UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-K

(Mark One)
(X)   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1996
                          -----------------    
                                      OR
( )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from __________ to __________.

Commission file number 0-20286
                       -------  
                             RC/ARBY'S CORPORATION
                             ---------------------
            (Exact name of registrant as specified in its charter)

                  Delaware                        59-2277791 
                  --------                        ---------- 
        (State or other jurisdiction of        (I.R.S. Employer 
         incorporation or organization)       Identification No.)

            1000 Corporate Drive
          Fort Lauderdale, Florida                   33334
          ------------------------                   -----
    (Address of principal executive offices)       (Zip Code)

  Registrant's telephone number, including area code (954) 351-5600
                                                     --------------  
Securities registered pursuant to Section 12(b) of the Act:

                                           Name of each exchange
           Title of each class              on which registered
           -------------------              -------------------

                                    None

        Securities registered pursuant to Section 12(g) of the Act:

                                    None

      Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities  Exchange Act of
1934  during the  preceding  12 months (or for such  shorter  period  that the
registrant  was  required to file such  reports),  and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if  disclosure of  delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of  registrant's  knowledge,  in definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this  Form 10-K or any
amendment to this Form 10-K. [X] 

     All of the voting  stock of the  registrant  is held by the  registrant's
parent, CFC Holdings Corp. There were 1,000 shares of the registrant's  common
stock ($1.00 par value) outstanding as of March 31, 1997.

      The registrant  meets the  conditions  set forth in General  Instruction
J(1)(a)  and (b) of Form 10-K and is  therefore  filing  this  report with the
reduced disclosure format.


<PAGE>






         "ARBY'S," "RC COLA," "DIET RC," "ROYAL CROWN," "ROYAL CROWN
     DRAFT COLA," "DIET RITE," "NEHI," "NEHI LOCKJAW," "UPPER 10," "KICK,"
              AND "THIRST THRASHER" ARE REGISTERED TRADEMARKS OF
                   RC/ARBY'S CORPORATION OR ITS SUBSIDIARIES.





                                       2


<PAGE>



                                    PART I

               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

   Certain  statements  in this Annual Report on Form 10-K (this "Form 10-K"),
including  statements  under  "Item 1.  Business"  and  "Item 7.  Management's
Discussion  and Analysis of Financial  Condition  and Results of  Operations,"
constitute  "forward-looking  statements"  within the  meaning of the  Private
Securities  Litigation  Reform Act of 1995 (the  "Reform  Act").  Such forward
looking  statements  involve known and unknown risks,  uncertainties and other
factors which may cause the actual  results,  performance or  achievements  of
RC/Arby's Corporation ("RCAC") and its subsidiaries to be materially different
from any future  results,  performance or  achievements  express or implied by
such forward-looking statements. Such factors include, but are not limited to,
the following: general economic and business conditions;  competition; success
of operating  initiatives;  development and operating  costs;  advertising and
promotional  efforts;  brand  awareness;  the  existence or absence of adverse
publicity;  acceptance of new product  offerings;  changing trends in customer
tastes;  the  success of  multi-branding;  changes  in  business  strategy  or
development plans; quality of management;  availability,  terms and deployment
of capital;  business  abilities  and judgment of personnel;  availability  of
qualified  personnel;  the Company's indirect parent,  Triarc Companies,  Inc.
("Triarc"), not receiving from the Internal Revenue Service a favorable ruling
that the  spinoff  referred  to herein  will be  tax-free  to  Triarc  and its
subsidiaries  and its  stockholders  or the failure to satisfy other customary
conditions to closing for transactions of the types referred to herein;  labor
and  employee  benefit  costs;  availability  and  cost of raw  materials  and
supplies;  changes  in, or failure  to comply  with,  government  regulations;
construction   schedules;   the  costs  and   other   effects   of  legal  and
administrative  proceedings;  and other risks and uncertainties  referenced in
this  Form  10-K.  RCAC  will not  undertake  and  specifically  declines  any
obligation to publicly  release the result of any revisions  which may be made
to any forward-looking statements to reflect events or circumstances after the
date of such  statements  or to  reflect  the  occurrence  of  anticipated  or
unanticipated events.

Item 1. Business.

                                 INTRODUCTION

   RCAC is a holding  company that conducts  business  operations  through its
wholly-owned  subsidiaries,  Royal Crown  Company,  Inc.  ("Royal  Crown") and
Arby's, Inc. (d/b/a Triarc Restaurant Group) ("Arby's").  Royal Crown produces
and sells soft drink  concentrates  used in the production and distribution of
soft drinks by  independent  bottlers  under the brand names RC COLA,  DIET RC
COLA,  DIET RITE COLA,  DIET RITE flavors,  NEHI,  NEHI LOCKJAW,  UPPER 10 and
KICK.  RC COLA is the  third  largest  national  brand  cola  and is the  only
national brand cola alternative available to non-Coca-Cola and  non-Pepsi-Cola
bottlers.  Royal Crown is also the exclusive  supplier of cola  concentrate to
Cott  Corporation  ("Cott"),  which sells  private  label soft drinks to major
retailers in the United States, Canada, the United Kingdom,  Australia, Japan,
Spain and South Africa.

   Arby's is the world's largest franchise  restaurant system  specializing in
roast beef sandwiches with an estimated  market share in 1996 of approximately
73%  of  the  roast  beef  sandwich  segment  of  the  quick-service  sandwich
restaurant category. In addition,  Arby's believes that it is the 11th largest
restaurant chain in the United States,  based on domestic  system-wide  sales.
Worldwide sales for the Arby's system were approximately $2.0 billion in 1996.
Arby's acts both as a franchisor and as an owner and operator in a system that
included  3,022  restaurants  as of  December  31,  1996,  of  which  355 were
company-owned.

   RCAC is a wholly-owned  subsidiary of CFC Holdings Corp. ("CFC  Holdings"),
94.6% of which in turn is owned by Triarc,  and the remaining 5.4% of which is
owned by a wholly-owned subsidiary of Triarc.  Triarc is a public corporation,
the  Class A  Common  Stock of  which  (the  only  class  of  Triarc's  voting
securities) is traded on the New York Stock Exchange.

                                     3

<PAGE>



   RCAC was  incorporated  in 1982 in  Florida  under  the name  "Royal  Crown
Corporation"  and   reincorporated  in  Delaware  in  1994.  Royal  Crown  was
incorporated in 1978 in Delaware and,  through its  predecessor  corporations,
has been in business since 1905.  Arby's was  incorporated in 1964 in Ohio and
reincorporated in Delaware in 1994. The principal executive offices of each of
RCAC and Arby's are located at 1000 Corporate Drive, Fort Lauderdale,  Florida
33334. The telephone  number at such offices is (954) 351-5600.  The principal
executive  offices  of Royal  Crown are  located  in White  Plains,  New York.
Reference herein to the "Company" includes  collectively RCAC, Royal Crown and
Arby's, unless the context indicates otherwise.

STRATEGIC ALTERNATIVES

   SPINOFF TRANSACTIONS

   In October 1996 Triarc  announced  that its Board of  Directors  approved a
plan to  offer up to  approximately  20% of the  shares  of its  beverage  and
restaurant  businesses  (including those of the Company) to the public through
an initial public offering and to spin off the remainder of the shares of such
businesses to Triarc stockholders (collectively,  the "Spinoff Transactions").
Consummation  of the  Spinoff  Transactions  will be subject  to,  among other
things,  receipt  of  a  favorable  ruling  from  the  IRS  that  the  Spinoff
Transactions  will  be  tax-free  to  Triarc  and  its  subsidiaries  and  its
stockholders. The request for the ruling from the IRS contains several complex
issues and there can be no  assurance  that Triarc will  receive the ruling or
that Triarc will consummate the Spinoff Transactions. The Spinoff Transactions
are not  expected  to occur  prior to the end of the  second  quarter of 1997.
Triarc is currently evaluating the impact, if any, of its proposed acquisition
of  Snapple  Beverage  Corp.  (which it  announced  on March 27,  1997) on the
anticipated structure of the Spinoff Transactions.

   A  registration  statement  has not  been  filed  with the  Securities  and
Exchange  Commission with respect to the proposed  offering of common stock of
Triarc's restaurant and beverage businesses. The offering of common stock will
be made only by means of a prospectus.  The common stock may not be sold,  nor
may offers to buy be  accepted  prior to the time the  registration  statement
becomes effective.  This Form 10-K does not constitute an offer to sell or the
solicitation of an offer to buy such common stock,  nor will there be any sale
of the common stock in any state in which such an offer,  solicitation or sale
would be unlawful prior to registration or qualification  under the securities
laws of any such state.

   TRIARC BEVERAGE GROUP

   In October  1996  Triarc also  announced  the  establishment  of the Triarc
Beverage  Group,  which  oversees  the  operations  of Royal  Crown and Mistic
Brands,  Inc.  ("Mistic"),   Triarc's  other  beverage   subsidiary.   Michael
Weinstein,  the chief executive officer of Mistic and Royal Crown is the chief
executive  officer  of the  Triarc  Beverage  Group and has  direct  operating
responsibility  for both companies.  John Carson, the chairman of Royal Crown,
is chairman of Triarc  Beverage Group and oversees  international  operations,
private label sales,  domestic strategic franchising and industry affairs. The
Triarc  Beverage  Group is in the process of  consolidating  its  headquarters
operations  in White  Plains,  New York.  Royal  Crown and Mistic  continue to
operate  independent  sales and marketing  operations to serve their different
distribution  systems and marketplace  needs. The finance,  administrative and
operational  functions of the two companies are being consolidated to maximize
efficiencies.

   SALE OF COMPANY-OWNED RESTAURANTS

   On February 13, 1997,  Arby's,  Arby's Restaurant  Development  Corporation
("ARDC"),  Arby's  Restaurant  Holding Company ("ARHC") and Arby's  Restaurant
Operations  Company ("AROC"),  each a wholly-owned  subsidiary of the Company,
entered  into a stock  purchase  agreement  with  RTM,  Inc.  ("RTM")  and RTM


                                      4
<PAGE>

Partners  Inc.  ("Holdco")  pursuant to which Holdco would  acquire from ARDC,
ARHC and AROC (the "Sellers") all of the stock of two  corporations  ("Newco")
owning all of the Sellers' 355 company-owned Arby's restaurants.  The purchase
price is approximately $71 million,  consisting primarily of the assumption of
approximately  $69  million in mortgage  indebtedness  and  capitalized  lease
obligations.  The  consummation  of the  transaction  is subject to  customary
closing  conditions,  including  receipt of necessary  consents and regulatory
approvals.

   In connection  with the  transaction,  the Sellers will receive  options to
purchase  from Holdco up to an  aggregate of 20% of the common stock of Newco.
RTM, Holdco and two affiliated  entities also agreed to enter into a guarantee
in favor of the  Sellers  and Triarc  guaranteeing  payment  of,  among  other
things,  the assumed debt  obligations.  RTM has also agreed to cause Newco to
build an additional 190 Arby's  restaurants over the next 14 years pursuant to
a  development  agreement.  This is in addition to a previous  commitment  RTM
entered into in 1996 to build an additional 210 Arby's restaurants.

   Arby's future role in the Arby's system as a franchisor  will be to enhance
the strength of the Arby's brand by increasing  the number of  restaurants  in
the Arby's system and by establishing a "cut above" positioning for the Arby's
brand through  upgraded menu items and facilities,  while  continuing to bring
new concepts to the system, such as P.T. Noodles, ZuZu and T.J. Cinnamons. See
" Item 1. -- Business Segments -- Restaurants."

   CHANGE IN FISCAL YEAR

   Effective  January  1,  1997,  the  Company  adopted  a 52/53  week  fiscal
convention  pursuant to which the Company's fiscal year will end on the Sunday
closest to December  31. Each  fiscal year will be  comprised  of four 13 week
fiscal quarters, although in some years the fourth quarter will represent a 14
week period.

BUSINESS SEGMENTS

                            BEVERAGES (ROYAL CROWN)

   Royal Crown produces and sells  concentrates used in the production of soft
drinks  which  are  sold  domestically  and  internationally  to  independent,
licensed bottlers who manufacture and distribute  finished beverage  products.
Royal Crown's major  products have  significant  recognition  and include:  RC
COLA,  DIET RC COLA, DIET RITE COLA,  DIET RITE flavors,  NEHI,  UPPER 10, and
KICK.  Further,  Royal Crown is the exclusive  supplier of cola concentrate to
Cott.

   RC Cola is the third largest  national  brand cola and is the only national
brand cola available to non-Coca-Cola and non-Pepsi-Cola  bottlers.  DIET RITE
is available in a cola as well as various other flavors and  formulations  and
is the only national brand that is sugar-free  (sweetened with 100% aspartame,
a non-nutritive sweetener), sodium-free and caffeine-free. DIET RC COLA is the
no-calorie  version of RC COLA containing  aspartame as its sweetening  agent.
NEHI is a line  of  approximately  20  flavored  soft  drinks,  UPPER  10 is a
lemon-lime soft drink and KICK is a citrus soft drink.  Royal Crown's share of
the overall domestic  carbonated soft drink market was  approximately  1.9% in
1996 according to Beverage Digest/Maxwell estimates.  Royal Crown's soft drink
brands have  approximately  a 2.1% share of national  supermarket  volume,  as
measured by data of Information Resources, Inc. ("IRI").

   BUSINESS STRATEGY

   Royal  Crown's  management  is  pursuing  business  strategies  designed to
strengthen its distribution  system,  make more effective use of its marketing
resources,  continue the  expansion  of its  international  and private  label
businesses, develop new packages and concentrate resources on its core brands.
Additionally,  in January 1997,  Triarc sold its interest in Saratoga Beverage
Group,  Inc.  ("Saratoga") and Royal Crown  terminated its  relationship  with

                                      5
<PAGE>

Saratoga.  Royal Crown has also  decided to  discontinue  selling  Royal Crown
Draft Cola as a finished product. Royal Crown is evaluating the possibility of
selling concentrate for that product.

   ADVERTISING AND MARKETING

   A  principal  determinant  of  success in the soft  drink  industry  is the
ability to  establish a recognized  brand name,  the lack of which serves as a
significant  barrier to entry to the  industry.  Advertising,  promotions  and
marketing  expenditures  in  1994,  1995  and 1996  were  approximately  $78.2
million, $86.2 million and $76.8 million,  respectively.  Royal Crown believes
that its products continue to enjoy nationwide brand recognition.

   ROYAL CROWN'S BOTTLER NETWORK

   Royal  Crown  sells its  flavoring  concentrates  for  branded  products to
independent  licensed bottlers in the United States and 61 foreign  countries,
including Canada.  Consistent with industry practice, each bottler is assigned
an exclusive  territory  within which no other  bottler may  distribute  Royal
Crown branded soft drinks.  As of December 31, 1996, Royal Crown products were
packaged and/or distributed  domestically in 156 licensed territories,  by 174
licensees,  covering 50 states.  There were a total of 56  production  centers
operating  pursuant  to 49  production  and  distribution  agreements  and 124
distribution only agreements.

   Royal Crown enters into a license agreement with each of its bottlers which
it believes is comparable to those prevailing in the industry. The duration of
the  license  agreements  varies,  but  Royal  Crown  may  terminate  any such
agreement  in the  event of a  material  breach of the  terms  thereof  by the
bottler that is not cured within a specified period of time.

    Royal Crown's ten largest bottler groups  accounted for 63.6% and 68.4% of
Royal Crown's  domestic unit sales of concentrate for branded  products during
1995 and 1996, respectively.  The two largest bottler groups, Chicago Bottling
Group, and Beverage America, accounted for 20.1% and 10.2%,  respectively,  of
Royal Crown's  domestic unit sales of concentrate for branded  products during
1995 and 21.9% and 9.3%, respectively, during 1996.

   PRIVATE LABEL

   Royal Crown  believes  that  private  label sales  through  Cott, a leading
supplier of private  label soft drinks,  represent an  opportunity  to benefit
from the  increased  emphasis by national  retailers  on the  development  and
marketing of quality store brand  merchandise  at  competitive  prices.  Royal
Crown's  private  label  sales  began in late  1990 and,  as  Cott's  business
expanded,  more than tripled from  calendar  year 1992 to calendar  year 1994.
Unit  sales to Cott  declined  in 1995,  according  to Cott,  as a result of a
significant  reduction in worldwide Cott system  inventories  and a slowing of
the rapid growth  Cott's  business  has  experienced.  In 1996,  sales to Cott
rebounded  as  Cott's  business  grew  and its  inventory  normalized  as Cott
increased its purchases from Royal Crown for certain non-cola concentrates. In
1994, 1995 and 1996, revenues from the Cott business represented approximately
14.2%, 12.1% and 12.6%, respectively, of Royal Crown's total revenues.

   Royal Crown provides  concentrate to Cott pursuant to a concentrate  supply
agreement  entered into in 1994 (the "Cott  Worldwide  Agreement").  Under the
Cott Worldwide  Agreement,  Royal Crown is Cott's exclusive worldwide supplier
of cola concentrates for retailer-branded  beverages in various containers. In
addition,  Royal Crown also supplies Cott with non-cola  carbonated soft drink
concentrates.  The Cott  Worldwide  Agreement  requires  that Cott purchase at


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<PAGE>

least  75% of its total  worldwide  requirements  for  carbonated  soft  drink
concentrates  from  Royal  Crown.  The  initial  term  of the  Cott  Worldwide
Agreement is 21 years, with multiple six-year extensions.

