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Notes to Financial Statements

1. Organization and Nature of Business

NBC Franchisor LLC ("we", "our" and the "Company"), a special purpose Delaware limited liability company, was organized on June 14, 2021. The Company is a direct, wholly owned subsidiary of NBC Funding LLC (the "Issuer"), which is a special purpose Delaware limited liability company that is a direct, wholly owned subsidiary of NBC SPV Guarantor LLC ("SPV Holdco") and an indirect, wholly owned subsidiary of NBC Holdings, LLC ("Parent").

The Company was formed in connection with a financing transaction (the "Securitization Transaction"), which was completed on July 30, 2021 (see Note 4), and serves as the "franchisor" of the Nothing Bundt Cakes Brand and owns all Franchise Assets, which includes all franchise agreements and intellectual property related to the business. The Company grants the rights to own and operate Nothing Bundt Cakes bakeries, which specialize in selling decorated bundt cakes and other related gift items. The Company grants each franchisee a transferable right and license to use the "System," the proprietary marks, and to market, sell, and provide the approved products in accordance with the System. The System consists of certain trademarks, service marks, and commercial symbols, including the mark "Nothing Bundt Cakes," certain bakery design décor and images, all of which the Company may modify from time to time. Nothing Bundt Franchising, LLC (the "Manager"), is an affiliated company that performs certain services for the Company under a management agreement (refer to Note 6).

The Company had 542 franchised bakeries as of December 31, 2023 and 459 franchised bakeries as of December 25, 2022.

2. Summary of Significant Accounting Policies

Basis of Accounting

The financial statements and accompanying notes are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP").

Fiscal Year

The Company's fiscal year ends on the last Sunday in December. The fiscal year 2022 in the following table encompasses a 52-week period whereas fiscal year 2023 reflects a 53-week period. [Item 23: RECEIPTS]

NBC Franchisor LLC NOTES TO THE FINANCIAL STATEMENTS

1. Nature of Business

NBC Franchisor LLC (the "Company"), a special purpose Delaware limited liability company, was organized on June 14, 2021. The Company is a direct, wholly owned subsidiary of NBC Funding LLC (the "Debt Issuer"), which is a special purpose Delaware limited liability company that is a direct, wholly owned subsidiary of NBC SPV Guarantor LLC and an indirect, wholly owned subsidiary of NBC Holdings, LLC ("Parent").

The Company was formed in connection with a financing transaction (the "Securitization Transaction"), which was completed on July 30, 2021 (see Note 4), and serves as the "franchisor" of the Nothing Bundt Cakes brand and owns all Franchise Assets, which includes all franchise agreements and intellectual property related to the business. The Company grants the rights to own and operate Nothing Bundt Cakes bakeries, which specialize in selling decorated bundt cakes and other related gift items. The Company grants each franchisee a transferable right and license to use the "System," the proprietary marks, and to market, sell, and provide the approved products in accordance with the System. The System consists of certain trademarks, service marks, and commercial symbols, including the mark "Nothing Bundt Cakes," certain bakery design décor and images, all of which the Company may modify from time to time. Nothing Bundt Franchising, LLC (the "Manager"), is an affiliated company that performs certain services for the Company under a management agreement (refer to Note 7).

The Company had 643 franchised bakeries as of December 29, 2024 and 542 franchised bakeries as of December 31, 2023.

2. Significant Accounting Policies

• a. Basis of Accounting The accounts are maintained, and the financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
• b. Fiscal Year The Company's fiscal year ends on the last Sunday in December. Fiscal year 2024 in the following table encompasses a 52-week period whereas fiscal year 2023 reflects a 53-week period.

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To retain your rights under this Rider, each Nothing Bundt Cakes® Bakery opened pursuant to this Rider must operate continuously throughout this Rider's term in full compliance with its franchise agreement.

• (c) Changes in Investment Requirements.

You acknowledge that the estimated expenses and investment requirements set forth in Items 6 and 7 of our Franchise Disclosure Document are subject to increase over time, and future Nothing Bundt Cakes® Bakeries likely will involve greater initial investment and operating capital requirements than those stated in the Franchise Disclosure Document provided to you before you signed this Rider.

