MEMORANDUM OF AGREEMENT
                             -----------------------


           Between Allan J. Okscin and Friendly Ice Cream Corporation


     This  acknowledges  and  documents  our mutual  agreement  concerning  your
separation from Friendly Ice Cream  Corporation  ("Friendly's").  This Agreement
will confirm various matters  concerning your separation from employment so that
no misunderstanding exists between you and Friendly's.

     It is your  intention,  and the  intention  of  Friendly's,  that  you will
continue  in your  current  position  as Vice  President,  Corporate  Controller
through  and  including  May  31,  2006  (the  "Separation   Date"),   and  your
responsibilities and compensation will remain the same as they are on this date.
Following the Separation Date, you will no longer be an employee of Friendly's.

I.   SALARY CONTINUATION
     -------------------

     Following  the date hereof,  and  continuing  for twelve  months beyond the
Separation Date,  Friendly's will continue to pay you, at your current base rate
of pay and on your current  payment  schedule,  including  car  allowance and an
amount equal to your  executive  match (the current  executive  match payment is
equal to seven  percent (7%) of your  current base salary,  paid in twelve equal
monthly  installments,  less applicable  taxes).  The salary you receive will be
subject to appropriate  statutory  deductions and such other deductions normally
made for  employees  of  Friendly's.  Within ten (10) days after the  Separation
Date, we will also pay you (i) and amount equal to four (4) weeks'  vacation and
(ii) the sum of ten thousand dollars ($10,000) in lieu of outplacement services.
You will not be eligible to receive any bonus for 2006.

     From  time  to time  after  your  separation,  you  may be  contacted  with
questions  relating to matters  you have been  involved  with while  employed by
Friendly's.  You  agree  to  provide  your  complete  cooperation  and  make all
pertinent information regarding these matters available upon request, as well as
be personally available, at mutually convenient times, on an as-needed basis.


II.  BENEFIT/RETIREMENT PLANS
     ------------------------

     Your group medical/dental  insurance and other such benefits,  if enrolled,
end on your last day of active work. To continue  medical/dental coverage beyond
your  Separation  Date,  you must complete a  continuation  of coverage  (COBRA)
application,  which will be provided to you. It is your  responsibility  to make
all payments to the COBRA carrier.

         Notwithstanding anything to the contrary contained herein:

     >>   If you elect to retire and  receive  retirement  benefits,  Friendly's
          will  reimburse  you an amount equal to the cost of twelve (12) months
          of retiree  medical  premiums  and twelve (12) months of COBRA  dental
          premiums; or

     >>   If you elect not to retire and receive retirement benefits, Friendly's
          will reimburse you an amount equal to twelve (12) months of your COBRA
          payments.


<PAGE>


     Your group life  insurance ends on your  Separation  Date, but if your life
insurance is provided  through  Pacific  Mutual Life  Insurance  Company,  it is
unaffected by your leaving  employment  because it is your own personal  policy.
Payments by  Friendly's  on your behalf will cease as of your  Separation  Date.
Questions  about  coverage  thereafter  or about other  matters  related to this
policy should be referred to Ms. Karen Socola of the AYCO  Corporation  at (518)
373-7725.


IIII.    COVENANTS
         ---------

     In  consideration  of the terms set forth in this letter,  you agree to the
following:

     1.   You will forever refrain from disclosing or confirming or using in any
     way, either directly or indirectly,  any information  concerning insurance,
     loss  claims,  loss  payments,  safety  and  health  conditions,  financial
     condition,   strategic   planning  or  other   confidential  or  non-public
     information relating to Friendly's or its subsidiaries,  divisions, parents
     and affiliates, and any of their agents, employees,  directors and officers
     which you learned or became aware of since the inception of your employment
     with  Friendly's  except for  information  which is generally  known by the
     public,  without  Friendly's  prior written  consent,  except to the extent
     required by law.

     2.   You will turn over to your  supervisor all originals and copies of any
     documents,  manuals, plans, equipment,  business papers, computer diskettes
     or other materials relating to Friendly's and its subsidiaries,  divisions,
     parents and  affiliates,  their agents,  employees,  directors and officers
     which are in your control or possession  within two days of the  Separation
     Date.

