment and fixtures in good working condition as wedetermine. The Proposed New Owner shall have agreed, in writing, to make such reasonable capital expenditures to remodel, equip, modernize and redecorate the interior and exterior of the premises in accordance with our then existing plans and specifications for a Zoyo Neighborhood Yogurt® shop, and shall have agreed to pay our expenses for plan preparation or review, and site inspection;

(l) upon receiving our consent for the Transfer or sale of the Franchise, the Proposed NewOwner shall agree to assume all of your obligations under this Agreement in a form acceptable to us, or, at our option, shall agree to execute a new Franchise Agreement with us in the form then being used by us. We may, at our option, require that you guarantee the performance, and obligations of the Proposed New Owner; and

(m) you must have properly offered us the opportunity to exercise our right of first refusal asdescribed below, and we must have then declined to exercise it.

14.6 Right of First Refusal.

If you or any of your Principal Owners wish to Transfer any Interest, we will have a right of firstrefusal to purchase that Interest as follows. The party proposing the Transfer (the “transferor”) must obtain a bona fide, executed written offer (accompanied by a “good faith” earnest money deposit of at least five percent (5%) of the proposed purchase price) from a responsible and fully disclosed purchaser, and must submit an exact copy of the offer to us. You also agree to provide us with any other information we need to evaluate the offer, if we request it within five (5) days of receipt of the offer. We have theright, exercisable by delivering written notice to the transferor within thirty (30) days from the date of last delivery to us of the offer and any other documents we have requested, to purchase the Interest for the price and on the terms and conditions contained in the offer, except that we may substitute cash for any form of payment proposed in the offer, and will not be obligated to pay any “finder’s” or broker’s fees that are a part of the proposed Transfer. We also will not be required to pay any amount for any claimed value of intangible benefits, for example, possible tax benefits that may result by structuring or closingthe proposed Transfer in a particular manner or for any consideration payable other than the bona fidepurchase price for the Interest proposed to be transferred. (In fact, we may in our sole and absolute discretion withhold consent to any proposed Transfer if the offer directly or indirectly requires payment of any consideration other than the bona fide purchase price for the Interest proposed to be transferred.) Our credit will be deemed equal to the credit of any other proposed purchaser, and we will have at least sixty (60) days to prepare for closing. We will be entitled to all customary representations and warranties given purchasers in connection with such sales. If the proposed Transfer includes assets not related to theoperation of the Franchise, we may purchase only the assets related to the operation of the Franchise ormay also purchase the other assets. (An equitable purchase price will be allocated to each asset includedin the Transfer.)


If we do not exercise our right of first refusal, the transferor may complete the sale to the Proposed New Owner pursuant to and on the terms of the offer, as long as we have approved the Transfer as provided in Section 14. You must immediately notify us of any changes in the terms of an offer. Any material change in the terms of an offer before closing will make it a new offer, revoking any previousapproval or previously made election to purchase and giving us a new right of first refusal effective as of the day we receive formal notice of a material change in the terms. If the sale to the Proposed New Owner is not completed within one hundred twenty (120) days after we have approved the Transfer, ourapproval of the proposed Transfer will expire. Any later proposal to complete that proposed Transfer will be deemed a new offer, giving us a new right of approval and right of first refusal effective as of the day we receive formal notice of the new (or continuing) proposal. We will not exercise a right of first refusalwith respect to a proposed Transfer of less than a controlling interest to a member of a Principal Owner’simmediate family or to your key employees.

14.7 Death and Disability.

Upon the death or permanent disability of you or a Principal Owner, the executor, administrator, conservator or other personal representative of the deceased or disabled person must Transfer the deceased or disabled person’s Interest within a reasonable time, not to exceed ninety (90) days from the date of death or permanent disability, to a person we have approved. Such Transfers, including without limitation transfers by a will or inheritance, will be subject to all the terms and conditions for assignments and Transfers contained in this Agreement. Failure to so dispose of an Interest within the ninety (90) day period of time will constitute grounds for termination of this Agreement.

14.8 Effect of Consent to Transfer.

Our consent to a proposed Transfer pursuant to Section 14 will not constitute a waiver of anyclaims we may have against you or any Principal Owner, nor will it be deemed a waiver of our right todemand exact compliance with any of the terms or conditions of this Agreement by the Proposed New Owner.

15. TERMINATION OF THE FRANCHISE.

15.1 Grounds.

You will be in default, and we may, at our option, terminate this Agreement, as provided herein,if: (1) you do not develop or open the Franchise as provided in this Agreement; (2) you abandon, surrender, transfer control of, lose the right to occupy the Premises of, or do not actively operate, the Franchise, or your lease for or purchase of the location of the Franchise is terminated for any reason;(3) you or your Principal Owners assign or Transfer this Agreement, any Interest, the Franchise, or assets of the Franchise without complying with the provisions of Section 14; (4) you are adjudged a bankrupt, become insolvent or make a general assignment for the benefit of creditors; (5) you use, sell, distribute or give away any unauthorized services or products, and do not cease the use, sale, or distribution ofunauthorized services or products; (6) you or any of your Principal Owners are convicted of or plead nocontest to a felony or are convicted or plead no contest to any crime or offense that is likely to adversely affect the reputation of us, you, the Franchise, or the goodwill associated with the Marks; (7) you are involved in any action that is likely to adversely affect the reputation of us, you, the Franchise, or the goodwill associated with the Marks; (8) you or any of your employees violate any health or safety law,ordinance or regulation, or operate the Franchise in a manner that presents a health or safety hazard toyour customers or the public; (9) you do not pay when due any monies owed to us, our affiliates ordesignated suppliers; (10) you or any of your Principal Owners fail to comply with any other provision ofthis Agreement or any mandatory specification, standard, operating procedure or minimum revenue


requirement; or (11) you or any of your Principal Owners fail on three (3) or more separate occasions within any twelve (12) consecutive month period to submit when due any financial statements, reports orother data, information, or supporting records; pay when due any amounts due under this Agreement; or otherwise fail to comply with this Agreement, whether or not such failures to comply are corrected after notice is given to you or your Principal Owners.

15.2 Procedure.

Except as described below, you will have thirty (30) days, or such longer period as applicable law mayrequire, after your receipt from us of a written Notice of Termination within which to remedy any defaulthereunder, and to provide evidence thereof to us. If you fail to correct the alleged default within that time,this Agreement will terminate without further notice to you effective immediately when the thirty (30) day period, or such longer period as applicable law may require, expires. You will have ten (10) days after yourreceipt from us of a written Notice of Termination, or such longer period as applicable law may require, toremedy any default under items (5) and (9) in Section 15.1 above, and to provide evidence thereof to us. If you fail to correct the alleged default within that time, this Agreement will terminate without further noticeto you, effective immediately when the ten (10) day period expires, or such longer period as applicable lawmay require. You will have seventy-two (72) hours, or such longer period as applicable law may require,after you receive from us a written Notice of Termination to remedy any default under item (8) in Section15.1 above and to provide evidence thereof to us. If you fail to correct the alleged default within that time,this Agreement will terminate without further notice to you, effective immediately when the seventy-two(72) hour period expires, or such longer period as applicable law may require. You will have thirty (30) days, or such longer period as applicable law may require, after you receive from us a written Notice ofTermination to remedy any default under item (10) in Section 15.1 above and to provide evidence thereof to us. If you fail to correct the alleged default within that time, this Agreement will terminate without furthernotice to you, effective immediately when the thirty (30) day period expires, or such longer period asapplicable law may require. We may terminate this Agreement immediately upon delivery of written noticeto you, with no opportunity to cure, if the termination results from any of the following: (1) the nature ofyour breach makes it not curable; (2) you willfully and repeatedly deceive customers relative to the source,nature or quality of goods sold; (3) any default under items (2), (3), (4), (6), (7) or (11) in Section 15.1above; or (4) you willfully and materially falsify any report, statement, or other written data furnished to useither during the franchise application process or after you are awarded a franchise. Any report submittedunder Section 12 will be conclusively deemed to be materially false if it understates Gross Revenues bymore than five percent (5%).

15.3 Termination Fee.

In the event that we terminate this Agreement under this Section or other applicable provisions ofthis Agreement, we shall be entitled, in those states in which such termination fees are enforceable, to receive from you a termination fee in the amount equal to one-half (1/2) of our then-current initial franchise fee for new Zoyo Neighborhood Yogurt® franchise (the “Termination Fee”). The Termination Fee shall be payable by you in addition to any damages payable to us, including loss of future revenues, resulting from your improper or wrongful breach or other termination of this Agreement. We shall be entitled to recover all costs, including attorneys’ fees, incurred in connection with the termination and collection of the Termination Fee.


16. RIGHTS AND OBLIGATIONS OF COMPANY AND FRANCHISE OWNERUPON TERMINATION OR EXPIRATION OF THE FRANCHISE.

16.1 Payment of Amounts Owed to Us.

You agree to pay us within five (5) days after the effective date of termination or expiration ofthis Agreement, or any later date that the amounts due to us are determined, all amounts owed to us or our affiliates which are then unpaid.

16.2 Marks.

You agree that after the termination or expiration of this Agreement you will:

(a) not directly or indirectly at any time identify any business with which you are associatedas a current or former Zoyo Neighborhood Yogurt® franchise;

(b) not use any Marks or any colorable imitation of any Marks in any manner or for anypurpose, or use for any purpose any trademark or other commercial symbol that suggests or indicates anassociation with us;

(c) return to us or destroy (whichever we specify) all customer lists, forms and materialscontaining any Marks or otherwise relating to a Zoyo Neighborhood Yogurt® shop;

(d) remove all Marks affixed to uniforms or, at our direction, cease to use those uniforms;and

(e) take any action that may be required to cancel all fictitious or assumed name orequivalent registrations relating to your use of any Mark.

16.3 De-Identification.

If you retain possession of the Premises, you agree to completely remove or modify, at your sole expense, any part of the interior and exterior decor that we deem necessary to disassociate the Premises with the image of a Zoyo Neighborhood Yogurt® shop, including any signage bearing the Marks. If you do not take the actions we request within thirty (30) days after notice from us, we have the right to enter the Premises and make the required changes at your expense, and you agree to reimburse us for those expenses on demand.

16.4 Confidential Information.

You agree that on termination or expiration of the Franchise you will immediately cease to useany of the Confidential Information, and agree not to use it in any business or for any other purpose. You further agree to immediately return to us all copies of the Operations Manual and any written Confidential Information or other confidential materials that we have loaned or provided to you.

16.5 Our Option to Purchase the Franchise.

Upon the termination or expiration of the Franchise, we will have the option, but not the obligation, exercisable for thirty (30) days upon written notice to you, to purchase at fair market value all of the tangible assets of the Franchise, including all approved equipment, fixtures, furniture and signs and all supplies, materials, and other items imprinted with any Marks, and to take an assignment of the lease


for the Premises and any other lease or concession agreement necessary for the operation of the Franchise. If you and we cannot agree on the fair market value of the assets of the Franchise within a reasonable time, such value shall be determined by an average of the appraisals of two (2) independent appraisers, one of whom will be selected by you and one of whom will be selected by us. If the appraisals differ by more than ten percent (10%), then you and we will mutually agree on a value, or if you and we cannot agree, our appraisers will select a third appraiser whose determination of market value will be final. We shall not assume any liabilities, debts or obligations of the Franchise in connection with any such transfer, and you will indemnify us from any and all claims made against us arising out of any such transfer of the assets of the Franchise. All parties will comply with all applicable laws in connection with any such transfer, and you agree to cooperate with us in complying with all such requirements.

The closing shall occur within thirty (30) days after we exercise our option to purchase the assetsor such later date as may be necessary to comply with applicable bulk sales or similar laws. At theclosing, you and we both agree to execute and deliver all documents necessary to vest title in the purchased assets or real property in us free and clear of all liens and encumbrances, except those assumed by us or to effectuate the lease of the Premises. You also agree to provide us with all information necessary to close the transaction. We reserve the right to assign our option to purchase the Franchise or designate a substitute purchaser for the Franchise. By signing this Agreement, you irrevocably appoint us as your lawful attorney-in-fact with respect to the matters contemplated by Section 16.5, with full power and authority to execute and deliver in your name all documents required to be provided by you under this Section 16.5 in the event you do not provide them in a timely and proper manner. You also agree to ratify and confirm all of our acts as your lawful attorney-in-fact, and indemnify and hold us harmless from all claims, liabilities, losses or damages suffered by us in so doing.

Once we give notice that we will purchase the Franchise assets, we will have the right to immediately take over the operations of the Franchise. From the date we take over the Franchise to the date of closing of the purchase of the Franchise assets, we will be entitled to use any Gross Revenues of the Franchise to operate the Franchise, and to retain as a management fee up to ten percent (10%) of the balance of such Gross Revenues after operating expenses are paid, plus any additional costs and expenses we may incur.

16.6 Continuing Obligations.

All obligations of this Agreement (whether yours or ours) that expressly or by their nature survivethe expiration or termination of this Agreement will continue in full force and effect after andnotwithstanding its expiration or termination until they are satisfied in full or by their nature expire.

16.7 Management of the Franchise.

In the event that you are in default under this Agreement in accordance with Section 15 above orany other provision of this Agreement, and in addition to any other rights or remedies available to us inthe event of such termination, we may, but need not, assume the Franchise’s management. All Gross Revenues from the Franchise’s operation while we assume its management will be kept in a separate account, and all of the Franchise’s expenses will be charged to this account. We may charge you (in addition to the Royalty Fee and Advertising Fee contributions due under this Agreement) a reasonable management fee in an amount that we may specify, equal to up to ten percent (10%) of the Franchise’sGross Revenues, plus our direct out-of-pocket costs and expenses, if we assume management of theFranchise under this paragraph. We have a duty to utilize only our reasonable efforts in managing theFranchise, and will not be liable to you for any debts, losses, or obligations the Franchise incurs, or to any of your creditors for any products or services the Franchise purchases, while we manage it pursuant to this paragraph.


17. ENFORCEMENT.

17.1 Invalid Provisions; Substitution of Valid Provisions.

To the extent that the non-competition provisions of Sections 9.3 or 14.5(j) are deemed unenforceable because of their scope in terms of area, business activity prohibited, or length of time, you agree that any invalid provision will be deemed modified or limited to the extent or manner necessary to make each particular provision valid and enforceable to the greatest extent possible in light of the intentof the parties expressed in such provision under the laws applied in the forum in which we are seeking to enforce such provisions.

If any lawful requirement or court order of any jurisdiction (1) requires a greater advance noticeof the termination or non-renewal of this Agreement than is required under this Agreement, or the takingof some other action which is not required by this Agreement, or (2) makes any provision of thisAgreement or any specification, standard, or operating procedure we prescribed invalid or unenforceable,then the advance notice or other action required or revision of the specification, standard, or operatingprocedure will be substituted for the comparable provisions of this Agreement in order to make themodified provisions enforceable to the greatest extent possible. You agree to be bound by themodification to the greatest extent lawfully permitted.

17.2 Reasonable Business Judgment

Whenever we reserve discretion in a particular area or where we agree or are required to exerciseour rights reasonably or in good faith, we will satisfy our obligations whenever we exercise “reasonablebusiness judgment” in making our decision or exercising our rights. A decision or action by us will be deemed to be the result of “reasonable business judgment,” even if other reasonable or even arguably preferable alternatives are available, if our decision or action is intended to promote or benefit the System generally even if the decision or action also promotes a financial or other individual interest of ours.Examples of items that will promote or benefit the System include enhancing the value of the Marks,improving customer service and satisfaction, improving product quality, improving uniformity, enhancing or encouraging modernization, and improving the competitive position of the System. Neither you nor any third party (including a trier of fact), will substitute their judgment for our reasonable business judgment.

17.3 Unilateral Waiver of Obligations.

Either you or we may, by written notice, unilaterally waive or reduce any obligation or restrictionof the other under this Agreement. The waiver or reduction may be revoked at any time for any reason onten (10) days’ written notice.

17.4 Our Written Consent.

Whenever this Agreement requires our advance approval or consent, you agree to make a timelywritten request for it. Our approval or consent will not be valid unless it is in writing except as it pertainsto approval of advertising and website material which will be by Sections 11.2 and 11.4 of this Agreement.

17.5 Lien.

To secure your performance under this Agreement and indebtedness for all sums due us or our affiliates, we shall have a lien upon, and you hereby grant us a security interest in, the following collateral


and any and all additions, accessions, and substitutions to or for it and the proceeds from all of the same:(a) all inventory now owned or after-acquired by you and the Franchise, including but not limited to allinventory and supplies transferred to or acquired by you in connection with this Agreement; (b) all accounts of you or the Franchise now existing or subsequently arising, together with all interest in you or the Franchise, now existing or subsequently arising, together with all chattel paper, documents, and instruments relating to such accounts; (c) all contract rights of you or the Franchise, now existing or subsequently arising; and (d) all general intangibles of you or the Franchise, now owned or existing, or after-acquired or subsequently arising. You agree to execute such financing statements, instruments, and other documents, in a form satisfactory to us, that we deem necessary so that we may establish and maintain a valid security interest in and to these assets.

17.6 No Guarantees.

If in connection with this Agreement we provide to you any waiver, approval, consent, or suggestion, or if we neglect or delay our response or deny any request for any of those, then we will not be deemed to have made any warranties or guarantees upon which you may rely, and will not assume any liability or obligation to you.

17.7 No Waiver.

If at any time we do not exercise a right or power available to us under this Agreement or do notinsist on your strict compliance with the terms of the Agreement, or if there develops a custom or practicethat is at variance with the terms of this Agreement, then we will not be deemed to have waived our right to demand exact compliance with any of the terms of this Agreement at a later time. Similarly, our waiver of any particular breach or series of breaches under this Agreement, or of any similar term in anyother agreement between us and any other Zoyo Neighborhood Yogurt® franchisee will not affect ourrights with respect to any later breach. It will also not be deemed to be a waiver of any breach of thisAgreement for us to accept payments that are due to us under this Agreement.

17.8 Cumulative Remedies.

The rights and remedies specifically granted to either you or us by this Agreement will not be deemed to prohibit either you or us from exercising any other right or remedy provided under this Agreement, or permitted by law or equity.

17.9 Specific Performance; Injunctive Relief.

Provided we give you the appropriate notice, we will be entitled, without being required to post abond, to the entry of temporary and permanent injunctions and orders of specific performance to(1) enforce the provisions of this Agreement relating to your use of the Marks and non-disclosure andnon-competition obligations under this Agreement; (2) prohibit any act or omission by you or your employees that constitutes a violation of any applicable law, ordinance, or regulation; constitutes a danger to the public; or may impair the goodwill associated with the Marks or Zoyo Neighborhood Yogurt® shops; or (3) prevent any other irreparable harm to our interests. If we obtain an injunction or order of specific performance, then you shall pay us an amount equal to the total of our costs of obtaining it, including without limitation reasonable attorneys’ and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses, and any damages we incur as a result of the breach of any such provision. You further agree to waive any claims for damage in the event there is a later determination that an injunction or specific performance order was issued improperly.


17.10 Mediation.

Except insofar as we elect to enforce this Agreement or to seek temporary or permanent injunctive relief as provided above, the parties will attempt, in good faith, to resolve promptly through negotiation all controversies, disputes or claims arising between us, our affiliates, and our predecessors and their respective owners, officers, directors, agents, and employees (in their representative capacity) and you (and your Principal Owners and guarantors) arising out of or related to: (1) this Agreement, any provision thereof, or any related agreement (except for any lease or sublease with us or any of our affiliates); (2) the relationship of the parties hereto; (3) the validity of this Agreement or any related agreement, or any provision thereof; or (4) any specification, standard or operating procedure relating to the establishment or operation of the Franchise. For such purpose, any party may request the others to meet within fifteen (15) days at a mutually agreed upon time and place. If the parties are not able toconduct a meeting within said fifteen (15) day period or to resolve the dispute within thirty (30) days aftertheir first negotiating meeting (or such longer period of time as may be mutually agreed upon), any party may then refer the claim or controversy to non-binding mediation conducted by a reputable and licensedmediator in the Phoenix, Arizona area (the “Mediator”) by sending a written mediation request to theother parties (the “Mediation Request”). In the event that a Mediation Request is made, the parties agree to participate in the mediation process. The parties and the Mediator may join in the mediation any other party necessary for a mutually acceptable resolution of the dispute. Should the Mediator at any time be unable or unwilling to serve, the parties shall select a successor Mediator. The mediation procedure shall be determined by the Mediator in consultation with the parties. The fees and expenses of the Mediator shall be borne equally by the parties. Should such mediation efforts fail to resolve the dispute, then the parties are free to seek enforcement of the agreement through any legal means.

17.11 Waiver of Punitive Damages and Jury Trial; Limitations of Actions.

Except with respect to your obligations to indemnify us and claims that we may bring under Sections 7, 9, 15, or 16 of this Agreement, and except for claims arising from your non-payment or underpayment of any amounts owed to us or our affiliates, (1) any and all claims arising out of or related to this Agreement or the relationship between you and us shall be barred, by express agreement of the parties, unless an action or proceeding is commenced within two (2) years from the date the cause of action accrues; and (2) you and we hereby waive to the fullest extent permitted by law, any right to or claim for any punitive or exemplary damages against the other, and agree that, except to the extent provided to the contrary in this Agreement, in the event of a dispute between you and us, each party will be limited to the recovery of any actual damages sustained by it. You and we irrevocably waive trial by jury in any action, proceeding or counterclaim, whether at law or in equity, brought by either you or us.

17.12 Governing Law/Consent To Jurisdiction.

Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15U.S.C. §§ 1051 et seq.), this Agreement and the Franchise will be governed by the internal laws of theState of Arizona (without reference to its choice of law and conflict of law rules), except that the provisions of any Arizona law relating to the offer and sale of business opportunities or franchises or governing the relationship of a franchisor and its franchisees will not apply unless their jurisdictionalrequirements are met independently without reference to this paragraph. You agree that we may instituteany action against you arising out of or relating to this Agreement in any state or federal court of generaljurisdiction in Maricopa County, Arizona, and you irrevocably submit to the jurisdiction of such courts and waive any objection you may have to either the jurisdiction or venue of such court.