   Cott delivers the private  label  concentrate  and  packaging  materials to
independent bottlers for bottling. The finished private label product is then

shipped to Cott's trade customers, including major retailers such as Wal-Mart,
A&P and Safeway.  The Cott Worldwide  Agreement provides that, as long as Cott
purchases a specified  minimum number of units of private label concentrate in
each year of the Cott Worldwide  Agreement,  Royal Crown will not  manufacture
and sell private label  carbonated  soft drink  concentrates  to parties other
than Cott anywhere in the world.

   Through its private label program,  Royal Crown  develops new  concentrates
specifically for Cott's private label accounts. The proprietary formulae Royal
Crown uses for its private label program are customer specific and differ from
those of Royal  Crown's  branded  products.  Royal  Crown  works  with Cott to
develop a concentrate according to each trade customer's specifications. Royal
Crown retains ownership of the formulae for such concentrates  developed after
the date of the Cott Worldwide Agreement,  except upon termination of the Cott
Worldwide Agreement as a result of breach or non-renewal by Royal Crown.

   PRODUCT DISTRIBUTION

   Bottlers  distribute  finished  product  through  four  major  distribution
channels:   take  home   (consisting  of  food  stores,   drug  stores,   mass
merchandisers,  warehouses and discount  stores);  convenience  (consisting of
convenience stores and retail gas station mini-markets); fountain/food service
(consisting of fountain syrup sales and  restaurant  single drink sales);  and
vending  (consisting of bottle and can sales through  vending  machines).  The
take home channel is the  principal  channel of  distribution  for Royal Crown
products.  According to IRI data,  the volume of Royal Crown  products in food
stores and drug stores in 1996 was down approximately 7% and 9%, respectively,
as  compared  to 1995,  while  the  volume  of Royal  Crown  products  in mass
merchandisers  was  down   approximately  12%  in  1996.  Royal  Crown  brands
historically  have not been broadly  distributed  through vending  machines or
convenience  outlets;  in 1996,  the  volume of Royal  Crown  products  in the
convenience channel was down approximately 10% as compared to 1995.

   INTERNATIONAL

   Sales outside the United States accounted for approximately 9.9% , 9.6% and
10.3% of Royal  Crown's sales in 1994,  1995,  and 1996,  respectively.  Sales
outside the United States of branded concentrates  accounted for approximately
8.9%,  10.2% and 12.3% of branded  concentrate  sales in 1994,  1995 and 1996,
respectively.  As of December 31, 1996, 90 bottlers and 13  distributors  sold
Royal Crown brand  products  outside the United States in 61  countries,  with
international  sales in 1996 distributed among Canada 11.3%, Latin America and
Mexico 29.8%,  Europe  33.3%,  the Middle  East/Africa  14.7% and the Far East
10.9%.  While the financial and managerial  resources of Royal Crown have been
focused on the United  States and Canada,  Royal Crown's  management  believes
significant  opportunities exist in international  markets. In those countries
where Royal Crown brands are currently distributed,  Royal Crown traditionally
has  provided  limited  advertising  support due to capital  constraints.  New
bottlers were added in 1996 to the  following  international  markets:  Brazil
(2), Sweden, Poland, Argentina, Korea, Syria and the C.I.S/Baltics (2).

   PRODUCT DEVELOPMENT AND RAW MATERIALS

   Royal Crown  believes  that it has a  reputation  as an industry  leader in
product innovation.  Royal Crown introduced the first national brand diet cola
in 1961.  The DIET RITE flavors line was  introduced in 1988 to complement the


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cola line and to target the  non-cola  segment of the  market,  which has been
growing  faster than the cola segment due to a consumer  trend toward  lighter
beverages. In 1997, Royal Crown introduced a new version of DIET RITE COLA.

   From time to time,  Royal  Crown  purchases  as much as a year's  supply of
certain raw  materials  to protect  itself  against  supply  shortages,  price
increases and/or political  instabilities in the countries from which such raw
materials are sourced.  Flavoring  ingredients  and  sweeteners  are generally
available on the open market from several sources.

                             RESTAURANTS (ARBY'S)

TRIARC RESTAURANT GROUP

   In June 1996  the Company announced that Arby's would do business under the
name  Triarc  Restaurant  Group to reflect  the  Company's  commitment  to the
multi-branded restaurant concept. See " -- Multi-Branding" below.

SALE OF COMPANY-OWNED RESTAURANTS

   On February 13, 1997,  Arby's,  ARDC,  ARHC and AROC,  each a  wholly-owned
subsidiary of the Company,  entered into a stock  purchase  agreement with RTM
and Holdco pursuant to which Holdco would acquire from the Sellers (ARDC, ARHC
and AROC) all of the stock of Newco  which  will own all of the  Sellers'  355
company-owned  Arby's  restaurants.  The purchase price is  approximately  $71
million,  consisting  primarily of the assumption of approximately $69 million
in mortgage  indebtedness and capitalized lease obligations.  The consummation
of the  transaction  is subject to  customary  closing  conditions,  including
receipt of necessary consents and regulatory approvals.

GENERAL

   Arby's is the world's largest franchise  restaurant system  specializing in
slow-roasted  meat  sandwiches  with  an  estimated  market  share  in 1996 of
approximately  73% of the roast beef  sandwich  segment  of the quick  service
sandwich restaurant category. In addition, the Company believes that Arby's is
the 11th largest quick service restaurant chain in the United States, based on
domestic  system-wide sales. As of December 31, 1996, Arby's restaurant system
consisted  of 3,022  restaurants,  of which 2,859  operated  within the United
States and 163 operated  outside the United  States.  As of December 31, 1996,
Arby's owned and operated 355 restaurants and the remaining 2,667  restaurants
were owned and  operated by  franchisees.  At December  31,  1996,  all but 16
restaurants outside the United States were franchised.  System-wide sales were
approximately  $1.8  billion in 1994,  approximately  $1.9 billion in 1995 and
approximately $2.0 billion in 1996.

   In addition to its various slow-roasted meat sandwiches, Arby's restaurants
also offer a selected menu of chicken,  submarine sandwiches,  side-dishes and
salads.  A breakfast  menu is also  available at some Arby's  restaurants.  In
addition,  Arby's  has  entered  into  agreements  with  three  multi-branding
partners and intends to expand its multi-branding efforts which will add other
brands' items to Arby's menu items at such multi-branded restaurants.  See "--
Multi-Branding" below.

   Arby's  revenues are derived  from three  principal  sources:  (i) sales at
company-owned  restaurants  (which  will  terminate  upon the  closing  of the
transaction  with RTM, see "Item 1. -- Business --  Strategic  Alternatives");
(ii) royalties  from  franchisees  and (iii) one-time  franchise fees from new
franchisees.  During  1994,  1995,  and 1996  approximately  77% , 80% and 80%
respectively,  of Arby's  revenues  were derived  from sales at  company-owned
restaurants and approximately  23% , 20%, and 20%  respectively,  were derived
from royalties and franchise fees.

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<PAGE>

INDUSTRY

   The U.S.  restaurant  industry  is highly  fragmented,  with  approximately
415,000 units  nationwide.  Industry  surveys indicate that the largest chains
accounted for  approximately 18% of all units and 30% of all industry sales in
1996. According to data compiled by the National Restaurant Association, total
domestic  restaurant  industry sales were estimated to be  approximately  $200
billion in 1996, of which approximately $98 billion was estimated to be in the
quick service restaurant ("QSR") or fast food segment.

ARBY'S RESTAURANTS

   The first  Arby's  restaurant  opened in  Youngstown,  Ohio in 1964.  As of
December 31, 1996, Arby's  restaurants were being operated in 48 states and 13
foreign countries.  At December 31, 1996, the five leading states by number of
operating units were: Ohio, with 234 restaurants; Texas, with 183 restaurants;
California, with 166 restaurants; Michigan, with 155 restaurants; and Florida,
with 150 restaurants.  The leading country outside the United States is Canada
with 111 restaurants.

   Arby's  restaurants  in the  United  States and Canada  typically  range in
size from 700 square feet to 4,000 square feet. Restaurants in other countries
typically are larger than U.S. and Canadian restaurants. Restaurants typically
have a  manager,  assistant  manager  and as  many as 20  full  and  part-time
employees.  Staffing  levels,  which vary during the day,  tend to be heaviest
during the lunch hours.

   The following table sets forth the number of  company-owned  and franchised
Arby's restaurants at December 31, 1994, 1995 and 1996.

                                   THROUGH DECEMBER 31, 1996
                                   -------------------------
                                     1994     1995     1996
                                    ------   ------   -----

Company-owned restaurants..........    288      373      355
Franchised restaurants.............  2,500    2,577    2,667
                                    ------   ------   ------
      Total restaurants............  2,788    2,950    3,022
                                    ======   ======   ======

    From April 1993  through  December  31,  1995,  Arby's had an  accelerated
program of opening company-owned  restaurants.  Arby's opened 49 company-owned
restaurants in 1995, as compared to nine company-owned restaurants in 1994 and
five  company-owned  restaurants  in 1993. In 1996,  new  restaurant  openings
slowed down as management focused resources on converting existing restaurants
to multi-brand restaurants and upgrading facilities offering an expanded menu.
In 1996 Arby's opened three company-owned restaurants.  In order to facilitate
new company-owned  restaurant openings, in 1995 and 1996, RC/Arby's,  ARDC and
ARHC entered into a series of transactions including loan agreements with FFCA
Mortgage Corp.  (formerly known as FFCA  Acquisition  Corp.),  a subsidiary of
Franchise Finance Corporation of America,  pursuant to which they borrowed, in
the aggregate,  $62.7 million  ($58.4  million of which was  outstanding as of
December 31, 1996), of the $87.3 million  available under such agreements.  In
February  1997,  the Company  entered into an agreement with RTM to sell to an
affiliate of RTM all of the 355 company-owned Arby's restaurants. See "Item 1.
Business -- Strategic Alternatives."

FRANCHISE NETWORK

    At December 31, 1996,  there were 571 Arby's  franchisees  operating 2,667
separate locations.  The initial term of the typical  "traditional"  franchise


                                      9
<PAGE>

agreement  is 20 years.  As of  December  31,  1996,  Arby's did not offer any
financing arrangements to its franchisees,  except that in certain development
agreements Arby's has made available extended payment terms.

    As of December 31, 1996,  Arby's had received prepaid  commitments for the
opening of up to 429 new  domestic  franchised  restaurants  over the next ten
years.  Arby's  plans  opening   approximately  115  new  domestic  franchised
restaurants in 1997.  Arby's also expects that 20 new  franchised  restaurants
outside of the United States will open in 1997.  In addition,  as noted above,
RTM has agreed to cause Newco to build an  additional  190 Arby's  restaurants
pursuant to a  development  agreement.  See "Item 1. -- Business --  Strategic
Alternatives."  Arby's  also has  territorial  agreements  with  international
franchisees in five  countries at December 31, 1996.  Under the terms of these
territorial  agreements,  many  of  the  international  franchisees  have  the
exclusive right to open Arby's  restaurants in specific  regions or countries,
and, in some cases,  the right to  sub-franchise  Arby's  restaurants.  Arby's
management expects that future  international  franchise  agreements will more
narrowly limit the  geographic  exclusivity  of the  franchisees  and prohibit
sub-franchise arrangements.

    Arby's offers  franchises for the  development of both single and multiple
"traditional"  restaurant  locations.  All franchisees are required to execute
standard  franchise  agreements.  Arby's  standard  U.S.  franchise  agreement
currently  provides for, among other things,  an initial $37,500 franchise fee
for the first  franchised  unit and  $25,000  for each  subsequent  unit and a
monthly royalty payment based on 4.0% of restaurant  sales for the term of the
franchise agreement.  As a result of lower royalty rates still in effect under
earlier  agreements,  the average royalty rate paid by franchisees during 1996
was 3.1%. Franchisees typically pay a $10,000 commitment fee, credited against
the franchise fee referred to above,  during the development process for a new
traditional restaurant.

    In December 1994, Arby's began granting development  agreements which give
developers  rights to develop Arby's  limited menu  restaurants in conjunction
with  either  an  existing   operating  food  service  or  other  business  in
non-traditional  locations for a specified term.  These  agreements  require a
$1,000  development  deposit per store which is then applied toward  royalties
which  are to be  paid  at a rate  of 10% of  sales  (which  includes  the AFA
contribution referred to below). The  developer/franchisee is required to sign
an individual franchise agreement for a term of five years. As of December 31,
1996, there were 30 franchised limited menu restaurants in operation.

    Franchised  restaurants are operated in accordance with uniform  operating
standards  and   specifications   relating  to  the  selection,   quality  and
preparation of menu items, signage,  decor,  equipment,  uniforms,  suppliers,
maintenance  and  cleanliness  of  premises  and  customer   service.   Arby's
continuously   monitors   franchisee   operations  and  inspects   restaurants
periodically  to  ensure  that  company  practices  and  procedures  are being
followed.

MULTI-BRANDING

    Arby's continues to pursue the development of a  multi-branding  strategy,
which  allows  a  single  restaurant  to  offer  the  consumer  distinct,  but
complementary, brands at the same restaurant. Collaborating to offer a broader
menu is intended to increase  sales per square foot of facility  space,  a key
measure of return on  investment  in retail  operations.  Arby's has  obtained
exclusive  worldwide  rights to operate or grant  franchises  to operate  ZuZu
restaurants,  which offer handmade Mexican food, at multi-brand locations.  In
addition,  in 1995 Arby's  acquired P.T.  Noodle's,  which offers a variety of
Asian,  Italian and American dishes based on serving  corkscrew noodles with a
variety of different  sauces. In August 1996, Arby's completed the purchase of
the tradenames,  trademarks,  service marks,  logos,  signs,  recipes,  secret
formulas and technical  information of T.J.  Cinnamons,  Inc., an operator and
franchisor  of retail  bakeries  specializing  in gourmet  cinnamon  rolls and
related  products.  As of March 1, 1997, 22 company-owned  Arby's  restaurants
were multi-brand  locations,  including 14 that offer P.T. Noodles'  products,
five that offer ZuZu's products and three that offer T.J. Cinnamons' products.

                                      10
<PAGE>

ADVERTISING AND MARKETING

    Arby's  advertises  primarily  through  regional  television,   radio  and
newspapers.   Payment  for  advertising  time  and  space  is  made  by  local
advertising  cooperatives in which owners of local franchised  restaurants and
Arby's,  to  the  extent  that  it  owns  local   company-owned   restaurants,
participate.  Franchisees  and Arby's  contribute  0.7% of gross  sales to the
Arby's Franchise Association ("AFA"), which produces advertising and promotion
materials  for the  system.  Each  franchisee  is  also  required  to  spend a
reasonable  amount, but not less than 3% of its monthly gross sales, for local
advertising.  This amount is divided between the franchisee's individual local
market advertising  expense and the expenses of a cooperative area advertising
program with other  franchisees who are operating  Arby's  restaurants in that
area. Contributions to the cooperative area advertising program are determined
by the  participants in the program and are generally in the range of 3% to 5%
of monthly  gross  sales.  In 1994,  1995 and 1996,  Arby's  expenditures  for
advertising  and  marketing  in support  of  company-owned  stores  were $17.2
million, $22.4 million, and $25.8 million, respectively.

QUALITY ASSURANCE

    Arby's has  developed  a quality  assurance  program  designed to maintain
standards  and  uniformity of the menu  selections  at each of its  franchised
restaurants. A full-time quality assurance employee is assigned to each of the
four  independent  processing  facilities  that process  roast beef for Arby's
domestic  restaurants.  The quality assurance employee inspects the roast beef
for quality and uniformity.  In addition,  a laboratory at Arby's headquarters
tests  samples of roast beef  periodically  from each  franchisee.  Each year,
representatives  of Arby's  conduct  unannounced  inspections of operations of
each franchisee to ensure that Arby's  policies,  practices and procedures are
being followed. Arby's field representatives also provide a variety of on-site
consultative services to franchisees.

PROVISIONS AND SUPPLIES

    Arby's  roast  beef is  provided  by  four  independent  meat  processors.
Franchise  operators  are  required to obtain  roast beef from one of the four
approved  suppliers.  Arby's,  through the non-profit  purchasing  cooperative
ARCOP, Inc. ("ARCOP"),  which negotiates  contracts with approved suppliers on
behalf of Arby's and its franchisees,  has entered into "cost-plus"  contracts
and  purchases  with  these  suppliers.   Arby's  believes  that  satisfactory
arrangements could be made to replace any of its current roast beef suppliers,
if necessary, on a timely basis.

    Franchisees   may  obtain  other  products,   including  food,   beverage,
ingredients,  paper  goods,  equipment  and signs,  from any source that meets
Arby's specifications and approval, which products are available from numerous
suppliers.  Food,  proprietary  paper  and  operating  supplies  are also made
available,  through national contracts employing volume purchasing,  to Arby's
franchisees through ARCOP.

GENERAL

    TRADEMARKS

    Royal Crown considers its concentrate formulae,  which are not the subject
of any patents,  to be trade  secrets.  In addition,  RC COLA,  DIET RC, ROYAL
CROWN,  ROYAL CROWN DRAFT COLA, DIET RITE, NEHI, NEHI LOCKJAW,  UPPER 10, KICK
and THIRST THRASHER are registered as trademarks in the United States,  Canada
and a number of other countries. Royal Crown believes that such trademarks are
material to its business.