You must open all of the Nothing Bundt Cakes® Bakeries in compliance with the Schedule, regardless of (i) the requirement of a greater investment, (ii) the financial condition or performance of your previous Nothing Bundt Cakes® Bakeries, or (iii) any other circumstances, financial or otherwise.

However, we are not obligated to execute any of the franchise agreements contemplated by this Rider if you have not complied with each and every condition in this Rider or otherwise do not meet our then-current requirements.

• 1. Subfranchising and Sublicensing Rights.

This Rider does not give you any right to franchise, license, subfranchise, or sublicense others to develop and operate Nothing Bundt Cakes® Bakeries.

Only you (and/or Approved Affiliates) may construct, develop, open, and operate Nothing Bundt Cakes® Bakeries pursuant to this Rider.

This Rider also does not give you (or your Approved Affiliates) any independent right to use the Nothing Bundt Cakes® trademark or our other trademarks and commercial symbols.

The right to use our trademarks and commercial symbols is granted only under a Nothing Bundt Cakes® franchise agreement signed directly with us.

This Rider only grants you potential development rights if you fully comply with its terms.

• 1. Fees Payable under the Rider.

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3. Development Obligations.

(a) Approved Affiliates. To maintain your rights under this Rider, you (and/or Approved Affiliates) must, by the deadlines specified in the Schedule, sign franchise agreements and leases for, and then construct, develop, and have open and operating within the Development Area, the agreedupon minimum number of Nothing Bundt Cakes® Bakeries. If your owners establish a new legal entity to operate one or more of the Nothing Bundt Cakes® Bakeries to be developed pursuant to this Rider and that new legal entity's ownership is completely identical to your ownership, that legal entity automatically will be considered an "Approved Affiliate" without further action. However, if the new legal entity's ownership is not completely identical to your ownership, you first must seek our approval for that new entity to develop and operate the proposed Bakery as an Approved Affiliate. We may refuse any such request if you and/or your owners do not (a) own and control at least eighty percent (80%) of the new entity's ownership interests and (b) have the authority to exercise voting and management control of the Bakery proposed to be owned by the new entity.

• (b) Form of Franchise Agreement.

You (and/or your Approved Affiliates) will operate each Nothing Bundt Cakes® Bakery under a separate franchise agreement with us.

The franchise agreement (and related documents, including Guaranty and Assumption of Obligations) that you and your owners (or your Approved Affiliate and its owners) must sign for each Bakery developed pursuant to this Rider will be our then-current form of franchise agreement (and related documents, including Guaranty and Assumption of Obligations), any or all terms of which may differ substantially and materially from any or all terms contained in the First Franchise Agreement, provided, however, that the initial franchise fee will be Forty-Five Thousand Dollars ($45,000) for the second and each subsequent Nothing Bundt Cakes® Bakery to be developed pursuant to this Rider.

Despite any contrary provision contained in the newly signed franchise agreements, your (and your Approved Affiliates') additional Nothing Bundt Cakes® Bakeries within the Development Area must be open and operating by the dates specified in the Schedule.

To retain your rights under this Rider, each Nothing Bundt Cakes® Bakery opened pursuant to this Rider must operate continuously throughout this Rider's term in full compliance with its franchise agreement.

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incur(s), including, without limitation, legal fees and expenses, if this Confidentiality Agreement is enforced against me. Due to the importance of this Confidentiality Agreement to the Franchisee and the Company, any claim I have against the Franchisee or the Company is a separate matter and does not entitle me to violate, or justify any violation of this Confidentiality Agreement.

• 1. For purposes of this Agreement, "Confidential Information" means certain information, processes, methods, techniques, procedures, and knowledge, including know-how, manuals, and trade secrets (whether or not judicially recognized as a trade secret), developed or to be developed relating directly or indirectly to the development or operation of a Bakery. This includes all information not generally known or easily accessible and is important and useful in developing and operating a Nothing Bundt Cakes franchise. Without limiting the foregoing, Confidential Information includes, but is not limited to:
• (a) Information in the Nothing Bundt Cakes Operations Manual and any and all System standards;
• (b) Sales and marketing techniques, and knowledge and experience used in developing and operating Nothing Bundt Cakes franchises;
  • (c) Personnel recruitment, training programs and techniques and compensation methods;
• (d) Lists of prospective franchisees, supplier networks, strategic partners, vendors and manufacturers associated with Nothing Bundt Cakes franchises;
• (e) Franchisee referral sources, billing and collection methods, financial information, makeup and functions of the intellectual property infrastructure associated with the System including all software, computer systems or billing system associated with Nothing Bundt Cakes Franchises;
• (f) Other information about the Company, franchise system, business plans, and marketing plans;
• (g) Proprietary Recipes and other trade secrets, pricing plans through supplier networks, standards and specifications for product and/or service placement and pricing, price marketing mixes related to products and services offered under the System; and
• (h) Guest Information and any other information the Company reasonably designates as confidential or proprietary.