17.13 Binding Effect.

This Agreement is binding on and will inure to the benefit of our successors and assigns and,subject to the Transfers provisions contained in this Agreement, will be binding on and inure to the benefit of your successors and assigns, and if you are an individual, on and to your heirs, executors, and administrators.

17.14 No Liability to Others; No Other Beneficiaries.

We will not, because of this Agreement or by virtue of any approvals, advice or services providedto you, be liable to any person or legal entity that is not a party to this Agreement, and no other party shallhave any rights because of this Agreement.

17.15 Construction.

All headings of the various Sections of this Agreement are for convenience only, and do notaffect the meaning or construction of any provision. All references in this Agreement to masculine, neuter or singular usage will be construed to include the masculine, feminine, neuter or plural, whereverapplicable. Except where this Agreement expressly obligates us to reasonably approve or notunreasonably withhold our approval of any of your actions or requests, we have the absolute right to refuse any request by you or to withhold our approval of any action or omission by you. The term “affiliate” as used in this Agreement is applicable to any company directly or indirectly owned or controlled by you or your Principal Owners, or any company directly or indirectly owned or controlled by us that sells products or otherwise transacts business with you.

17.16 Joint and Several Liability.

If two (2) or more persons are you under this Agreement, their obligation and liability to us shallbe joint and several.

17.17 Multiple Originals.

This Agreement may be executed in two or more counterparts, all of which shall be consideredone and the same agreement and shall become effective when counterparts have been signed by eachparty and delivered to the other parties hereto. This Agreement, once executed by a party, may be delivered to the other parties hereto by facsimile transmission or other electronic means of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

17.18 Timing Is Important.

Time is of the essence of this Agreement. “Time is of the essence” is a legal term thatemphasizes the strictness of time limits. In this case, it means it will be a material breach of thisAgreement to fail to perform any obligation within the time required or permitted by this Agreement.

17.19 Independent Provisions.

The provisions of this Agreement are deemed to be severable. In other words, the parties agreethat each provision of this Agreement will be construed as independent of any other provision of this Agreement.


18. NOTICES AND PAYMENTS.

All written notices, reports and payments permitted or required under this Agreement or by the Operations Manual will be deemed delivered: (a) at the time delivered by hand; (b) one (1) business day after transmission by telecopy, facsimile or other electronic system; (c) one (1) business day after being placed in the hands of a reputable commercial courier service for next business day delivery; or (d) three(3) business days after being placed in the U.S. mail by Registered or Certified Mail, Return Receipt Requested, postage prepaid; and addressed to the party to be notified or paid at its most current principal business address of which the notifying party has been advised, or to any other place designated by either party. Any required notice, payment or report which we do not actually receive during regular business hours on the date due (or postmarked by postal authorities at least two (2) days before it is due) will be deemed delinquent.

19. ENTIRE AGREEMENT.

This Agreement and all exhibits to this Agreement constitute the entire agreement between theparties and supersede any and all prior negotiations, understandings, representations, and agreements. Nothing in this or in any related agreement, however, is intended to disclaim the representations we made in the Franchise Disclosure Document that we furnished to you. You acknowledge that you are entering into this Agreement as a result of your own independent investigation of our Franchise and not as a result of any representations about us made by our shareholders, officers, directors, employees, agents, representatives, independent contractors, or franchisees that are contrary to the terms set forth in this Agreement, or in any disclosure document, prospectus, or other similar document required or permitted tobe given to you pursuant to applicable law. This Agreement may be modified only by written agreement signed by both you and us, except that we may modify the Operations Manual at any time as provided herein.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the AgreementDate.

“WE”ZOYO FRANCHISING, LLC,an Arizona limited liability company

By: Zoyo, LLC, its MemberBy: Aaron Klusman, Manager of Zoyo, LLC

“YOU”

By:Its:


EXHIBIT 1

TO THE ZOYO UNIT FRANCHISE AGREEMENT

FRANCHISE AGREEMENT EXPIRATION DATE

FRANCHISE PROTECTED TERRITORY

PROJECTED FRANCHISING OPENING SCHEDULE

1-1 Expiration Date. Unless sooner terminated in accordance with the provisions of this

Agreement, this Agreement will expire on ________ _________ _____ ______________.

1-2 Franchise Premises. The Franchise Premises are:

1-3 Franchising Opening Schedule. You must open the Franchise to which this Agreement

corresponds within the following time period (the “Opening Deadline”), subject to the requirements of

Section 4, and any other applicable provision of the Agreement:

Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement Exhibit 1 – Expiration Date and Opening ScheduleGP:3611127 v2 1

EXHIBIT 2


OWNER’S GUARANTY AND ASSUMPTION OF OBLIGATIONS

In consideration of, and as an inducement to, the execution of the Franchise Agreement, dated asof this _____ day of _________ _____ ____, 20__ (“the Agreement”), by and between ZoyoFranchising, LLC (“us”), an Arizona limited liability company, and

(“the Franchise Owner”), each of the undersigned owners of the FranchiseOwner and their respective spouses (“you,” for purposes of this Guaranty only), hereby personally andunconditionally agree to perform and keep during the terms of the Agreement, each and every covenant,obligation, payment, agreement, and undertaking on the part of Franchise Owner contained and set forthin the Agreement. Each of you agree that all provisions of the Agreement relating to the obligations of Franchise Owners, including, without limitation, the covenants of confidentiality and non-competition and other covenants set forth in the Agreement, shall be binding on you.

Each of you waives (1) protest and notice of default, demand for payment or nonperformance ofany obligations guaranteed by this Guaranty; (2) any right you may have to require that an action bebrought against Franchise Owner or any other person as a condition of your liability; (3) all right to payment or reimbursement from, or subrogation against, the Franchise Owner which you may have arising out of your guaranty of the Franchise Owner’s obligations; and (4) any and all other notices and legal or equitable defenses to which you may be entitled in your capacity as guarantor.

Each of you consents and agrees that (1) your direct and immediate liability under this Guarantyshall be joint and several; (2) you will make any payment or render any performance required under the Agreement on demand if Franchise Owner fails or refuses to do so when required; (3) your liability will not be contingent or conditioned on our pursuit of any remedies against Franchise Owner or any other person; (4) your liability will not be diminished, relieved or otherwise affected by any extension of time, credit or other indulgence which we may from time to time grant to Franchise Owner or to any other person, including without limitation, the acceptance of any partial payment or performance, or the compromise or release of any claims; and (5) this Guaranty will continue and be irrevocable during the term of the Agreement and afterward for so long as the Franchise Owner has any obligations under the Agreement.

If we are required to enforce this Guaranty in a judicial or arbitration proceeding, and prevail insuch proceeding, we will be entitled to reimbursement of our costs and expenses, including, but notlimited to, reasonable accountants’, attorneys’, attorneys’ assistants’, arbitrators’ and expert witness fees,costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses, whether incurred prior to, in preparation for or in contemplation of the filing of any such proceeding. If we are required to engage legal counsel in connection with any failure by you to comply with this Guaranty, you agree to reimburse us for any of the above-listed costs and expenses incurred byus.

Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement Exhibit 2 – Owner’s Guaranty and Assumption of ObligationsGP:3611127 v2 1

This Guaranty is now executed as of the Agreement Date.

OWNER: OWNER’S SPOUSE:

____________________ _______________ ____________________ _______________Name: _________ ____ _______________ Name: ______________ _______________


____________________ _______________ ____________________ _______________Name: _________ ____ _______________ Name: ______________ _______________


____________________ _______________ ____________________ _______________Name: _________ ____ _______________ Name: ______________ _______________

NOTARY PUBLIC

State of )) ss.

County of )

I,___________________________, a notary in the State of ______________________ ,County of _________________________, do hereby certify that the foregoing Guaranty and Assumptionof Obligations was acknowledged before me this ______ day of _________ _______, ____ ___, by

and , who is (are) personally known to me or whohas (have) produced identification demonstrating his/her identity.

____________________ _______________ _____Signature of Person Taking Acknowledgement

My Commission Expires: _________ _____ _______________

Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement Exhibit 2 – Owner’s Guaranty and Assumption of ObligationsGP:3611127 v2 2

EXHIBIT 3

TO THE ZOYO UNIT FRANCHISE AGREEMENTADDENDUM TO LEASE AGREEMENT

This Addendum to Lease Agreement (this “Addendum”), is entered into effective on this ______day of _______________, 20___, (the “Effective Date”) by and between _________ ________, a____________________ ___ (the “Lessor”), and ___________ _____ , a __________________ _____(the “Lessee”) (each a “Party” and collectively, the “Parties”).

RECITALS

WHEREAS, the Parties hereto have entered into a certain Lease Agreement, dated on the ______day of ______________ , 20___ (the “Agreement”), and pertaining to the premises located at____________________ ________ (the “Premises”);

WHEREAS, Lessor acknowledges that Lessee intends to operate a Zoyo Neighborhood Yogurt®shop from the Premises pursuant to a Franchise Agreement (the “Franchise Agreement”) with Zoyo Franchising, LLC, an Arizona limited liability company (“Franchisor”) under the name Zoyo or other name designated by Franchisor (“Franchise”); and

WHEREAS, the Parties now desire to amend the Lease Agreement in accordance with the terms and conditions contained herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein set forthand each act done and to be done pursuant hereto, and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby represent, warrant, covenant and agree as follows:

1. Remodeling and Decor. The above recitals are hereby incorporated by reference. Lessoragrees that Lessee shall have the right to remodel, equip, paint and decorate the interior of the Premises and to display the proprietary marks and signs on the interior and exterior of the Premises as Lessee is reasonably required to do pursuant to the Franchise Agreement and any successor Franchise Agreement under which Lessee may operate a Franchise on the Premises.

2. Assignment. Lessee shall have the right to assign all of its right, title and interest in andto the Lease Agreement to Franchisor or its parent, subsidiary, or affiliate, (including another franchisee)at any time during the term of the Lease, including any extensions or renewals thereof, without firstobtaining Lessor’s consent, pursuant to the terms of the Collateral Assignment of Lease attached hereto as Schedule 1. However, no assignment shall be effective until such time as Franchisor or its designated affiliate gives Lessor written notice of its acceptance of the assignment, and nothing contained herein or in any other document shall constitute Franchisor or its designated subsidiary or affiliate a party to the Lease Agreement, or guarantor thereof, and shall not create any liability or obligation of Franchisor or its parent unless and until the Lease Agreement is assigned to, and accepted in writing by, Franchisor or its parent, subsidiary or affiliate. In the event of any assignment, Lessee shall remain liable under the terms of the Lease. Franchisor shall have the right to reassign the Lease to another franchisee without the Landlord’s consent in accordance with Section 4(a) below.

Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement Exhibit 3 – Addendum to Lease AgreementGP:3611127 v2 1

3. Default and Notice.

(a) In the event there is a default or violation by Lessee under the terms of the LeaseAgreement, Lessor shall give Lessee and Franchisor written notice of the default or violationwithin ten (10) days after Lessor receives knowledge of its occurrence. If Lessor gives Lessee adefault notice, Lessor shall contemporaneously give Franchisor a copy of the notice. Franchisor shall have the right, but not the obligation, to cure the default. Franchisor will notify Lessor whether it intends to cure the default and take an automatic assignment of Lessee’s interest asprovided in Section 4(a) below. Franchisor will have an additional fifteen (15) days from the expiration of Lessee’s cure period in which it may exercise the option to cure, but is not obligated to cure the default or violation.

(b) All notices to Franchisor shall be sent by registered or certified mail, postageprepaid, to the following address:

Zoyo Franchising, LLC450 N. McClintock DriveChandler, Arizona 85226Attention: Aaron KlusmanFacsimile: (602) 337-7099

Franchisor may change its address for receiving notices by giving Lessor written noticeof the new address. Lessor agrees that it will notify both Lessee and Franchisor of any change inLessor’s mailing address to which notices should be sent.

(c) Following Franchisor’s approval of the Lease Agreement, Lessee agrees not toterminate, or in any way alter or amend the same during the Initial Term of the Franchise Agreement or any Interim Period thereof without Franchisor’s prior written consent, and anyattempted termination, alteration or amendment shall be null and void and have no effect as toFranchisor’s interests thereunder; and a clause to the effect shall be included in the Lease.

4. Termination or Expiration.

(a) Upon Lessee’s default and failure to cure the default within the applicable cureperiod, if any, under either the Lease Agreement or the Franchise Agreement, Franchisor will, atits option, have the right, but not the obligation, to take an automatic assignment of Lessee’sinterest in the Lease Agreement and at any time thereafter to re-assign the Lease Agreement to a new franchisee without Lessor’s consent and to be fully released from any and all liability to Lessor upon the reassignment, provided the franchisee agrees to assume Lessee’s obligations and the Lease Agreement. Upon notice from Franchisor to Lessor requesting an automatic assignment, Lessor will, at the cost of Franchisor, take appropriate actions to secure the leased premises including but not limited to changing the locks and granting Franchisor sole rights to the Premises.

(b) Upon the expiration or termination of either the Lease Agreement or theFranchise Agreement (attached), Lessor will cooperate with and assist Franchisor in securingpossession of the Premises and if Franchisor does not elect to take an assignment of the Lessee’sinterest, Lessor will allow Franchisor to enter the Premises, without being guilty of trespass and without incurring any liability to Lessor, to remove all signs, awnings, and all other items identifying the Premises as a Franchise and to make other modifications (such as repainting) as


are reasonably necessary to protect Zoyo marks and system, and to distinguish the Premises from a Franchise. In the event Franchisor exercises its option to purchase assets of Lessee or has rights to those through the terms and conditions of any agreement between Lessee and Franchisor, Lessor shall permit Franchisor to remove all the assets being purchased by Franchisor.

5. Consideration; No Liability.

(a) Lessor hereby acknowledges that the provisions of this Addendum are requiredpursuant to the Franchise Agreement under which Lessee plans to operate its business and Lesseewould not lease the Premises without this Addendum. Lessor also hereby consents to theCollateral Assignment of Lease from Lessee to Franchisor as evidenced by Exhibit A.

(b) Lessor further acknowledges that Lessee is not an agent or employee ofFranchisor and Lessee has no authority or power to act for, or to create any liability on behalf of,or to in any way bind Franchisor or any affiliate of Franchisor, and that Lessor has entered intothis Addendum with full understanding that it creates no duties, obligations or liabilities of, or against, Franchisor or any affiliate of Franchisor.

6. Sales Reports. If requested by Franchisor, Lessor will provide Franchisor with whateverinformation Lessor has regarding Lessee’s sales from its Franchise.

7. Amendments. No amendment or variation of the terms of the Lease or this Addendumshall be valid unless made in writing and signed by the Parties hereto.

8. Reaffirmation of Lease. Except as amended or modified herein, all of the terms,conditions and covenants of the Lease Agreement shall remain in full force and effect and are incorporated herein by reference and made a part of this Addendum as though copied herein in full.


9. Beneficiary. Lessor and Lessee expressly agree that Franchisor is a third partybeneficiary of this Addendum.

IN WITNESS WHEREOF, the Parties have duly executed this Addendum as of the EffectiveDate.

LESSOR:

a(n)

By:

Name:

Its:

LESSEE:

a(n)

By:

Name:

Its:


SCHEDULE 1

COLLATERAL ASSIGNMENT OF LEASE

This COLLATERAL ASSIGNMENT OF LEASE (this “Assignment”) is entered into effective asof the ___ day of _______________, 20___ (the “Effective Date”), the undersigned,____________________ _____________, (“Assignor”) hereby assigns, transfers and sets over untoZoyo Franchising, LLC, an Arizona limited liability company (“Assignee”) all of Assignor’s right, titleand interest as tenant, in, to and under that certain lease, a copy of which is attached hereto as Exhibit 1(the “Lease Agreement”) with respect to the premises located at____________________ _______________ _______________ _____ ____ (the “Premises”). ThisAssignment is for collateral purposes only and except as specified herein, Assignee shall have no liabilityor obligation of any kind whatsoever arising from or in connection with this Assignment unless Assigneeshall take possession of the Premises demised by the Lease Agreement pursuant to the terms hereof and shall assume the obligations of Assignor thereunder.

Assignor represents and warrants to Assignee that it has full power and authority to so assign theLease Agreement and its interest therein and that Assignor has not previously, and is not obligated to,assign or transfer any of its interest in the Lease Agreement nor the Premises demised thereby.

Upon a default by Assignor under the Lease Agreement or under that certain franchise agreementfor Zoyo between Assignee and Assignor (“Franchise Agreement”), or in the event of a default byAssignor under any document or instrument securing the Franchise Agreement, Assignee shall have theright and is hereby empowered to take possession of the Premises, expel Assignor therefrom, and, in theevent, Assignor shall have no further right, title or interest in the Lease Agreement.

Assignor agrees it will not suffer or permit any surrender, termination, amendment or modification of the Lease Agreement without the prior written consent of Assignee. Through the InitialTerm of the Franchise Agreement and any Renewal Period thereof (as defined in the Franchise Agreement), Assignor agrees that it shall elect and exercise all options to extend the term of or renew the Lease Agreement not less than thirty (30) days before the last day that said option must be exercised, unless Assignee otherwise agrees in writing. Upon failure of Assignee to otherwise agree in writing, and upon failure of Assignor to so elect to extend or renew the Lease Agreement as stated herein, Assignor hereby irrevocably appoints Assignee as its true and lawful attorney-in-fact, which appointment is coupled with an interest, to exercise the extension or renewal options in the name, place and stead of Assignor for the sole purpose of effecting the extension or renewal.

[Remainder of Page Left Intentionally Blank – Signature Page Follows]

Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement Exhibit 3 – Addendum to Lease Agreement

GP:3611127 v2 5

IN WITNESS WHEREOF, Assignor and Assignee have duly executed this CollateralAssignment of Lease as of the Effective Date.

ASSIGNOR:

a(n)

By:

Name:

Its:

ASSIGNEE:

ZOYO FRANCHISING, LLC,an Arizona limited liability company



EXHIBIT 4


OWNERSHIP INTERESTS IN FRANCHISE OWNER

4-1. Full name and address of the owners of, and a description of the type of, all currently

held Interests in Franchise Owner:

4-2. Minimum individual and aggregate Principal Owner ownership percentage required at alltimes during the term of this Agreement:

4-2.1 During the term of this Agreement, the Principal Owners together must have a“controlling interest” (i.e., a ninety percent (90%) “ownership interest” of the equity, voting control and profits) in Franchise owner.

4-2.2 Unless otherwise permitted, the required minimum “ownership interest” of each PrincipalOwner during the term of this Agreement is:

NameOwnershipPercentage

Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement Exhibit 4 – Ownership Interests in Franchise OwnerGP:3611127 v2 1

EXHIBIT 5


STATE-SPECIFIC ADDENDA

STATE OF ILLINOIS’ SPECIFIC DISCLOSURE ADDENDUM

The conditions under which your franchise can be terminated and your rights upon non-renewal may be affected by Illinois law, 815 ILCS 705/19 and 705/20.

The choice of forum and law may be different as provided by the Illinois Franchise Disclosure Act (815 ILCS 705/4). In these cases Illinois, forum and law shall control.

Because of our financial condition, the Illinois Attorney General’s Office has imposed that we defer thepayment by you of all initial franchise fees owed to us, or our affiliate, until such time as all initial obligations owed to you under the franchise agreement or other agreements have been fulfilled by us and you have commenced doing business pursuant to the franchise agreement.

Executed as of the Agreement Date

Zoyo Franchising, LLC

By Zoyo LLC, its MemberBy Aaron Klusman, Manager of Zoyo, LLC

Franchise Owner

By:

Its:

Zoyo Franchising, LLC FDD – Exhibit B – Franchise Agreement Exhibit 5 – State Specific AddendaGP:3611127 v2 1

STATE OF MINNESOTA’S SPECIFIC DISCLOSURE ADDENDUM

Minn. Stat. §80C.21 and Minn. Rule 2860.4400J prohibit us from requiring litigation to be conducted outside Minnesota. In addition, nothing in the disclosure document or Regional Developer Franchise Agreement can abrogate or reduce any of your rights as provided for in Minnesota Statutes, Chapter 80C, or your rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.

With respect to franchises governed by Minnesota law, we will comply with Minn. Stat. Sec. 80C.14, Subdivisions 3, 4, and 5 which require, except in certain specified cases, that a franchisee be given 90 days’ notice of termination (with 60 days to cure) and 180 days’ notice for non-renewal of the Regional Developer Franchise Agreement.

You do not consent to us obtaining injunctive relief. However, you agree that we may seek injunctive relief.See Minn. Rules 2860.4400J.

Minnesota Rule part 2860.4400D prohibits requiring a franchisee to assent to a release, assignment, novation, or waiver that would relieve any person of liability imposed by the Minnesota Franchise Law, provided that thisrule shall not bar the voluntary settlement of disputes.

We will not require you to assent to liquidated damages. Liquidated damage provisions are void.

Minn. Rule Part 2860.4400J prohibits you from waiving your rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.

Minn. Rule 2860.4400J prohibits waiver of a jury trial. If any portion of the Franchise Disclosure Documents or Franchise Agreement or Regional Developer Franchise Agreement provides for a waiver of jury trial, Minnesota law will control.

The Limitations of Claims section of the Franchise Disclosure Document must comply with Minnesota Statutes, Section 80C.17, Subd. 5. If any portion of the Franchise Disclosure Documents or Franchise Agreement or Regional Developer Franchise Agreement is contrary to Minnesota Statutes, Section 80C.17, Subd. 5,Minnesota law will control.




Franchise Owner

By:

Its:


STATE OF WASHINGTON’ SPECIFIC DISCLOSURE ADDENDUM

Section 2.1 of the Franchise Agreement is amended to provide that we will defer payment of the Initial Franchise Fee until such time as all initial obligations owed to you under the Franchise Agreement have been fulfilled by us and you have commenced doing business pursuant to the Franchise Agreement.