    Arby's is the sole owner of the ARBY'S  trademark  and  considers  it, and
certain other  trademarks  owned or licensed by Arby's,  to be material to its
business.  Pursuant to its standard franchise agreement, Arby's grants each of


                                      11
<PAGE>

its  franchisees the right to use Arby's  trademarks,  service marks and trade
names in the manner specified therein.

    The material  trademarks  of Royal Crown and Arby's are  registered in the
U.S.  Patent and Trademark  Office and various  foreign  jurisdictions.  Royal
Crown's and Arby's  rights to such  trademarks  in the United States will last
indefinitely  as long as they  continue to use and police the  trademarks  and
renew filings with the applicable  governmental  offices.  No challenges  have
arisen to Royal Crown's or Arby's right to use the foregoing trademarks in the
United States.

    COMPETITION

    The Company's two  businesses  operate in highly  competitive  industries.
Many of the major competitors in these industries have  substantially  greater
financial,  marketing,  personnel and other resources than does the Company or
Triarc.

    Royal  Crown's  soft  drink  products  compete  generally  with all liquid
refreshments and in particular with numerous nationally-known soft drinks such
as  Coca-Cola  and  Pepsi-Cola.  Royal  Crown  competes  with  other  beverage
companies not only for consumer  acceptance but also for shelf space in retail
outlets and for marketing focus by Royal Crown's  distributors,  most of which
also distribute other beverage brands. The principal methods of competition in
the beverage  industry include product quality and taste,  brand  advertising,
trade and consumer promotions,  pricing,  packaging and the development of new
products.

    Arby's  faces  direct  and  indirect   competition   from   numerous  well
established  competitors,  including  national and regional  fast food chains,
such as  McDonald's,  Burger  King,  Wendy's and Boston  Market.  In addition,
Arby's competes with locally owned  restaurants,  drive-ins,  diners and other
food service  establishments.  Key competitive factors in the QSR industry are
price, quality of products,  quality and speed of service,  advertising,  name
identification, restaurant location and attractiveness of facilities.

    In  recent  years,  both  the  beverage  and  restaurant  businesses  have
experienced   increased  price  competition  resulting  in  significant  price
discounting throughout these industries. Price competition has been especially
intense with respect to sales of beverage products in food stores,  with local
bottlers granting significant discounts and allowances off wholesale prices in
order to maintain or increase  market  share in the food store  segment.  When
instituting its own discount promotions,  Arby's has experienced  increases in
sales but, with respect to company-owned  restaurant  operations,  lower gross
margins.  While the net impact of price  discounting in the soft drink and QSR
industries  cannot be quantified,  such practices could have an adverse impact
on the Company.

    WORKING CAPITAL

    Royal Crown's and Arby's working  capital  requirements  are generally met
through  cash flow from  operations.  Accounts  receivable  of Royal Crown are
generally due in 30 days and Arby's franchise  royalty fee receivables are due
within 10 days after each month end.

    GOVERNMENTAL REGULATIONS

    Each of the  Company's  two  business  segments is subject to a variety of
federal, state and local laws, rules and regulations.

      Arby's is subject to  regulation  by the Federal  Trade  Commission  and
state laws  governing  the offer and sale of  franchises  and the  substantive
aspects of the  franchisor-franchisee  relationship.  In  addition,  Arby's is
subject to the Fair Labor  Standards Act and various state laws governing such


                                      12
<PAGE>

matters as minimum wages,  overtime and other working conditions.  Pursuant to
an amendment  to the Fair Labor  Standards  Act, the federal  minimum wage was
increased  from $4.25 per hour to $4.75 per hour,  effective  October 1, 1996,
with an additional increase to $5.15 per hour to become effective on September
1,  1997.  Significant  numbers  of  the  food  service  personnel  at  Arby's
restaurants  are paid at rates  related to the federal and state minimum wage,
and  increases in the minimum wage may  therefore  increase the labor costs of
Arby's  and its  franchisees.  Arby's is also  subject to the  Americans  with
Disabilities  Act (the "ADA"),  which requires that all public  accommodations
and commercial  facilities meet certain federal requirements related to access
and use by  disabled  persons.  Compliance  with  the ADA  requirements  could
require  removal  of  access  barriers  and  non-compliance  could  result  in
imposition  of fines by the U.S.  government or an award of damages to private
litigants.  Although  Arby's  management  believes  that  its  facilities  are
substantially  in  compliance  with  these  requirements,   Arby's  may  incur
additional costs to comply with the ADA. However, the Company does not believe
that  such  costs  will  have a  material  adverse  effect  on  the  Company's
consolidated  financial position or results of operations.  From time to time,
Arby's  has  received  inquiries  from  federal,  state and  local  regulatory
agencies or has been named as a party to administrative proceedings brought by
such regulatory agencies. The Company does not believe that any such inquiries
or  proceedings   will  have  a  material  adverse  effect  on  the  Company's
consolidated financial position or results of operations.

    The production  and marketing of Royal Crown  beverages are subject to the
rules and  regulations of various  federal,  state and local health  agencies,
including the United States Food and Drug  Administration (the "FDA"). The FDA
also  regulates  the  labeling of Royal Crown  products.  In  addition,  Royal
Crown's  dealings  with  their  licensees  and/or  distributors  may,  in some
jurisdictions,  be  subject  to  state  laws  governing  licensor-licensee  or
distributor relationships.

    Except as  described  herein,  the  Company  is not  aware of any  pending
legislation that in its view is likely to affect  significantly the operations
of the Company's subsidiaries. The Company believes that the operations of its
subsidiaries comply  substantially with all applicable  governmental rules and
regulations.

    ENVIRONMENTAL MATTERS

    Certain of the  Company's  operations  are subject to  federal,  state and
local  environmental laws and regulations  concerning the discharge,  storage,
handling  and  disposal  of  hazardous  or  toxic  substances.  Such  laws and
regulations  provide for  significant  fines,  penalties and  liabilities,  in
certain cases without  regard to whether the owner or operator of the property
knew of, or was responsible  for, the release or presence of such hazardous or
toxic substances. In addition, third parties may make claims against owners or
operators of properties for personal  injuries and property damage  associated
with releases of hazardous or toxic  substances.  The Company  cannot  predict
what environmental legislation or regulations will be enacted in the future or
how  existing  or  future  laws  or  regulations   will  be   administered  or
interpreted.  The Company  cannot  predict  the amount of future  expenditures
which  may be  required  in order to  comply  with any  environmental  laws or
regulations  or to satisfy  any such  claims.  The Company  believes  that its
operations comply  substantially  with all applicable  environmental  laws and
regulations.

   In  1993  Royal  Crown  became  aware  of   possible   contamination   from
hydrocarbons in groundwater at two abandoned bottling facilities.  In 1994, as
a result of tests  necessitated  by the  removal of four  underground  storage
tanks at Royal  Crown's no longer used  distribution  site in Miami,  Florida,
hydrocarbons  were  discovered  in the  groundwater.  Assessment is proceeding
under the direction of the Dade County  Department of Environmental  Resources
Management ("DERM") to determine the extent of the contamination.  Remediation
has commenced at this site,  and management  estimates that total  remediation
costs (in  excess of  amounts  incurred  through  December  31,  1996) will be
approximately  $135,000,  depending on the actual extent of the contamination.
Additionally,  in 1994 the Texas  Natural  Resources  Conservation  Commission
approved the  remediation of hydrocarbons in the groundwater by Royal Crown at
its former distribution site in San Antonio, Texas.  Remediation has commenced


                                      13
<PAGE>

at this  site.  Management  estimates  the  total  cost of  remediation  to be
approximately  $110,000 (in excess of amounts  incurred  through  December 31,
1996),  of which  60-70% is  expected to be  reimbursed  by the State of Texas
Petroleum Storage Tank Remediation Fund. Royal Crown has incurred actual costs
of $439,000,  in the aggregate,  through  December 31, 1996 for these matters.
The Company  does not believe  that the outcome of these  matters  will have a
material adverse effect on the Company's consolidated results of operations or
financial  position.  See "Item 7.  Management's  Discussion  and  Analysis of
Financial  Condition  and  Results of  Operations  --  Liquidity  and  Capital
Resources."

    SEASONALITY

    The beverage and restaurant  businesses are seasonal.  In such businesses,
the highest sales occur during spring and summer  (April  through  September).
However,  the  Company's  consolidated  financial  results are not  materially
affected by these seasonal factors.

    EMPLOYEES

    As of December 31, 1996,  Arby's employed  approximately  7,035 personnel,
including  approximately 925 salaried personnel and approximately 6,110 hourly
personnel.  As of such date, Royal Crown employed approximately 200 personnel,
including  approximately  170 salaried  personnel and  approximately 30 hourly
personnel.  The Company's  management  believes  that  employee  relations are
satisfactory.  At December  31, 1996,  none of the  Company's  employees  were
represented by labor unions.

Item 2. Properties.

   The Company  maintains  a large  number of diverse  properties.  Management
believes  that  these  properties,  taken  as  a  whole,  are  generally  well
maintained and are adequate for current and foreseeable  business  needs.  The
majority  of  the   properties   are  leased.   Except  as  set  forth  below,
substantially all of the Company's  materially  important physical  properties
are being fully utilized.

   Certain  information  about the major plants and  facilities  maintained by
each of the  Company's  two  business  segments as of December 31, 1996 is set
forth in the following table:

         Segment             Facilities-Location    Land Title  Floor Space
         -------             -------------------    ----------  -----------
         Beverages.........  Concentrate Mfg.:
                              Columbus, GA
                              (including office)      1  owned    216,000
                              Cincinnati, OH          1  leased    23,000
                             Corporate Headquarters   1  leased    19,180*

         Restaurant........  355 Restaurants:        75  owned         **
                              (all but 16           280  leased
                               locations
                               throughout the
                               United States)
                             Corporate Headquarters   1  leased    58,429*

         Inactive Facilities

         Restaurant........  Restaurants              1  owned         **
                                                     10  leased

----------------
*  Royal Crown and Arby's also share 18,759 square feet of common space in the
   Company's  corporate  headquarters  located  in  Fort  Lauderdale,  FL.  In
   connection with the formation of the Triarc  Beverage Group,  approximately
   one half of a 32,320 square foot lease obligation for Mistic's headquarters
   in White Plains, NY has been assumed by Royal Crown.

                                      14
<PAGE>

** While Arby's  restaurants range in size from  approximately 700 square feet
   to 4,000 square feet, the typical  company-owned  Arby's  restaurant in the
   United States is  approximately  2,570 square feet. It is expected that all
   of the  company-owned  Arby's  restaurants  will  be  sold.  See  "Item  1.
   Business -- Strategic Alternatives" and "Business Segments -- Restaurants".

   Arby's also owns seven and leases fifteen  restaurants  which are leased or
sublet principally to franchisees. Substantially all properties are pledged as
collateral for certain debt.

Item 3.  Legal Proceedings.

   On February 19, 1996,  Arby's  Restaurants S.A. de C.V. ("AR"),  the master
franchisee  of Arby's in  Mexico,  commenced  an action in the civil  court of
Mexico  against  Arby's for breach of contract.  AR alleged that a non-binding
letter of intent dated  November 9, 1994 between AR and Arby's  constituted  a
binding  contract  pursuant to which Arby's had obligated itself to repurchase
the master  franchise  rights from AR for $2.5  million.  AR also alleged that
Arby's had  breached a master  development  agreement  between AR and  Arby's.
Arby's  promptly  commenced an  arbitration  proceeding on the ground that the
franchise and development  agreements each provided that all disputes  arising
thereunder were to be resolved by arbitration. Arby's is seeking a declaration
in the  arbitration  to the effect that the  November 9, 1994 letter of intent
was not a binding  contract  and  therefore AR has no valid breach of contract
claim,  as well as a  declaration  that AR's  commencement  of  suspension  of
payments proceedings in February 1995 had automatically  terminated the master
development  agreement.  In the civil  court  proceeding,  the court  denied a
motion by  Arby's to  suspend  the  proceedings  pending  the  results  of the
arbitration,  and Arby's has appealed that ruling.  In the  arbitration,  some
evidence  has been  taken but  proceedings  have been  suspended  by the court
handling the  suspension of payments  proceedings.  Arby's is contesting  AR's
claims  vigorously  and  believes  that it has  meritorious  defenses  to AR's
claims.

   Other matters arise in the ordinary course of the Company's  business,  and
it is the opinion of management that the course of any such matter,  or all of
them  combined,  will not have a  material  adverse  effect  on the  Company's
consolidated financial condition or results of operations.

Item 4.  Submission of Matters to Vote of Security Holders.

   Not applicable.



                                      15
<PAGE>


                                   PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.
            

   All of the Company's common stock is owned by CFC Holdings,  94.6% of which
in turn is  owned by  Triarc,  and the  remaining  5.4% of which is owned by a
wholly-owned subsidiary of Triarc.

Item 6.   Selected Financial Data.
                                        Year Ended December 31,
                             ----------------------------------------------
                              1992      1993     1994     1995       1996
                              ----      ----     ----     ----       ----
                                             (In thousands)
Net sales...................$298,886 $314,686  $322,888 $389,591   $409,100
Royalties, franchise fees
   and other revenues.......  42,767   46,296    51,017   55,792     57,252
                             ------- --------  --------  -------   --------
Total revenues.............. 341,653  360,982   373,905  445,383    466,352
                             ------- --------  -------- --------   --------
Operating profit (loss).....  48,005    9,713 (a)30,074   (4,756)(b)(31,583)(c)
Income (loss) before extra-
   ordinary charges and
   cumulative effect of 
   changes in accounting
   principles...............   1,779  (22,890)(a)(5,477) (33,650)(b)(50,558)(c)
Extraordinary charges.......       -   (7,059)        -        -          -
Cumulative effect of changes
   in accounting principles.       -   (1,891)        -        -          -
Net income (loss)...........   1,779  (31,840)(a)(5,477) (33,650)(b)(50,558)(c)
Total assets................ 293,950  355,059   340,842  394,220    360,444
Long-term debt and note
   payable to affiliate..... 106,612  288,394   291,349  357,938    287,810
Stockholder's equity
  (deficit) (d).............  63,792  (33,148)  (38,625) (63,410)  (113,968)
------------------
(a)Reflects  certain  significant  charges  recorded  during  1993 as follows:
   $21,305,000  charged  to  operating  profit  representing   $18,000,000  of
   facilities relocation and corporate  restructuring  relating to a change in
   control of the Company and  $3,305,000  of other net  charges;  $18,507,000
   charged to loss  before  extraordinary  charges  and  cumulative  effect of
   changes  in   accounting   principles   representing   the   aforementioned
   $21,305,000 charged to operating profit,  $5,700,000 of other charges, less
   $8,498,000  of income tax benefit  relating to the  aggregate  of the above
   charges;   and   $27,457,000   charged   to  net  loss   representing   the
   aforementioned $18,507,000 charged to loss before extraordinary charges and
   cumulative  effect of  changes  in  accounting  principles,  $7,059,000  of
   extraordinary  charges from the early extinguishment of debt and $1,891,000
   cumulative effect of changes in accounting principles.

(b)Reflects  certain  significant  charges  recorded  during  1995 as follows:
   $17,054,000 charged to operating loss representing a $14,647,000 charge for
   a reduction in the carrying  value of long-lived  assets  impaired or to be
   disposed of and $2,407,000 of other  charges;  and  $13,243,000  charged to
   loss  before  extraordinary  charges  and  cumulative  effect of changes in
   accounting   principles  and  net  loss  representing  the   aforementioned
   $17,054,000  charged  to  operating  loss,  less  $4,911,000  of income tax
   benefit  relating  to  the  aggregate  of  the  above  charges  and  plus a
   $1,100,000 provision for income tax contingencies.

(c)Reflects  certain  significant  charges  recorded  during  1996 as follows:
   $65,250,000 charged to operating loss representing a $58,900,000 charge for
   a reduction in the carrying  value of long-lived  assets  impaired or to be
   disposed  of  and   $6,350,000  of  facilities   relocation  and  corporate
   restructuring; and $41,107,000 charged to loss before extraordinary charges
   and  cumulative  effect of changes in  accounting  principles  and net loss
   representing the aforementioned $65,250,000 charged to operating loss, less
   $24,143,000 of income tax benefit on the above charges.

(d)The Company has not paid any cash dividends on its common shares during any
   of the years presented.  In 1993, the Company  transferred as a dividend to
   CFC  Holdings  a  $75.0  million   promissory   note  which   evidenced  an
   intercompany loan from the Company to Triarc.

                                      16
<PAGE>



Item 7. Management's Discussion  and  Analysis  of  Financial  Condition  and
          Results of Operations.

Introduction

   This  "Management's  Discussion  and  Analysis of Financial  Condition  and
Results of  Operations"  should be read in conjunction  with the  consolidated
financial  statements  included  herein of RC/Arby's  Corporation  ("RCAC" or,
collectively with its subsidiaries,  the "Company").  Certain statements under
this caption "Management's  Discussion and Analysis of Financial Condition and
Results  of  Operations"  constitute  "forward-looking  statements"  under the
Reform Act. See "Special Note Regarding  Forward-Looking  Statements" in "Part
I" preceding "Item 1".

