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Exhibit 10.37

AMENDMENT TO
AMENDED AND RESTATED OPTION AGREEMENT

        THIS AMENDMENT TO AMENDED AND RESTATED OPTION AGREEMENT (this
"Amendment") is made and entered into effective the 1st day of June, 2002 by and
between DFW RESTAURANT TRANSFER CORP., a Texas corporation ("Holder"), NS
ASSOCIATES I, LTD., a Texas limited partnership ("Grantor") and
SCHLOTZSKY'S, INC., a Texas corporation ("Guarantor").

W I T N E S S E T H:

        WHEREAS, Holder, Grantor and Guarantor are parties to an Amended and
Restated Option Agreement dated as of February 7, 2001 (the "Option Agreement"),
pursuant to which Holder holds an option to acquire Grantor's rights under that
certain Amended and Restated Area Developer Agreement dated August 13, 1996
between Grantor and Guarantor, as amended (the "ADA"); and

        WHEREAS, the parties with to modify certain provisions of the Option
Agreement in the manner, and subject to the terms and conditions, set forth
herein;

        NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

        1.    Defined Terms. All capitalized terms used herein without
definition shall have the meanings assigned to them in the Option Agreement.

        2.    Modification of Certain Portions of Option Agreement. Provided
that Holder (x) pays to Grantor, on or before five o'clock p.m. Dallas, Texas
time on July 1, 2002 an option payment of $250,000 (the "July Option Payment")
and (y) pays to Grantor on or before five o'clock p.m. Dallas, Texas time on
August 1, 2002 an option payment of $250,000 (the "August Option Payment"), then
the Option Agreement shall be modified in the following respects:

        (a)  The first sentence of Section 3 of the Option Agreement shall be
amended to read in its entirety as follows:

        "Holder shall be entitled to exercise the Option in accordance with the
provisions of Section 4 during the period commencing on the date of this
Agreement and continuing until 5:00 p.m., Dallas, Texas time on August 30, 2002
(such period being the 'Option Period')."

        (b)  Paragraph 4 of the Option Agreement shall be amended to read in its
entirety as follows:

        "4. Exercise Price. The entire Option exercise price is hereby changed
to $28,850,000. The exercise price to be paid on the closing of the exercise of
the Option (the 'Exercise Price') is $23,768,000, which price takes into account
all previous option payments received by Grantor. The Exercise Price shall be
payable as follows:

        (i)    A payment of $500,000 (the 'Cash Payment') at the Closing; and

        (ii)  A promissory note in the original principal amount of $23,268,000,
the form of which is attached hereto as Exhibit 'A' (the 'Note'). Guarantor will
guarantee Holder's payment and performance of the Note through a Guaranty of
Payment, the form of which is attached hereto as Exhibit 'B' (the 'Guaranty').
Holder's obligations under the Note shall be further secured by a Security
Agreement, the form of which is attached hereto as Exhibit 'C' (the 'Security
Agreement')."

        (c)  Exhibit "A" to this Amendment shall be substituted for Exhibit "A"
to the Option Agreement; and

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        (d)  The first sentence of Section 5 of the Option Agreement will be
amended to read in its entirety as follows:

        "Holder shall be entitled to exercise the Option during the Option
Period by delivering to Grantor at the address set forth in Section 13 hereof by
courier or by certified mail, postage prepaid, return receipt requested, notice
of Holder's exercise of the Option; and the closing shall be held ten (10)
business days thereafter; provided, however, that in no event shall the closing
occur later than August 30, 2002."

If Owner does not make the July Option Payment to Grantor prior to five
o'clock p.m. Dallas, time on July 1, 2002 or does not make the August Option
Payment to Guarantor prior to five o'clock p.m. Dallas, Texas time on August 1,
2002, the modifications to the Option Agreement provided for herein shall not be
made or become effective.

        3.    Continuing Effect. Except as amended hereby, the Option Agreement
is, and shall remain, in full force and effect according to the terms and
conditions set forth therein.

        4.    Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute one and the same instrument.

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        IN WITNESS WHEREOF the parties have executed this amendment as of the
day and year first above written.

    HOLDER:
 
 
DFW RESTAURANT TRANSFER CORP.,
a Texas corporation
 
 
By:
       

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John C. Wooley, President
 
 
GRANTOR:
 
 
NS ASSOCIATES I, LTD.,
a Texas limited partnership
 
 
By:    NS Associates, Inc.,
          a Texas corporation,
          its General Partner
 
 
By:
       

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Morris P. Newberger, President
 
 
GUARANTOR:
 
 
SCHLOTZSKY'S, INC.,
a Texas corporation
 
 
By:
       

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John C. Wooley, President

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EXHIBIT "A"

PROMISSORY NOTE

$ 23,268,000                                              ,

        FOR VALUE RECEIVED, the undersigned, DFW RESTAURANT TRANSFER CORP., a
Texas corporation ("Maker"), HEREBY PROMISES TO PAY to the order of NS
ASSOCIATES I, LTD., a Texas limited partnership ("Payee"), the principal sum of
Twenty Three Million Two Hundred Sixty-Eight Thousand Dollars ($23,268,000),
plus interest accruing on the unpaid balance thereof as herein provided.

        Prior to maturity, the unpaid principal amount of this Promissory Note
shall bear interest at the rate of eight percent (8%) per annum (such rate of
interest to be referred to herein as the "Contract Rate"). Accrued interest on
the unpaid principal balance of this Promissory Note shall be computed on the
basis of a year consisting of 365 days, applied to the actual number of days in
each calendar month, but in no event shall such computation result in an amount
of accrued interest that would exceed accrued interest on the unpaid principal
balance hereof during the same period at the Maximum Rate.