If any of the provisions of this Franchise Agreement are inconsistent with the relationship provisions of RCW19.100.180 or other requirements of the Washington Franchise Investor Protection Act (the “Act”), theprovisions of the Act will prevail over the inconsistent provisions of the Franchise Agreement with regard to any franchise sold in Washington.

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


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 franchiseagreement is in effect and where the parties are represented by independent counsel. Provisions such as thosethat unreasonably restrict or limit the statute of limitations period for claims under the Act, rights or remedies under the Act such as a right to a jury trial may not be enforceable.

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




Franchise Owner

By:

Its:


EXHIBIT C

REGIONAL DEVELOPER AGREEMENT

ZOYO FRANCHISING FDD – Exhibit C – RD Agreement

TABLE OF CONTENTS

SECTION PAGE1. GRANT OF RIGHTS. .........................................................................................................22. DEVELOPMENT FEE........................................................................................................23. REGIONAL DEVELOPER’S DEVELOPMENT OBLIGATION. ....................................2

3.1 Development Obligations ........................................................................................23.2 Pilot Franchise. ........................................................................................................23.3 Regional Developer Sales Office.............................................................................3

4. REGIONAL DEVELOPER RIGHTS. ................................................................................34.1 Regional Developer Rights. .....................................................................................34.2 Rights Maintained by Company. .............................................................................3

5. TERM. .................................................................................................................................46. ADDITIONAL OBLIGATIONS OF COMPANY AND REGIONAL DEVELOPER. .....4

6.1 Pilot Franchise Training...........................................................................................46.2 Regional Developer Training...................................................................................46.3 Regional Developer Manual. ...................................................................................56.4 General Guidance.....................................................................................................56.5 Franchise Registration and Disclosure.....................................................................56.6 Sales Services...........................................................................................................66.7 Support Services. .....................................................................................................66.8 Dealings with Unit Franchisees. ..............................................................................86.9 Regional Developer’s Inspections. ..........................................................................8

7. OPERATING STANDARDS..............................................................................................87.1 Standard of Service. .................................................................................................87.2 Compliance with Laws and Good Business Practices. ............................................87.3 Accuracy of Information..........................................................................................97.4 Notification of Litigation. ........................................................................................97.5 Insurance. .................................................................................................................97.6 Proof of Insurance Coverage. ..................................................................................97.7 Marketing Plan and Local Advertising. ...................................................................97.8 Approval of Advertising. .......................................................................................107.9 Accounting, Bookkeeping and Records.................................................................107.10 Reports. ..................................................................................................................10

8. PAYMENTS TO REGIONAL DEVELOPER..................................................................118.1 Regional Developer. ..............................................................................................118.2 Commissions After Termination............................................................................118.3 Application of Payments........................................................................................118.4 Setoffs. ...................................................................................................................11

9. MARKS. ............................................................................................................................129.1 Ownership and Goodwill of Marks........................................................................129.2 Limitations on Regional Developer’s Use of Marks. ............................................129.3 Restrictions on Internet and Website Use. .............................................................129.4 Notification of Infringements and Claims. ............................................................129.5 Discontinuance of Use of Marks............................................................................139.6 Indemnification For Use of Marks.........................................................................13

ZOYO FRANCHISING FDD – Exhibit C – RD Agreement i

10. CONFIDENTIAL INFORMATION. ................................................................................1311. ASSIGNABILITY. ............................................................................................................14

11.1 Assignability by Company.....................................................................................1411.2 Assignments by Regional Developer.....................................................................1511.3 Conditions for Approval of Assignment or Transfer. ............................................1611.4 Assignment to Entity Principally Controlled By Regional Developer. .................1711.5 Death or Disability. ................................................................................................1811.6 Company’s Right of First Refusal. ........................................................................1811.7 Ownership Structure. .............................................................................................19

12. NON-COMPETITION. .....................................................................................................1912.1 In Term...................................................................................................................1912.2 Post-Term...............................................................................................................19

13. TERMINATION................................................................................................................1913.1 Termination by Company. .....................................................................................1913.2 Rights and Obligations Upon Termination or Expiration......................................20

14. SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF; MEDIATION. ..........................2115. GENERAL CONDITIONS AND PROVISIONS. ............................................................22

15.1 Relationship of Regional Developer to Company. ................................................2215.2 Indemnification. .....................................................................................................2215.3 Waiver and Delay. .................................................................................................2315.4 Survival of Covenants............................................................................................2315.5 Successors and Assigns..........................................................................................2315.6 Joint and Several Liability. ....................................................................................2315.7 Governing Law. .....................................................................................................2415.8 Consent to Jurisdiction...........................................................................................2415.9 Waiver of Punitive Damages and Jury Trial..........................................................2415.10 Limitation of Claims. .............................................................................................2415.11 Entire Agreement. ..................................................................................................2415.12 Titles for Convenience. ..........................................................................................2515.13 Gender....................................................................................................................2515.14 Severability. ...........................................................................................................2515.15 Fees and Expenses. ................................................................................................2515.16 Notices. ..................................................................................................................2515.17 Time of Essence. ....................................................................................................2615.18 Lien and Security Interest. .....................................................................................2615.19 Reasonable Business Judgment .............................................................................26

16. SUBMISSION OF AGREEMENT. ..................................................................................2717. ACKNOWLEDGMENTS. ................................................................................................27A. EXHIBIT 1...................................................................................................................... A-1B. EXHIBIT 2.......................................................................................................................B-1C. EXHIBIT 3.......................................................................................................................C-1D. EXHIBIT 4...................................................................................................................... D-1E. EXHIBIT 5

..........................................................................................................................................E-1

ZOYO FRANCHISING FDD – Exhibit C – RD Agreement1



THIS REGIONAL DEVELOPER AGREEMENT (the “Agreement”) is made and entered into this____________ day of ____________________, 20_______, (the “Effective Date”), by and between ZoyoFranchising, LLC, an Arizona limited liability company (“we”, “us” or “our”), and______________________________________ corporation/limited liability company/partnership (CircleOne) (referred to as “Regional Developer”), with reference to the following facts:

A. We and our affiliates have designed and developed valuable and proprietary formats and systems forthe development and operation of businesses operating unit franchises (“Zoyo Unit Franchise(s)”) andregional developer franchises (“Regional Developer Franchise(s)”). Zoyo Unit Franchises offerfranchisees the right to open a franchise that specializes in self-serving frozen yogurt shops providinga wide variety of delicious frozen yogurt flavors, toppings and sauces, and other related products andservices. Zoyo Regional Developer Franchises solicit, qualify, train and assist Zoyo Unit Franchiseowners (“Unit Franchisee(s)”). The term “Regional Developer Franchises” refers to franchisesowned and operated by a Zoyo Neighborhood Yogurt® regional developer.

B. We have developed and use, promote and license certain trademarks, service marks and othercommercial symbols in operating Zoyo Neighborhood Yogurt® franchises, including “ZoyoNeighborhood Yogurt,” and we may create, use and license other trademarks, service marks andcommercial symbols for use in operating Zoyo Unit Franchises and Regional Developer Franchises(collectively, the “Marks”).

C. We offer prospective Unit Franchisees (“Prospective Franchisee(s)”) the right to own and operate aZoyo Unit Franchise offering the products and services we authorize (and only the products andservices we authorize) and using our business formats, methods, systems, procedures, signs, designsand layouts, standards, specifications and Marks, all of which we may improve, further develop andotherwise modify from time to time (collectively, the “System”).

D. We also offer prospective Regional Developer Franchise owners the right to own and operate aRegional Developer Franchise that will solicit, qualify, train, and assist Unit Franchisees in openingand operating Zoyo Unit Franchises within a defined geographic development area (a “DevelopmentArea”).

E. Regional Developer desires to become a Regional Developer business (an “RD Business”) underwhich it will solicit, qualify, train and assist Zoyo Unit Franchises within the Development Area setforth in Exhibit 1.

F. We desire to grant to Regional Developer the right to operate an RD Business in accordance with theterms and upon the conditions contained in this Agreement.

WHEREFORE, IT IS AGREED:

1. GRANT OF RIGHTS.

Subject to the terms of this Agreement, we hereby grant to Regional Developer a Regional Developer Franchise, and Regional Developer hereby accepts the rights during the Term to open and operate, to solicit, qualify for final approval by us, train, and assist Prospective Franchisees to open and operate Zoyo Unit Franchises in the Development Area set forth in Exhibit 1, all in accordance with this agreement.

2. DEVELOPMENT FEE.

Regional Developer must pay to us a non-refundable “Development Fee” of ____________, payable

upon execution of this Agreement.

3. REGIONAL DEVELOPER’S DEVELOPMENT OBLIGATION.

3.1 Development Obligations

Regional Developer agrees to comply with the development quota described in Exhibit 2 attachedhereto (“RD Minimum Development Obligations”) for each time period described on Exhibit 2 (“RD Development Periods”). The determination as to whether Regional Developer has satisfied the RD Minimum Development Obligations will be made based on the number of Zoyo Unit Franchises sold in theDevelopment Area, and the number of Zoyo Unit Franchises open and operating in the Development Area atthe end of each RD Development Period. For purposes of these development obligations, a Zoyo UnitFranchise will be considered “sold” if there is a fully signed and effective Zoyo Neighborhood Yogurt® franchise agreement (a “Franchise Agreement”) with no existing contingencies and a fully paid initial franchise fee respecting the Zoyo Unit Franchise. A Zoyo Unit Franchise will be considered “open and operating” and will be counted toward the satisfaction of the RD Minimum Development Obligations if it is open and operating in the Development Area and the Zoyo Unit Franchise is not in default under the applicable Franchise Agreement.

3.2 Pilot Franchise.

It is recommended, but not required, that Regional Developer sign a Franchise Agreement and openone (1) Zoyo Unit Franchise within the Development Area that successfully passes our operational review, tobe used as a prototype business and training facility (the “Pilot Franchise”). If Regional Developer chooses to open and operate a Pilot Franchise, it must be opened no later than nine (9) months after the Effective Date inorder to provide training and assistance to any Unit Franchisees in the Development Area. RegionalDeveloper will operate the Pilot Franchise or any replacement thereof at all times during the Term and anyextension of it. The Pilot Franchise must be located at a site within the Development Area that is suitable forthe operation of a Zoyo Unit Franchise (“the Pilot Franchise Site”), and may be the same as the Regional Developer Sales Office. The Pilot Franchise Site is subject to the same approval process as any other Zoyo Unit franchise site as specified in the Franchise Agreement. If Regional Developer does not operate a Pilot Franchise, Regional Developer must construct, equip and open a training facility.

ZOYO FRANCHISING FDD – Exhibit C – RD Agreement

3.3 Regional Developer Sales Office.

Regional Developer shall establish and operate a franchise sales office (“Sales Office”) within the Development Area, which may be the same as the Pilot Franchise Site. We will not approve or disapprovethe location of the Sales Office.

4. REGIONAL DEVELOPER RIGHTS.

4.1 Regional Developer Rights.

Except as provided in Section 4.2, as long as this Agreement is in effect, and Regional Developer is infull compliance with this Agreement, and meet the RD Minimum Development Obligations, then we and our affiliates will not operate, establish or grant in Regional Developer’s Development Area another Regional Developer Franchise offering Zoyo Unit Franchises.

4.2 Rights Maintained by Company.

We (and any of our affiliates) have the right to engage in any activities we deem appropriate that are not expressly prohibited by this Agreement, whenever and wherever we desire, including:

(a) establish and operate Zoyo Unit Franchises and Regional Developer Franchises, andgranting right to other persons to establish and operate Zoyo Unit Franchises or Regional DeveloperFranchises, on any terms and conditions we deem appropriate and at any locations other than in Regional Developer’s Development Area;

(b) establish Zoyo Unit Franchises and grant rights to other persons to solicit, qualify,train and assist Zoyo Unit Franchises, on any terms and conditions we deem appropriate and at any locationswithin the Development Area, provided however, that Regional Developer will be entitled to its share of the Initial Commissions and any Royalty Fees, as described in Section 8 of this Agreement;

(c) provide and grant rights to other persons to provide goods and services similar to orcompetitive with those provided by Zoyo Unit Franchises to customers located within a Development Area,whether identified by the Marks or other trademarks or service marks, through any distribution channel other than Zoyo Unit Franchises located within a Development Area (including, but not limited to, sales of products via mail order, catalogs, toll free telephone numbers and electronic means including the Internet);

(d) acquire the assets or ownership interest of one or more businesses providing productsand services similar to those provided at Zoyo Unit Franchises, and franchising, licensing or creating similar arrangements with respect to these businesses once acquired, wherever these businesses (or the franchisees or licensees of these businesses) are located or operating (including within a Development Area);

(e) be acquired (regardless of the form of transaction) by a business providing productsand services similar to those provided at Zoyo Unit Franchises, or by another business, even if such business operates, franchises and/or licenses competitive businesses within a Development Area; and

(f) provide or offer Zoyo Neighborhood Yogurt® products and services to customerswithin or outside of a Development Area through Zoyo Neighborhood Yogurt® affiliates or dealers of ZoyoNeighborhood Yogurt® products and services.


5. TERM.

The term of this Agreement (the “Term”) shall be for a period of fifteen (15) years commencing onthe Effective Date, unless sooner terminated in accordance with the provisions of Section 13. Regional Developer shall have the right to renew this Agreement for two (2) additional periods of five (5) years each if(i) Regional Developer has complied with the RD Minimum Development Obligation, and all of the otherterms of this Agreement during the Term; (ii) Regional Developer and all of its owners and their spouses sign our general release form; (iii) we and Regional Developer mutually agree on a new minimum or other development obligations for the Development Area for the extension period; (iv) Regional Developer has completed, to our satisfaction, any new training and refresher programs as we have reasonably required; and (v) Regional Developer has paid a renewal fee amounting to the greater of One Thousand Dollars ($1,000) per operating Zoyo Unit Franchise in the Development Area or Twenty Thousand Dollars ($20,000). Under the general release, Regional Developer and its owners and their spouses will waive any and all claims against us, our affiliates, and our and their owners, officers, directors, employees, agents, successors and assigns. If Regional Developer wishes to renew this Agreement, Regional Developer must notify us in writing between nine (9) and twelve (12) months before the Term would otherwise expire. Regional Developer must sign our then-current form of the regional developer agreement at least sixty (60) days before the Term expires, which agreement may differ materially from the provisions of this Agreement; provided that Regional Developer will be required to pay the Renewal Fee in lieu of the initial territory fee stated in the then-current regionaldeveloper agreement.

6. ADDITIONAL OBLIGATIONS OF COMPANY AND REGIONAL DEVELOPER.

6.1 Pilot Franchise Training.

We or our designee shall provide Regional Developer with our initial training program for Zoyo Unit Franchises as described under the Franchise Agreement, and additional opening assistance on-site at the Pilot Franchise if Regional Developer decides to operate a Pilot Franchise, as we determine. The Franchise Agreement for each Zoyo Unit Franchise opened by Developer after the Pilot Franchise shall provide that Developer will receive from us only the classroom training portion of our initial training program, and shallnot provide on-site assistance to the Developer.

6.2 Regional Developer Training.

Forty-five (45) days before Regional Developer opens its Regional Developer Franchise for business,we or our designee will provide up to three (3) days of training to Regional Developer on the operation of anRD Business. This training program may include classroom training and/or hands-on training and will beconducted in Mesa, Arizona, and/or at any other location(s) we designate. Regional Developer must completethe initial training to our satisfaction and participate in all other activities we require before soliciting Prospective Franchisees in the Development Area. Additionally, Regional Developer is responsible for all attendees’ out-of-pocket expenses in connection with all training programs, including costs and expenses of transportation, lodging, meals, wages and employee benefits.

If we determine that Regional Developer cannot complete initial training to our satisfaction, we may,at our option, either (1) require Regional Developer to attend additional training at Regional Developer’sexpense (for which we may charge reasonable fees), or (2) terminate this Agreement.

Regional Developer must participate in periodic webinars and sales calls scheduled by us for Regional Developer Franchises, and attend a national business meeting or convention of up to three days eachyear. We may also require Regional Developer to attend up to seven (7) days of additional or refresher


training courses each year. We may charge reasonable fees for these courses, conventions, webinars, sales calls, and programs. Regional Developer is responsible for all travel and living expenses.

6.3 Regional Developer Manual.

(a) We will loan to Regional Developer one (1) copy of our operations manuals (the“Manuals”). Regional Developer will conduct all business activities in strict accordance with our standardoperational methods and procedures as prescribed from time to time in the Manuals. As used in theAgreement, the term “Manuals” shall be deemed to include the Manuals delivered to Regional Developer, all amendments to the Manuals, and all supplemental bulletins, notices and memoranda which prescribe standard methods or techniques of operation, and which we may from time to time deliver to Regional Developer.

(b) We shall have the right to modify or supplement the Manuals. Such modificationsand supplements shall be effective and binding on Regional Developer fifteen (15) days after notice thereof is mailed or otherwise delivered to Regional Developer. Regional Developer acknowledges and agrees thatmodifications of, and supplements to, the Manuals may obligate Regional Developer to invest additionalcapital or incur higher operating costs.

(c) The Manuals are our property and may not be duplicated, copied, disclosed ordisseminated in whole or in part in any manner except with our express prior written consent. RegionalDeveloper must maintain the confidentiality of the Manuals. Upon the termination of this Agreement,Regional Developer must return to us all copies of the Manuals in its possession or control. If Regional Developer’s copy of the Manuals is lost, destroyed or significantly damaged, Regional Developer agrees toobtain a replacement copy at our then-applicable charge.

6.4 General Guidance.

We will provide guidance to Regional Developer in the Manuals and other bulletins or other written materials, by electronic media, and/or by telephone consultation. If Regional Developer requests and weagree to provide additional or special guidance, assistance or training, Regional Developer must pay our then-applicable charges, including our personnel’s per diem charges and any travel and living expenses.

6.5 Franchise Registration and Disclosure.

Neither Regional Developer nor any representative of Regional Developer shall solicit Prospective Franchisees of Zoyo Unit Franchises (1) until we have registered our current Franchise Disclosure Document in applicable jurisdictions in the Development Area and have provided Regional Developer with the requisite documents, or (2) at any time when we notify Regional Developer that our registration is not then in effect or our documents are not then in compliance with applicable law. If Regional Developer’s activities pursuant to this Agreement require the preparation, amendment, registration, or filing of information or any disclosure or other documents, then all requisite disclosure documents, ancillary documents, and registration applications shall be prepared and filed by us or our designee, and registration secured, before Regional Developer may solicit Prospective Franchisees for Zoyo Unit Franchises. Costs and legal fees necessary to prepare such registration applicable to Regional Developer shall be borne by Regional Developer. In particular, Regional Developer shall:

(a) prepare and forward to us verified financial statements of Regional Developer in suchform and for such periods as shall be designated by us, including audited financial statements, if necessaryand appropriate to comply with applicable legal disclosure, filing or other legal requirements;


(b) promptly provide all information reasonably required by us to prepare all requisitedisclosure documents and ancillary documents for the offering of franchises throughout the DevelopmentArea; and

(c) execute all documents required by us for the purpose of registering RegionalDeveloper and us to offer franchises throughout the Development Area.

Regional Developer agrees to review all information pertaining to Regional Developer prepared to comply with legal requirements for selling franchises in the Development Area and verify its accuracy if so requestedby us. Regional Developer acknowledges that we and our affiliates and designees shall not be liable to Regional Developer for any errors, omissions or delays which occur in the preparation of such materials.

6.6 Sales Services.

Regional Developer will solicit and identify Prospective Franchisees for Zoyo Unit Franchises to belocated within the Development Area. Regional Developer will, at its expense, be responsible for advertisingfor, recruiting, screening, and interviewing prospects for Zoyo Unit Franchises within the Development Area. Regional Developer will provide Prospective Franchisees with written promotional and marketing information regarding a Zoyo Unit franchises that we supply or communicate information we provide or approve regarding Zoyo Unit Franchises by telephone, email or other on-line communications, face-to-face meetings, or visits at other Zoyo Unit Franchises within the Development Area. Regional Developer willsubmit each qualified Prospective Franchisee for a Zoyo Unit Franchises to be located in the Development Area to us for approval. All Prospective Franchisees Regional Developer submits to us, if an individual, orthe Principal Owner (as the term “Principal Owner” is defined in the Franchise Agreement) of the Prospective Franchisee, if the Prospective Franchisee is not an individual, will be individuals who are of good character, have adequate financial resources, and meet our criteria for Unit Franchisees or Principal Owners of Unit Franchisees. Each application for a franchise Regional Developer receives must be submitted to us with all information respecting the Prospective Franchisee, the Principal Owner of the Prospective Franchisee, if applicable, the Prospective Franchisee’s proposed franchise location, if known, and all other information we customarily then require concerning Prospective Franchisees, including such financial statements and other information as we may reasonably require. Regional Developer will assist the Prospective Franchisee in preparing such financial reports and other information. We will notify Regional Developer in writing as to whether we approve or disapprove Prospective Franchisees to become Unit Franchisees. We agree to exertour best efforts to notify Regional Developer within ten (10) business days after the later of: (1) our receipt of a complete application, financial statement, and other materials regarding the Prospective Franchisee; or (2) our personal interview of the Prospective Franchisee, if any. We will determine whether the Prospective Franchisee possesses sufficient financial and managerial capability and meets other criteria we then use in the grant of franchises. We may refuse to grant a franchise to an Prospective Franchisee for any reason withoutcompensation to Regional Developer.