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Notes to Financial Statements

4. Securitization Transaction

In conjunction with the Securitization Transaction, on July 30, 2021, the Issuer entered into a base indenture (the "Indenture") under which the Issuer may issue multiple series of notes. On the same date, Issuer entered into a series supplement to the Indenture whereby it issued a series of senior term notes, the Series 2021-1 Fixed Rate Secured Notes (the "Offered Notes"), in an aggregate principal amount of $335 million.

The Offered Notes were issued in two tranches, the $280 million Series 2021-1 2.989% Fixed Rate Class A-2 Senior Secured Notes and the $55 million Series 2021-1 4.970% Fixed Rate Class B Senior Subordinated Secured Notes. Both tranches have an "Anticipated Repayment Date" of July 2026 and a final maturity date of July 2051.

In addition to the Offered Notes, the Indenture and series supplement provide for $20.0 million in Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 ("VFN Notes"), which will allow the Issuer to borrow amounts, including swingline borrowings and letters of credit, from time to time on a revolving basis and $3.8 million Series 2021-1 Senior Secured Liquidity Reserve Notes, Class A-1 ("LR Notes"), which are term notes and allow the Issuer to borrow amounts on a delayed draw basis. Interest accrues on the VFN Notes at a variable rate of base (Term SOFR) plus 2.5%.

On July 30,2021, as part of the Securitization Transaction, the Manager contributed to the Company substantially all of its intellectual property, including all trademarks and internet domains (collectively, the "Securitization IP"), as well as all franchise agreements, development agreements, and all rights to develop and expand substantially all franchising and licensing activities with respect to the Nothing Bundt Cakes brand (collectively, the "Franchise Assets").

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1. Grant of Development Rights. Subject to your strict compliance with this Rider, we grant you the exclusive right to develop _______ (__) Nothing Bundt Cakes® Bakeries (including the Nothing Bundt Cakes® Bakery covered by the First Franchise Agreement), according to the mandatory development schedule described in Exhibit A to this Rider (the "Schedule"), within the geographic area depicted on the map attached to this Rider (the "Development Area"). The rights set forth in this Rider are subject to the terms of the Franchise Agreement including, without limitation, our rights in Section 1.3 therein and all of the activities in which we reserve the right to engage in as permitted in the First Franchise Agreement. Additionally, for the avoidance of any doubt, Nothing Bundt Cakes® Bakeries that you (or your "Approved Affiliates," a term defined in Section 3 below) are permitted to develop and operate at ROFR Sites do not count toward your compliance with the Schedule.

YOU ACKNOWLEDGE AND AGREE THAT TIME IS OF THE ESSENCE UNDER THIS RIDER, AND YOUR RIGHTS UNDER THIS RIDER ARE SUBJECT TO TERMINATION, AS PROVIDED IN THIS RIDER, IF YOU DO NOT COMPLY STRICTLY WITH THE DEVELOPMENT OBLIGATIONS PROVIDED IN THE SCHEDULE. WE MAY ENFORCE THIS RIDER STRICTLY.

3. Development Obligations.

[Item 1: THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS AND AFFILIATES]

We identify the System by means of certain trade names, service marks, trademarks, logos, emblems, and indicia of origin, including, but not limited to, the "Nothing Bundt Cakes®" mark, distinctive trade dress, and such other trade names, trademarks, and service marks as we now or in the future may designate in writing for use in connection with the System (the "Marks"). We continue to develop, use, and control the use of the Marks in order to identify for the public the source of products and services marketed under the System, and to represent the System's high standards of quality, appearance, and service. We reserve the right to create and develop private label products, including cake mixes, gift packages, and related items under the Marks ("Proprietary Products").

Development Rights

In addition to our single u

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 93)