Results of Operations

   Trends  affecting the restaurant  segment  (Arby's) in recent years include
consistent  growth  of  the  restaurant  industry  as a  percentage  of  total
food-related spending, with the quick service restaurant ("QSR"), or fast food
segment in which the Company  operates (see below),  being the fastest growing
segment of the  restaurant  industry.  In addition,  there has been  increased
price  competition  in the QSR industry,  particularly  evidenced by the value
menu concept  which offers  comparatively  lower prices on certain menu items,
the combination  meals concept which offers a combination meal at an aggregate
price lower than the individual food and beverage  items,  couponing and other
price discounting.  Some QSR's have been adding selected higher-priced premium
quality  items to their  menus,  which appeal more to adult tastes and recover
some of the margins  lost in the  discounting  of other menu  items.  Assuming
consummation  of the RTM sale  (see  discussion  below  under  "Liquidity  and
Capital Resources"),  the Company's restaurant  operations will be exclusively
franchising.

   Trends  affecting the beverage  segment  (Royal Crown) in recent years have
included the  increased  market share of private  label  beverages,  increased
price  competition  throughout  the industry,  the  development of proprietary
packaging and the  proliferation  of new products being  introduced  including
"premium" beverages.

Year Ended December 31, 1996 Compared with Year Ended December 31, 1995

   Revenues  increased  $21.0  million  (4.7%)  to  $466.4  million  in  1996.
Restaurant  revenues  increased  $15.6 million (5.7%) to $288.3 million due to
(i) a $14.1  million  increase  in net sales  principally  resulting  from the
inclusion  in  1996  of a full  year of net  sales  for  the 85  company-owned
restaurants  added in 1995 (net of closings) and a 0.5% increase in same-store
sales and (ii) a $1.5 million increase in royalties,  franchise fees and other
revenues  resulting  primarily  from a net  increase  of 90 (3.5%)  franchised
restaurants, a 0.8% increase in same-store sales of franchised restaurants and
a 2.0% increase in average royalty rates due to the declining  significance of
older  franchise  agreements  with  lower  rates,  the  effects  of which were
partially  offset by a $1.8 million  decline in franchise  fees resulting from
fewer  franchise  store  openings in 1996.  Beverage  revenues  increased $5.4
million  (3.1%)  to  $178.1  million  due to (i) a $6.9  million  increase  in
finished product sales (as opposed to concentrate)  reflecting increased sales
in the New York  metropolitan  area,  the  distribution  rights to which  were
acquired  during  January  1995,  as well as the full year  effect of the 1995
addition  of an herbal tea line and (ii) a $1.7  million  volume  increase  in
private  label  concentrate  sales,  all  partially  offset by a $3.2  million
decrease in branded  concentrate  sales  principally  reflecting lower average
selling prices.

   Gross profit (total revenues less cost of sales)  increased $8.0 million to
$213.5  million in 1996 while gross  margins  (gross  profit  divided by total
revenues)  were  relatively  unchanged at 45.8% in 1996 compared with 46.1% in
1995.  Restaurant  gross profit  increased  $7.2 million to $97.1  million due
primarily  to the effect of the  increase in revenues  described  above and an
increase in  restaurant  gross  margins to 33.7% from 33.0%.  The  increase in
restaurant  gross  margins  was  primarily  due to lower beef costs and health


                                      17
<PAGE>

insurance  costs and an  improvement  in labor  efficiencies  due to fewer new
store openings and related  start-up costs in 1996 versus 1995, the effects of
which were partially  offset by a slightly  lower  percentage of royalties and
franchise fees (with no associated cost of sales) to total revenues.  Beverage
gross  profit  increased  $0.8  million  to $116.4  million as a result of the
effect of the increase in net sales volume noted above,  substantially  offset
by a decline in gross margins to 65.4% from 66.9% due to the  increased  sales
of lower-margin  finished product noted above and lower average selling prices
for branded concentrate.

   Advertising,  selling and  distribution  expenses  declined $6.0 million to
$102.5  million in 1996.  Advertising  and selling  expenses  in the  beverage
segment  declined  $9.4 million  primarily due to (i) a net reduction in media
spending for branded  concentrate  products and Royal Crown Premium Draft Cola
("Draft  Cola"),  for which there had been higher costs in connection with its
launch in mid-1995 and (ii) lower  beverage  coupon costs  reflecting  reduced
bottler utilization,  partially offset by a $2.0 million provision in 1996 for
uncollectible  trade receivables from MetBev, Inc.  ("MetBev"),  an affiliated
distributor,  which sold the  distribution  rights for Royal Crown products in
New York City and certain surrounding  counties in December 1996 and commenced
the liquidation of its remaining assets and liabilities.  Partially offsetting
the decrease in the beverage segment,  advertising and selling expenses in the
restaurant segment increased $3.4 million primarily in response to competitive
pressures,  a  larger  company-owned  store  base and  multi-brand  restaurant
development.

   General and administrative expenses decreased $9.7 million to $77.3 million
in 1996,  principally  reflecting the effect of cost reduction efforts in both
the restaurant  and beverage  segments and non- recurring 1995 charges of $2.1
million for the closing of certain unprofitable restaurants and a $1.2 million
provision for the guarantee  (the "MetBev  Guarantee") of MetBev's third party
accounts  payable  since  MetBev  had  experienced  in 1995 and  continued  to
experience in 1996  significant  losses from  operations  There was no similar
provision for the guarantee in 1996 since MetBev made similar purchases from a
subsidiary of the Company in 1996.

   The  1995 and 1996  reductions  in  carrying  value  of  long-lived  assets
impaired or to be disposed of result from the  application  of the  evaluation
measurement requirements under Statement of Financial Accounting Standards No.
121,  "Accounting  for the Impairment of Long-Lived  Assets and for Long-Lived
Assets to be Disposed  Of" which was adopted in 1995.  The 1996  provision  of
$58.9 million was recorded to reduce the carrying value of certain  long-lived
assets and certain  identifiable  intangibles to estimated fair value relating
to the estimated  loss on the  anticipated  disposal of  long-lived  assets in
connection with the planned sale of all company-owned restaurants (see further
discussion  below under "Liquidity and Capital  Resources").  The reduction in
carrying  value of  long-lived  assets  impaired  or to be  disposed of in the
amount of $14.6 million in 1995 reflects a $12.0 million  reduction in the net
carrying value of certain  restaurants and other long-lived  restaurant assets
which were  determined to be impaired and a $2.6 million  reduction in the net
carrying value of certain other restaurants and equipment to be disposed of.

   The 1996 facilities  relocation and corporate  restructuring charge of $6.3
million results from (i) $3.7 million of estimated losses on planned subleases
(principally  for  the  write-off  of  nonrecoverable   unamortized  leasehold
improvements  and furniture and fixtures) of surplus office space in excess of
anticipated sublease proceeds as a result of the planned sale of company-owned
restaurants  discussed below under  "Liquidity and Capital  Resources" and the
relocation of the headquarters of Royal Crown which are being centralized with
the offices of Mistic Brands,  Inc.,  Triarc's other beverage  subsidiary,  in
White  Plains,  New York,  (ii)  $2.2  million  of  employee  severance  costs
associated  with the relocation of Royal Crown's  headquarters  and (iii) $0.4
million for the shutdown of the beverage segment's Ohio production facility.

   Interest   expense   increased  $3.3  million  to  $42.9  million  in  1996
principally  due to the full year  effect  in 1996 of  financing  for  capital
spending at the restaurant  segment through  mortgage and equipment notes with


                                      18
<PAGE>

FFCA  Mortgage  Corporation  ("FFCA")  principally  during the second  through
fourth quarters of 1995 ($58.4 million outstanding at December 31, 1996).

   Other income  (expense),  net was income of $0.6  million in 1996  compared
with expense of $1.8 million in 1995.  The favorable  change between years was
principally  attributable  to $1.4 million of lower losses on asset  disposals
and the nonrecurring 1995 write-down of a $1.0 million investment in MetBev.

   The  Company's  benefit  from  income  taxes in 1996  and 1995  represented
effective rates of 32% and 27%,  respectively.  Such benefit rate is higher in
1996 due to the reduced effect in 1996 of the  amortization of  non-deductible
costs in  excess of net  assets of  acquired  companies  ("Goodwill")  of $2.0
million in each year as a result of the  significantly  greater  1996  pre-tax
loss and a nonrecurring 1995 provision for income tax  contingencies  relating
to the  examination  of the  Company's  income tax  returns for the years 1989
through 1992 of $1.1 million.

Year Ended December 31, 1995 Compared with Year Ended December 31, 1994

   Revenues  increased  $71.5  million  (19.1%)  to  $445.4  million  in 1995.
Restaurant  revenues  increased $49.6 million (22.2%) due to (i) $50.1 million
of net sales resulting from 85 additional company-owned restaurants (including
acquired  restaurants) to a total of 373 at the end of 1995,  partially offset
by a $5.3 million decrease in company-owned  same-store sales due primarily to
increased  competitive  discounting  and a decline in the  number of  customer
orders,  (ii)  a $3.5  million  increase  in  royalties  resulting  from a net
increase of 77  franchised  restaurants,  a 3.3%  increase in average  royalty
rates due to the declining  significance  of older  franchise  agreements with
lower rates,  and a 0.9% increase in franchised  same-store  sales and (iii) a
$1.3 million increase in franchise fees and other revenues.  Beverage revenues
increased $21.9 million (14.5%)  reflecting $20.8 million of finished beverage
product sales arising from the Company's  January 1995  acquisition  of TriBev
Corporation ("TriBev"). The remaining increase reflected sales from the launch
of Draft Cola in the New York and Los Angeles  metropolitan  areas  during the
second quarter of 1995.

   Gross profit  increased  $7.0 million to $205.5 million in 1995 and margins
decreased  to 46.1%  compared  with  53.1% in 1994.  Restaurant  gross  profit
increased $6.8 million due primarily to the net increase in revenues described
above,  the effects of which were partially  offset by a decline in restaurant
margins to 33.0% from 37.3% due  primarily  to (i) $3.0  million of  recurring
costs  associated  with  replacing the  point-of-sale  register  system in all
domestic company-owned restaurants and (ii) start-up costs associated with the
significantly higher number of new restaurant openings (49 in 1995 versus 9 in
1994).  Also  affecting  margins was the lower  percentage  of  royalties  and
franchise fees to total revenues. Beverage gross profit increased $0.2 million
while beverage  margins  decreased to 66.9% from 76.5% due to the inclusion in
1995 of the  lower-margin  finished  product sales  associated with TriBev and
Draft Cola noted above.

   Advertising,  selling and distribution  expenses increased $13.2 million to
$108.6 million in 1995.  The increase  consisted of (i) $8.0 million of higher
expenses in the beverage segment,  reflecting increased spending in connection
with the  introduction of Draft Cola and costs resulting from TriBev following
its  acquisition  and (ii) $5.2 million of higher  expenses in the  restaurant
segment  primarily  attributable  to the  increased  number  of  company-owned
restaurants  and  increased  promotional  food costs  related  to  competitive
discounting.

   General and  administrative  expenses  increased  $14.0  million  to  $87.0
million in 1995 due to (i) a $7.0 million  increase in employee  compensation,
relocation  and  severance  costs  principally  associated  with  building  an
infrastructure to facilitate the then growth plans primarily in the restaurant
segment, (ii) a $2.1 million provision for the closing of certain unprofitable


                                      19
<PAGE>

restaurants,  (iii) $1.2 million  attributable to TriBev,  (iv) a $1.2 million
provision  for  the  MetBev  Guarantee  and  (v)  other  general  inflationary
increases.

   The  reduction in carrying  value of  long-lived  assets  impaired or to be
disposed of $14.6 million in 1995 is discussed above.

   Interest  expense  increased  $5.1  million  to $39.6  million  in 1995 due
principally to $58.7 million of additional  mortgage and equipment  loans from
FFCA and a $6.0  million  net  increase  in  borrowings  from  Triarc  and its
subsidiaries,  which were used to finance  capital  expenditures  and business
acquisitions in the restaurant segment.

   Other  income  (expense),  net  amounted to expense of $1.8 million in 1995
compared with income of $0.6 million in 1994. The  unfavorable  change between
years was  principally  attributable  to $1.6  million of 1995 losses on asset
disposals and the write-down of the $1.0 million investment in MetBev in 1995.

   The Company's  benefit from income taxes in 1995  represented  an effective
rate of 27%,  while  the  provision  for  income  taxes in 1994  reflected  an
effective  rate of (45%).  The 1995  effective  rate differed from the federal
income tax statutory rate of 35% principally due to the effect of amortization
of non- deductible  Goodwill and the aforementioned $1.1 million provision for
income tax contingencies.  The 1994 effective rate differed from the statutory
rate principally due to the effect of amortization of Goodwill and the effects
of foreign and state income taxes, net of Federal benefit.

Liquidity and Capital Resources

   Consolidated cash decreased $2.3 million during 1996 to $7.4 million.  Such
decrease  reflects  cash  used  in  investing  activities  (primarily  capital
expenditures and an acquisition  described  below) of $16.7 million  partially
offset by (i) cash provided by operating  activities of $13.5 million and (ii)
cash provided by financing activities (primarily borrowings from third parties
and Triarc,  net of  repayments)  of $0.9  million.  The net cash  provided by
operating  activities  principally  reflects  non-cash  charges  for  (i)  the
reduction  in  carrying  value of  long-lived  assets of $58.9  million,  (ii)
depreciation and amortization of $25.1 million, (iii) provision for facilities
relocation and corporate  restructuring,  net of payments, of $6.1 million and
(iv) provision for doubtful accounts and other items, net of $3.0 million, all
partially  offset  by (i) a net  loss of  $50.6  million,  (ii)  benefit  from
deferred  income taxes of $26.0 million and (iii) changes in operating  assets
and  liabilities  of $3.0  million.  The cash used for  operating  assets  and
liabilities  of $3.0  million  reflects  an increase  in  receivables  of $7.6
million principally due to a $4.2 million increase in receivables from MetBev,
higher  beverage  sales in the fourth  quarter of 1996  versus 1995 and slower
collections,  partially  offset by decreases in inventories  and other current
assets of $2.2  million and a net  increase in accrued  expenses  and accounts
payable of $2.4 million.  The Company  expects  continued  positive cash flows
from operations during 1997.

   The $275.0  million  aggregate  principal  amount of 9 3/4% senior  secured
notes  due 2000  (the  "Senior  Notes")  mature  on  August 1, 2000 and do not
require any  amortization of the principal  amount thereof prior to such date.
Interest at the rate of 9 3/4% per annum is payable  semi-annually on February
1 and August 1 of each  year.  Obligations  under the  Senior  Notes have been
guaranteed  by Royal  Crown and Arby's and all of the stock and  substantially
all of the  personal  property  of Royal  Crown  and  Arby's  are  pledged  as
collateral  for such  guarantees.  The indenture  pursuant to which the Senior
Notes were issued (the "Senior Note  Indenture")  contains  various  covenants
including, among others,  restrictions on dividends and other similar payments
and   limitations   on  (i)  the  incurrence  of   indebtedness,   (ii)  asset
dispositions,  (iii) investments and (iv) affiliate transactions other than in
the normal course of business.  Under the terms of the Senior Note  Indenture,
as of December 31, 1996 RCAC could not pay any dividends, or make any loans or
advances, to CFC Holdings.

                                      20
<PAGE>


   Two  subsidiaries of RCAC maintain loan and financing  agreements with FFCA
which,  as  amended,  permit  borrowings  in the form of  mortgage  notes (the
"Mortgage  Notes") and equipment  notes (the  "Equipment  Notes")  aggregating
$87.3 million (the "FFCA Loan  Agreements").  The Mortgage Notes and Equipment
Notes are repayable in equal monthly  installments,  including interest,  over
twenty and seven years,  respectively.  As of December  31,  1996,  borrowings
under the FFCA Loan Agreements  aggregated $62.7 million (including cumulative
repayments of $4.3 million  through  December 31, 1996) resulting in remaining
availability  of $24.6  million  through  December  31,  1997 to  finance  new
company-owned  restaurants whose sites are identified to FFCA by September 30,
1997 on terms similar to those of outstanding borrowings. The assets of one of
the  borrowers,  Arby's  Restaurant  Development  Corporation,   will  not  be
available to pay creditors of Triarc, RCAC or Arby's until all loans under the
FFCA Loan Agreements have been repaid in full. As discussed below, in February
1997 the Company entered into an agreement to sell all of its restaurants and,
if such sale is consummated on terms as they currently  exist, the buyer would
assume $54.7 million of  borrowings  under the FFCA Loan  Agreements,  and the
Company would have no further availability under these financing agreements.

   During 1996, the Company  increased its net borrowings  from Triarc and its
subsidiaries by $3.7 million under promissory notes. The outstanding principal
amounts of such promissory  notes,  aggregating $20.5 million of notes payable
offset by a $1.6 million  note  receivable  at December  31, 1996,  consist of
$12.0 million  payable on demand,  $1.8 million  payable in 1997, $6.7 million
payable in 1998 and $1.6 million receivable on demand.  Subsequent to December
31, 1996,  the Company  borrowed an additional  $11.8  million,  net under the
demand promissory note (the "Demand Note") payable to Triarc.