6.7 Support Services.

Regional Developer will perform the following ongoing Support Services on our behalf to UnitFranchisees for each Zoyo Unit Franchise located in the Development Area:

(a) Assist with Zoyo Unit Franchise location selection for each Unit Franchisee, whichwill consist of providing each Unit Franchisee with criteria for a satisfactory site and assisting each UnitFranchisee in completing a site submittal package (containing such demographic, commercial, and other information as we may reasonably require) for each location at which Unit Franchisee proposes to establish and operate a Zoyo Unit Franchise, assist in negotiating lease terms, and coordinate the work of contractors and architects respecting the development of each Zoyo Unit Franchise;


(b) Provide standards and specifications for the build out, interior design, layout, floorplan, signs, designs, color, and decor of the Zoyo Unit Franchise as we periodically direct;

(c) Submit completed forms and reports to us as we periodically direct, including siteselection and pre-opening assistance forms and reports related to leases and construction;

(d) Advise the Unit Franchisee regarding the standards and specifications for theequipment, supplies, and materials used in, and the menu items offered for sale by, the Zoyo Unit Franchiseand advice regarding selecting suppliers for purchasing items used in connection with the Zoyo Unit Franchise;

(e) Assist the Unit Franchisee with opening its Zoyo Unit Franchise;

(f) Provide guidance in implementing advertising and marketing programs, operatingand sales procedures, and bookkeeping and accounting programs;

(g) Upon the reasonable request of a Unit Franchisee, provide telephone or electronicmedia consultation regarding the operation and management of the Zoyo Unit Franchise and advice regardingrestaurant services, product quality control, menu items, and customer relations issues;

(h) Assist us in communicating to Unit Franchisees in the Development Area all on-going updates of information and programs regarding menu items and their preparation, the Zoyo UnitFranchise business, and the System, including information concerning our special or new services. Weinitially will communicate all updates and changes to Unit Franchisees by our newsletter;

(i) Assist us in communicating to Unit Franchisees in the Development Area advice andassistance to Unit Franchisee in connection with developing and improving Unit Franchisee’s Zoyo UnitFranchise;

(j) Conduct at least one (1) quality assurance inspection using the inspection form andcriteria we periodically develop and designate (or reinspection in the case of a failed first inspection) of each Zoyo Unit Franchise in the Development Area every month in the manner we periodically require, suchinspections to be verified by written reports in a form acceptable to us and to be conducted by one of RegionalDeveloper’s representatives that we approve;

(k) Provide access to advertising and promotional materials we periodically develop;

(l) At our written request, establish one or more advertising cooperatives for Zoyo UnitFranchises located in the Development Area using forms and procedures we supply. If a cooperative is formed, all Zoyo Unit Franchises we or our Affiliates own in the Development Area (or portion thereof) will be required to join and participate in such cooperative;

(m) At our written request, assist us in connection with any assignment of franchise rightsinvolving a Unit Franchisee in the Development Area; and

(n) Submit periodic reports to us on activities in the Development Area using proceduresand forms we provide.


6.8 Dealings with Unit Franchisees.

Regional Developer acknowledges that we have delegated to Regional Developer certain of our responsibilities under the Franchise Agreement to Unit Franchisees in the Development Area. Regional Developer’s responsibilities to Unit Franchisees will be described in this Agreement or in the Area Developer Manual or as we otherwise periodically may provide. In providing services to Unit Franchisees, Regional Developer will comply with the terms and conditions of any Franchise Agreement or other agreement ineffect between Unit Franchisees and us. Regional Developer understand, however, that Regional Developer’srights as an area developer are only derived from this Agreement and that Regional Developer are not a party, third party beneficiary, or holder of any other right or title to or interest in any Franchise Agreement. Similarly, no Unit Franchisee is a third party beneficiary of this Agreement or any other agreement betweenus and Regional Developer. Regional Developer agree that Regional Developer may not under anycircumstances sell any products or other items to, or collect any money for any reason from, Unit Franchiseeswithout our prior written consent.

6.9 Regional Developer’s Inspections.

Regional Developer will ascertain through field audits, reviews, and inspections that each Unit Franchisee in the Development Area has complied satisfactorily with all provisions of the Franchise Agreement, specifications, standards, operating procedures, and the Manuals, and will promptly notify Unit Franchisee in writing, with a copy and evaluation report to us, of any deficiencies; provided, however, Regional Developer understand and acknowledge that Regional Developer’s inspections and reports are advisory only and that we will have: (1) all of the rights to inspect and ascertain compliance of all Unit Franchisees as if this Agreement were not in effect; (2) the sole right to send notices of default to Unit Franchisee; (3) the sole right to terminate a Franchise Agreement for failure to cure such defaults (if an opportunity to cure is granted); and (4) the sole right to take any legal action respecting any violation of a Franchise Agreement. If Regional Developer believes that any Unit Franchisee in the Development Area has breached a Franchise Agreement with us, Regional Developer will document in writing all facts related to thealleged breach and request in writing that we investigate such alleged breach. If, as a result of ourinvestigation, we determine that a Unit Franchisee has breached its Franchise Agreement with us, we maytake such action as we deem appropriate.

7. OPERATING STANDARDS.

7.1 Standard of Service.

Regional Developer shall at all times give prompt, courteous and efficient service to Unit Franchiseesin the Development Area. Regional Developer shall, in all dealings with Unit Franchisees, ProspectiveFranchisees and the public, adhere to the highest standards of honesty, integrity, fair dealings and ethical conduct.

7.2 Compliance with Laws and Good Business Practices.

Regional Developer shall secure and maintain in force all required licenses, permits and certificates relating to Regional Developer’s activities under this Agreement and operate in full compliance with all applicable laws, ordinances and regulations. Regional Developer acknowledges being advised that many jurisdictions have enacted laws concerning the advertising, sale, renewal and termination of, and continuing relationship between parties to a franchise agreement, including, without limitation, laws concerning disclosure requirements. Regional Developer agrees promptly to become aware of, and to comply with, all such laws and legal requirements in force in the Development Area and to utilize only disclosure documents that we have approved for use in the applicable jurisdiction.


7.3 Accuracy of Information.

Before it solicits any Prospective Franchisee, Regional Developer shall each time take reasonablesteps to confirm that the information contained in any written materials, agreements and other documentsrelated to the offer or sale of franchises is true, correct and not misleading at the time of such offer or sale andthat the offer or sale of such franchise will not at that time be contrary to, or in violation of, any applicable state law related to the registration of the franchise offering. We shall provide Regional Developer with any changes to our disclosure documents and other agreements on a timely basis and, upon request, provide Regional Developer with confirmation that the information contained in any written materials, agreements ordocuments being used by Regional Developer are true, correct and not misleading, except for informationspecifically relating to disclosures regarding Regional Developer. If Regional Developer notifies us of an error in any information in our documents, we shall have a reasonable period of time to attempt to correct any deficiencies, misrepresentations or omissions in such information.

7.4 Notification of Litigation.

Regional Developer shall notify us in writing within five (5) days after the commencement of anyaction, suit, arbitration, proceeding, or investigation, or the issuance of any order, writ, injunction, award anddecree, by any court agency or other governmental instrumentality, which names Regional Developer or anyof its Owners or otherwise concerns the operation or financial condition of Regional Developer, the RD Business or any Unit Franchisee.

7.5 Insurance.

Regional Developer shall at all times during the term of this Agreement maintain in force, at Regional Developer’s sole expense, insurance for the RD Business of the types, in the amounts and with such terms andconditions as we may from time to time prescribe in the Manuals, or otherwise. All of the required insurance policies shall name us, and affiliates designated by us, as additional insured, contain a waiver of the insurance company’s right of subrogation against us and the designated affiliates, and provide that we will receive thirty(30) days’ prior written notice of termination, expiration, cancellation or modification of any such policy. IfRegional Developer chooses to operate a Pilot Franchise, Regional Developer must also maintain all insurance coverage as prescribed in the Franchise Agreement and the Manuals.

7.6 Proof of Insurance Coverage.

Regional Developer will provide proof of insurance to us before beginning operations of its RD Business. This proof will show that the insurer has been authorized to inform us in the event any policies lapse or are cancelled or modified. We have the right to change the types, amount and terms of insurance that Regional Developer is required to maintain by giving Regional Developer prior reasonable notice. Noncompliance with these insurance provisions shall be deemed a material breach of this Agreement, and inthe event of any lapse in insurance coverage, we shall have the right, in addition to all other remedies, to demand that Regional Developer cease operations of its RD Business until coverage is reinstated or, in the alternative, to pay any delinquencies in premium payments and charge the same back to Regional Developer.

7.7 Marketing Plan and Local Advertising.

(a) To advertise for Prospective Franchisees in the Development Area, RegionalDeveloper is required to spend a quarterly minimum amount equal to One Thousand Dollars ($1,000).Regional Developer will provide us an accounting of the amounts spent on advertising within 30 daysfollowing the end of each quarter following the date of this Agreement. We may increase the quarterly


minimum amount at any time, provided that the quarterly minimum amount will not exceed $1,500 during theterm of this Agreement.

(b) If we decide to establish one, Regional Developer must join and participate in theAdvertising Cooperative (“Co-op”), which is an association of all Zoyo franchises located within RegionalDeveloper’s Area of Dominant Influence (“ADI”). An ADI is a geographic market designation that defines abroadcast media market, consisting of all counties in which the home market stations receive a preponderanceof viewing. One function of the Co-op is to establish a local advertising pool, of which the funds must be used for Zoyo Unit Franchise advertising only and for the mutual benefit of each Co-op member. Regional Developer must contribute to the pool in accordance with the rules and regulations of the Co-op, asdetermined by its members, up to a maximum of 3% of Zoyo Unit Franchise and Regional Developer’s GrossRevenue. Amounts contributed to the advertising pool by a Regional Developer may be considered as spentfor local advertising, and therefore toward the minimum local advertising requirement.

7.8 Approval of Advertising.

Prior to their use by Regional Developer, samples of all advertising and promotional materials not prepared or previously approved by us shall be submitted to us for approval, which approval shall not be unreasonably withheld. Regional Developer shall not use any advertising or promotional materials that we have not approved or have disapproved. Regional Developer acknowledges and understands that certain states require the filing of franchise sales advertising materials with the appropriate state agency prior to dissemination. Regional Developer agrees to timely comply with such filing requirements at Regional Developer’s own expense unless such advertising has been previously filed with the state by us. We maycharge Regional Developer for the costs incurred by us in printing large quantities of advertising and marketing materials supplied by us to Regional Developer at Regional Developer’s request.

7.9 Accounting, Bookkeeping and Records.

Regional Developer shall maintain at its business premises in the Development Area all original invoices, receipts, checks, contracts, licenses, acknowledgement of receipt forms, and bookkeeping and business records we require from time to time. Regional Developer shall furnish to us, within ninety (90) days after the end of Regional Developer’s fiscal year, a balance sheet and profit and loss statement (audited by a CPA, if requested by us) for the RD Business for such year (or a monthly or quarterly statement if required by us, in which case such statements also shall reflect year-to-date information). In addition upon our request, within ten (10) days after such returns are filed, exact copies of federal and state income, sales and any other tax returns (including and such other forms, records, books and other information as we periodically require regarding the RD Business, shall be furnished to us. Regional Developer shall maintain all records and report of the business conducted pursuant to this Agreement for at least four (4) years after the date of termination or expiration of this Agreement.

7.10 Reports.

Regional Developer shall, as often as required by us, deliver to us a written report of its RD Business activities in such form and detail as we may from time to time specify, including information about efforts to solicit Prospective Franchisees, the status of pending real estate transactions and the status of Franchises.


8. PAYMENTS TO REGIONAL DEVELOPER.

8.1 Regional Developer.

(a) Except as provided below, during the term of this Agreement, Regional Developershall be paid a commission equal to fifty percent (50%) of initial franchise fees paid by Unit Franchisees to us, minus any broker’s fees or sales commissions, if any, for the purchase of Zoyo Unit Franchises located within the Development Area (the “Initial Fee Commission(s)”), subject to fulfillment of the following conditions: (a) the Unit Franchisee executes a Franchise Agreement with us and an initial franchise fee has been paid to and actually received by us (we shall not be deemed to have received any fees paid into escrow, if applicable, until such fees actually have been remitted to us); and (b) Regional Developer has complied with all of its other obligations under this Agreement with respect to such sale and has verified the same to usin writing in a form prescribed by us. The Initial Fee Commissions and will be payable to RegionalDeveloper on the last day of the month following the month when the conditions of this Section 8.1 have beenfulfilled.

(b) Except as provided below, we shall pay to Regional Developer, forty percent (40%)of the royalty fees (which excludes advertising fees and any other fees) actually received by us from each Unit Franchisee located in the Development Area during the applicable period pursuant to their FranchiseAgreement (“Royalty Fees”). Royalty Fees will be payable to Regional Developer on the last day of themonth following the month when the conditions of this section have been fulfilled. Notwithstanding theforegoing, if Regional Developer has failed to provide the support services described in Section 6.7, conductthe periodic inspections and file a written report as described in Section 6.9 or failed to perform in any other material respect, with respect to one or more Zoyo Unit Franchise located in the Development Area for whichthe Regional Developer is responsible, the other services described in Section 6 to be provided to Zoyo UnitFranchises located in the Development Area during any applicable month, then Regional Developer shall not be entitled to receive commissions on Royalty Fees with respect to such Zoyo Unit Franchises for the period during which reports or services were not provided.

8.2 Commissions After Termination.

All payments under this Section 8 shall immediately and permanently cease after the expiration or termination of this Agreement, although Regional Developer shall receive all amounts which have accrued to Regional Developer as of the effective date of expiration or termination.

8.3 Application of Payments.

Our payments to Regional Developer shall be based on amounts actually collected from Unit Franchisees, not on payments accrued, due or owing. In the event of termination of a Franchise Agreement for a Zoyo Unit Franchise within the Development Area, we shall apply any payments received from a Unit Franchisee to pay past due indebtedness of that Zoyo Unit Franchise for Royalty Fees, advertising contributions, purchases from us or our affiliates, interest or any other indebtedness to us or our affiliates. To the extent that such payments are applied to a Zoyo Unit Franchise’s overdue Royalty Fee payments, Regional Developer shall be entitled to its pro rata share of such payments, less its pro rata share of the costs of collection paid to third parties.

8.4 Setoffs.

Regional Developer shall not be allowed to set off amounts owed to us for fees or other amounts dueunder this Agreement against any monies owed to Regional Developer by us, which right to set off is herebyexpressly waived by Regional Developer. We shall be allowed to set off against amounts owed to Regional


Developer for commissions, Royalty Fees or other amounts due under this Agreement any monies owed to usby Regional Developer.

9. MARKS.

9.1 Ownership and Goodwill of Marks.

Regional Developer’s right to use the Marks is derived only from this Agreement and is limited to Regional Developer’s operation of its Regional Developer Business. Regional Developer’s unauthorized use of the Marks is a breach of this Agreement and infringes our rights in the Marks. Regional Developer acknowledges and agrees that Regional Developer’s use of the Marks and any goodwill established by that use are for our exclusive benefit and that this Agreement does not confer any goodwill or other interests in the Marks upon Regional Developer (other than the right to operate an RD Business under this Agreement). All provisions of this Agreement relating to the Marks apply to any additional and substitute trademarks and service marks we authorize Regional Developer to use.

9.2 Limitations on Regional Developer’s Use of Marks.

Regional Developer may not use any Mark: (1) as part of any corporate or legal business name; (2)with any prefix, suffix or other modifying words, terms, designs, symbols other than logos we have licensedto Regional Developer; (3) in selling any unauthorized services or products; (4) as part of any domain name,electronic address or search engine, without our consent; or (5) in any other manner we have not expresslyauthorized in writing. Regional Developer may not use any Mark in advertising the transfer, sale or other disposition of Regional Developer’s business under this Agreement or an ownership interest in Regional Developer (if a corporation, partnership, limited liability company or another business entity holds thefranchise at any time during this Agreement’s term) without our prior written consent.

9.3 Restrictions on Internet and Website Use.

We retain the sole right to advertise the System on the Internet and to create, operate, maintain and modify, or discontinue the use of, a website using the Marks. Regional Developer has the right to access ourwebsite. Except as we may authorize in writing, however, Regional Developer will not: (1) link or frame our website; (2) conduct any business or offer to sell or advertise any products or services on the Internet (or anyother existing or future form of electronic communication); (3) create or register any Internet domain name in any connection with its RD Business; and (4) use any e-mail address which we have not authorized for use in operating the RD Business. Regional Developer will not register, as Internet domain names, any of the Marks that we now or hereafter may own or any abbreviation, acronym or variation of the Marks, or any other name that could be deemed confusingly similar. Further, Regional Developer may not market, advertise or promote its RD Business or conduct any business on the Internet, including using social and professional networking sites to promote its RD Business, except as provided in our written social media policy (if any) or with our prior written approval.

9.4 Notification of Infringements and Claims.

Regional Developer agrees to notify us immediately of any apparent infringement of, or challenge to, Regional Developer’s use of any Mark, or of any person’s claim of any rights in any Mark, and not tocommunicate with any person other than us and our attorneys and Regional Developer’s attorneys regarding any infringement, challenge or claim. We may take action we deem appropriate (including no action) and control exclusively any litigation, U.S. Patent and Trademark Office proceeding or other administrative proceeding arising from any infringement, challenge or claim or otherwise concerning any Mark. Regional Developer agrees to sign any documents and take any actions that, in the opinion of our attorneys, are


necessary or advisable to protect and maintain our interests in any litigation or Patent and Trademark Office or other proceeding or otherwise to protect and maintain our interests in the Marks.

9.5 Discontinuance of Use of Marks.

If we believe at any time that it is advisable for us and/or Regional Developer to modify or discontinue using any Mark and/or use one or more additional or substitute trademarks or service marks, Regional Developer agrees to comply with our directions within ninety (90) days after receiving notice. Weneed not reimburse Regional Developer for Regional Developer’s expenses in complying with these directions, for any loss of revenue due to any modified or discontinued Mark, or for Regional Developer’s expenses of promoting a modified or substitute trademark or service mark.

9.6 Indemnification For Use of Marks.

We agree to indemnify and reimburse Regional Developer against and for all damages for which Regional Developer is held liable in any trademark infringement proceeding arising out of RegionalDeveloper’s authorized use of any Mark pursuant to and in compliance with this Agreement, and for all costsRegional Developer reasonably incurs in the defense of any such claim in which Regional Developer is named as a party, so long as Regional Developer has timely notified us of the claim, and has otherwise complied with this Agreement. At our option, we may defend and control the defense of any proceeding relating to any Mark.

10. CONFIDENTIAL INFORMATION.

We possess (and may continue to develop and acquire) certain confidential information relating to the development and operation of Zoyo Unit Franchises and RD Businesses (the “Confidential Information”), which includes (without limitation):

(1) site selection criteria;

(2) methods, formats, specifications, standards, systems, procedures, sales and marketingtechniques, knowledge and experience used in developing and operating Zoyo Unit Franchises and Regional Developer Franchises;

(3) marketing research and promotional, marketing and advertising programs for Zoyo UnitFranchises and Regional Developer Franchises;

(4) knowledge of specifications for and suppliers of, and methods of ordering, certain operatingassets and products that Zoyo Unit Franchises and Regional Developer Franchises use;

(5) knowledge of the operating results and financial performance of Zoyo Unit Franchises andRegional Developer Franchises;

(6) customer communication and retention programs, along with data used or generated inconnection with those programs; graphic designs and related intellectual property;

(7) information generated by or used or developed in the operation of Zoyo Unit Franchises andRegional Developer Franchises, including customer names, addresses, telephone numbersand related information; and

(8) any other information designated confidential or proprietary by us.


Regional Developer acknowledges and agrees that by entering into this Agreement, Regional Developer will not acquire any interest in Confidential Information, other than the right to use certainConfidential Information in accordance with this Agreement, and that Regional Developer’s use of anyConfidential Information in any other business would constitute an unfair method of competition with us andour franchisees. Regional Developer further acknowledges and agrees that the Confidential Information isproprietary, includes our trade secrets, and is disclosed to Regional Developer only on the condition thatRegional Developer agrees, and it does agree, that Regional Developer:

(1) will not use any Confidential Information in any other business or capacity;

(2) will keep the Confidential Information absolutely confidential during and after thisAgreement’s term;

(3) will not make unauthorized copies of any Confidential Information disclosed via electronicmedium or in written or other tangible form;

(4) will adopt and implement all reasonable procedures that we periodically prescribe to preventunauthorized use or disclosure of Confidential Information, including, without limitation: (i)restricting its disclosure to Regional Developer’s personnel and Unit Franchisees needing to know such Confidential Information in order to develop and operate the Zoyo UnitFranchises; and (ii) requiring those having access to Confidential Information to sign confidentiality and non-disclosure agreements. We have the right to regulate the form of agreement that Regional Developer uses and to be a third party beneficiary of that agreement with independent enforcement rights; and

(5) will not sell, trade or otherwise profit in any way from the Confidential Information, exceptusing methods approved by us.

All ideas, concepts, techniques or materials relating to a Zoyo Unit Franchise or Regional Developer Franchise, whether or not protectable intellectual property and whether created by or for Regional Developer or its employees, must be promptly disclosed to us and will be deemed to be our sole and exclusive property and work made-for-hire for us. To the extent any item does not qualify as a “work made-for-hire” for us, by this paragraph, Regional Developer assigns ownership of that item, and all related rights to that item, to us and agrees to sign whatever assignment or other documents we request to evidence our ownership or to help us obtain intellectual property rights in the item.

“Confidential Information” does not include information, knowledge or know-how which is or becomes generally known in business consulting industry or which Regional Developer knew from previous business experience before we provided it to Regional Developer (directly or indirectly) or before Regional Developer attended our initial training program. If we include any material in Confidential Information, anyone who claims that it is not Confidential Information must prove that the exclusion in this paragraph is fulfilled.

11. ASSIGNABILITY.

11.1 Assignability by Company.

(a) We shall have the right, but not the obligation, to cause a subsidiary or affiliate ofours to perform any or all of our obligations and exercise any or all of our rights under this Agreement and


under any Franchise Agreement, and to require Regional Developer to perform any or all of its obligations hereunder, in favor or such subsidiary or affiliate, by delivery of written notice thereof to Regional Developer.