     3.   You, on behalf of yourself,  your spouse,  heirs,  agents,  attorneys,
     representatives  and  assigns,  hereby  release and  discharge  forever all
     claims and causes of action of every  name and nature  that have  arisen or
     might  have  arisen at any time up to and  including  the date on which you
     sign this Agreement  (whether  known or unknown,  accrued,  contingent,  or
     liquidated)  that you now have or may have against  Friendly's,  any of its
     subsidiaries,   divisions,   parents   and   affiliates,   or  any  of  the
     aforementioned  entities'  agents,  employees,   directors,  and  officers,
     including but not limited to, any claims  relating to your  employment with
     Friendly's  and the  termination  thereof;  any  claims  based on  statute,
     regulation,  ordinance,  contract or tort; any claims arising under the Age
     Discrimination  in Employment Act of 1967, as amended (the "ADEA"),  or any
     other federal,  state, or local law relating to employment  discrimination,
     harassment, or retaliation; any claims relating to wages, compensation,  or
     benefits;  and any related claims for attorney's  fees,  except that you do
     not release  Friendly's from claims for payments and other benefits related
     to this Agreement.

     4.   You agree not to file a lawsuit in any court of the  United  States or
     any State thereof  concerning any matter released in this Agreement or from
     participating  in  an  age   discrimination   investigation  or  proceeding
     conducted  by any such agency.  However,  by signing  this  Agreement,  you
     acknowledge  that you are waiving your right to money damages and any other
     relief  should any agency  pursue  claims on your behalf  arising out of or
     relating to your employment with and/or separation from Friendly's.


                                      -2-

<PAGE>


     5.   The parties agree to forever  refrain from taking any action or making
     any statement  which brings  discredit  upon or disparages  the other party
     (including, with respect to Friendly's, its services or products, or any of
     its directors, officers, employees, or agents).

     6.   If  either  party  breaches  any of the terms of this  Agreement,  the
     non-breaching party may be entitled to recover from the breaching party all
     costs, fees, and expenses (including  attorney's fees) as may be awarded by
     a court of competent  jurisdiction  under  applicable law and if Friendly's
     prevails as a  non-breaching  party, it will be entitled to recover what it
     has paid you under this Agreement.

     7.   Nothing  contained  in this  Agreement  shall be  deemed  to  create a
     contract  for  employment  for the period  beginning on the date hereof and
     ending on the  Separation  Date.  You will remain an employee at will,  and
     your employment may be terminated at any time for any reason.  In the event
     you  or  Friendly's  choose  to  terminate  your  employment  prior  to the
     Separation  Date, the date that your  employment is terminated will replace
     May 31, 2006, as the Separation Date.


V.   ENTIRE AGREEMENT
     ----------------

     This is the  entire  agreement  between  us and  any  prior  agreements  or
understandings,  whether  oral  or  written,  are  entirely  superseded  by this
Agreement and you have not relied upon any other agreement or representation not
found  in this  Agreement.  We each  have  voluntarily  accepted  the  terms  as
sufficient without reservation. This Agreement may only be modified by a written
agreement signed by you and an officer of Friendly's.

     Pursuant  to its  obligations  under the ADEA,  Friendly's  advises  you to
consult with an attorney  prior to executing  this  agreement.  You have 21 days
from the date of receipt of this document in which to consider  this  agreement.
In  addition,  you may  revoke  this  agreement  for seven  days  following  its
execution, but only by delivering a written revocation notice to Friendly's Vice
President  of Human  Resources.  This  agreement  shall not become  effective or
enforceable until the seven-day revocation period has expired.

     By signing this  Agreement,  you  acknowledge  that you have read and fully
understand all of its provisions  and that you are signing it  voluntarily.  You
also  acknowledge  that  you  are  not  relying  on any  representations  by any
representative  of  Friendly's  concerning  the  meaning  of any  aspect of this
Agreement.

     In the event, after the execution of this Agreement but before all payments
to you have  been  made,  Friendly's  determines  that you have  engaged  in any
fraudulent  or illegal  activity  related to  Friendly's  not actually  known to
Friendly's  prior to the execution of this Agreement,  Friendly's shall have the
right to terminate its remaining obligations under this Agreement,  declaring it
null and void.

     Each party hereto agrees that they are fully authorized and have all of the
requisite  right,  power,  and authority to enter into this Agreement,  which is
fully binding upon and  enforceable  against the  respective  parties  hereto in
accordance with its terms.


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<PAGE>


     This   Agreement  is  made  and  entered  into  in  the   Commonwealth   of
Massachusetts and shall in all respects be interpreted,  enforced,  and governed
by the laws of the Commonwealth of Massachusetts.

     If the above is in agreement with your understanding,  please sign and keep
one copy of this document for your records and return one copy to me.


ACCEPTED AND AGREED TO AS OF THIS 23rd DAY OF JANUARY, 2006.


FRIENDLY ICE CREAM CORPORATION

By:      /s/ Garrett J. Ulrich
         -----------------------------------------------------
             Garrett J. Ulrich
             Vice President, Human Resources


By:      /s/ Allan J. Okscin
         -----------------------------------------------------
             Allan J. Okscin


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