   In February  1997,  the  principal  subsidiaries  comprising  the Company's
restaurant  segment entered into an agreement (the "RTM  Agreement") with RTM,
Inc. ("RTM"),  the largest franchisee in the Arby's system,  pursuant to which
certain of such subsidiaries  would sell to an affiliate of RTM all of the 355
company-owned  Arby's  restaurants.  The purchase price consists of cash and a
promissory note  aggregating  $2.0 million and the assumption of approximately
$54.7  million  in  Mortgage  and  Equipment  Notes  and   substantially   all
capitalized lease obligations of approximately $15.0 million. The consummation
of the sale is subject to customary closing  conditions,  including receipt of
necessary consents and regulatory  approvals,  and is expected to occur during
the  second  quarter  of 1997.  After  the  consummation  of the  sale,  RTM's
affiliate  will  operate  the 355  restaurants  as a  franchisee  and will pay
royalties to the Company at a rate of 4% of those  restaurants'  net sales. As
part of the  transaction,  RTM has  agreed to build an  additional  190 Arby's
restaurants over the next 14 years pursuant to a development  agreement.  This
is in addition to a previous commitment RTM entered into last year to build an
additional 210 Arby's restaurants.

   Consolidated  capital  expenditures  amounted  to  $16.2  million in  1996,
which reflects significantly reduced spending levels from 1995, principally in
the  restaurant  segment  where  fewer  new  company-owned   restaurants  were
constructed. The Company expects that capital expenditures during 1997 will be
approximately $6.0 million,  which is significantly less than 1996 as a result
of the cessation of  restaurant-  related  spending due to the planned sale to
RTM.  As of  December  31,  1996,  there were  approximately  $0.5  million of
outstanding commitments for such capital expenditures. The Company anticipates
that it will meet its capital expenditure  requirements  through existing cash
and cash flows from operations.

   In  furtherance of the Company's  growth  strategy,  the Company  considers
selective  acquisitions,  as appropriate,  to grow  strategically  and explore
other  alternatives  to the  extent it has  available  resources  to do so. In
August 1996, the Company acquired the trademarks,  service marks,  recipes and
proprietary  formulas of T.J.  Cinnamons,  Inc., an operator and franchisor of
retail bakeries  specializing in gourmet  cinnamon rolls and related  products
for cash of $2.0 million and the issuance of $1.8 million of debt.

   The Company is a party to a tax-sharing  agreement  with Triarc whereby the
Company is  required  to pay  amounts  relating  to taxes based on the taxable
income of the Company and its  eligible  subsidiaries  on a stand alone basis.


                                      21
<PAGE>


The Company had  overpaid  its 1993 tax  obligation  due to losses  during the
fourth quarter of 1993, and has experienced  additional losses in 1994 through
1996. As a result,  no subsequent  payment has been required  through December
31, 1996. The Company does not expect to be required to make any such payments
during 1997.

   The Federal  income tax returns of Triarc and its  subsidiaries,  including
the Company,  have been examined by the Internal  Revenue  Service ("IRS") for
the tax years 1989  through  1992 and the IRS has issued  notices of  proposed
adjustments relating to the Company increasing taxable income by approximately
$13.0 million, the tax effect of which has not yet been determined.  Triarc is
contesting  the majority of the proposed  adjustments  and,  accordingly,  the
amount of any  payments  required  as a result  thereof  cannot  presently  be
determined.  However, management of the Company expects to be required to make
payments in the latter part of 1997 relating to the portion of the adjustments
that are agreed to.

   The Company  maintains a defined  benefit pension plan under which benefits
are  frozen.  While the Company has no current  plans to  terminate  the plan,
should  interest  rates  increase  to a  level  at  which  there  would  be an
insignificant  cash cost to the Company to terminate the plan, the Company may
decide to do so. As of December 31, 1996,  based on the 4.75% interest rate as
currently recommended by the Pension Benefit Guaranty Corporation (the "PBGC")
for  purposes  of such  calculation,  the Company  would have  incurred a cash
outlay of $2.1 million.  Such liability upon plan termination is significantly
dependent  upon the interest rate assumed for such  calculation  purposes and,
within a reasonable range, such contingent liability increases  (decreases) by
approximately  $0.3 million for each 1/2%  decrease  (increase) in the assumed
interest rate.  Based upon current  interest  rates,  the Company  believes it
would be able to  liquidate  the  pension  obligation  for less  than the $2.1
million determined using the PBGC rate should it choose to terminate the plan.

   In  October  1996 Triarc  announced that its Board of Directors  approved a
plan to  offer up to  approximately  20% of the  shares  of its  beverage  and
restaurant  businesses  (including those of the Company) to the public through
an initial public offering and to spin off the remainder of the shares of such
businesses to Triarc stockholders (collectively,  the "Spinoff Transactions").
Consummation  of the  Spinoff  Transactions  will be subject  to,  among other
things,  receipt  of  a  favorable  ruling  from  the  IRS  that  the  Spinoff
Transactions  will  be  tax-free  to  Triarc  and  its  subsidiaries  and  its
stockholders. The request for the ruling from the IRS contains several complex
issues and there can be no  assurance  that Triarc will  receive the ruling or
that Triarc will consummate the Spinoff Transactions. The Spinoff Transactions
are not  expected  to occur  prior to the end of the  second  quarter of 1997.
Triarc is currently evaluating the impact, if any, of its proposed acquisition
of  Snapple  Beverage  Corp.  (which it  announced  on March 27,  1997) on the
anticipated structure of the Spinoff Transactions. See "Item 1. -- Business --
Strategic Alternatives".

   Assuming consummation of the sale of company-owned  restaurants to RTM, the
Company's  remaining  restaurant  operations will be exclusively  franchising.
Royalties  and  franchise  fees  amounted  to $56.5  million  in 1996 and will
increase in 1997 from royalties  relating to the restaurants  sold to RTM. The
Company believes that, without the restaurant  operations,  it will be able to
reduce the  operating  costs of the  restaurant  segment  and,  together  with
substantially  reduced  capital  expenditure  requirements,  improve  its cash
flows.

   As of December 31, 1996,  the Company had cash of $7.4 million available to
meet  its  cash  requirements.  The  Company's  cash  requirements  for  1997,
exclusive of operating cash flows, consist principally of capital expenditures
of  approximately  $6.0 million,  funding for  acquisitions,  if any, and debt
(including  capitalized  leases and affiliated  note) principal  repayments of
$7.1 million,  subject to the assumption of debt  obligations  included in the
$7.1 million by RTM with respect to the RTM Agreement as discussed  above, but
excluding  any  repayments of the $12.0  million  principal  balance under the
Demand  Note,  as  discussed  below.  The  Company  anticipates  meeting  such


                                      22
<PAGE>


requirements  through  existing cash and/or cash flows from operations and, to
the extent  cash is required  other than for  repayments  to Triarc  under the
Demand  Note,  borrowings  from  Triarc to the extent  available.  The Company
believes that it will not be required to make any repayments  under the Demand
Note if the RTM sale is consummated and, if such sale is not  consummated,  it
will  be  required  to make  repayments  in 1997  only  to the  extent  of its
remaining  cash  balances  in excess of its ongoing  requirements  for working
capital. The ability of the Company to meet its long-term cash requirements is
dependent  upon its ability to obtain and sustain  sufficient  cash flows from
operations  which should be improved  assuming  consummation of the restaurant
sales to RTM as discussed above.

Contingencies

   In  1993  Royal  Crown   became  aware  of  possible   contamination   from
hydrocarbons in groundwater at two abandoned bottling  facilities.  Tests have
confirmed hydrocarbons in the groundwater at both of the sites and remediation
has  commenced.  Management  estimates  remediation  costs will aggregate $0.7
million,  of which $0.4 million has been expended to date, with  approximately
$0.2 million to $0.3 million  expected to be  reimbursed by the State of Texas
Petroleum  Storage Tank  Remediation Fund (the "Texas Fund") at one of the two
sites.

   On February 19, 1996, Arby's  Restaurantes S.A. de C.V. ("AR"),  the master
franchisee  of Arby's in  Mexico,  commenced  an action in the civil  court of
Mexico  against  Arby's for breach of contract.  AR alleged that a non-binding
letter of intent dated  November 9, 1994 between AR and Arby's  constituted  a
binding  contract  pursuant to which Arby's had obligated itself to repurchase
the master  franchise  rights from AR for $2.5  million.  AR also alleged that
Arby's had  breached a master  development  agreement  between AR and  Arby's.
Arby's promptly  commenced an arbitration  proceeding  since the franchise and
development agreements each provided that all disputes arising thereunder were
to be  resolved  by  arbitration.  Arby's  is  seeking  a  declaration  in the
arbitration to the effect that the November 9, 1994 letter of intent was not a
binding contract and, therefore,  AR has no valid breach of contract claim, as
well  as  a  declaration  that  the  master  development  agreement  has  been
automatically  terminated  as a result of AR's  commencement  of suspension of
payments  proceedings  in February  1995. In the civil court  proceeding,  the
court denied Arby's motion to suspend such proceedings  pending the results of
the arbitration, and Arby's has appealed that ruling. In the arbitration, some
evidence  has been  taken but  proceedings  have been  suspended  by the court
handling  the  suspension  of  payments  proceedings.   Arby's  is  vigorously
contesting  AR's  claims and  believes  it has  meritorious  defenses  to such
claims.

   Based  on  currently   available   information   and  given  (i)  potential
reimbursements  by the  Texas  Fund  discussed  above  and (ii) the  Company's
aggregate  reserves for such legal and environmental  matters of approximately
$0.8 million as of December  1996, the Company does not believe that the legal
and  environmental  matters  referred to above,  as well as  ordinary  routine
litigation  incidental to its businesses,  will have a material adverse effect
on its consolidated results of operations or financial position.

Inflation and Changing Prices

   Management  believes that  inflation  did not have a significant  effect on
gross margins during 1994,  1995 and 1996,  since  inflation  rates  generally
remained  at  relatively  low  levels.  Historically,  the  Company  has  been
successful in dealing with the impact of inflation to varying  degrees  within
the  limitations  of  the  competitive  environment  of  each  segment  of its
business.

Recently Issued Accounting Pronouncements

   In October  1996,  the  Accounting  Standards  Executive  Committee  of the
American  Institute  of  Certified  Public  Accountants  issued  Statement  of
Position 96-1, "Environmental  Remediation Liabilities" ("SOP 96-1"). SOP 96-1
provides  guidance  for  the  recognition  and  measurement  of  environmental
liabilities and is effective as of January 1, 1997. While an evaluation of the
impact of SOP 96-1 has not been  completed,  the  Company  does not believe it


                                      23
<PAGE>


will have a  material  impact on its  consolidated  results of  operations  or
financial position.

                                      24
<PAGE>


Item 8.     Financial Statements and Supplementary Data.


                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                         Page
                                                                         ----

Independent Auditors' Report............................................  26
Consolidated Balance Sheets as of December 31, 1995 and 1996............  27
Consolidated Statements of Operations for the years ended
   December 31, 1994, 1995 and 1996.....................................  28
Consolidated Statements of Stockholder's Equity (Deficit) for the
   years ended December 31, 1994, 1995 and 1996.........................  29
Consolidated Statements of Cash Flows for the years ended
   December 31, 1994, 1995 and 1996.....................................  30
Notes to Consolidated Financial Statements..............................  32

                                      25
<PAGE>





INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholder of RC/Arby's Corporation:

   We have audited the accompanying  consolidated  balance sheets of RC/Arby's
Corporation   (a   wholly-owned   subsidiary  of  CFC  Holdings   Corp.)   and
subsidiaries (the "Company") as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholder's equity (deficit) and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's  management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.

   We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those  standards  require  that we plan and  perform  the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial  statements.  An audit
also  includes  assessing  the  accounting  principles  used  and  significant
estimates  made by  management,  as well as evaluating  the overall  financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

   In our opinion,  such consolidated  financial statements present fairly, in
all material  respects,  the financial  position of the Company as of December
31, 1996 and 1995 and the results of their operations and their cash flows for
each of the three years in the period ended  December  31, 1996 in  conformity
with generally accepted accounting principles.

   As discussed in Note 1 to the consolidated  financial  statements,  in 1995
the Company  changed its method of accounting for the impairment of long-lived
assets and for long-lived assets to be disposed of.




DELOITTE & TOUCHE LLP
Certified Public Accountants

Fort Lauderdale, Florida
March 31, 1997

                                      26
<PAGE>


                       RC/ARBY'S CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS


                                                               December 31,
                                                              --------------
                                                              1995      1996
                                                              ----      ----
                                                              (In thousands)
                          ASSETS

Current assets:
  Cash...................................................   $  9,744   $ 7,411
  Receivables, net (Note 5)..............................     30,030    35,151
  Note receivable from affiliate (Note 15)...............      5,500     1,650
  Inventories (Note 6)...................................     14,870    12,110
  Assets held for sale (Note 4)..........................          -    71,116
  Deferred income tax benefit (Note 13)..................      5,971     8,568
  Prepaid expenses and other current assets..............      7,829     6,761
                                                            --------   -------
    Total current assets.................................     73,944   142,767

Properties, net (Note 7).................................    122,686    11,943
Unamortized costs in excess of net assets of acquired
  companies (Note 8).....................................    170,693   159,123
Deferred income tax benefit (Note 13)....................        793    24,231
Deferred costs and other assets (Note 9).................     26,104    22,380
                                                            --------   -------
                                                            $394,220  $360,444
                                                            ========  ========

          LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
  Current portion of long-term debt (Notes 11 and 12)....   $  3,697   $73,055
  Notes payable to affiliates (Note 11)..................     13,925    13,765
  Accounts payable.......................................     22,635    24,027
  Accrued expenses (Note 10).............................     52,042    61,744
                                                            --------   -------
    Total current liabilities............................     92,299   172,591

Long-term debt (Notes 11 and 12).........................    351,238   281,110
Note payable to affiliate (Note 11)......................      6,700     6,700
Deferred income and other liabilities....................      7,393    14,011
Commitments and contingencies (Notes 2, 4, 13, 17 and 18)

Stockholder's equity (deficit) (Notes 3, 4 and 11):
  Common stock, $1.00 par value; authorized 3,000 shares;
    issued and outstanding 1,000 shares..................          1         1
  Additional paid-in capital.............................     44,300    44,300
  Accumulated deficit....................................   (107,711) (158,269)
                                                            --------  --------
    Total stockholder's deficit..........................    (63,410) (113,968)
                                                            --------  --------
                                                            $394,220  $360,444
                                                            ========  ========

         See accompanying notes to consolidated financial statements.

                                      27
<PAGE>



                    RC/ARBY'S CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS


                                                     Year Ended December 31,
                                                    ------------------------
                                                    1994      1995      1996
                                                    ----      ----      ----
                                                         (In thousands)

Revenues:
  Net sales..................................... $322,888   $389,591  $409,100
  Royalties.....................................   46,670     50,135    53,639
  Franchise fees................................    3,653      4,648     2,834
  Other revenues................................      694      1,009       779
                                                  -------   --------   -------
                                                  373,905    445,383   466,352
                                                  -------   --------   -------

Costs and expenses:
  Cost of sales.................................  175,416    239,870   252,811
  Advertising, selling and distribution (Note 1)   95,419    108,584   102,535
  General and administrative (Notes 15 and 16)..   72,996     87,038    77,339
  Reduction in carrying value of long-lived
   assets impaired or to be disposed of
   (Notes 1 and 4)..............................        -     14,647    58,900
  Facilities relocation and corporate
   restructuring (Note 14)......................        -          -     6,350
                                                  -------   --------   -------
                                                  343,831    450,139   497,935
                                                  -------   --------   -------

     Operating profit (loss)....................   30,074     (4,756)  (31,583)

Interest expense................................  (34,433)   (39,565)  (42,883)
Other income (expense), net (Notes 15 and 19)...      586     (1,818)      562
                                                  -------   --------   -------

     Loss before income taxes...................   (3,773)   (46,139)  (73,904)

Benefit from (provision for) income taxes
 (Note 13)......................................   (1,704)    12,489    23,346
                                                  -------   --------   -------

     Net loss...................................  $(5,477)  $(33,650) $(50,558)
                                                  =======   ========  ========

         See accompanying notes to consolidated financial statements.

                                      28
<PAGE>



                    RC/ARBY'S CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
                  For the three years ended December 31, 1996






                                     Common Stock     
                                     ------------    Additional            
                                  Number               Paid-In   Accumulated
                                of Shares     Amount   Capital     Deficit
                                ---------     ------   -------     -------
                                                 (Dollars in thousands)

Balance at December 31, 1993..  10,445,000 $     104  $  35,332   $ (68,584)
   Recapitalization (Note 3).. (10,444,000)     (103)       103           -
   Net loss...................          -          -          -      (5,477)
                                ---------  ---------  ---------   ---------
Balance at December 31, 1994..      1,000          1     35,435     (74,061)
   Capital contribution
     from CFC Holdings Corp.
     (Note 15)...............           -          -      8,865           -
   Net loss...................          -          -          -     (33,650)
                                ---------  ---------  ---------   ---------
Balance at December 31, 1995..      1,000          1     44,300    (107,711)
   Net loss...................          -          -          -     (50,558)
                                ---------  ---------  ---------   ---------
Balance at December 31, 1996..      1,000  $       1  $  44,300   $(158,269)
                                =========  =========  =========   =========














         See accompanying notes to consolidated financial statements.