(b) We shall have the right to assign this Agreement, or any of our rights and privilegesunder this Agreement to any other person, firm or corporation, other than a subsidiary or affiliate of ours, without Regional Developer’s prior consent, and we shall not be liable for any obligations accruing under thisAgreement after the effective date of such assignment; provided the assignee shall expressly assume andagree to perform our obligations under this Agreement and is reasonably capable of performing them.

11.2 Assignments by Regional Developer.

(a) We have entered into this Agreement in reliance upon, and in consideration of, thesingular personal skills, character, aptitude, business ability, financial capacity and qualifications of RegionalDeveloper and the trust and confidence reposed in Regional Developer or, in the case of a business entity Regional Developer, its owners (individually, an “Owner”). Therefore, neither Regional Developer’s interest in this Agreement nor any of its rights or privileges hereunder shall be assigned or transferred, voluntarily or involuntarily, in whole or in part, by operation of law or otherwise, in any manner, without our prior written approval.

(b) Any assignment or transfer without our approval is a breach of this Agreement andhas no effect. In this Agreement, the term “transfer” includes any voluntary, involuntary, direct or indirectassignment, sale, gift or other disposition and includes the following events:

(1) transfer of record or beneficial ownership of capital stock in RegionalDeveloper (if Regional Developer is a corporation), a partnership or membership interest (if RegionalDeveloper is a partnership or limited liability company), or any other ownership interest or right to receive allor a portion of Regional Developer’s profits or losses;

(2) a merger, consolidation or exchange of shares or other ownership interests, orissuance of additional ownership interest or securities representing or potentially representing shares or otherownership interests, or a redemption of shares or other ownership interests;

(3) any sale or exchange of voting interests or securities convertible to votinginterests, or any agreement granting the right to exercise or control the exercise of the voting rights of any owner or to control Regional Developer’s operations or affairs;

(4) transfer of an interest in Regional Developer, this Agreement, or RDBusiness or its assets (or any right to receive all or a portion of RD Business’ profits or losses or any capitalappreciation relating to the RD Business) in a divorce, insolvency or entity dissolution proceeding, or otherwise by operation of law;

(5) if Regional Developer or an Owner (if Regional Developer is a businessentity) dies, transfer of an interest in Regional Developer, this Agreement, or the RD Business or its assets (orany right to receive all or a portion of Regional Developer Business’ profits or losses or any capital appreciation relating to the RD Business) by will, declaration or transfer in trust, or under the law of intestate succession; or

(6) pledge of this Agreement (to someone other than us) or of an ownershipinterest in Regional Developer (if Regional Developer is a business entity) as security, foreclosure upon the Development Area franchises, or Regional Developer’s transfer, surrender or loss of the area developmentfranchise possession, control or management.


11.3 Conditions for Approval of Assignment or Transfer.

We may impose any reasonable condition(s) to the granting of our consent to such assignments. Without limiting the generality of the foregoing, the imposition by us of any or all of the following conditions to our consent to any such assignment shall be deemed to be reasonable:

(a) that the assignee (or the principal officers, shareholders, directors or general partnersof the assignee in the case of a business entity assignee) demonstrates that it has the skill, qualifications and economic resources necessary, in our judgment, reasonably exercised, to own and operate the RD Business;

(b) that Regional Developer has paid all amounts owed to us;

(c) that the assignee shall expressly assume in writing for our benefit all of theobligations of Regional Developer under this Agreement and any other agreements proposed to be assigned tosuch assignee;

(d) that neither the assignee nor its owners or affiliates operates, has an ownershipinterest in, or performs services for, a Competitive Business (defined in Section 12.2);

(e) that the assignee shall have completed (or agreed to complete) our training program;

(f) that the assignee signs our then current form of Regional Developer Agreement, theprovisions of which may differ materially from any and all of those contained in this Agreement, and the term of which shall be the remaining term of this Agreement;

(g) that as of the date of any such assignment, the assignor shall have strictly compliedwith all of its obligations to us, whether under this Agreement or any other agreement, arrangement orunderstanding with us;

(h) that the assignee is not then in default of any obligation to us under any agreementbetween such assignee and us;

(i) that the assignor shall pay to us a transfer fee of Thirty Thousand Dollars ($30,000),except for transfers pursuant to Section 11.4 below;

(j) that the assignor and the assignor’s spouse (if any) shall sign a general release, in aform satisfactory to us, of any and all claims against us and our affiliates and our and their respectiveshareholders, officers, directors, employees, representatives, agents, successors and assigns; and

(k) that assignor will not directly or indirectly at any time or in any manner identifyhimself, herself or itself or any of assignor’s business as a current or former Zoyo Unit Franchise or as one ofour Unit Franchisees or Regional Developers, use any Mark, any colorable imitation of a Mark, or otherindicia of a Zoyo Unit Franchise or Regional Developer Franchise in any manner or for any purpose, or utilize for any purpose any trade name, trademark, service mark or other commercial symbol that suggests or indicates a connection or association with us.

Regional Developer shall not in any event have the right to pledge, encumber, charge, hypothecate or otherwise give any third party a security interest in this Agreement in any manner whatsoever without our express prior written permission, which permission may be withheld for any reason whatsoever in our sole subjective judgment.


11.4 Assignment to Entity Principally Controlled By Regional Developer.

The Regional Developer Franchise and its assets and liabilities may be assigned to a newly formed corporation or other legal entity that conducts no business other than the operation of the franchise and in which Regional Developer and any of Regional Developer’s principals own and control in the aggregate not less than ninety percent (90%) of the equity and voting power of all outstanding capital stock or ownership interest, provided as follows:

(a) that the proposed transferee complies with the provisions of this Agreement; and

(b) that Regional Developer are empowered to act for said corporation or other legalentity; and

(c) that Regional Developer shall submit to us documentation that we may reasonablyrequest to effectuate the transfer; and

(d) that Regional Developer shall submit to us a true and complete list of theshareholders, members or partners, showing number of shares or interests owned, and a list of the officers and directors if a corporation, or managers if a limited liability company, or managing partners if a partnership. We shall be promptly notified of any changes in said lists; and

(e) that all certificates of shares or interests issued by transferee at any time shall haveendorsed with the appropriate legend to conform with state law, referring to this Agreement by date and name of parties hereto and stating “Transfer to This Certificate is Limited by the Terms and Conditions of aRegional Developer Agreement dated ______ ____ ________;” and

(f) that a copy of this Agreement shall be given to every shareholder, member or partner;and

(g) that a copy of the organizational documents and any corporate resolutions and aCertificate of Good Standing will be furnished to us at our reasonable request, and prompt notification inwriting of any amendments thereto will be provided to us; and

(h) that the number of shares or interests issued or outstanding in the transferee will notbe increased or decreased without prior written notice to us, which notice will in its terms guarantee compliance with this Agreement. In addition, new shareholders, members or partners must be approved by us and agree to be bound by this entire Agreement. Shareholders, members or partners may make a separate agreement among them providing for purchase by the survivors among them of the shares of any shareholders or interests of any members or partners upon death, or other agreements affecting ownership or voting rights, so long as voting control and a majority representation of the board of directors or members or partners remains with those individuals who initially applied for and were approved as franchisees under this Agreement. Shareholders, members or partners must notify us in writing of any such agreement which affectscontrol of the transferee.


11.5 Death or Disability.

(a) Upon the death or disability of Regional Developer or an Owner, the executor,administrator, conservator, guardian or other personal representative must assign, sell, or transfer Regional Developer’s interest in this Agreement, the RD Business and its assets, or the Owner’s ownership interest in Regional Developer, to a third party approved by us. That transfer (including, without limitation, transfer by bequest or inheritance) must occur, subject to our rights, within a reasonable time, not to exceed nine (9) months from the date of death or disability, and is subject to all of the terms and conditions in this Section 11.A failure to transfer such interest within this time period is a breach of this Agreement. The term “disability” means a mental or physical disability, impairment or condition that is reasonably expected to prevent oractually does prevent Regional Developer from supervising the Development Area management andoperation for ninety (90) or more consecutive days.

(b) If, upon the death or disability of Regional Developer or an Owner, a trainedmanager who we approve is not managing the day-to-day operations, then the executor, administrator,conservator, guardian or other personal representative must, within a reasonable time not to exceed thirty (30)days from the date of death or disability, appoint a manager that we must approve to operate the RD Business. The manager must, at Regional Developer’s or the Owner’s estate’s expense, satisfactorily complete the training we designate within the specified time period.

11.6 Company’s Right of First Refusal.

If Regional Developer at any time determines to sell or transfer an interest in this Agreement or theRD Business, or if Owner determines to sell or transfer a controlling ownership interest in RegionalDeveloper, then Regional Developer or the Owner, as applicable (the “Seller”) must obtain from a responsibleand fully disclosed buyer, and send us a true and complete copy of a bona fide, executed written offer relating exclusively to an interest in Regional Developer or this Agreement and the RD Business. The offer must include details of the payment terms of the proposed sale and the sources and terms of any financing for the proposed purchase price. To be a valid, bona fide offer, the proposed purchase price must be in a fixed dollar amount and without any contingent payments of purchase price (such as earn-out payments).

We may, by delivering written notice to the Seller within thirty (30) days after we receive both anexact copy of the offer and all other information requested, elect to purchase the interest for the price and on the terms and conditions contained in the offer, provided that: 1) we may substitute cash for any form of payment proposed in the offer; (2) our credit will be deemed equal to the credit of any proposed buyer; (3) the closing will occur within sixty (60) days after notifying the Seller of our election to purchase or, if later, the closing date proposed in the offer; and (4) we must receive, and the Seller agrees to make, all customary representations and warranties given by the seller of the assets of a business or ownership interests in a legal entity, as applicable, including, without limitation, representations and warranties regarding ownership and condition of, and title to, assets and (if applicable) ownership interests and validity of contracts and the liabilities, contingent or otherwise, relating to the assets or ownership interests being purchased. If we exercise our right of first refusal, the Seller agrees that, for two (2) years beginning on the closing date, the Seller and members of its immediate family will be bound by the non-competition covenant contained in Section 12.2 below.

If we do not exercise our right of first refusal, the Seller may complete the sale to the proposed buyeron the original offer’s terms, subject to our approval of the transfer as provided above. If the Seller does notcomplete the sale to the proposed buyer within sixty (60) days after we notify the Seller that we do not intend to exercise our right of first refusal, or if there is a material change in the terms of the sale (which the Seller must let us know promptly), we will have an additional right of first refusal during the thirty (30) day period


following either the expiration of the sixty (60) day period or receipt of notice of the material change(s) in the sale’s terms, either on the terms originally offered or the modified terms, at our option.

11.7 Ownership Structure.

Regional Developer represents and warrants that all persons holding direct or indirect, legal or beneficial ownership interest in Regional Developer (collectively, the “Owners’”) are listed in Exhibit 3 and that its ownership structure is as set forth on Exhibit 3. In consideration of, and as an inducement to, the execution of this Agreement, each Owner of the Regional Developer and their respective spouses shall personally and unconditionally sign our Guaranty and Assumption of Obligations form, attached as Exhibit 4, guarantying to us and our successors and assigns that the Regional Developer will punctually pay and performeach and every undertaking, agreement and covenant set forth in the Agreement; and agreeing to be personally bound by, and personally liable for the breach of, each and every provision in the Agreement. Regional Developer shall not change its ownership structure without complying with all of the terms and conditions of this Section 11. Within ten (10) days of any change in Regional Developer’s ownership structure, Regional Developer shall submit a revised Exhibit 3 to us and any new Owner shall sign our Guaranty and Assumption of Obligations form.

12. NON-COMPETITION.

12.1 In Term.

During the term of this Agreement, neither Regional Developer, nor any of the Principals, nor any member of Regional Developer’s or a Principal’s immediate family will have any direct or indirect interest(e.g., through a spouse) as a disclosed or beneficial owner, investor, partner, director, officer, controlling shareholder, employee, consultant, representative or agent, or in any other capacity, in a Competitive Business (defined below), whether located within or outside the Development Area, unless we shall first consent thereto in writing.

12.2 Post-Term.

For a twelve (12) month period following the assignment, expiration or termination of this Agreement, for any reason, neither Regional Developer, nor any Owner, nor any member of RegionalDeveloper’s or an Owner’s immediate family will have any direct or indirect interest (e.g., through a spouse)as a disclosed or beneficial owner, investor, partner, director, officer, employee, consultant, representative oragent, or in any other capacity, in any Competitive Business located or operating: (a) within the DevelopmentArea; (b) within the development area of any of our other Regional Developers; (c) within five (5) miles of any Zoyo Unit Franchise or Regional Developer Franchise in operation or development on the date ofassignment, expiration or termination; or (d) within any unsold Zoyo development areas. The term“Competitive Business” means any business that derives more than Ten Thousand Dollars ($10,000) ofrevenue per year from the sale of frozen yogurt and ice cream products, or other related products and services,or any business that grants franchises or licenses to others to operate such a business, other than a Zoyo Unit Franchise operated under a franchise agreement with us.

13. TERMINATION.

13.1 Termination by Company.

We may terminate this Agreement, effective upon written notice of termination to Regional Developer, if:


(a) Regional Developer or one of its Owners makes or attempts to make a transfer inviolation of Section 11;

(b) Regional Developer fails to meet the RD Minimum Development Obligation for anyDevelopment Period;

(c) Regional Developer has made, or makes, a material misrepresentation or omission inacquiring the rights under this Agreement or in operating the RD Business;

(d) Regional Developer does not satisfactorily complete initial training;

(e) Regional Developer is convicted by a trial court of, or pleads no contest to, a felony;

(f) Regional Developer fails to maintain the insurance we require from time to time;

(g) Regional Developer or an Owner engages in any dishonest, unethical or illegalconduct or any other conduct which, in our opinion, adversely affects our reputation, the reputation of other Zoyo Unit Franchises or the goodwill associated with the Marks;

(h) Regional Developer knowingly makes any unauthorized use or disclosure of any partof the Manuals or any other Confidential Information;

(i) Regional Developer (a) fails on three (3) or more separate occasions within anytwenty-four (24) consecutive month period to submit when due reports or other data, information orsupporting records, pay when due any amounts due to us (or our affiliates), or otherwise comply with this Agreement, whether or not Regional Developer corrects any of these failures after we deliver written notice to Regional Developer; or (b) fails on two (2) or more separate occasions within any twelve (12) consecutivemonth period to comply with the same obligations under this Agreement, whether or not Regional Developercorrects either of the failures after we deliver written notice to Regional Developer;

(j) Regional Developer makes an assignment for the benefit of creditors or admits inwriting insolvency or inability to pay debts generally as they become due; Regional Developer consents to the appointment of a receiver, trustee or liquidator of all or the substantial part of the assets of the RD Business; or the assets of the RD Business are attached, seized, subjected to a writ or distress warrant, or levied upon, unless the attachment, seizure, writ, warrant or levy is vacated within thirty (30) days following the order’s entry;

(k) Regional Developer fails to comply with any other provision of this Agreement anddoes not correct the failure within thirty (30) days after we deliver written notice of the failure to RegionalDeveloper; or

(l) Regional Developer fails to pay any sums due to us and does not correct the failurewithin ten (10) days after we deliver written notice of that failure to Regional Developer.

We have the right to terminate any other agreement between us and Regional Developer due to a default by Regional Developer.

13.2 Rights and Obligations Upon Termination or Expiration.

Upon the expiration of the Term, or upon the earlier termination of this Agreement, Regional Developer shall have no further right to construct, equip, own, open or operate additional Zoyo Unit


Franchises (except pursuant to a separate Franchise Agreement between Regional Developer and us which is in full force and effect on the date of expiration or termination). Upon expiration or termination of this Agreement, we may ourselves construct, equip, open, own or operate, or license others to construct, equip,open, own or operate Zoyo Unit Franchises in the Development Area, except as provided in any separateFranchise Agreement executed pursuant to this Agreement. When this Agreement expires or is terminated for any reason and except as required to perform Regional Developer’s obligations under a valid separate Franchise Agreement with us, Regional Developer shall:

(a) not directly or indirectly at any time thereafter or in any manner: (a) identify itself orany business as a current or former Regional Developer of ours; (b) use any Mark, any colorable imitation of a Mark, any trademark, service mark or commercial symbol that is confusingly similar to any Mark or other indicia of a Zoyo Unit Franchise in any manner or for any purpose; or (c) use for any purpose any trade name, trademark, service mark or other commercial symbol that indicates or suggests a connection or association with us;

(b) take the actions required to cancel all fictitious or assumed name or equivalentregistrations relating to Regional Developer’s use of any Mark;

(c) deliver to us within thirty (30) days all advertising, marketing and promotionalmaterial, forms and other materials containing any Mark or otherwise identifying or relating to the RDBusiness or to a Zoyo Unit Franchise;

(d) if applicable, notify all search engines of the termination or expiration of RegionalDeveloper’s right to use all domain names, Websites and other search engines associated directly or indirectlywith the Marks or Zoyo Unit Franchises and authorize those search engines to transfer to us, or our designee,all rights to the domain names, Websites and search engines relating to the Marks or Zoyo Unit Franchises.We have the absolute right and interest in, and to, all domain names, Websites and search engines associated with the Marks or Zoyo Unit Franchises, and Regional Developer hereby authorizes us to direct all applicableparties to transfer Regional Developer’s domain names, Websites and search engines to us or our designee ifthis Agreement expires or is terminated for any reason whatsoever. All parties may accept this Agreement as conclusive of our right to such domain names, Websites and search engines and this Agreement will constitute the authority from Regional Developer to all parties to transfer all such domain names, Websites and search engines to us;

(e) immediately cease using any of our Confidential Information in any business orotherwise and return to us all copies of the Manuals and any other confidential materials that we have lent toRegional Developer; and

(f) give us, within thirty (30) days after the expiration or termination of this Agreement,evidence satisfactory to us of Regional Developer’s compliance with these obligations.

14. SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF; MEDIATION.

14.1 Injunctive Relief

Provided we give Regional Developer the appropriate notice, we will be entitled, without being required to post a bond, to the entry of temporary and permanent injunctions and orders of specific performance to (1) enforce the provisions of this Agreement relating to Regional Developer’s use of the Marks and non-disclosure and non-competition obligations under this Agreement; (2) prohibit any act or omission by Regional Developer or Regional Developer’s employees that constitutes a violation of any applicable law, ordinance, or regulation; constitutes a danger to the public; or may impair the goodwill


associated with the Marks or Zoyo Franchises; or (3) prevent any other irreparable harm to our interests. If we obtain an injunction or order of specific performance, then Regional Developer shall pay us an amount equal to the total of our costs of obtaining it, including without limitation, reasonable attorneys’ and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel andliving expenses, and any damages we incur as a result of the breach of any such provision. Regional Developer further agrees to waive any claims for damage in the event there is a later determination that aninjunction or specific performance order was issued improperly.

14.2 Mediation

Except insofar as we elect to enforce this Agreement or to seek temporary or permanent injunctiverelief as provided above, the parties will attempt, in good faith, to resolve promptly, through negotiation, allcontroversies, disputes or claims arising between us, our affiliates, and our and their respective owners,officers, directors, agents, and employees (in their representative capacity) and Regional Developer (and Regional Developer’s owners and guarantors) arising out of or related to: (1) this Agreement, any provisionthereof, or any related agreement (except for any lease or sublease with us or any of our affiliates); (2) the relationship of the parties hereto; (3) the validity of this Agreement or any related agreement, or any provision thereof; or (4) any specification, standard or operating procedure relating to the establishment or operation of the Franchise. For such purpose, any party may request the others to meet within fifteen (15) days at a mutually agreed upon time and place. If the parties are not able to conduct a meeting within said fifteen (15)day period or to resolve the dispute within thirty (30) days after their first negotiating meeting (or such longer period of time as may be mutually agreed upon), any party may then refer the claim or controversy to non- binding mediation conducted by a reputable and licensed mediator in the Phoenix, Arizona area (the “Mediator”) by sending a written mediation request to the other parties (the “Mediation Request”) In the event that a Mediation Request is made, the parties agree to participate in the mediation process. The parties and the Mediator may join in the mediation any other party necessary for a mutually acceptable resolution of the dispute. Should the Mediator at any time be unable or unwilling to serve, the parties shall select a successor Mediator. The mediation procedure shall be determined by the Mediator in consultation with the parties. The fees and expenses of the Mediator shall be borne equally by the parties. Should such mediation efforts fail to resolve the dispute, then the parties are free to seek enforcement of the agreement through any legal means.

15. GENERAL CONDITIONS AND PROVISIONS.

15.1 Relationship of Regional Developer to Company.

It is expressly agreed that the parties intend by this Agreement to establish between us and Regional Developer the relationship of franchisor and franchisee. Except as expressly provided herein, it is further agreed that Regional Developer has no authority to create or assume in our name or on our behalf, any obligation, express or implied, or to act or purport to act as agent or representative on our behalf for any purpose whatsoever. In no event shall either party be deemed to be fiduciaries of the other. Neither we nor Regional Developer is the employer, employee, agent, partner or co-venturer of, or with the other, each being independent contractors. Regional Developer agrees that it will not hold itself out as the agent, employee, partner or co-venturer of ours, or as having any of the aforesaid authority. All Employees hired by, or working for, Regional Developer shall be the employees of Regional Developer and shall not, for anypurpose, be deemed employees of us or subject to our control.