        Notwithstanding the foregoing, if at any time the Contract Rate exceeds
the Maximum Rate, as hereinafter defined, the rate of interest to accrue on this
Promissory Note as provided above shall be limited to the Maximum Rate; however,
any subsequent reductions in the Contract Rate shall not reduce the rate of
interest to accrue on this Promissory Note below the Maximum Rate until the
total amount of interest accrued on this Promissory Note equals the amount that
would have accrued if the Contract Rate had at all times been in effect. Any
amount of principal hereof which is not paid when due, whether at stated
maturity, by acceleration or otherwise, shall bear interest from the day when
due until said principal amount is paid in full, payable on demand, at the
Maximum Rate, as hereinafter defined.

        Commencing on September 30, 2002 and continuing on the thirtieth (30th)
day of each month thereafter (except that any payment due for the month of
February shall be payable on the last day of such month), through and including
May 30, 2005, payments of principal and accrued interest in the amount of Five
Hundred Twenty Thousand Dollars ($520,000) each shall be due and payable. A
final payment of all outstanding principal and accrued interest shall be due and
payable on June 30, 2005.

        Notwithstanding anything to the contrary set forth herein, Payee shall
have the right to accelerate the indebtedness under this Note and to require
Maker to prepay all outstanding principal and interest due hereunder upon the
occurrence of a "change in control of Guarantor or Holder," as defined in the
Amended and Restated Option Agreement between Maker, Payee and
Schlotzsky's, Inc. dated as of February 7, 2001.

        Both principal and interest are payable in lawful money of the United
States of America to Payee at 5720 LBJ Freeway, Suite 625, Dallas, Texas 75240,
or such other address as the holder hereof shall notify Maker in writing, in
immediately available funds without setoff or counterclaim.

        Maker may, at any time or from time to time, prepay the principal amount
outstanding hereunder, in whole or in part, without premium or penalty.

        Maker agrees that the maximum lawful rate of interest (the "Maximum
Rate") applicable to this Promissory Note under Texas law shall be the indicated
rate ceiling as specified under Texas law; provided that, if permitted by law,
Payee may from time to time implement any ceiling under such laws and revise the
index, formula or provision of law used to compute the rate under this
Promissory Note by notice to Maker as provided in such laws; provided further
that, if any other provision of Texas, state or federal law now or hereafter in
effect and applicable hereto shall permit a greater interest rate than the
maximum rates currently in effect, the Maximum Rate shall be the highest lawful
interest rate hereunder. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds such Maximum Rate, the Maker
and the Payee shall, to the full extent permitted by applicable

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law, exclude voluntary prepayments and the effects thereof, and amortize,
prorate, allocate and spread, in equal parts, the total amount of interest
throughout the entire contemplated term of this Promissory Note so that the
interest rate is uniform throughout the entire term of this Promissory Note. If
it is so determined that any interest in excess of such Maximum Rate is provided
for, such excess shall be applied first to any other amounts not constituting
interest due or which may become due under this Promissory Note, and the
balance, if any, shall be refunded to Maker; provided, however, that in no event
shall Maker be obligated to pay, and Payee hereby waives payment of, the amount
of interest to the extent it is in excess of the amount permitted by applicable
law.

        This Promissory Note is the promissory note referred to in, and shall be
entitled to the benefits of, that certain Security Agreement dated as of the
date hereof, between Maker and Payee. Payment of this Promissory Note is further
secured by a Guaranty of even date executed by Schlotzsky's, Inc.

        In the event this Promissory Note is placed in the hands of an attorney
for collection or if all or any part of the indebtedness represented hereby is
proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief or other court proceedings, Maker and all endorsers
and each other party now or hereafter liable for payment of this Promissory Note
jointly and severally agree to pay reasonable attorneys' fees and collection
costs to the holder hereof in addition to the principal and interest payable
hereunder.

        Maker and each endorser and each other party now or hereafter liable for
payment of this Promissory Note severally waive presentment for payment, notice
of dishonor, protest, notice of protest and diligence in collecting or bringing
suit against any party liable hereon and agree to any and all extensions,
renewals, partial payments, substitutions of evidence of indebtedness and the
taking, release or substitution of any security or collateral with or without
notice before or after maturity.

        If any of the following events (each an "Event of Default") shall occur
and be continuing: (i) Maker shall fail to pay the principal balance of this
Note or any interest accrued on the principal amount of this Promissory Note
when due; or (ii) Maker shall admit in writing his inability to pay his debts,
or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against Maker seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property, and in the case of any such proceeding instituted against Maker it
shall remain undismissed for a period of 90 days; then, and in any such event,
the holder hereof may, by notice to Maker: (A) declare this Promissory Note and
all interest thereon to be forthwith due and payable, whereupon this Promissory
Note and all accrued interest thereon shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by Maker; (B) to the extent permitted by
applicable law, bring suit at law, in equity or through other appropriate
proceedings, whether for the specific performance of any covenant or agreement
contained herein, for an injunction against a violation of any of the terms
hereof, in aid of the exercise of any power granted hereby or thereby or by law,
to recover judgment for any and all amounts due on this Promissory Note, or
otherwise; and (C) exercise all of the remedies available to the secured party
under the Security Agreement.

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        This Promissory Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.

MAKER:

DFW RESTAURANT TRANSFER CORP.

By:                                                                           
Name:                                                                     
Title:                                                                         

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Exhibit 10.37
AMENDMENT TO AMENDED AND RESTATED OPTION AGREEMENT