                                      29
<PAGE>
                    RC/ARBY'S CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                     Year ended December 31,
                                                    ------------------------
                                                    1994      1995      1996
                                                    ----      ----      ----
                                                         (In thousands)
Cash flows from operating activities:
   Net loss....................................  $ (5,477)  $(33,650) $(50,558)
   Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
      Reduction in carrying value of
       long-lived assets.......................         -     14,647    58,900
      Depreciation and amortization
       of properties...........................    10,107     13,768    14,095
      Amortization of costs in excess of net
       assets of acquired companies and other
       intangibles.............................     7,743      9,399     8,597
      Amortization of deferred financing costs.     2,168      2,204     2,369
      Provision for facilities relocation and
       corporate restructuring.................         -          -     6,350
      Payments on facilities relocation and
       corporate restructuring.................    (5,615)      (711)     (224)
      Provision for doubtful accounts..........       577      1,970     3,095
      Provision for (benefit from) deferred
       income taxes............................        71     (5,182)  (26,035)
      Other, net...............................    (2,098)      (580)      (91)
      Changes in operating assets and liabilities:
        Decrease (increase) in:
          Receivables..........................    (7,768)    (5,074)   (7,576)
          Inventories..........................    (1,478)    (2,367)    1,120
          Prepaid expenses and other current
           assets .............................    (1,929)    (1,976)    1,068
        Increase (decrease) in:
          Accounts payable.....................     8,998        229    (2,080)
          Due to Triarc Companies, Inc. .......    (1,652)         -         -
          Accrued expenses.....................   (13,049)     7,346     4,437
                                                  -------    -------   -------
Net cash provided by (used in) operating
  activities...................................    (9,402)        23    13,467
                                                  -------    -------   -------
Cash flows from investing activities:
   Business acquisitions:
     Trademarks, favorable lease acquisition
      costs, non-compete agreement and other
      intangible assets........................      (883)    (4,376)   (1,972)
     Properties, net...........................   (10,110)    (9,219)        -
     Costs in excess of net assets of acquired
      companies................................    (5,319)    (2,708)        -
     Net current assets........................         -       (758)        -
     Capitalized leases assumed................     2,726      2,726         -
                                                  -------   --------   -------
                                                  (13,586)   (14,335)   (1,972)
   Capital expenditures........................   (33,726)   (48,556)  (16,175)
   Proceeds from sales of properties...........     7,314      1,997     1,408
   Investment in affiliate.....................         -     (1,000)        -
   Other.......................................    (1,203)         -         - 
                                                  -------    -------   -------
Net cash used in investing activities..........   (41,201)   (61,894)  (16,739)
                                                  -------    -------   -------
Cash flows from financing activities:
   Proceeds from issuance of long-term debt ...         -     61,620     4,027
   Borrowings, net of repayments, and
    collections on notes with affiliates.......     5,925      5,950     3,690
   Repayments of long-term debt................    (8,673)    (3,358)   (6,453)
   Payment of deferred financing costs.........         -     (3,347)     (325)
   Capital contribution from CFC Holdings Corp.         -      8,865         -
                                                  -------   --------   -------
Net cash provided by (used in) financing
  activities...................................    (2,748)    69,730       939
                                                  -------    -------   -------
Net increase (decrease) in cash................   (53,351)     7,859    (2,333)
Cash at beginning of year......................    55,236      1,885     9,744
                                                  -------   --------   -------
Cash at end of year............................   $ 1,885   $  9,744   $ 7,411
                                                  =======   ========   =======
                                  (continued)

                                      30
<PAGE>



                        RC/ARBY'S CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)




                                                    Year ended December 31,
                                                   -------------------------
                                                   1994       1995      1996
                                                   ----       ----      ----
                                                         (In thousands)
Supplemental disclosures of cash flow information:
 Cash paid (received) during the year for:
   Interest ..................................... $31,939   $ 36,683   $37,931
                                                  =======   ========   =======
   Income taxes (refunds), net................... $ 3,889   $    740   $  (101)
                                                  =======   ========   =======

Supplemental disclosures of noncash investing
 and financing activities:
   Total capital expenditures.................... $36,184   $ 48,918   $16,175
   Amounts representing capitalized leases.......  (2,458)      (362)        -
                                                  -------   --------   -------
     Capital expenditures paid in cash........... $33,726   $ 48,556   $16,175
                                                  =======   ========   =======












         See accompanying notes to consolidated financial statements.

                                      31
<PAGE>


                    RC/ARBY'S CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              December 31, 1996


(1)  Summary of Significant Accounting Policies

Principles of Consolidation

     The consolidated  financial  statements include the accounts of RC/Arby's
Corporation ("RCAC" or, collectively with its subsidiaries,  the "Company"), a
direct  wholly-owned  subsidiary of CFC Holdings Corp. ("CFC Holdings") and an
indirect wholly-owned subsidiary of Triarc Companies, Inc. ("Triarc"), and its
subsidiaries.  The Company's  principal  wholly-owned  subsidiaries  are Royal
Crown Company, Inc. ("Royal Crown") and Arby's, Inc. ("Arby's"). Additionally,
the  Company  has three  wholly-owned  subsidiaries  which own and/or  operate
Arby's restaurants, Arby's Restaurant Development Corporation ("ARDC"), Arby's
Restaurant  Holding Company ("ARHC") and Arby's Restaurant  Operations Company
("AROC").  All significant  intercompany  balances and transactions  have been
eliminated in consolidation.

Inventories

     Inventories are stated at the lower of cost  (determined on the first-in,
first-out basis) or market.

Properties and Depreciation and Amortization

     Properties  are  stated  at  cost  less   accumulated   depreciation  and
amortization. Depreciation and amortization of properties is calculated on the
straight-line  basis using the  estimated  useful  lives of the related  major
classes of properties:  15-40 years for buildings and 3-15 years for machinery
and  equipment.  Leased  assets  capitalized  and leasehold  improvements  are
amortized over the shorter of their estimated useful lives or the terms of the
respective leases.

Amortization of Intangibles

     Costs in excess of net  assets of  acquired  companies  ("Goodwill")  are
being amortized on the straight-line basis over 15 to 40 years. Trademarks are
being  amortized  on the  straight-line  basis  over 7 to 15  years.  Deferred
financing costs are being amortized as interest  expense over the lives of the
respective debt using the interest method.

Impairments

  Intangible Assets

     The amount of  impairment,  if any, in  unamortized  Goodwill is measured
based on projected future results of operations.  To the extent future results
of operations of those  subsidiaries to which the Goodwill relates through the
period such Goodwill is being  amortized are  sufficient to absorb the related
amortization, the Company has deemed there to be no impairment of Goodwill.

  Long-Lived Assets

     Effective  October 1, 1995 the Company  adopted  Statement  of  Financial
Accounting  Standards  ("SFAS") No. 121,  "Accounting  for the  Impairment  of


                                      32
<PAGE>


                    RC/ARBY'S CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996


Long-Lived  Assets and for Long-Lived Assets to Be Disposed Of". This standard
requires that long-lived assets and certain identifiable  intangibles held and
used by an entity be reviewed  for  impairment  whenever  events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may not be
recoverable.  In 1996 the Company recorded a provision of $58,900,000 in order
to reduce the carrying  value of certain  long-lived  assets and  identifiable
intangibles  relating to the  estimated  loss on the  anticipated  sale of all
company-owned restaurants (see Note 4).

Derivative Financial Instrument

     The Company had an interest rate swap agreement  entered into in order to
synthetically  alter the interest rate of certain of the Company's  fixed-rate
debt (see Note 11) until the swap's  maturity in 1996. The Company  calculated
the estimated  remaining amount to be paid or received under the interest rate
swap agreement for the period from the periodic  settlement  date  immediately
prior to the financial  statement date through the end of the agreement  based
on the interest rate applicable at the financial statement date and recognized
such amount which applied to the period from the last periodic settlement date
through the financial  statement date as a component of interest expense.  The
recognition  of gain  or loss  from  the  interest  rate  swap  agreement  was
effectively  correlated  with the underlying  debt. A payment  received at the
inception of the agreement, which was deemed to be a fee to induce the Company
to enter into the agreement, was amortized over the full life of the agreement
since the Company was not at risk for any gain or loss on such payment.

Advertising Costs

     The Company  accounts for advertising  production costs by expensing such
production  costs  the  first  time  the  related   advertising  takes  place.
Advertising  costs amounted to  $84,692,000,  $95,495,000  and $87,038,000 for
1994, 1995 and 1996, respectively.

Income Taxes

     The Company and its subsidiaries are included in the consolidated Federal
income tax return filed by Triarc. Under a tax sharing agreement,  the Company
provides for Federal  income taxes on the same basis as if it filed a separate
consolidated  return.  Deferred income taxes are provided to recognize the tax
effect of temporary  differences  between the bases of assets and  liabilities
for tax and financial statement purposes.

Franchise Fees and Royalties

     Franchise fees are  recognized as income when a franchised  restaurant is
opened.  Franchise fees for multiple area developments represent the aggregate
of the franchise fees for the number of  restaurants  in the area  development
and are recognized as income when each restaurant is opened in the same manner
as  franchise  fees  for  individual  restaurants.  Royalties  are  based on a
percentage of  restaurant  sales of the  franchised  outlet and are accrued as
earned.

                                      33
<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

Reclassifications

     Certain  amounts  included  in the prior  years'  consolidated  financial
statements  have  been   reclassified  to  conform  with  the  current  year's
presentation.

(2)  Significant Risks and Uncertainties

Nature of Operations

     The  Company  is a  holding  company  which is  engaged  in two  lines of
business  (each with the indicated  percentage  of the Company's  consolidated
revenues  for the  year  ended  December  31,  1996):  restaurants  (62%)  and
beverages (38%).

     The  restaurant  segment  primarily  franchises  and operates (see Note 4
regarding the February 1997 agreement to sell all  company-owned  restaurants)
Arby's quick service restaurants representing the largest franchise restaurant
system  specializing in roast beef  sandwiches.  The beverage segment produces
and sells a broad selection of carbonated beverages and concentrates under the
principal brand names RC COLA,  DIET RC, ROYAL CROWN,  ROYAL CROWN DRAFT COLA,
DIET  RITE,  NEHI,  NEHI  LOCKJAW,  UPPER 10,  KICK and THIRST  THRASHER.  The
Company's operations principally are throughout the United States.

Use of Estimates

     The preparation of consolidated  financial  statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure  of  contingent   assets  and   liabilities  at  the  date  of  the
consolidated  financial  statements  and the  reported  amount of revenues and
expenses during the reporting  period.  Actual results could differ from those
estimates.

Significant Estimates

     The  Company's  significant  estimates  are  for  costs  related  to  (i)
provisions for  examinations of its income tax returns by the Internal Revenue
Service  (the  "IRS")  (see  Note  13),  (ii)  provisions  for  impairment  of
long-lived assets and for long-lived assets to be disposed of (see Note 4) and
(iii) provisions for  environmental  and other legal  contingencies  (see Note
18).

Certain Risk Concentrations

     The  Company  believes  that  its  vulnerability  to risk  concentrations
related to significant customers and vendors, products sold and sources of its
raw materials is not significant on a consolidated basis. Risk of geographical
concentration is also minimized since each of the segments  generally operates
throughout the United States with minimal foreign exposure.

                                      34
<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

(3)  Recapitalization

     On  March  21,  1994  RCAC,   previously  a  Florida   corporation,   was
reincorporated  in the state of Delaware  whereby the  10,455,000  outstanding
shares ($.01 par value) of the predecessor corporation were canceled and 1,000
common shares ($1.00 par value) of the successor corporation were issued. As a
result,  "Common  stock" and  "Additional  paid-in  capital"  were reduced and
increased,  respectively,  by $103,000.  The consolidated financial statements
for 1994 and 1995 have been restated to reflect this recapitalization.

(4)  Planned Transactions

Spinoff

     In October 1996 Triarc  announced that its Board of Directors  approved a
plan to  offer up to  approximately  20% of the  shares  of its  beverage  and
restaurant  businesses  (including those of the Company) to the public through
an initial public offering and to spin off the remainder of the shares of such
businesses to Triarc stockholders (collectively,  the "Spinoff Transactions").
Consummation  of the  Spinoff  Transactions  will be subject  to,  among other
things,  receipt  of  a  favorable  ruling  from  the  IRS  that  the  Spinoff
Transactions  will  be  tax-free  to  Triarc  and  its  subsidiaries  and  its
stockholders. The request for the ruling from the IRS contains several complex
issues and there can be no  assurance  that Triarc will  receive the ruling or
that Triarc will consummate the Spinoff Transactions. The Spinoff Transactions
are not  expected  to occur  prior to the end of the  second  quarter of 1997.
Triarc is currently evaluating the impact, if any, of its proposed acquisition
of Snapple  Beverage Corp.  (which Triarc  announced on March 27, 1997) on the
anticipated structure of the Spinoff Transactions.

Sale of Restaurants

     In February  1997 the  principal  subsidiaries  comprising  the Company's
restaurant  segment entered into an agreement (the "RTM  Agreement") with RTM,
Inc. ("RTM"),  the largest franchisee in the Arby's system,  pursuant to which
certain of such subsidiaries  would sell to an affiliate of RTM all of the 355
company-owned  restaurants.   The  purchase  price  consists  of  cash  and  a
promissory  note  aggregating  $2,000,000 and the assumption of  approximately
$69,735,000  in  mortgage  and  equipment   notes  payable  to  FFCA  Mortgage
Corporation (see Note 11) and capitalized lease obligations.  The consummation
of the sale is subject to customary closing  conditions,  including receipt of
necessary consents and regulatory  approvals,  and is expected to occur during
the second quarter of 1997.

     In 1996 the  Company  recorded  a  $58,900,000  charge to (i)  reduce the
carrying value of the  long-lived  assets to be sold (reported as "Assets held
for sale" in the  accompanying  consolidated  balance sheet as of December 31,
1996) by  approximately  $46,000,000  to estimated  fair value  consisting  of
adjustments to "Properties, net" of $36,343,000,  "Unamortized costs in excess
of net assets of acquired  companies"  of $5,214,000  and "Deferred  costs and
other assets" of $4,443,000 and (ii) provide for associated net liabilities of
approximately $12,900,000, principally reflecting the present value of certain
equipment  operating  lease  obligations  which  will  not be  assumed  by the
purchaser and estimated closing costs. The estimated fair value was determined
based on the terms of the RTM  Agreement  including  anticipated  sales price.
During 1996 the operations of the  restaurants to be disposed of had net sales
of  $231,041,000  and  a  pretax  loss  of  $3,897,000.   Such  loss  reflects


                                      35
<PAGE>


                    RC/ARBY'S CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996


$10,071,000 of allocated general and administrative expenses and $8,692,000 of
interest  expense  related to the mortgage and equipment notes and capitalized
lease obligations  directly related to the operations of the restaurants being
sold to RTM.

     In 1995 the Company recorded a provision of $14,647,000 in its restaurant
segment  consisting  of a $12,019,000  reduction in the net carrying  value of
certain restaurants and other restaurant-related long- lived assets which were
determined to be impaired and a $2,628,000  reduction to a net carrying  value
of $975,000 of certain restaurants and related equipment to be disposed.  Such
provision  reduced  "Properties,  net" by $12,425,000,  "Unamortized  costs in
excess of net assets of acquired  companies" by $1,260,000 and "Deferred costs
and other  assets" by  $962,000  to reflect  the fair value of the  respective
assets.  The fair value was  generally  determined  by  applying a fair market
capitalization  rate to the estimated  expected future annual cash flows.  The
results of operations of the restaurants to be disposed  resulted in a pre-tax
loss of $806,000 for the year ended December 31, 1995.

(5)  Receivables, net

     The  following  is  a  summary  of  the  components  of  receivables  (in
thousands):
                                                          December 31,
                                                       -----------------
                                                       1995         1996
                                                       ----         ----
    Receivables:
        Trade.......................................  $27,619     $35,749
        Other.......................................    4,321       4,061
                                                      -------     -------
                                                       31,940      39,810
    Less allowance for doubtful accounts............    1,910       4,659
                                                      -------     -------
                                                      $30,030     $35,151
                                                      =======     =======

     The following is an analysis of the  allowance for doubtful  accounts for
the years ended December 31 (in thousands):
                                              1994       1995        1996
                                              ----       ----        ----

    Balance at beginning of year........... $ 1,130    $   986     $ 1,910
    Provision for doubtful accounts
     (Note 15).............................     577      1,970       3,095
    Recoveries of doubtful accounts........     110         44          53
    Uncollectible accounts written off.....    (831)    (1,090)       (399)
                                            -------    -------     -------
    Balance at end of year................. $   986    $ 1,910     $ 4,659
                                            =======    =======     =======

     Substantially  all receivables are pledged as collateral for certain debt
(see Note 11).

                                      36
<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

(6) Inventories

     The  following  is  a  summary  of  the  components  of  inventories  (in
thousands):
                                                          December 31,
                                                        ----------------
                                                        1995        1996
                                                        ----        ----

    Raw materials...................................  $11,677     $ 8,184
    Work in process.................................      479         467
    Finished goods..................................    2,714       3,459
                                                      -------     -------
                                                      $14,870     $12,110
                                                      =======     =======

     Substantially  all inventories are pledged as collateral for certain debt
(see Note 11).