15.2 Indemnification.

To the fullest extent permitted by law, Regional Developer agrees to indemnify, defend and hold harmless us, our affiliates, and our and their respective shareholders, directors, officers, employees, agents,


representatives, successors and assigns (the “Indemnified Parties”) from and against all claims, obligations and damages (and to reimburse any one or more of the Indemnified Parties for any damages incurred as a result of such claims and obligations) directly or indirectly arising out of: (1) the RD Business conducted by Regional Developer pursuant to this Agreement, (2) Regional Developer’s breach of this Agreement, or(3) Regional Developer’s non-compliance or alleged non-compliance with any law, ordinance, rule orregulation. For purposes of this indemnification, “claims” include all obligations, damages (actual,consequential, punitive or otherwise) and costs that any Indemnified Party reasonably incurs in defending anyclaim against it, including, without limitation, reasonable accountants’, arbitrators’, attorneys’ and expert witness’ fees, costs of investigation and proof of facts, court costs, travel and living expenses and otherexpenses of litigation, arbitration or alternative dispute resolution, regardless of whether litigation or alternative dispute resolution is commenced. Each Indemnified Party may defend and control the defense of any claim against it which is subject to this indemnification at Regional Developer’s expense, and Regional Developer may not settle any claim or take any other remedial, corrective or other actions relating to anyclaim without our consent. This indemnity will continue in full force and effect, subsequent to andnotwithstanding, this Agreement’s expiration or termination. An Indemnified Party need not seek recovery from an insurer or other third party, or otherwise mitigate its losses and expenses, in order to maintain and recover fully a claim against Regional Developer. Regional Developer agrees that a failure to pursue a recovery or mitigate a loss will not reduce or alter the amounts that an Indemnified Party may recover from Regional Developer.

15.3 Waiver and Delay.

Except as otherwise expressly provided to the contrary, no waiver by us of any breach or series of breaches or defaults in performance by the Regional Developer, and no failure, refusal or neglect of, or by, us to exercise any right, power or option given to us under this Agreement or under any other agreement between us and Regional Developer, whether entered into before, after or contemporaneously with the execution of this Agreement (and whether or not related to this Agreement) or to insist upon strict compliance with or performance of the Regional Developer’s obligations under this Agreement or any other agreementbetween us and Regional Developer, whether entered into before, after or contemporaneously with the execution of this Agreement (and whether or not related to this Agreement), shall constitute a novation, or a waiver of the provisions of this Agreement with respect to any subsequent breach thereof or a waiver of ourright at any time thereafter to require exact and strict compliance with the provisions thereof.

15.4 Survival of Covenants.

The covenants contained in this Agreement which, by their terms, require performance by the partiesafter the expiration or termination of this Agreement or ancillary agreements, shall be enforceablenotwithstanding said expiration or other termination of this Agreement for any reason whatsoever.

15.5 Successors and Assigns.

This Agreement shall be binding upon and inure to the benefit of our and Regional Developer’s legal representatives, successors and assigns.

15.6 Joint and Several Liability.

If either party consists of more than one person or entity, or a combination thereof, the obligationsand liabilities of each such person or entity to the other under this Agreement are joint and several.


15.7 Governing Law.

Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C.§§ 1051 et seq.), this Agreement and the Regional Developer Franchise will be governed by the internal laws of the State of Arizona (without reference to its choice of law and conflict of law rules), except that the provisions of any Arizona law relating to the offer and sale of business opportunities or franchises or governing the relationship of a franchisor and its franchisees will not apply unless their jurisdictionalrequirements are met independently without reference to this paragraph. Regional Developer agrees that wemay institute any action against Regional Developer arising out of or relating to this Agreement in any stateor federal court of general jurisdiction in Maricopa County, Arizona, and Regional Developer irrevocablysubmits to the jurisdiction of such courts and waive any objection Regional Developer may have to either thejurisdiction or venue of such court.

15.8 Consent to Jurisdiction.

Subject to Section 14 and the provisions below, Regional Developer and its owners agree that allactions arising under this Agreement or otherwise as a result of the relationship between Regional Developerand us must be commenced in the State of Arizona, and in the state or federal court of general jurisdiction closest to where our principal business address then is located, and Regional Developer (and its Owners) irrevocably submits to the jurisdiction of those courts and waives any objection Regional Developer (or its Owners) might have with either the jurisdiction of, or venue in, those courts. Nonetheless, RegionalDeveloper and any of its Owners agree that we may enforce this Agreement and any arbitration orders andawards in the courts of the state or states in which Regional Developer or its Owners are domiciled.

15.9 Waiver of Punitive Damages and Jury Trial.

Except for Regional Developer’s obligation to indemnify us under Section 15.2 above and exceptwhere authorized by federal statute, we and Regional Developer and its Owners waive to the fullest extent permitted by law any right to or claim for any punitive or exemplary damages against the other and agree that, in the event of a dispute between us and Regional Developer, the party making a claim will be limited to equitable relief and to recovery of any actual damages it sustains. We and Regional Developer irrevocably waive trial by jury in any action, proceeding or counterclaim, whether at law or in equity, brought by eitherparty.

15.10 Limitation of Claims.

Any and all claims arising out of, or relating to, this Agreement or our relationship with Regional Developer, except for claims for indemnification under Section 15.2 above, will be barred unless a judicial orarbitration proceeding is commenced within two (2) years from the date on which the party asserting the claim knew or should have known of the facts giving rise to the claims.

15.11 Entire Agreement.

This Agreement and all exhibits to this Agreement constitute the entire agreement between the partiesand supersede any and all prior negotiations, understandings, representations, and agreements. Nothing inthis or in any related agreement, however, is intended to disclaim the representations we made in the franchise disclosure document that we furnished to Regional Developer. Regional Developer acknowledges that Regional Developer is entering into this Agreement as a result of Regional Developer’s own independentinvestigation of our franchised business and not as a result of any representations about us made by ourshareholders, officers, directors, employees, agents, representatives, independent contractors, or franchiseesthat are contrary to the terms set forth in this Agreement, or in any disclosure document, prospectus, or other


similar document required or permitted to be given to Regional Developer pursuant to applicable law. This Agreement cannot be modified or changed except by written instrument signed by all of the parties to this Agreement, provided that we may modify or amend the Manuals at any time without notice to, or approval of,Regional Developer or any other person.

15.12 Titles for Convenience.

Article and Section titles used in this Agreement are for convenience only and shall not be deemed toaffect the meaning or construction of any of the terms, provisions, covenants or conditions of this Agreement.

15.13 Gender.

All terms used in any one number or gender shall extend to mean and include any other number and gender as the facts, context or sense of this Agreement or any section or paragraph hereof may require.

15.14 Severability.

Except as expressly provided to the contrary in this Agreement, each Section, paragraph, term and provision of this Agreement in severable, and if, for any reason, any part thereof, is found to be invalid or contrary to, or in conflict with, any applicable present or future law and regulation in a final, unappealable ruling issued by any court, agency or tribunal with competent jurisdiction, that ruling will not impair the operation, or otherwise affect, any other portions of this Agreement, which will continue to have full force and effect and bind the parties. If any covenant which restricts competitive activity is deemed unenforceable by virtue of its scope in terms of area, business activity prohibited, and/or length of time, but would be enforceable if modified, we and Regional Developer agree that the covenant will be enforced to the fullest extent permissible under the laws and public policies applied in the jurisdiction whose law determines the covenant’s validity. If any applicable and binding law or rule of any jurisdiction requires more notice than this Agreement requires of this Agreement’s termination or of our refusal to enter into a successor agreement, or if, under any applicable and binding law or rule of any jurisdiction, any provision of this Agreement is invalid or unenforceable or unlawful, the notice and/or other action required by the law or rule will be substituted for the comparable provisions of this Agreement, and we may modify the invalid or unenforceable provisions to the extent required to be valid and enforceable or delete the unlawful provision in its entirety. Regional Developer agrees to be bound by any promise or covenant imposing the maximum duty the lawpermits which is subsumed within any provision of this Agreement, as though it were separately articulated inand made a part of this Agreement.

15.15 Fees and Expenses.

Should any party to this Agreement commence any action or proceeding for the purpose of enforcing,or preventing the breach of, any provision of this Agreement, whether by arbitration, judicial or quasi-judicialaction or otherwise, or for damages for any alleged breach of any provision of this Agreement, or for adeclaration of such party’s rights or obligations under this Agreement, then the prevailing party shall be reimbursed by the losing party for all costs and expenses incurred in connection therewith, including, but not limited to, reasonable attorneys’ fees for the services rendered to such prevailing party.

15.16 Notices.

Except as otherwise expressly provided herein, all written notices and reports permitted or required tobe delivered by the parties pursuant to this Agreement shall be deemed so delivered at the time delivered byhand, one (1) business day after transmission by mail, via registered or certified mail, return receipt requested;


or one (1) business day after placement with Federal Express, or other reputable air courier service, requesting delivery on the most expedited basis available, postage prepaid and addressed as follows:

If to company: ZOYO FRANCHISING, LLC450 N. McClintock DriveChandler, Arizona 85226Attn: Aaron KlusmanFacsimile: (602) 337-7099

With a copy to:

If to Regional Developer:

With a copy to:

Or to such other addresses any such party may designate by ten (10) days’ advance written notice tothe other party.

15.17 Time of Essence.

Time shall be of the essence for all purposes of this Agreement.

15.18 Lien and Security Interest.

To secure Regional Developer’s performance under this Agreement and indebtedness for all sums dueus or our affiliates, we shall have a lien upon, and Regional Developer hereby grants us a security interest in,the following collateral and any and all additions, accessions, and substitutions to or for it and the proceeds from all of the same: (a) all inventory now owned or after-acquired by Regional Developer and the RD Business, including but not limited to all inventory and supplies transferred to or acquired by RegionalDeveloper in connection with this Agreement; (b) all accounts of Regional Developer and/or the RD Businessnow existing or subsequently arising, together with all interest in Regional Developer and/or the RDBusiness, now existing or subsequently arising, together with all chattel paper, documents, and instruments relating to such accounts; (c) all contract rights of Regional Developer and/or the RD Business, now existing or subsequently arising; and (d) all general intangibles of Regional Developer and/or the RD Business, now owned or existing, or after-acquired or subsequently arising. Regional Developer agree to execute such financing statements, instruments, and other documents, in a form satisfactory to us, that we deem necessary so that we may establish and maintain a valid security interest in and to these assets.

15.19 Reasonable Business Judgment

Whenever we reserve discretion in a particular area or where we agree or are required to exercise ourrights reasonably or in good faith, we will satisfy our obligations whenever we exercise “reasonable business


judgment” in making our decision or exercising our rights. A decision or action by us will be deemed to be the result of “reasonable business judgment,” even if other reasonable or even arguably preferable alternatives are available, if our decision or action is intended to promote or benefit the System generally even if the decision or action also promotes a financial or other individual interest of ours. Examples of items that will promote or benefit the System include enhancing the value of the Marks, improving customer service and satisfaction, improving product quality, improving uniformity, enhancing or encouraging modernization, and improving the competitive position of the System. Neither Regional Developer nor any third party (including a trier of fact), will substitute their judgment for our reasonable business judgment.

16. SUBMISSION OF AGREEMENT.

This Agreement shall not be binding upon us unless and until it shall have been submitted to andsigned by our Manager, and the date of said signing as set forth on the first page of this Agreement shall bethe effective date of this Agreement.

17. ACKNOWLEDGMENTS.

To induce us to sign this Agreement and grant Regional Developer the Franchise, Regional Developer acknowledges:

(a) That Regional Developer has independently investigated the Zoyo RD Business franchiseopportunity and recognizes that, like any other business, the nature of the RD Business may, and probablywill, evolve and change over time.

(b) That an investment in a Zoyo Regional Developer Business involves business risks.

(c) That Regional Developer’s business abilities and efforts are vital to Regional Developer’ssuccess.

(d) That performing Regional Developer’s obligations will require a high level of customerservice and strict adherence to the System.

(e) That Regional Developer has not received or relied upon, and we expressly disclaim makingany representation, warranty or guaranty, express or implied, as to the revenues, profits or success of a ZoyoRegional Developer Franchise or any Zoyo Unit Franchise.

(f) That any information Regional Developer has acquired from other Unit Franchisees orRegional Developers regarding their sales, profits or cash flows is not information obtained from us, and wemake no representation about that information’s accuracy.

(g) That Regional Developer has no knowledge of any representations made about the ZoyoRegional Developer franchise opportunity by us, our subsidiaries or affiliates or any of their respectiveofficers, directors, shareholders or agents that are contrary to the statements made in our Franchise Disclosure Document or to the terms and conditions of this Agreement.

(h) That in all of their dealing with Regional Developer, our officers, directors, employees andagents act only in a representative, and not in an individual capacity and that business dealings between Regional Developer and them as a result of this Agreement are only between Regional Developer and us.

(i) That Regional Developer has represented to us, to induce us to enter into this Agreement, thatall statements Regional Developer has made and all materials Regional Developer has given to us in acquiring


the franchise are accurate and complete and that Regional Developer has made no misrepresentations or material omissions in obtaining the franchise.

(j) That Regional Developer has read this Agreement and our Franchise Disclosure Documentand understands and accepts that the terms and covenants in this Agreement are reasonably necessary for us to maintain our high standards of quality and service, as well as the uniformity of those standards at each ZoyoRegional Developer Business and Zoyo Unit Franchise, and to protect and preserve the goodwill of theMarks.

IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to be executed as of the first date set forth above.

COMPANY:

ZOYO FRANCHISING, LLC,an Arizona limited liability company,

By: Zoyo, LLC, its MemberIts: Aaron Klusman, its Manager

REGIONAL DEVELOPER:

By:

Its: ____________________________________


A. EXHIBIT 1

TO THE ZOYO FRANCHISING, LLC REGIONAL DEVELOPER AGREEMENT

DEVELOPMENT AREA

The Development Area referred to in Recital D of this Agreement shall be the following:

ZOYO FRANCHISING FDD – Exhibit C – RD Agreement Exhibit 1 – Development AreaA-1

B. EXHIBIT 2


DEVELOPMENT OBLIGATION

The Minimum Development Obligation referred to in Paragraph 3.1(a) of this Agreement shall be the following:

RD Minimum Development Obligations. Regional Developer must meet the following RD MinimumDevelopment Obligations by the last day of each RD Development Period during the initial fifteen (15) yearterm of this Agreement:

RDDevelopment

Period

Cumulative Number of ZoyoUnit Franchises Sold in the

Development Area

Cumulative Number ofZoyo Unit Franchises

Opened and Operating in theDevelopment Area

123456789101112131415

Zoyo Unit Franchises operated by Regional Developer or us in the Development Area count towardsfulfillment of Regional Developer’s cumulative RD Minimum Development Obligations. The RDDevelopment Periods are the successive twelve (12) month periods following the Effective Date of thisAgreement.

ZOYO FRANCHISING FDD – Exhibit C – RD Agreement Exhibit 2 – Development ObligationB-1

C. EXHIBIT 3


OWNERSHIP INTERESTS IN REGIONAL DEVELOPER

3-1. Full name and address of the owners of, and a description of the type of, all currently held

Interests in Regional Developer:

3-2. Minimum individual and aggregate ownership percentage required at all times during theterm of this Agreement:

3-2.1 During the term of this Agreement, the owners listed below together must have a “controllinginterest” (i.e., a ninety percent (90%) “ownership interest” of the equity, voting control and profits) inRegional Developer.

3-2.2 Unless otherwise permitted, the required minimum “ownership interest” of each ownerduring the term of this Agreement is:

Name Ownership Percentage

ZOYO FRANCHISING FDD – Exhibit C – RD Agreement Exhibit 3 – Ownership InterestsC-1

D. EXHIBIT 4


OWNER’S GUARANTY AND ASSUMPTION OF OBLIGATIONS

In consideration of, and as an inducement to, the execution of the Regional Developer Agreement, datedas of this _____ day of ________________ ___, 20__ (“the Agreement”), by and between Zoyo Franchising,LLC (“we” or “us”), an Arizona limited liability company, and

(“the Regional Developer”), each of theundersigned owners of the Regional Developer and their respective spouses (“you,” for purposes of thisGuaranty only), hereby personally and unconditionally agree to perform and keep during the terms of theAgreement, each and every covenant, obligation, payment, agreement, and undertaking on the part of RegionalDeveloper contained and set forth in the Agreement. Each of you agree that all provisions of the Agreementrelating to the obligations of Regional Developers, including, without limitation, the covenants of confidentiality and non-competition and other covenants set forth in the Agreement, shall be binding on Regional Developer.

Each of you waives (1) protest and notice of default, demand for payment or nonperformance of any obligations guaranteed by this Guaranty; (2) any right you may have to require that an action be brought against Regional Developer or any other person as a condition of Regional Developer’s liability; (3) all right to payment or reimbursement from, or subrogation against, the Regional Developer which you may have arising out of Regional Developer’s guaranty of the Regional Developer’s obligations; and (4) any and all other notices and legal or equitable defenses to which you may be entitled in Regional Developer’s capacity as guarantor.

Each of you consents and agrees that (1) Regional Developer’s direct and immediate liability under this Guaranty shall be joint and several; (2) you will make any payment or render any performance required underthe Agreement on demand if Regional Developer fails or refuses to do so when required; (3) Regional Developer’s liability will not be contingent or conditioned on our pursuit of any remedies against Regional Developer or any other person; (4) Regional Developer’s liability will not be diminished, relieved or otherwiseaffected by any extension of time, credit or other indulgence which we may from time to time grant to RegionalDeveloper or to any other person, including without limitation, the acceptance of any partial payment or performance, or the compromise or release of any claims; and (5) this Guaranty will continue and be irrevocable during the term of the Agreement and afterward for so long as the Regional Developer has any obligations under the Agreement.

If we are required to enforce this Guaranty in a judicial or arbitration proceeding, and prevail in such proceeding, we will be entitled to reimbursement of our costs and expenses, including, but not limited to, reasonable accountants’, attorneys’, attorneys’ assistants’, arbitrators’ and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses, whether incurred prior to, in preparation for or in contemplation of the filing of any such proceeding. If we are required to engage legal counsel in connection with any failure by you to comply with this Guaranty, you agree to reimburse us for any of the above-listed costs and expenses incurred by us.


ZOYO FRANCHISING FDD – Exhibit C – RD Agreement Exhibit 4 – Guaranty and Assumption of ObligationsD-1

This Guaranty is now executed as of the Agreement Date.


________ ___________ _______________ ____________________ _______________Name: _________ ____ _______________ Name: ______________ _______________


________ ___________ _______________ ____________________ _______________Name: _________ ____ _______________ Name: ______________ _______________


________ ___________ _______________ ____________________ _______________Name: _________ ____ _______________ Name: ______________ _______________

NOTARY PUBLIC

State of )) ss.

County of )

I,_________________ _________, a notary in the State of _______________________,County of _________________________, do hereby certify that the foregoing Guaranty and Assumption ofObligations was acknowledged before me this ______ day of _________________, ______ _, by

and , who is (are) personally known to me or who has(have) produced identification demonstrating his/her identity.

____________________ _______________ _____Signature of Person Taking Acknowledgement

My Commission Expires: _________ _____ ______________

ZOYO FRANCHISING FDD – Exhibit C – RD Agreement Exhibit 4 – Guaranty and Assumption of ObligationsD-2

E. EXHIBIT 5


STATE-SPECIFIC ADDENDA

STATE OF ILLINOIS’ SPECIFIC DISCLOSURE ADDENDUM

The conditions under which Regional Developer’s franchise can be terminated and Regional Developer’s rights upon non-renewal may be affected by Illinois law, 815 ILCS 705/19 and 705/20.

The choice of forum and law may be different as provided by the Illinois Franchise Disclosure Act (815 ILCS 7054). In these cases Illinois, forum and law shall control.

Because of our financial condition, the Illinois Attorney General’s Office has imposed that we defer thepayment by you of all initial franchise fees owed to us, or our affiliate, until such time as all initial obligations owed to you under the franchise agreement or other agreements have been fulfilled by us and you have commenced doing business pursuant to the franchise agreement.




Regional Developer

By:

Its:

ZOYO FRANCHISING FDD – Exhibit C – RD Agreement Exhibit 5 – State Specific AddendaE-1

STATE OF MINNESOTA’S SPECIFIC DISCLOSURE ADDENDUM

Minn. Stat. §80C.21 and Minn. Rule 2860.4400J prohibit us from requiring litigation to be conducted outside Minnesota. In addition, nothing in the Disclosure Document or Agreement can abrogate or reduce any of Regional Developer’s rights as provided for in Minnesota Statutes, Chapter 80C, or Regional Developer’s rightsto any procedure, forum, or remedies provided for by the laws of the jurisdiction.

With respect to franchises governed by Minnesota law, we will comply with Minn. Stat. Sec. 80C.14, Subdivisions 3, 4, and 5 which require, except in certain specified cases, that a franchisee be given 90 days’ notice of termination (with 60 days to cure) and 180 days’ notice for non-renewal of the Agreement.

You do not consent to us obtaining injunctive relief. However, you agree that we may seek injunctive relief.See Minn. Rules 2860.4400J.

Minnesota Rule part 2860.4400D prohibits requiring a franchisee to assent to a release, assignment, novation, or waiver that would relieve any person of liability imposed by the Minnesota Franchise Law, provided that thisrule shall not bar the voluntary settlement of disputes.

We will not require you to assent to liquidated damages. Liquidated damage provisions are void.

Minn. Rule Part 2860.4400J prohibits you from waiving Regional Developer’s rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.

Minn. Rule 2860.4400J prohibits waiver of a jury trial. If any portion of the Franchise Disclosure Document or the Agreement provides for a waiver of jury trial, Minnesota law will control.

The Limitations of Claims section of the Franchise Disclosure Document must comply with Minnesota Statutes, Section 80C.17, Subd. 5. If any portion of the Franchise Disclosure Document or the Agreement is contrary to Minnesota Statutes, Section 80C.17, Subd. 5, Minnesota law will control.




Regional Developer

By:

Its:


STATE OF WASHINGTON’ SPECIFIC DISCLOSURE ADDENDUM

Section 2 of the Regional Developer Agreement is amended to provide that we will defer payment of the Development Fee until such time as all initial obligations owed to you under the Regional Developer Agreement have been fulfilled by us and you have commenced doing business pursuant to the Regional Developer Agreement.

If any of the provisions of this Regional Developer Agreement are inconsistent with the relationship provisionsof RCW 19.100.180 or other requirements of the Washington Franchise Investor Protection Act (the “Act”), the provisions of the Act will prevail over the inconsistent provisions of the Regional Developer Agreement with regard to any franchise sold in Washington.

