Is Coffee News required to provide franchisees with any assistance beyond what is disclosed in Item 11?

ent as Exhibit A for a specimen copy of the Promissory Note.1

ITEM 11

FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING

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

Before you publish your first edition of Coffee News,

1. We will provide you upon your initial franchise fee payments an operations manual describing how to arrange the distribution of the Periodical within your geographic area, how to sell advertising, how advertising in the Periodical operates, how to design such advertisements, how to determine the suggested pricing of advertising, and how to determine coverage areas as well as including sample filler advertisements, office supply samples of insertion orders, business cards, envelops, and monthly sales envelops for your use in producing your own supplies of such materials (Franchise Agreement Section 7.1). Responsibility for the sale of advertisements rests solely with you.

2. Prior to purchasing any territories and to signing an agreement with us and to paying the Initial franchise fees, you and we will agree on the boundaries of your exclusive distribution territory that will optimally have a population of 25,000 to 50,000 total and 25 to 40 active restaurants (Franchise Agreement Section 1.1). Since no territory may overlap another, we will research the territory that you wish to service to determine if all or part of it is currently serviced by us or any of our franchises. We usually approve an area where you wish to publish if it does not overlap another where an existing publisher operates. We will also research population and commerce figures to determine the number of people and the number of restaurants that are contained within the proposed territory. This population/restaurant guideline is based on discussions with existing franchises in the U.S. and Canada and considers information from our 5 company-owned franchises. Upon signing the franchise agreement, you will have exclusive rights to distribute your editions of Coffee News within the agreed territory. It is important to note that you may solicit and accept advertisements from any source inside or outside your territory since the agreement limits only your distribution rights.

¹ A sample Promissory Note is attached to Coffee News License Agreement as Schedule B.

We will not sign an agreement with you or require the payment of the Initial fees until we have agreed on the specific territories you wish to purchase.

When you request the areas where you wish to publish, we will determine the number of franchises that the area would represent based on the guidelines in Item 11.2 and Item 12. There is no time limit for an acceptance since all site locations are resolved before you sign an agreement with us.

• 1. We shall disclose to you the unique marketing and sales techniques employed in the design and format of the Periodical, described in detail in the operations manual (Franchise Agreement Section 7.2).
• 1. The design of the periodical stand is disclosed in the operations manual. The current suggested stand for Coffee News can be purchased for $5.25 each plus shipping and handling for a total of approximately $5.75 each from Coffee News USA or its preferred vendor (Franchise Agreement Section 7.3). If you opt to purchase stands elsewhere, we will provide labels for each stand at a nominal charge.
  • 1. You are not required to buy or use electronic cash registers or computer systems.

After you publish your first edition of Coffee News,

1. We shall provide you support services as deemed reasonable and advisable by us (Franchise Agreement Section 7.4).

You are not required to purchase a computer or any associated systems from us or any other vendor.

Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 17–21)