(7)  Properties

     The following is a summary of the components of  properties,  at cost (in
thousands):
                                                            December 31,
                                                          ----------------
                                                          1995        1996
                                                          ----        ----

       Land ........................................... $ 24,619    $  3,413
       Buildings and improvements and leasehold
         improvements..................................   83,561      11,422
       Machinery and equipment.........................   57,674      13,359
       Leased assets capitalized.......................   16,343         888
                                                         -------    --------
                                                         182,197      29,082
       Less accumulated depreciation and amortization..   59,511      17,139
                                                        --------    --------
                                                        $122,686    $ 11,943
                                                        ========    ========

     The decrease in  properties  from  December 31, 1995 to December 31, 1996
principally  resulted  from the 1996  reduction  in carrying  value of certain
long-lived  assets to be disposed of and  reclassification  as of December 31,
1996 of such assets to "Assets held for sale" (see Note 4).

     Substantially  all  properties are pledged as collateral for certain debt
(see Note 11).

(8)  Unamortized Costs in Excess of Net Assets of Acquired Companies

     The  following is a summary of the  components  of  unamortized  costs in
excess of net assets of acquired companies (in thousands):

                                                             December 31,
                                                          ----------------
                                                          1995        1996
                                                          ----        ----

       Costs in excess of net assets of acquired
         companies..................................... $230,134    $223,721
       Less accumulated amortization...................   59,441      64,598
                                                        --------    --------
                                                        $170,693    $159,123
                                                        ========    ========

                                      37
<PAGE>



                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

(9)  Deferred Costs and Other Assets

     The following is a summary of the  components of deferred costs and other
assets (in thousands):

                                                            December 31,
                                                          ----------------
                                                          1995        1996
                                                          ----        ----

       Deferred financing costs........................  $18,909     $18,987
       Less accumulated amortization of deferred
         financing costs...............................    5,810       8,077
                                                         -------     -------
           Deferred financing costs, net...............   13,099      10,910
                                                         -------     -------

       Trademarks......................................    3,421       7,748
       Less accumulated amortization of trademarks.....      424         934
                                                         -------     -------
           Trademarks, net.............................    2,997       6,814
                                                         -------     -------

       Other...........................................   10,008       4,656
                                                         -------     -------
                                                         $26,104     $22,380
                                                         =======     =======
(10) Accrued Expenses

     The  following  is a summary of the  components  of accrued  expenses (in
thousands):

                                                            December 31,
                                                          ----------------
                                                          1995        1996
                                                          ----        ----

       Accrued interest................................  $16,803     $16,949
       Accrued advertising.............................   10,995      12,504
       Accrued compensation and related benefits.......   10,149      11,208
       Due to Triarc and affiliates....................        -       3,085
       Other...........................................   14,095      17,998
                                                         -------     -------
                                                         $52,042     $61,744
                                                         =======     =======


                                      38
<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

(11) Long-term Debt and Notes Payable to Affiliates

     Long-term debt consisted of the following (in thousands):

                                                             December 31,
                                                           ----------------
                                                           1995        1996
                                                           ----        ----

     9 3/4% senior secured notes due 2000 (a)........... $275,000    $275,000
     Mortgage notes payable to FFCA Mortgage Corporation
       ("FFCA"), bearing interest at a weighted average
       rate of 11.09% as of December 31, 1996, due
       through 2016 (b).................................   51,685      52,136
     Equipment notes payable to FFCA,  bearing  interest
       at a weighted average rate of 10.89% at
       December 31, 1996, due through 2003 (b)..........    6,545       6,236
     Notes, bearing interest at 7.94% to 13 1/2%, due
       through 2002 secured by equipment and buildings..    4,392       4,865
     Capitalized lease obligations (c)..................   17,313      15,928
                                                         --------    --------
         Total debt.....................................  354,935     354,165
     Less amounts payable within one year...............    3,697      73,055
                                                         --------    --------
                                                         $351,238    $281,110
                                                         ========    ========

    Notes payable to affiliates consisted of the following (in thousands):

                                                             December 31,
                                                           ----------------
                                                           1995        1996
                                                           ----        ----

    Note payable to Triarc bearing interest at 11.875%
      due on demand (Note 15)........................... $11,675      $12,015
    Note payable to Triarc bearing interest at 11.875%
      due in 1998 (Note 15).............................   6,700        6,700
    Note payable to Chesapeake Insurance Company Limited
      ("Chesapeake Insurance" - an affiliate) bearing
      interest at 9 1/2% due in 1997 (Note 15)..........   2,250        1,750
                                                         -------      -------
        Total notes payable to affiliates...............  20,625       20,465
    Less amounts payable within one year................  13,925       13,765
                                                         -------      -------
                                                         $ 6,700      $ 6,700
                                                         =======      =======


                                      39
<PAGE>



                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

    Aggregate  annual  maturities  of  long-term  debt and  notes  payable  to
affiliates,  including  capitalized  lease  obligations,  are as follows as of
December 31, 1996 (in thousands):

       Year ending December 31,
       ------------------------
       1997 ........................................... $ 86,820
       1998 ...........................................    7,935
       1999 ...........................................    1,075
       2000 ...........................................  275,388
       2001 ...........................................      409
       Thereafter......................................    3,003
                                                        --------
                                                        $374,630
                                                        ========

(a) In September  1993,  the Company  entered into a three-year  interest rate
swap agreement (the "Swap Agreement") in the amount of $137,500,000. Under the
Swap Agreement, interest on $137,500,000 was paid by the Company at a floating
rate (the "Floating Rate") based on the 180-day London Interbank Offered Rate,
and the Company received  interest at a fixed rate of 4.72%. The Floating Rate
was set at the inception of the Swap  Agreement  through  January 31, 1994 and
thereafter was  retroactively  reset at the end of each six-month  calculation
period  through  July 31, 1996 and on  September  24,  1996.  The  transaction
effectively  changed the Company's interest rate on $137,500,000 of the 9 3/4%
senior  secured  notes due 2000 (the  "Senior  Notes")  from a fixed rate to a
floating-rate  basis.  Under  the Swap  Agreement,  during  1994  the  Company
received $614,000 which was determined at the inception of the Swap Agreement.
Thereafter  the Company paid (i) $439,000  during 1994 in connection  with the
six-month  reset period ended July 31, 1994,  (ii)  $2,271,000  during 1995 in
connection with such year's two six-month  reset periods and (iii)  $1,631,000
during 1996 in connection with such year's two six-month reset periods and the
reset period  ending with the  agreement's  termination  date of September 24,
1996.

(b)  During  1995 and  1996  ARDC and ARHC  entered  into  loan and  financing
agreements with FFCA Mortgage Corporation  ("FFCA") which, as amended,  permit
borrowings in the form of mortgage notes (the "Mortgage  Notes") and equipment
notes  (the  "Equipment  Notes")  aggregating   $87,294,000  (the  "FFCA  Loan
Agreements"). The Mortgage Notes and Equipment Notes bear interest at rates in
effect at the time of the  borrowings  ranging  from 10 1/8% to 11 1/2%  plus,
with respect to the Mortgage Notes, participating interest to the extent gross
sales of the financed  restaurants  exceed certain defined levels which are in
excess of current levels. The Mortgage Notes and Equipment Notes are repayable
in equal  monthly  installments,  including  interest,  over  twenty and seven
years,  respectively.  As of December 31, 1996, borrowings under the FFCA Loan
Agreements   aggregated   $62,697,000   (including  cumulative  repayments  of
$4,325,000  through December 31, 1996) resulting in remaining  availability of
$24,597,000 through December 31, 1997 to finance new company-owned restaurants
whose sites are  identified  to FFCA by September 30, 1997 on terms similar to
those  of  outstanding  borrowings.   The  assets  of  ARDC  of  approximately
$37,000,000 will not be available to pay creditors of RCAC,  Triarc, or Arby's
until all loans under the FFCA Loan  Agreements  have been repaid in full.  As
discussed in Note 4, in February 1997 the Company entered into an agreement to
sell all of its restaurants  and, if such sale is consummated on terms as they
currently  exist,  the purchaser would assume  $54,709,000 of borrowings under
the FFCA Loan Agreements.

(c) As  discussed  in Note 4, in  February  1997 the Company  entered  into an
agreement to sell all of its  restaurants  and, if such sale is consummated on
terms as they  currently  exist,  the purchaser  would assume all  capitalized


                                      40
<PAGE>

                    RC/ARBY'S CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996


lease obligations  associated with the restaurants  currently  estimated to be
approximately $15,000,000.

   Under the Company's  debt  agreements,  substantially  all of the Company's
assets are pledged as  security.  In  addition,  obligations  under the Senior
Notes have been  guaranteed  by Royal Crown and Arby's and all of the stock of
and  substantially  all of the  personal  property  Royal Crown and Arby's are
pledged  as  collateral   for  such   guarantees.   Since  the   non-guarantor
subsidiaries,   primarily  ARDC,  ARHC  and  AROC,  are  not  inconsequential,
condensed  consolidating  financial  statements of the Company,  reporting the
parent company only, the guarantors in the aggregate and the non-guarantors in
the  aggregate  are set forth in Note 21. In addition,  Triarc has  guaranteed
repayment  of  $24,698,000  of  borrowings  under  the FFCA  Loan  Agreements.
Assuming  consummation  of the RTM sale  (see  Note 4),  Triarc  would  remain
contingently  liable under its guarantee upon the failure,  if any, of RTM and
certain of its affiliates to satisfy such obligation.  The indenture  pursuant
to which the Senior Notes were issued contains  various  covenants  including,
among  others,  restrictions  on  dividends  and other  similar  payments  and
limitations on (i) the incurrence of  indebtedness,  (ii) asset  dispositions,
(iii)  investments  and (iv) affiliate  transactions  other than in the normal
course of business. Under the terms of such indenture, as of December 31, 1996
the Company  could not pay any  dividends or make any loans or advances to CFC
Holdings.

(12) Fair Value of Financial Instruments

     The  carrying  amounts  and  fair  values  of  the  Company's   financial
instruments  for  which  such  amounts  differ  in total  are as  follows  (in
thousands):
                                                     December 31,
                                       --------------------------------------
                                              1995                 1996
                                       ------------------   -----------------
                                       Carrying    Fair     Carrying    Fair
                                        Amount     Value     Amount     Value
                                        ------     -----     ------     -----
Long-term debt (Note 11):
   Senior Notes....................... $275,000  $226,000   $275,000  $283,000
   FFCA Loan Agreements...............   58,230    61,264     58,372    61,814
   Other long-term debt...............   21,705    21,705     20,793    20,793
                                       --------   -------   --------  --------
                                       $354,935  $308,969   $354,165  $365,607
                                       ========  ========   ========  ========
Swap Agreement (liability) (Note 11).. $   (684) $   (896)  $      -  $      -
                                       ========  ========   ========  ========

    The fair values of the Senior Notes are based on quoted  market  prices at
the  respective  reporting  dates.  The fair value of the  Mortgage  Notes and
Equipment  Notes under the FFCA Loan  Agreements at December 31, 1995 and 1996
was  determined by discounting  the future monthly  payments using the rate of
interest  available  under such  agreements at December 31, 1995 and 1996. The
fair values of all other long-term debt were assumed to reasonably approximate
their  carrying  amounts  since  (i) for the  notes  payable  to  Triarc,  the
origination  dates were during 1995 and the interest  rates still  approximate
current levels,  (ii) for capitalized lease obligations,  the weighted average
implicit interest rate approximates  current levels and (iii) for other notes,
the remaining maturities are relatively short-term. The fair value of the Swap
Agreement as of December 31, 1995 represented the estimated amount the Company
would  have  paid  to  terminate  the  Swap   Agreement,   as  quoted  by  the
counterparty.

                                      41
<PAGE>



                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

(13) Income Taxes

     As  discussed  in Note 1, the  Company is  included  in the  consolidated
Federal income tax return of Triarc. Pursuant to a tax sharing agreement,  the
Company  provides for Federal  income taxes on the same basis as if it filed a
separate  consolidated  return.  The benefit from current Federal income taxes
due from Triarc has been netted with other amounts due to Triarc  resulting in
a net  receivable  of $977,000 as of  December  31, 1995  included in "Prepaid
expenses and other  current  assets" and a net  liability of  $3,085,000 as of
December 31, 1996 included in "Accrued expenses" (Note 10).

     The loss before income taxes consists of the following components for the
years ended December 31 (in thousands):

                                                  1994       1995      1996
                                                  ----       ----      ----

    Domestic..................................  $ (6,243) $(44,191)  $(70,496)
    Foreign...................................     2,470    (1,948)    (3,408)
                                                --------  --------   --------
                                                $ (3,773) $(46,139)  $(73,904)
                                                ========  ========   ========

    The benefit from  (provision  for) income taxes  consists of the following
components for the years ended December 31 (in thousands):

                                                  1994       1995       1996
                                                  ----       ----       ----    
    Current:
       Federal................................  $  1,091   $ 7,281   $ (1,619)
       State..................................      (496)      383       (700)
       Foreign................................    (2,228)     (357)      (370)
                                                --------   -------   --------
                                                  (1,633)    7,307     (2,689)
                                                --------   -------   --------

    Deferred:
       Federal.................................     (662)     4,347    23,621
       State...................................     (162)       835     2,414
       Foreign.................................      753          -         -
                                                --------   --------  --------
                                                     (71)     5,182    26,035
                                                --------   --------  --------
                                                $ (1,704)  $ 12,489  $ 23,346
                                                ========   ========  ========

                                      42
<PAGE>



                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

    The net current deferred income tax asset and the net non-current deferred
income tax asset resulted from the following components (in thousands):

                                                             December 31,
                                                          -----------------
                                                          1995         1996
                                                          ----         ----
    Current deferred income tax assets (liabilities):
       Accrued employee benefit costs.................  $ 2,514      $ 3,404
       Allowance for doubtful accounts................      475        1,729
       Accrued interest relating to income tax matters      968        1,176
       Closed facilities reserves.....................    1,061          821
       Other, net.....................................      953        1,438
                                                        -------      -------
                                                          5,971        8,568
                                                        -------      -------

    Non-current deferred income tax assets (liabilities):
       Depreciation and other properties basis
         differences..................................    2,733       28,126
       Reserve for income tax contingencies...........   (4,090)      (7,115)
       Deferred franchise fees........................    1,303        1,330
       Other, net.....................................      847        1,890
                                                        -------      -------
                                                            793       24,231
                                                        -------      -------
                                                        $ 6,764      $32,799
                                                        =======      =======

    The difference between the reported income tax benefit (provision) and the
tax benefit that would result from applying the 35% Federal  statutory rate to
the loss before income taxes is reconciled as follows (in thousands):

                                                    1994      1995       1996
                                                  -------   --------   ------

        Income tax benefit computed at Federal
          statutory rate......................... $ 1,321   $ 16,149   $25,866
        Decrease (increase) in Federal taxes
         resulting from:
          Amortization of non-deductible Goodwill  (2,057)    (2,005)   (2,005)
          Effect of net operating losses of
            foreign subsidiary for which no tax
            carryback benefit is available.......       -       (548)   (1,193)
          State income (taxes) benefit, net of
            Federal income tax effect............    (428)       792     1,114
          Foreign tax rate in excess of United
            States Federal statutory rate and
            foreign withholding taxes, net of
            Federal income tax benefit...........    (479)      (307)     (241)
          Provision for income tax contingencies.       -     (1,100)        -
          Non-deductible amortization of
            restricted stock...................         -       (418)        -
          Other, net...........................       (61)       (74)     (195)
                                                  -------   --------   -------
                                                  $(1,704)  $ 12,489   $23,346
                                                  =======   ========   =======

     The Federal income tax returns of Triarc and its subsidiaries,  including
the  Company,  have been  examined  by the IRS for the tax years 1985  through
1988.  Triarc  has  resolved  all the issues  related  to such  audit and,  in
connection  therewith,  the Company paid  $4,803,000  and $407,000 in 1994 and
1996, respectively,  in final settlement of such examination. Such amounts had
been  fully  reserved  in  years  prior  to 1994.  The IRS has  completed  its


                                      43
<PAGE>

                    RC/ARBY'S CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996


examination of the Federal  income tax returns of Triarc and its  subsidiaries
for the tax years from 1989  through  1992 and has issued  notices of proposed
adjustments relating to the Company increasing taxable income by approximately
$13,000,000,  the tax effect of which has not yet been  determined.  Triarc is
contesting  the majority of the proposed  adjustments  and,  accordingly,  the
amount of any  payments  required  as a result  thereof  cannot  presently  be
determined.  During 1995 the Company provided  $1,100,000 included in "Benefit
from  (provision  for) income  taxes" and during 1994,  1995 and 1996 provided
$900,000,  $1,000,000  and  $1,000,000,  respectively,  included in  "Interest
expense"  relating to such  examinations and other tax matters.  Management of
the Company believes that adequate aggregate provisions have been made in 1996
and prior periods for any tax liabilities, including interest, that may result
from the 1989 through 1992 examination and other tax matters.