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


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 franchiseagreement is in effect and where the parties are represented by independent counsel. Provisions such as those that unreasonably restrict or limit the statute of limitations period for claims under the Act, rights or remedies under the Act such as a right to a jury trial may not be enforceable.

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




Franchise Owner

By:

Its:

GP:3633988 v2


EXHIBIT D

ZoyoOperations ManualTable of Contents

Introduction ................................................................................................................................. 1Welcome to Zoyo ........................................................................................................................ 5Getting Started ............................................................................................................................ 18Marketing .................................................................................................................................... 10Business Management ................................................................................................................ 4Customer Service ........................................................................................................................ 9Equipment and Supplies ............................................................................................................. 5Zoyo Policies and Procedures ..................................................................................................... 16Products ....................................................................................................................................... 7Personnel: Team Members ......................................................................................................... 40Safety and Security ..................................................................................................................... 6Appendix ..................................................................................................................................... 46Total ............................................................................................................................................167

ZOYO FRANCHISING FDD – Exhibit D –Operations Manual Table of Contents

GP:3610821 v3

GP:3610821 v3ZOYO FRANCHISING FDD – Exhibit E –Financial Statements

EXHIBIT E

FINANCIAL STATEMENTS

Audited Financial Statements


Years Ended December 31, 2013 and 2012

Auditor's Report


Audited Financial Statements


Contents

Financial Statements

Balance Sheets 2Statements of Income and Members' Equity 3Statements of Cash Flows 4Notes to Financial Statements... ... 5

VillanuevaF certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the MembersZoyo Franchising, LLCChandler, Arizona

We have audited the accompanying financial statements of Zoyo Franchising, LLC, which comprise the balancesheets as of December 31, 2013 and 2012, and the related statements of income and members' equity, and cashflows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordancewith accounting principles generally accepted in the United States of America; this includes the design,implementation, and maintenance of internal control relevant to the preparation and fair presentation of financialstatements that are free from material misstatement, whether due to fraud or error.

Auditor's ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audits. We conducted ouraudits in accordance with auditing standards generally accepted in the United States of America. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, including the assessment of therisks of material misstatement of the financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express nosuch opinion. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of significant accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the financialposition of Zoyo Franchising, LLC as of December 31, 2013 and 2012, and the results of its operations and itscash flows for the years then ended in accordance with accounting principles generally accepted in the UnitedStates of America.

Phoenix, ArizonaApril 25, 2014

37O7 North 7th Street • Suite 125 • Phoenix, AZ 85O14 • 602-235-9414 • Fax: 602-235-9474


Balance Sheets

December 31,2013 2012

AssetsCurrent AssetsCashRoyalty Fees ReceivablePrepaid ExpensesAdvances to Parent Company

Total Current AssetsIntangible AssetsTrade Names, Trademarks, & Commercial Symbols

Net Intangible Assets

Total Assets

777 $449

3,501158,804163,531

72,00072,000

235,531 $

85

127,378127,463

72,00072,000

199,463

Liabilities and Members' EquityCurrent LiabilitiesAccounts PayableDeferred Revenue-Advertising Royalty FeesDeferred Revenue-Franchise License

Total Liabilities

Members' Equity

Total Liabilities and Members' Equity

7,504 $7,473

175,000189,977

45,554

235,531 $

4,755

105,000109,755

89,708

199,463

See accompanying notes.


Statements of Income and Members' Equity

For the Year Ended December 31,2013 2012

RevenueFranchise License SalesRoyalty Fees

ExpensesCommissionsLegal and ProfessionalAdministrative ExpensesMarketingOfficeSalary and WagesTravelLicenses and PermitsTraining

Total Expenses

Net Income (Loss)

Beginning Members' EquityContributions

Ending Members' Equity

299,442 $22,419321,861

194,726108,72117,24311,20611,17110,1785,6525,0182,100

366,015

(44,154)

89,708

45,554 $

349,323

349,323

222,61824,29025,00020,3102,6393,4101,407

299,674

49,649

11,39928,66089,708



Statements of Cash Flows

For the Year Ended December 31,2013 2012

Cash Flows From Operating ActivitiesNet Income (Loss)Adjustments to Reconcile Net Income (Loss) to Net CashProvided by Operating Activities:Increase in Royalty Fees ReceivableIncrease in Prepaid ExpensesIncrease (Decrease) in Accounts PayableIncrease in Deferred Revenue

Net Cash Provided by Operating Activities

Cash Flows From Investing ActivitiesIncrease in Intangible AssetsIncrease in Advances to Parent CompanyDecrease in Advances from Parent CompanyNet Cash Used by Investing Activities

Cash Flows From Financing ActivitiesContributionsNet Cash Provided by Financing Activities

Net Increase (Decrease) in CashCash at Beginning of PeriodCash at End of Period

(44,154) $

(449)(3,501)2,749

77,47332,118

(31,426)

(31,426)

49,649

(1,208)105,000153,441

(29,755)(127,378)(25,000)

(182,133)

$

28,6600

69285777 $

28,660

(32)11785



Notes to Financial Statements


(See independent auditor's report.)

1. Summary of Significant Accounting Policies

Business Purpose

Zoyo Franchising, LLC (Franchising) was organized effective August 11, 2011 as an ArizonaLimited Liability Company and is 100% owned by Zoyo, LLC. Franchising was formed tomarket a franchise concept for self-serve yogurt shops. The concept is demonstrated in anumber of Zoyo retail stores located in Arizona. Some of the stores are owned directly byZoyo, LLC or by affiliated entities.

Franchising grants single-unit franchises that are directly licensed to operate a franchiseunder the name of "Zoyo Neighborhood Yogurt". Zoyo franchises specialize in a self-servicefrozen yogurt shop that provides a wide variety of frozen yogurt flavors, toppings and sauces.All franchise units must adhere to a strict licensing agreement that requires compliance witha number of standards that govern operations, store layout, reporting, and brand use.

The franchise license allows for the use of only Zoyo authorized products and services,business formats, methods, systems, procedures, signs, designs and layouts, standard,specification, trademarks, service marks and other commercial symbols for use in operatingZoyo unit franchises.

Regional Developer Agreements

In addition to licensing store units, Franchising enters into Regional Developer Agreementswhich authorize a "Regional Developer" to develop individual franchise units ("stores")within a specific territory. The rights to become a regional developer sell between $130,000and $350,000 depending on the size of the market.

The Regional Developer agrees to recruit prospective franchisees in designated developmentareas, provide sales and support services to unit franchisees, and may establish and operateone or more franchise units as pilot franchises. Each individual unit developed, includingauthorized pilot units are charged a licensing fee of $35,000. The licensing fee is allocated50% to the Regional Developer and 50% to Franchising, excluding the initial RegionalDeveloper pilot unit.


Notes to Financial Statements (continued)



1. Summary of Significant Accounting Policies (continued)

Regional Developer Agreements (continued)

The term of the agreement is usually for fifteen years and the Developer must develop acertain number of franchise units each year or risk the loss of the right to develop units andcancellation of the agreement.

The Regional Developer has the responsibility to solicit, qualify, train, assist, and superviseeach of the franchise stores within his territory in accordance with the standards required bythe agreement.

Franchising is focused on creating as many regional developers as possible to grow the brandin an effective and efficient manner.

Royalty Fees

A royalty fee of 6% of gross sales is charged to each franchise unit store for the use of theZoyo name and certain supporting activities provided by Franchising. This fee is split withthe Regional Developer with 3% to Franchising and 3% to the Regional Developer. TheArizona stores that help develop the Zoyo brand are currently exempt from this fee.

Variable Interest Entities

Franchising has evaluated and determined that it holds a variable interest in certain entities.The variable interests relate to investments by the member of Franchising in affiliated limitedliability companies. Franchising has determined that it is not the primary beneficiary of theseentities, as it does not have the power to direct the activities, and therefore they are notconsolidated.

Advertising

An advertising fee of 2% of gross sales can be charged to each regional franchise store for anational advertising campaign. These fees will commence when the franchised stores are inoperation. Currently, the Arizona stores are not charged this fee.






Use of Estimates

The preparation of financial statements in conformity with generally accepted accountingprinciples requires management to make estimates and assumptions that affect certainreported amounts and disclosures. Accordingly, actual results could differ from thoseestimates.

Income Taxes

Franchising is treated as a partnership for federal income tax purposes. Consequently,federal income taxes are not payable by or provided for Franchising. Franchising's netincome or loss is allocated to the member in accordance with income tax regulations.

Franchising's income tax filings are subject to audit by various taxing authorities. As ofDecember 31, 2013, Franchising's open audit periods are 2011 to 2013.

Revenue Recognition

Revenue from the sale of Regional Developer Agreements is recognized with the delivery ofthe right to develop individual units within the specified territory and the operating manualsand other documents which guide the development of stores, operation of stores, and definethe national policies related to the concept of "Zoyo Neighborhood Yogurt". Should aDeveloper have the right to operate a pilot unit, the portion of the fee related to the license ofthe pilot unit ($35,000) is deferred until the pilot unit is opened. Each of the individual unitsmust have a signed franchise licensing agreement.

The same recognition method is used for all franchise unit stores.

Royalty fees are recognized upon fulfillment of the contractual obligations by Franchising.A franchise unit that fails to pay the fees is subject to termination of the licensing agreement.

National advertising fees are 2% of gross sales and are to be used to fund national advertisingcampaigns. Such fees will be recognized upon fulfillment of the contractual obligations andwill be offset against related expenditures.






Trade Names, Trademarks, and Commercial Symbols

A portion of legal fees and other costs incurred during the development period have beenclassified as costs associated with the creation and protection of trademarks, service marks,and commercial symbols related to the Zoyo brand. In accordance with generally acceptedaccounting principles, such expenditures are not expensed unless changes in events andcircumstances indicate that an intangible asset's carrying value may not be recoverable. Suchcircumstances could include, but are not limited to (1) a significant decrease in the marketvalue of the an asset, (2) a significant adverse change in the extent or manner in which anasset is used, or (3) an accumulation of costs significantly in excess of the amount originallyexpected for the acquisition of an asset. Franchising measures the carrying amount of theasset against the estimated undiscounted future cash flows associated with it. Should the sumof the expected benefits future net cash flows be less than the carrying value of the assetbeing evaluated, an impairment loss would be recognized.

Date of Management's Review

Management has evaluated subsequent events through April 25, 2014, the date which thefinancial statements were able to be issued. There were no material subsequent events thatrequired recognition or additional disclosure in these financial statements.

2. Related Party Transactions

Zoyo, LLC currently provides administrative support services to Franchising. A formal feearrangement has not been established for these services. Administrative fees of $17,243 and$25,000 were charged for December 31, 2013 and 2012, respectively.

Advances receivable from Zoyo, LLC are expected to be offset against administrativecharges for services provided by Zoyo, LLC.





3. Commitments

Franchising maintains agreements with various companies to provide marketing andconsulting services for the sale of franchise licenses. Under the terms of the agreements,Franchising will pay a commission up to 50% of any license sold. The agreements can becancelled by Franchising at any time without penalty.

4. Status of Regional Developer Agreements

Regional Developer Agreements were sold for the States of Michigan and Georgia and theStates of Oklahoma, Indiana and the city of Houston, Texas for the years ended December31, 2013 and 2012, respectively. The pilot franchise units are under development.

5. Franchise Stores

The Company sold a single store agreement in the State of Virginia in 2013.

The pilot store in the State of Indiana started operations and payment of royalty fees in 2013.In accordance with the Company's revenue recognition policy, $35,000 of the initial sale ofthe Regional Developer Agreement was recognized as revenue in 2013.

THESE FINANCIAL STATEMENTS HAVE BEEN PREPARED WITHOUT AN AUDIT. PROSPECTIVE FRANCHISEES OR SELLERS OF FRANCHISES SHOULD BE ADVISED THAT NO INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT HAS AUDITED THESE FIGURES OR EXPRESSED AN OPINION WITH REGARD TO THEIR CONTENT OR FORM.

10:57 AM

03/07/12

Accrual Basis

Zoyo Franchising LLC

Balance Sheet

As of December 31, 2011

Dec 31, 11

ASSETS

Current Assets

Checking/Savings

10001 · Chase Checking Account

ZF 978630309 117.02

Total 10001 · Chase Checking Account 117.02

Total Checking/Savings 117.02

Total Current Assets 117.02

TOTAL ASSETS 117.02

LIABILITIES & EQUITY

Liabilities

Current Liabilities

Accounts Payable

20000 · Accounts Payable 5,665.32

Total Accounts Payable 5,665.32

Other Current Liabilities

26000 · Loan Payable

Z0 Zoyo LLC 34,347.58

Z2 Zoyo 12th & Glendale LLC 2,550.00

Total 26000 · Loan Payable 36,897.58

Total Other Current Liabilities 36,897.58

Total Current Liabilities 42,562.90

Total Liabilities 42,562.90

Equity

Net Income -42,445.88

Total Equity -42,445.88

TOTAL LIABILITIES & EQUITY 117.02

Page 1 of 1

GP:3610821 v3ZOYO FRANCHISING FDD – Exhibit F –Confidentiality and Non-Disclosure Agreement

EXHIBIT F

CONFIDENTIALITY/NONDISCLOSURE AGREEMENT

GP:3610821 v3

ZOYO FRANCHISING FDD – Exhibit F – Confidentiality and Non-Disclosure Agreement1

CONFIDENTIALITY/NONDISCLOSURE AGREEMENT

THIS AGREEMENT, made and entered into this ______ day of __________________, 20____,by and between Zoyo Franchising, LLC, an Arizona limited liability company, (hereinafter referred to as“the Company”) and _______________________________________________, whose address is____________________________________________________________ (hereinafter referred to as“Prospective Franchisee”) and each owner of Prospective Franchisee and his or her spouse (individually, an“Owner,” and collectively, the “Owners”) (collectively, Franchisor, Franchisee, and Owners are referred tohereinafter as the “Parties”).

WITNESSETH THAT:

WHEREAS, Prospective Franchisee desires to obtain certain confidential and proprietaryinformation from the Company for the sole purpose of inspecting and analyzing said information in an effortto determine whether to purchase a franchise from the Company; and

WHEREAS, the Company is willing to provide such information to Prospective Franchisee for thelimited purpose and under the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and promisesherein contained, and other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged by the parties hereto, the parties hereto agree as follows:

1. DEFINITION. “Confidential Information” is used herein to mean all information,documentation and devices disclosed to or made available to Prospective Franchisee by the Company,whether orally or in writing, as well as any information, documentation or devices heretofore or hereafterproduced by Prospective Franchisee in response to or in reliance on said information, documentation anddevices made available by the Company.

2. TERM. The parties hereto agree that the restrictions and obligations of Paragraph 4 of thisAgreement shall be deemed to have been in effect from the commencement on the ______ day of__________________, 20____, of the ongoing negotiations between Prospective Franchisee and theCompany and continue in perpetuity until disclosed by the Company.

3. TRADE SECRET ACKNOWLEDGEMENT. Prospective Franchisee acknowledgesand agrees the Confidential Information is a valuable trade secret of the Company and that any disclosure orunauthorized use thereof will cause irreparable harm and loss to the Company.

4. TREATMENT OF CONFIDENTIAL INFORMATION. In consideration of thedisclosure to Prospective Franchisee of Confidential Information, Prospective Franchisee agrees to treatConfidential Information in confidence and to undertake the following additional obligations with respectthereto:

(a) To use Confidential Information for the sole purpose of inspecting and analyzingthe information in an effort to determine whether to purchase a franchise from the Company and solely in itsoperation of the Company Franchise;

(b) Not to disclose Confidential Information to any third party;

(c) To limit dissemination of Confidential Information to only those of ProspectiveFranchisee’s officers, directors and employees who have a need to know to perform the limited tasks set

GP:3610821 v3


forth in Item 4 (a) above; and who have agreed to the terms and obligations of this Agreement by affixingtheir signatures hereto;

(d) Not to copy Confidential Information or any portions thereof; and

(e) To return Confidential Information and all documents, notes or physical evidencethereof, to the Company upon a determination that Prospective Franchisee no longer has a need therefor, ora request therefor, from the Company, whichever occurs first.

5. SURVIVAL OF OBLIGATIONS. The restrictions and obligations of this Agreementshall survive any expiration, termination or cancellation of this Agreement and shall continue to bindProspective Franchisee, his heirs, successors and assigns in perpetuity.

6. NEGATION OF LICENSES. Except as expressly set forth herein, no rights to licenses,expressed or implied, are hereby granted to Prospective Franchisee as a result of or related to thisAgreement.

7. APPLICABLE LAW. This Agreement shall be construed and enforced in accordancewith the laws of the State of Arizona.

INWITNESSWHEREOF, the parties hereto have caused this Agreement to be duly executed.

FRANCHISOR:


By: Zoyo LLC, its MemberBy Aaron Klusman, Manager of Zoyo, LLC

FRANCHISE OWNER:

By:

Its:

[Remainder of Page Left Intentionally Blank – Signature of Owners Follows]

GP:3610821 v3


OWNERS OF PROSPECTIVE FRANCHISEE:

_______________________________Signature of Owner

Owner’s Residential Address:

_______________________________

Owner’s %Ownership ofFranchisee:

______________________________Printed/Typed Name of Owner

_______________________________ _______%

______________________________Signature of Owner’s Spouse

Owner’s Title/Position with Franchisee:

_______________________________

_______________________________Printed/Typed Name of Spouse Date: ____________________, 20___



_______________________________



_______________________________ _______%



_______________________________




_______________________________



_______________________________ _______%



_______________________________


[Remainder of Page Left Intentionally Blank – Signature of Owners Continues]

GP:3610821 v3




_______________________________



_______________________________ _______%



_______________________________




_______________________________



_______________________________ _______%



_______________________________




_______________________________



_______________________________ _______%



_______________________________


EXHIBIT G

LIST OF ZOYO FRANCHISING, LLC FRANCHISE OWNERS

ZOYO FRANCHISING, LLC Unit Franchisees (as of December 31, 2013):

Deron Manwaring550 W. 300 N.Warsaw, IN 46580574 [email protected]@zoyogurt.com

Craig A Kovel3949 Spring Tide Grove, NWKennesaw, GA 30144770 [email protected](Signed but not open as of 12/31/14)

Bill Dobbins7829 Park AvenueAllen Park, MI 48101517 [email protected](Signed but not open as of 12/31/14)

Ron Pals1111 North ManningStillwater, OK 74075405 [email protected]@zoyogurt.com(Signed but not open as of 12/31/14)

Julie Yznaga15802 Manor Square Dr.Houston, TX 77062713 [email protected]@zoyougrt.com(Signed but not open as of 12/31/14)

Armando Kuppingoer VelasquezIsaura Ramirez6216 College Dr. #102Suffolk, VA 23435757 [email protected](Signed but not open as of 12/31/14)

ZOYO FRANCHISING FDD – Exhibit G – List of Franchisees

GP:3610821 v3

ZOYO FRANCHISING, LLC Regional Developer Franchises (as of December 31, 2013):

Deron Manwaring550 W. 300 N.Warsaw, IN 46580574 [email protected]@zoyogurt.com

Craig A Kovel3949 Spring Tide Grove, NWKennesaw, GA 30144770 [email protected]

Bill Dobbins7829 Park AvenueAllen Park, MI 48101517 [email protected]

Ron Pals1111 North ManningStillwater, OK 74075405 [email protected]@zoyogurt.com

Julie Yznaga15802 Manor Square Dr.Houston, TX 77062713 [email protected]@zoyougrt.com

ZOYO FRANCHISING FDD – Exhibit G – List of Franchisees

GP:3610821 v3

GP:3610821 v3ZOYO FRANCHISING FDD – Exhibit H – General Release Agreement

EXHIBIT H

GENERAL RELEASE AGREEMENT



GENERAL RELEASE AGREEMENT

THIS GENERAL RELEASE AGREEMENT (“Release”) is made and entered into this ______day of _____________, 20__, by and between Zoyo Franchising, LLC, an Arizona limited liabilitycompany (“Franchisor”), and _________________________________, a _______________corporation/limited liability company/partnership (circle one) (“Franchisee”), and each owner ofFranchisee and his or her spouse (individually, an “Owner,” and collectively, the “Owners”) (collectively,Franchisor, Franchisee, and Owners are referred to hereinafter as the “Parties”).

WITNESSETH

WHEREAS, the Parties previously entered into that certain Franchise Agreement dated_________________, 20___ (the “Agreement”), granting Franchisee the right to operate a Franchise ofFranchisor (“Franchise”) for a specific Term (as defined in the Agreement); and

WHEREAS, Franchisee desires to renew the Agreement for an additional Term (as defined in theAgreement); and

WHEREAS, the Agreement requires Franchisee and each of its Owners and their respectivespouses to execute, in favor of Franchisor and its officers, directors, agents, and employees, andFranchisor’s affiliates and their officers, directors, agents, and employees, as a condition to renew theAgreement, a general release from liability of all claims that Franchisee, its Owners, and their respectivespouses may have against Franchisor, its affiliates, and their respective owners, officers, directors,employees, and agents; and

WHEREAS, the Parties desire to enter into this Release to comply with the requirements of theAgreement and preserve Franchisee’s eligibility to renew the Agreement.

