We and our Predecessor have developed a proprietary System (“the System”) offering franchises under the name Aloha Sub Deli and Sandwich Shop (Aloha Sub) to operate quick service Restaurants in an attractive and inviting Hawaiian themed setting (each a “Restaurant”). The Restaurant serves a limited 2 DRAFT menu of sub sandwiches with our freshly baked Hawaiian bread using our own recipe, premium meats, sauces, fresh daily vegetables and various side items. The founder has created his own recipe for fresh bread baked daily and one special sauce of papaya seed dressing that are proprietary to the concept. You will market and operate your business under the name “Aloha Sub Deli and Sandwich Shop” as well as additional principal service marks, trademarks, trade names, logos, emblems and/or origin (as identified in Item 13). These principal marks and all other marks which may be designated by us in the future in writing for use with the System are referred to in this Disclosure Document as the “Proprietary Marks”. Jaimie B. DeMatoff, the founder, owns the rights to the mark “Aloha Sub Deli and Sandwich Shop” and has granted us the exclusive rights to use this trademark in connection with our franchise System. The System includes distinctive signage, interior and exterior.
You will compete with other businesses operated by independents, franchises or chains offering similar menu and services within the industry that compete for business in our target markets. You will find your major competitors to be restaurants, shops, ghost kitchens, bars, grocery stores and other retail establishments. We differentiate our Shop by providing proprietary Hawaiian bread, premium meats, freshly cut produce, hugh portions, freshly grilled steak and chicken products cooked to order with unique and proprietary sauces in a casual Hawaiian themed atmosphere served with Aloha Sub Magic. The sub sandwich segment is growing rapidly with individuals seeking unique and new tastes experiences and many entrepreneurs are finding ways to meet the demand.
Retail establishments that serve alcohol are typically subject to a wide variety of Federal, State and local laws, rules and regulations which will impact your Aloha Sub Franchise (Section 8M of the Franchise Agreement). The alcohol beverage control (ABC) licensing laws vary from state to state. You should investigate the ABC laws that apply in the geographic area where you are interested in locating your Franchise and consider whether you will qualify for licensing. The ABC licensing laws include regulations about where such businesses may be located and who may obtain a license for the sale of beer, wine and alcohol.
Obtaining that license can result in delays in getting your location open. The cost of an ABC license may vary greatly as some states do not issue new licenses, requiring licenses to be purchased from a third party. You should be aware that state “dram shop” laws give rise to potential liability for injuries that are directly or indirectly related to the sale and consumption of alcohol. Your staff must receive any training required by your state or municipality related to alcohol management (also referred to as “TIPS training”). You must continuously comply with the ABC laws to operate your Franchise. Other laws, rules and regulations that can affect your business include but are not limited to Americans 5 DRAFT with Disabilities Act, Federal Wage and Hourly Laws, and the Occupational Safety and Health Act. The Environmental Protection Agency, the U.S. Food and Drug Administration, the U.S. Department of Agriculture, as well as state and local environmental and health departments and other agencies have laws and regulations concerning the preparation of food and sanitary conditions of Shop facilities. State and local agencies routinely conduct inspections for compliance with these requirements. Under the Clean Air Act and state implementing laws, certain state and local areas are required to attain, by the applicable statutory guidelines, the national quality standards for ozone, carbon monoxide and particulate matter. Certain provisions of these laws impose limits on emissions resulting from commercial food preparation. In addition, some states may require you to obtain restaurant, business, occupational, food products, and miscellaneous licenses. Some states also have laws regarding who may secure these licenses. You may also have to obtain health licenses and comply with health laws and regulations that apply to restaurant and food
It is your sole and exclusive responsibility to ensure that your Aloha Sub franchise and the employees who work in your franchise comply with all licensing, certification or regulatory requirements. You are required to comply with all applicable local, state, and federal health laws and regulations as well as laws and regulations relating to access by persons with disabilities, known as the Americans with Disabilities Act. In addition, there is a wide variation in the state and local laws and regulations that govern the sale of alcoholic beverages and the potential liability imposed, by dram shop laws, regarding injuries that are directly or indirectly related to the sale and consumption of alcohol
When you sign a Development Agreement, you will be required to pay a non-refundable reservation fee for each site to be developed and opened under the Development Agreement beyond the initial unit for which you will pay the full franchise fee (Reservation Fee). The standard per-site Reservation Fee is five thousand dollars ($5,000) for each Shop scheduled to be developed by you under the Multi-Unit Development Agreement, plus you pay an additional $15,000 upon execution of the Franchise Agreement for the subsequent Shop. 7 DRAFT We will not grant a Development Agreement to an existing franchisee unless certain conditions are met. The conditions may require significant financial contributions. We require that any existing franchisee be in substantial compliance with our System standards and have operated their initial Shop successfully for a period of not less than six (6) months. During the term of your Franchise Agreement, you may, in our sole discretion, acquire additional franchise licenses to operate other Aloha Sub franchises in new locations, on an “as available” basis, only if you have operated at least one Aloha Sub Shop for six months or more, are in compliance with the terms of the Franchise Agreement, and can prove financial capacity to open the Shop without relying on revenues from your existing unit. These additional Shops may be purchased at a reduced price of eighty percent (80%) of the franchise fee then being charged to new franchisees. Each additional Franchise License includes the right to own and operate one Shop at a location that has been accepted by us in advance of your opening and to service an Exclusive Territory that has been mutually agreed upon by you and us.
- the Initial Franchise Fee for the first Aloha Sub Shop that you will be required to develop under your Multi-Unit Development Agreement; and
- a Reservation Fee of $5,000 for each additional Aloha Sub Shop you have 23 DRAFT committed to develop under your Multi-Unit Development Agreement. At the execution of the franchise agreements for each additional Aloha Sub Shop, you will pay and additional $15,000.
- Other Expenditures. The balance of your initial investment for the first Aloha Sub Shop is as stated in the preceding table. Your cost to develop each additional Aloha Sub Shop may be affected by inflation, local labor costs, materials cost and other factors not within our control.
- Total. In compiling this chart, we relied on our and our management’s experience in operation other Aloha Sub Shops.