NOW, THEREFORE, in consideration of the mutual agreements contained herein and othervaluable consideration, the Parties hereby agree as follows:

1. Recitals. The foregoing Recitals are incorporated into and made part of this Release.

2. Release. Franchisee, each Owner and his or her spouse, and their present or formeraffiliated entities, officers, directors, shareholders, partners, members, employees, contractors, agents,predecessors, successors, assigns, attorneys, representatives, heirs, personal representatives and anyspouses of each, as well as all other persons, firms, corporations, limited liability companies, associationsor partnerships or other affiliated entities claiming by or through them (the “Releasing Entities”), herebyfully release Franchisor and its present or former officers, directors, shareholders, partners, members,employees, contractors, agents, predecessors, successors, assigns, attorneys, representatives, heirs,personal representatives and any spouses of each, and Franchisor’s affiliates and their respective presentor former officers, directors, shareholders, partners, members, employees, contractors, agents,predecessors, successors, assigns, attorneys, representatives, heirs, personal representatives and anyspouses of each, as well as all other persons, firms, corporations, limited liability companies, associationsor partnerships or other affiliated entities claiming by or through Franchisor (the “Released Entities”)from any and all liabilities, claims, demands, debts, damages, obligations and causes of action of anynature or kind, whether presently known or unknown, which the Releasing Entities may have against theReleased Entities as of the date this Release is executed. [If Washington law applies add: Nothing inthis release limits the rights of franchisees under the Franchise Investment Protection Act ofWashington, Chapter 19.100 RCW.]


3. Miscellaneous.

A. This Release contains the entire agreement and representations between theParties hereto with respect to the subject matter hereof. This Release supersedes and cancels any priorunderstanding or agreement between the parties hereto whether written or oral, express or implied. Nomodifications or amendments to this Release shall be effective unless in writing, signed by all Parties.

B. In the event any provision hereof, or any portion of any provision hereof shall bedeemed to be invalid, illegal or unenforceable, such invalidity, illegality, or unenforceability shall notaffect the remaining portion of any provision, or of any other provision hereof, and each provision of thisRelease shall be deemed severable from all other provisions hereof.

C. This Release shall be governed by the laws of the State of Arizona. Anylitigation or court action arising under or related to this Release shall be filed in state or federal court inMaricopa County, State of Arizona.

D. In the event a court action is brought to enforce or interpret this Release, theprevailing Party in that proceeding or action shall be entitled to reimbursement of all of its legal expenses,including, but not limited to, reasonable attorneys’ fees and court costs incurred. The prevailing Partyshall be entitled to reimbursement of all such expenses both in the initial proceeding or action and on anyappeal therefrom.

E. This Release is binding on the Parties hereto and their respective successors,heirs, beneficiaries, agents, legal representatives, and assigns, and on any other persons claiming a right orinterest through the Parties.

F. This Release may be executed in any number of counterparts, all of which shallbe deemed to constitute one and the same instrument, and each counterpart shall be deemed an original.



IN WITNESS WHEREOF, the Parties hereto affix their signatures and execute this Release as ofthe day and year first above written.

FRANCHISOR:


By: Zoyo LLC, its MemberBy: Aaron Klusman, Manager of Zoyo, LLC

FRANCHISEE:

By:

Its:

OWNERS OF FRANCHISEE:



_______________________________

Owner's %Ownership ofFranchisee:


_______________________________ _______%

______________________________Signature of Owner's Spouse


_______________________________






_______________________________



_______________________________ _______%



_______________________________




_______________________________



_______________________________ _______%



_______________________________




_______________________________



_______________________________ _______%



_______________________________



GP:3610821 v3ZOYO FRANCHISING FDD – Exhibit I – Form of UCC-1 Filing Statement

EXHIBIT I

FORM OF UCC-1 FINANCING STATEMENT


1

UCC FINANCING STATEMENTFOLLOW INSTRUCTIONS (front and back) CAREFULLYA. NAME & PHONE OF CONTACT AT FILER [optional]

B. SEND ACKNOWLEDGMENT TO: (Name and Address)

THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY1. DEBTOR’S EXACT FULL LEGAL NAME - insert only one debtor name (1a or 1b) – do not abbreviate or combine names

OR

1a. ORGANIZATION’S NAME

1b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX

1c. MAILING ADDRESS TOWN STATE POSTAL CODE COUNTRY

1d. TAX ID #: SSN OR EIN ADD’L INFO REORGANIZATIONDEBTOR

1e. TYPE OF ORGANIZATION 1f. JURISDICTION OF ORGANIZATION 1g. ORGANIZATIONAL ID #, if any� � NONE

2. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - insert only one debtor name (2a or 2b) – do not abbreviate or combine names

OR





2e. TYPE OF ORGANIZATION 2f. JURISDICTION OF ORGANIZATION 2g. ORGANIZATIONAL ID #, if any� NONE

3. SECURED PARTY’S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) - insert only one secured party name (3a or 3b)

OR




4. This FINANCING STATEMENT covers the following collateral:

All of Debtor’s inventory, equipment, furnishings, fixtures, and supplies now owned or after-acquired; all of Debtor’saccounts now existing or subsequently arising, together with all interest of Debtor, now existing or subsequentlyarising, together with all chattel paper, documents, and instruments relating to such accounts; all of Debtor’s contractrights, now existing or subsequently arising; and all of Debtor’s general intangibles, now owned or existing, or after-acquired or subsequently arising.

5. ALTERNATIVE DESIGNATION [if applicable]: � LESSEE/LESSOR � CONSIGNEE/CONSIGNOR � BAILEE/BAILOR � SELLER/BUYER � AG. LIEN � NON-UCC FILING

6. �This FINANCING STATEMENT is to be filed [for record] (or recorded) in the REALESTATE RECORDS. Attach Addendum [if applicable]

7. Check to REQUEST SEARCH REPORT(S) on Debtor(s) � All Debtors � Debtor 1 � Debtor 2[ADDITIONAL FEE] [optional]

8. OPTIONAL FILER REFERENCE DATA

FILING OFFICER COPY – NATIONAL UCC FINANCING STATEMENT (FORM UCC1) (REV. 07/29/98)


2

Instructions for National UCC Financing Statement (Form UCC1)Please type or laser-print this form. Be sure it is completely legible. Read all Instructions, especially Instruction 1; correct Debtor name is

crucial. Follow Instructions completely.Fill in form very carefully; mistakes may have important legal consequences. If you have questions, consult your attorney. Filing office

cannot give legal advice.Do not insert anything in the open space in the upper portion of this form; it is reserved for filing office use.When properly completed, send Filing Office Copy, with required fee, to filing office. If you want an acknowledgment, complete item B

and, if filing in a filing office that returns an acknowledgment copy furnished by filer, you may also send Acknowledgment Copy;otherwise detach. If you want to make a search request, complete item 7 (after reading instruction 7 below) and send SearchReport Copy, otherwise detach. Always detach Debtor and Secured Party Copies.

If you need to use attachments, use 8-1/2 X 11 inch sheets and put at the top of each sheet the name of the first Debtor, formatted exactly as itappears in item 1 of this form; you are encouraged to use Addendum (Form UCC1Ad).

A. To assist filing offices that might wish to communicate with filer, filer may provide information in item A. This item is optional.B. Complete item B if you want an acknowledgment sent to you. If filing in a filing office that returns an acknowledgment copy furnished by

filer, present simultaneously with this form a carbon or other copy of this form for use as an acknowledgment copy.

1. Debtor name: Enter only one Debtor name in item 1, anorganization’s name (1a) or an individual’s name (1b). EnterDebtor’s exact full legal name. Don’t abbreviate.

1a. Organization Debtor. “Organization” means an entity havinga legal identity separate from its owner. A partnership is anorganization; a sole proprietorship is not an organization, evenif it does business under a trade name. If Debtor is apartnership, enter exact full legal name of partnership; youneed not enter names of partners as additional Debtors. IfDebtor is a registered organization (e.g., corporation, limitedpartnership, limited liability company), it is advisable toexamine Debtor’s current filed charter documents to determineDebtor’s correct name, organization type, and jurisdiction oforganization.

1b. Individual Debtor. “Individual” means a natural person and asole proprietorship, whether or not operating under a tradename. Don’t use prefixes (Mr., Mrs., Ms.). Use suffix box onlyfor titles of lineage (Jr., Sr., III) and not for other suffixes ortitles (e.g., M.D.). Use married woman’s personal name (MarySmith, not Mrs. John Smith). Enter individual Debtor’s familyname (surname) in Last Name box, first given name in FirstName box, and all additional given names in Middle Namebox.

For both organization and individual Debtors: Don’t’ use Debtor’strade name, DBA, AKA, FKA, Division name, etc. in place ofor combined with Debtor’s legal name; you may add suchother names as additional Debtors if you wish (but this isneither required nor recommended.

1c. An address is always required for the Debtor named in 1a or1b.

1d. Debtor’s taxpayer identification number (tax ID #) – socialsecurity number or employer identification number – may berequired in some states.

1e,f,g. “Additional information re organization Debtor” is alwaysrequired. Type of organization and jurisdiction of organizationas well as Debtor’s exact legal name can be determined fromDebtor’s current filed charter document. Organizational ID #,if any, is assigned by the agency where the charter documentwas filed; this is different from taxpayer ID #; this should beentered preceded by the 2-character U.S. Postal identificationof state of organization if one of the United States (e.g.,CA12345, for a California corporation whose organizationalID # is 12345); if agency does not assign organizational ED #,check box in item 1g indicating “none.”

Note: If Debtor is a trust or a trustee acting with respect to propertyheld in trust, enter Debtor’s name in item 1 and attach Addendum(Form UCC1Ad) and check appropriate box in item 17. If Debtoris a decedent’s estate, enter name of deceased individual in item 1band attach Addendum (Form UCC1Ad) and check appropriate boxin item 17. If Debtor is a transmitting utility or this FinancingStatement is filed in connection with a Manufactured-HomeTransaction or a Public-Finance Transaction as defined in

applicable Commercial Code, attach Addendum (Form UCC1Ad)and check appropriate box in item 18.

2. If an additional Debtor is included, complete item 2,determined and formatted per Instruction 1. To include furtheradditional Debtors, or one or more additional Secured Parties,attach either Addendum (Form UCC1Ad) or other additionalpage(s), using correct name format. Follow Instruction 1 fordetermining and formatting additional names.

3. Enter information for Secured Party or Total Assignee,determined and formatted per Instruction 1. If there is morethan one Secured Party, see Instruction 2. If there has been atotal assignment of the Secured Party’s interest prior to filingthis form, you may either (1) enter Assignor S/P’s name andaddress in item 3 and file an Amendment (Form UCC3) [seeitem 5 of that form]; or (2) enter Total Assignee’s name andaddress in item 3 and, if you wish, also attaching Addendum(Form UCC1Ad) giving Assignor S/Ps name and address initem 12.

4. Use item 4 to indicate the collateral covered by this FinancingStatement. If space in item 4 is insufficient, put the entirecollateral description or continuation of the collateraldescription on either Addendum (Form UCC1Ad) or otherattached additional page(s).

5. If filer desires (at filer’s option) to use titles of lessee andlessor, or consignee and consignor, or seller and buyer (in thecase of accounts or chattel paper), or bailee and bailor insteadof Debtor and Secured Party, check the appropriate box initem 5. If this is an agricultural lien (as defined in applicableCommercial Code) filing or is otherwise not a UCC securityinterest filing (e.g., a tax lien, judgment lien, etc.), check theappropriate box in item 5, complete items 1-7 as applicableand attach any other items required under other law.

6. If this Financing Statement is filed as a fixture filing or if thecollateral consists of timber to be cut or as-extracted collateral,complete items 1-5, check the box in item 6, and complete therequired information (items 13, 14 or 15 on Addendum (FormUCC1Ad)..

7. This item is optional. Check appropriate box in item 7 torequest Search Report(s) on all or some of the Debtors namedin this Financing Statement. The Report will list all FinancingStatements on file against the designated Debtor on the date ofthe Report, including this Financing Statement. There is anadditional fee for each Report. If you have checked a box initem 7, file Search Report Copy together with Filing OfficerCopy (and Acknowledgment Copy). Note: Not all states dosearches and not all states will honor a search request made viathis form; some states require a separate request form.

8. This item is optional and is for filer’s use only. For filer’sconvenience of reference, filer may enter in item 8 anyidentifying information (e.g., Secured Party’s loan number,law firm file number, Debtor’s name or other identification,state in which form is being filed, etc.) that filer may finduseful.


3

UCC FINANCING STATEMENT ADDENDUMFOLLOW INSTRUCTIONS (front and back) CAREFULLY9. NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT

OR


9b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME, SUFFIX

10. MISCELLANEOUS:THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

11. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - insert only one name (11a or 11b) – do not abbreviate or combine names

OR

11a. ORGANIZATIONS’ NAME




11e. TYPE OFORGANIZATION

11f. JURISDICTION OF ORGANIZATION 11g. ORGANIZATIONAL ID #, if any� NONE

12. �ADDITIONAL SECURED PARTY’S or�ASSIGNOR S/P’S NAME - insert only one name (12a or 12b)

OR




13. This FINANCING STATEMENT covers� timber to be cut or� as-extractedcollateral, or is filed as a� fixture filing.

14. Description of real estate:

15. Name and address of a RECORD OWNER of above-described real estate (ifDebtor does not have a record interest):

6. REQUIRED SIGNATURE(S)

16. Additional collateral description:

17. Check only if applicable and check only one box.Debtor is a� Trust or� Trustee acting with respect to property held in trust or� Decedent’s Estate

18. Check only if applicable and check only one box.� Debtor is a TRANSMITTING UTILITY� Filed in connection with a Manufactured-Home Transaction – effective 30 years� Filed in connection with a Public-Finance Transaction – effective 30 years

FILING OFFICE COPY – NATIONAL UCC FINANCING STATEMENT ADDENDUM (FORM UCC1Ad) (REV. 07/29/98)


4

Instructions for National UCC Financing Statement Addendum (Form UCC1Ad)

9. Insert name of first Debtor shown on Financing Statement to which this Addendum s related, exactly as shown in item 1 of FinancingStatement.

10. Miscellaneous: Under certain circumstances, additional information not provided on Financing Statement may be required. Also, somestates have non-uniform requirements. Use this space to provide such additional information or to comply with such requirements;otherwise, leave blank.

11. If this Addendum adds an additional Debtor, complete item 11 in accordance with Instruction 1 on Financing Statement. To add morethan one additional Debtor, either use an additional Addendum form for each additional Debtor or replicate for each additional Debtorthe formatting of Financing Statement item 1 on an 8-1/2 X 11 inch sheet (showing at the top of the sheet the name of the first Debtorshown on the Financing Statement), and in either case give complete information for each additional Debtor in accordance withInstruction 1 on Financing Statement. All additional Debtor information, especially the name, must be presented in proper formatexactly identical to the format of item 1 of Financing Statement.

12. If this Addendum adds an additional Secured Party, complete item 12 in accordance with Instruction 3 on Financing Statement. In thecase of a total assignment of the Secured Party’s interest before the filing of this Financing Statement, if filer has given the name andaddress of the Total Assignee in item 3 of the Financing Statement, filer may give the Assignor S/P’s name and address in item 12.

13-15. If collateral is timber to be cut or as-extracted collateral, or if this Financing Statement is filed as a fixture filing, check appropriate boxin item 13; provide description of real estate in item 14; and, if Debtor is not a record owner of the described real estate, also provide, initem 15, the name and address of a record owner. Also provide collateral description in item 4 of Financing Statement. Also check box6 on Financing Statement. Description of real estate must be sufficient under the applicable law of the jurisdiction where the real estateis located.

16. Use this space to provide continued description of collateral, if you cannot complete description in item 4 of Financing Statement.

17. If Debtor is a trust or a trustee acting with respect to property held in trust or is a decedent’s estate, check the appropriate box.

18. If Debtor is a transmitting utility or if the Financing Statement relates to a Manufactured-Home Transaction or a Public-FinanceTransaction as defined in the applicable Commercial Code, check the appropriate box.

GP:3610821 v3ZOYO FRANCHISING FDD – Exhibit J – Acknowledgement Agreement

EXHIBIT J

ACKNOWLEDGEMENT AGREEMENT

GP:3610821 v3ZOYO FRANCHISING FDD – Exhibit J – Acknowledgement Agreement

DISCLOSUREACKNOWLEDGMENT AGREEMENT

Applicant(If corporation) State of IncorporationAddress of ApplicantLocation (Territory) Applied For

1. I have received all appropriate disclosure documents for the State(s) of _______________ atleast fourteen (14) calendar days, exclusive of the day I received them and the day I signed them, beforesigning the Unit Franchise Agreement/Regional Developer Agreement or payment of any monies.

2. I have signed and returned to Zoyo Franchising, LLC (you or your) the acknowledgment ofreceipt for each disclosure document given me.

3. I have had an opportunity to read the Unit Franchise Agreement/Regional DeveloperAgreement thoroughly and understand all of your covenants and obligations and my obligations as aregional developer of the Zoyo Neighborhood Yogurt system. I understand that the Unit FranchiseAgreement/Regional Developer Agreement contains all obligations of the parties and that you do notgrant to me under the Regional Developer Agreement any right of first refusal.

4. I understand that this franchised business, as in all business ventures, involves risk and,despite assistance and support programs, the success of my business will depend largely upon me and myability.

5. I understand that my role in the franchise sales process is limited and that you have the rightto reject any franchise candidate. I understand that the franchise sales process is governed by federal andstate laws and that I must comply with those federal and state laws.

6. Except for fill in the blank provisions or for negotiated changes that I initiated, I received acopy of the revised Unit Franchise Agreement/Regional Developer Agreement or related agreement atleast seven (7) calendar days before the date on which the Unit Franchise Agreement/Regional DeveloperAgreement or related agreement was signed.

7. I have had no promises, guarantees or assurances made to me and no information provided tome relative to earnings, revenues, profits, expenses or projected revenues for this franchise, except asdisclosed in the disclosure document. If I believe that I have received any such promises, guarantees,assurances or information, I agree to describe it below (otherwise write “None”).

Applicants’ Acknowledgment:

Name: Name:Date: Date:

EXHIBIT K

RECEIPTS

ZOYO FRANCHISING FDD – Exhibit K – Receipts

GP:3610821 v3

GP:3610821 v3ZOYO FRANCHISING FDD – Exhibit K – Receipts

RECEIPTThis disclosure document summarizes certain provisions of the franchise agreement and other informationin plain language. Read this disclosure document and all agreements carefully.

If we offer you a franchise, we must provide this disclosure document to you 14 calendar days before yousign a binding agreement with, or make a payment to, us or our affiliate in connection with the proposedfranchise sale. Iowa, New York and Rhode Island require that we give you this disclosure document atthe earlier of the first personal meeting or 10 business days (or 14 calendar days in Iowa) before theexecution of the franchise or other agreement or the payment of any consideration that relates to thefranchise relationship. Michigan requires that we give you this disclosure document at least 10 businessdays before the execution of any binding franchise or other agreement or the payment of anyconsideration, whichever occurs first.

If we do not deliver this disclosure document on time or if it contains a false or misleading statement, or amaterial omission, a violation of federal law and state law may have occurred and should be reported tothe Federal Trade Commission, Washington, D.C. 20580 and those state administrators listed onExhibit A.

The franchisor is Zoyo Franchising, LLC located at 450 N. McClintock Drive, Chandler, Arizona 85226.Our telephone number is (602) 337-7090.


Our franchise seller involved in offering and selling the franchise to you is Sharon Mettra, 450 N.McClintock Drive, Chandler, Arizona, 85226, (602) 337-7090, or is listed below (with address andtelephone number), or will be provided to you separately before you sign a franchise agreement:____________________________________________________________________________________.

We authorize the respective state agencies identified on Exhibit A to receive service of process for us inthe particular state.

I have received a disclosure document dated April 30, 2014, that included the following Exhibits:

(A) State Administrators/Agents for Serviceof Process

(B) Franchise Agreement(C) Regional Developer Agreement(D) Manuals– Table of Contents(E) Financial Statements

(F) Confidentiality/NondisclosureAgreement

(G) List of Franchise Owners(H) General Release Agreement(I) Form UCC-1 Financing Statement(J) Acknowledgment Agreement(K) Receipts

Date:(Do not leave blank) Signature of Prospective Franchisee

Print Name

Copy for Franchisee

GP:3610821 v3ZOYO FRANCHISING FDD – Exhibit K – Receipts

RECEIPTThis disclosure document summarizes certain provisions of the franchise agreement and other informationin plain language. Read this disclosure document and all agreements carefully.

If we offer you a franchise, we must provide this disclosure document to you 14 calendar days before yousign a binding agreement with, or make a payment to, us or our affiliate in connection with the proposedfranchise sale. Iowa, New York and Rhode Island require that we give you this disclosure document atthe earlier of the first personal meeting or 10 business days (or 14 calendar days in Iowa) before theexecution of the franchise or other agreement or the payment of any consideration that relates to thefranchise relationship. Michigan requires that we give you this disclosure document at least 10 businessdays before the execution of any binding franchise or other agreement or the payment of anyconsideration, whichever occurs first.

If we do not deliver this disclosure document on time or if it contains a false or misleading statement, or amaterial omission, a violation of federal law and state law may have occurred and should be reported tothe Federal Trade Commission, Washington, D.C. 20580 and those state administrators listed onExhibit A.

The franchisor is Zoyo Franchising, LLC located at 450 N. McClintock Drive, Chandler, Arizona 85226.Our telephone number is (602) 337-7090.


Our franchise seller involved in offering and selling the franchise to you is Sharon Mettra, 450 N.McClintock Drive, Chandler, Arizona, 85226, (602) 337-7090, or is listed below (with address andtelephone number), or will be provided to you separately before you sign a franchise agreement:____________________________________________________________________________________.

We authorize the respective state agencies identified on Exhibit A to receive service of process for us inthe particular state.

I have received a disclosure document dated April 30, 2014, that included the following Exhibits:

(A) State Administrators/Agents for Serviceof Process

(B) Franchise Agreement(C) Regional Developer Agreement(D) Manuals– Table of Contents(E) Financial Statements

(F) Confidentiality/NondisclosureAgreement

(G) List of Franchise Owners(H) General Release Agreement(I) Form UCC-1 Financing Statement(J) Acknowledgment Agreement(K) Receipts

Date:(Do not leave blank) Signature of Prospective Franchisee

Print Name

Copy for Zoyo Franchising, LLCPlease sign and date both copies of this receipt, keep one copy (the previous page) for your records, andmail one copy (this page) to the address listed on the front page of this disclosure document or send toAaron Klusman by email to [email protected].