(14) Facilities Relocation and Corporate Restructuring

     The  "Facilities  relocation  and  corporate   restructuring"  charge  of
$6,350,000 set forth in the accompanying  consolidated statement of operations
for 1996  relates  to costs  associated  with (i)  estimated  costs of planned
subleases  (principally  for  the  write-off  of  nonrecoverable   unamortized
leasehold  improvements and furniture and fixtures) of surplus office space in
excess of anticipated  sublease proceeds as a result of the RTM sale (see Note
4) and the relocation of Royal Crown's headquarters which is being centralized
with the offices of Mistic Brands,  Inc., Triarc's other beverage  subsidiary,
in  White  Plains,  New  York  ($3,700,000),  (ii)  employee  severance  costs
associated with the relocation of Royal Crown's headquarters  ($2,200,000) and
(iii)  the  shutdown  of  the  beverage  segment's  Ohio  production  facility
($450,000).

(15) Related Party Transactions

     The  following is a summary of  transactions  between the Company and its
related parties (in thousands):

                                                     Year Ended December 31,
                                                    -------------------------
                                                    1994      1995       1996
                                                    ----      ----       ----
                                                  
    Costs allocated to the Company by Triarc
      under a management services agreement (a).. $ 9,000   $  9,000   $ 7,000
    Net sales to MetBev, Inc. ("MetBev"), net
      of marketing support credits (b)...........       -        551     8,985
    Guarantee of MetBev accounts payable (b).....       -      1,194         -
    Provision for uncollectible receivables from
      sales to MetBev and guarantee of MetBev
      accounts payable (b).......................       -      1,745     2,000
    Investment in preferred stock of MetBev (b)..       -      1,000         -
    Interest expense on notes payable to:
      Triarc (c).................................       -      2,169     2,588
      Chesapeake Insurance (c)...................     285        243       208


                                      44
<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

                                                     Year Ended December 31,
                                                    -------------------------
                                                    1994      1995       1996
                                                    ----      ----       ----
                                                  
      Southeastern Public Service Company
         ("SEPSCO") (c)..........................      93        750         -
    Interest income on notes receivable from
      Triarc (c).................................       -        212       261
    Compensation costs charged to the Company by
      Triarc for restricted stock and below
      market stock options (Note 16).............   1,452      1,612        74
    Capital contribution from CFC Holdings (d).         -      8,865         -
    Lease payments to NPC Leasing Corp. ("NPC"),
      an affiliate (e)...........................     178         21         -
    Sale of certain promissory notes from
      franchisees to SEPSCO at remaining
      outstanding principal amount...............   1,239          -         -
    Payments to affiliates for usage of aircraft.     357         73         -

-------------

  (a) The Company receives from Triarc certain management services,  including
legal,  accounting,  tax, insurance,  financial and other management services,
under a management services  agreement.  The Company was allocated costs under
such agreement of  $9,000,000,  $9,000,000,  and  $7,000,000  during the years
ended  December  31,  1994,  1995,  and 1996,  respectively.  Such  costs were
allocated  to the Company by Triarc based upon the relative sum of the greater
of income  before  income  taxes,  depreciation  and  amortization  and 10% of
revenues.  Management of the Company  believes that such allocation  method is
reasonable.  Further,  management of the Company believes that such allocation
approximates the costs that would have been incurred by the Company on a stand
alone basis.

  (b) During 1995 the Company paid  $1,000,000 and contributed a license for a
period of five years for the Royal Crown distribution  rights for its products
in New York City and certain  surrounding  counties to MetBev in exchange  for
preferred  stock in MetBev  representing a 37.5% voting interest and a warrant
to acquire 37.5% of the common stock of MetBev.  The remaining 62.5% was owned
by  other  parties  and  was  subject  to  certain  vesting  provisions.  Upon
consummation of the sale of the MetBev  distribution  rights (see below),  the
Company's  voting  interest  in  MetBev  was  44.7%  principally  due  to  the
cancellation of nonvested stock.  MetBev has incurred  significant losses from
its inception and had stockholders'  deficits as of December 31, 1995 and 1996
of $2,524,000 and $8,943,000, respectively. In December 1996, the distribution
rights  of  MetBev  were  sold to a  third  party  and  MetBev  commenced  the
liquidation of its remaining assets and liabilities.  In connection therewith,
in 1995 the  Company  wrote off its  $1,000,000  investment  to "Other  income
(expense),  net".  Further,  the Company  provided  $1,745,000  and $2,000,000
(included  in  "General  and  administrative"  and  "Advertising,  selling and
distribution") in 1995 and 1996, respectively,  for uncollectible  receivables
from sales (with minimal  gross  profit) of finished  product to MetBev and in
1995 a guarantee of a MetBev third party accounts payable.

  (c) The Company borrowed cash under various promissory notes with Triarc and
two of its  subsidiaries,  SEPSCO and  Chesapeake  Insurance.  See Note 11 for
details  involving such promissory notes which were outstanding as of December
31, 1995 and 1996. Also, ARDC and ARHC made cash advances to Triarc,  of which
$5,500,000 and $1,650,000 were  outstanding from ARDC at December 31, 1995 and


                                      45
<PAGE>

                    RC/ARBY'S CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996


1996,  respectively,  under a promissory  note presently due upon demand.  All
such promissory  notes payable and receivable bear or bore interest at 11.875%
per annum,  payable  quarterly,  except for the promissory  note to Chesapeake
Insurance which bears interest at 9 1/2% per annum.

  (d) In February 1995, CFC Holdings made a capital contribution of $8,865,000
of cash to the Company using funds contributed to it by Triarc.

  (e) During 1994 and 1995 the Company  leased  vehicles  and other  equipment
from NPC, an indirect wholly-owned subsidiary of Triarc, under long-term lease
obligations.  Lease  payments to NPC by the  Company  were based on the actual
costs to NPC plus a small profit factor.

(16) Pension and Other Benefit Plans

     Triarc maintains a 401(k) defined  contribution  plan covering all of the
Company's and Triarc's  employees who meet certain  minimum  requirements  and
elect  to   participate.   Employees  may   contribute  up  to  15%  of  their
compensation,  subject to certain  limitations.  The plan provides for Company
matching  contributions of 50% of employee contributions up to the first 5% of
an  employee's  contributions.  The plan also  provides for annual  additional
contributions at the Company's  discretion.  In connection with these employer
contributions,  the Company provided $396,000,  $1,175,000,  and $1,020,000 in
1994, 1995, and 1996, respectively.

     The Company's  employees who were eligible to  participate  prior to 1989
are covered  under a defined  benefit  pension plan (the "Plan")  which covers
employees of both the Company and certain  affiliates.  Prior to 1994 the plan
was frozen.

     Components  of net  periodic  pension  cost related to the Company are as
follows for the years ended December 31 (in thousands):

                                                   1994      1995      1996
                                                   ----      ----      ---- 
    Current service cost (represents plan 
      expenses).................................  $    77  $    84   $    83
    Interest cost on projected benefit obligation.    238      267       264
    Return on plan assets (gain) loss...........       62     (674)     (369)
    Net amortization and deferrals..............     (293)     472       138
                                                  -------  -------   -------
      Net periodic pension cost.................  $    84  $   149   $   116
                                                  =======  =======   =======

                                      46
<PAGE>



                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

    The following table sets forth the Company's  portion of the Plan's funded
status as of December 31 (in thousands):

                                                           1995        1996
                                                           ----        ----
    Actuarial present value of benefit obligations:
      Vested benefit obligation......................... $ 3,778      $ 3,749
      Nonvested benefit obligation......................      19           18
                                                         -------      -------
    Accumulated and projected benefit obligation........   3,797        3,767
    Plan assets at fair value...........................  (2,979)      (3,374)
                                                         -------      -------
    Funded status.......................................     818          393
    Unrecognized net gain (loss) from plan experience...     (34)          51
                                                         -------      -------
    Accrued pension cost................................ $   784      $   444
                                                         =======      =======

    Significant  assumptions  used in measuring the net periodic  pension cost
for the Plan included the following: (i) the expected long-term rate of return
on plan assets was 8% and (ii) the discount  rate was 7% for 1994, 8% for 1995
and 7% for 1996. The discount rate used in determining the benefit obligations
above was 7% at December 31, 1995 and 7 1/2% at December 31, 1996. The effects
of the  1995  increase  and the 1996  decrease  in the  discount  rate did not
materially  affect the net periodic  pension  cost.  The 1996  increase in the
discount  rate  used in  determining  the  benefit  obligation  resulted  in a
decrease in the accumulated and projected benefit obligation of $151,000.

    Plan assets as of December  31,  1996 are  invested in managed  portfolios
consisting of government and government agency obligations (51%), common stock
(39%), corporate debt securities (5%) and other investments (5%).

    The Company maintains  unfunded  postretirement  medical and death benefit
plans for a limited  number of employees  who have  retired and have  provided
certain  minimum  years of  service.  The  medical  benefits  are  principally
contributory while death benefits are noncontributory.  The net postretirement
benefit cost for 1994, 1995 and 1996 as well as the accumulated postretirement
benefit obligation as of December 31, 1996 were insignificant.

    Prior to 1994 and during 1994,  respectively,  Triarc granted  113,000 and
20,750 restricted shares of Triarc Class A common stock to certain Royal Crown
and Arby's senior  executives  under Triarc's 1993 Equity  Participation  Plan
(the  "Triarc  Equity  Plan").  The  aggregate  values  of the  awards  at the
respective  dates of grant of  $2,316,000  for 1993 and $458,000 for 1994 were
being  charged to the  Company as  compensation  expense  over the  applicable
vesting periods through 1996. On December 7, 1995, the Compensation  Committee
of Triarc's Board of Directors  authorized  management of Triarc to accelerate
the vesting of all of the then  outstanding  shares of  restricted  stock.  On
January 16, 1996 management of Triarc  accelerated the vesting and the Company
recorded  the  resulting  additional  amortization  expense of $662,000 in its
entirety in 1995. In addition, Triarc has granted stock options to certain key
employees  of the  Company  under the Triarc  Equity  Plan.  Of such  options,
165,000  granted  prior to 1994  were at an option  price of $20.00  per share
which was below the $31.75 fair market value of Triarc's  Class A common stock
at the date of grant representing an aggregate difference of $1,939,000.  Such
amount is being  charged  to the  Company  as  compensation  expense  over the
applicable  vesting  period  through  1998,  net of reversals of prior charges
arising from the  forfeiture of certain of those  options in  connection  with
employee  terminations (the "Forfeiture  Adjustments").  Compensation  expense
resulting from the grants of restricted  shares and below market stock options
aggregated  $1,452,000 (including $66,000 for 3,500 previously unvested shares


                                      47
<PAGE>


                    RC/ARBY'S CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996

of  restricted  stock which were  vested and  repurchased  from the  grantee),
$1,612,000  (including  the  $662,000  from  the  accelerated  vesting  of the
restricted  stock and net of $231,000 of Forfeiture  Adjustments)  and $74,000
(net of $173,000 of  Forfeiture  Adjustments)  during  1994,  1995,  and 1996,
respectively,   and  is  included  in  "General  and  administrative"  in  the
accompanying consolidated statements of operations.

(17) Lease Commitments

     The  Company  leases   buildings  and   improvements  and  machinery  and
equipment. Some leases provide for contingent rentals based upon sales volume.

     Rental  expense  under   operating   leases  consists  of  the  following
components for the years ended December 31 (in thousands):

                                               1994      1995      1996
                                               ----      ----      ----
                                             
      Minimum rentals......................  $12,160   $19,727   $23,164
      Contingent rentals...................    1,454       879       794
                                             -------   -------   -------
                                              13,614    20,606    23,958
      Less sublease income.................    2,826     5,358     5,460
                                             -------   -------   -------
                                             $10,788   $15,248   $18,498
                                             =======   =======   =======

    The Company's  future minimum rental  payments and sublease  rental income
for leases  having an initial  lease term in excess of one year as of December
31, 1996 are set forth below.  Such future minimum rental payments  exclude an
aggregate $11,540,000 of future operating lease payments relating to equipment
to be  transferred to RTM assuming  consummation  of the RTM sale (see Note 4)
but the  obligations  for which  will  remain  with the  Company.  As such the
Company  has  provided  for the  present  value of  $9,677,000  of such  lease
payments in "Reduction in carrying value of long-lived  assets  impaired or to
be disposed  of". Such future  minimum  rental  payments  include an aggregate
$105,165,000 ($9,844,000,  $9,264,000,  $8,403,000, $7,828,000, $7,476,000 and
$62,350,000 in 1997, 1998,  1999, 2000, 2001 and thereafter,  respectively) of
future  operating  lease payments and, in addition,  substantially  all of the
future  capitalized  lease  payments  which will be  assumed  by RTM  assuming
consummation  of the sale to RTM.  Such rental  payments and  sublease  rental
income were as follows (in thousands):

                                     Rental Payments       Sublease Income
                                 ---------------------- ---------------------
                                 Capitalized  Operating Capitalized Operating
   Year Ending December 31,         Leases      Leases     Leases      Leases
   ------------------------         ------      ------     ------      ------

   1997........................... $16,120     $17,467    $    81     $ 5,510
   1998...........................     105      14,085         60       3,224
   1999...........................      87      11,270         60       1,483
   2000...........................      87      10,170         57         938
   2001...........................      87       9,302         43         342
   Thereafter.....................     397      71,250        219       1,300
                                   -------    --------    -------     -------
   Total minimum payments.........  16,883    $133,544    $   520     $12,797
                                              ========    =======     =======
   Less interest..................     955
                                   -------
   Present value of minimum
     capitalized lease payments... $15,928
                                   =======

                                      48
<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996


   The present value of minimum  capitalized  lease  payments is included,  as
applicable,  with "Long-term  debt" or "Current  portion of long-term debt" in
the accompanying consolidated balance sheets (see Note 11).

   In August 1994,  the Company  completed  the sale and leaseback of the land
and buildings of fourteen company-owned restaurants.  The net cash sales price
of  the  properties  was  $6,703,000.  The  Company  entered  into  individual
twenty-year  land and building  leases for such properties and capitalized the
building  portion of such leases while the land portion is being accounted for
as operating  leases,  reflected in the table above.  Such sale  resulted in a
gain of $605,000  which was being  amortized  to income  over the  twenty-year
lives of the leases (see Note 4).

(18) Legal and Environmental Matters

   In  1993  Royal  Crown   became  aware  of  possible   contamination   from
hydrocarbons in groundwater at two abandoned bottling  facilities.  Tests have
confirmed hydrocarbons in the groundwater at both of the sites and remediation
has commenced. Management estimates remediation costs will aggregate $685,000,
of which $439,000 has been expended to date,  with  approximately  $225,000 to
$260,000  expected to be  reimbursed by the State of Texas  Petroleum  Storage
Tank Remediation Fund (the "Texas Fund") at one of the two sites.

   On February 19, 1996, Arby's  Restaurantes S.A. de C.V. ("AR"),  the master
franchisee  of Arby's in  Mexico,  commenced  an action in the civil  court of
Mexico  against  Arby's for breach of contract.  AR alleged that a non-binding
letter of intent dated  November 9, 1994 between AR and Arby's  constituted  a
binding  contract  pursuant to which Arby's had obligated itself to repurchase
the master  franchise  rights from AR for  $2,500,000.  AR also  alleged  that
Arby's had  breached a master  development  agreement  between AR and  Arby's.
Arby's promptly  commenced an arbitration  proceeding  since the franchise and
development agreements each provided that all disputes arising thereunder were
to be  resolved  by  arbitration.  Arby's  is  seeking  a  declaration  in the
arbitration to the effect that the November 9, 1994 letter of intent was not a
binding contract and, therefore,  AR has no valid breach of contract claim, as
well  as  a  declaration  that  the  master  development  agreement  has  been
automatically  terminated  as a result of AR's  commencement  of suspension of
payments  proceedings  in February  1995. In the civil court  proceeding,  the
court denied Arby's motion to suspend such proceedings  pending the results of
the arbitration, and Arby's has appealed that ruling. In the arbitration, some
evidence  has been  taken but  proceedings  have been  suspended  by the court
handling  the  suspension  of  payments  proceedings.   Arby's  is  vigorously
contesting  AR's  claims and  believes  it has  meritorious  defenses  to such
claims.

   Based  on  currently   available   information   and  given  (i)  potential
reimbursements  by the  Texas  Fund  discussed  above  and (ii) the  Company's
aggregate  reserves for such legal and environmental  matters of approximately
$750,000 as of December  1996, the Company does not believe that the legal and
environmental   matters  referred  to  above,  as  well  as  ordinary  routine
litigation  incidental to its businesses,  will have a material adverse effect
on its consolidated results of operations or financial position.

(19) Business Acquisitions

     The  Company consummated several business  acquisitions during 1994, 1995
and 1996 for cash of $13,586,000,  $14,335,000  and $1,972,000,  respectively,
and the issuance of debt in 1996 of  $1,750,000.  All such  acquisitions  have
been accounted for in accordance  with the purchase  method of accounting.  In
addition,  in 1994 Triarc entered into a definitive merger agreement with Long
John Silver's Restaurants,  Inc. ("LJS"), an owner, operator and franchisor of


                                      49
<PAGE>


                    RC/ARBY'S CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996

quick service fish and seafood  restaurants,  whereby Triarc would acquire all
of the  outstanding  stock of LJS. In  December  1994,  Triarc  decided not to
proceed  with  the  acquisition  of  LJS  due  to  the  higher  interest  rate
environment  and  difficult  capital  markets  which  would have  resulted  in
significantly   higher  than  anticipated  costs  and  unacceptable  terms  of
financing.  Accordingly,  the Company  recorded a charge of $1,521,000 in 1994
for the expenses it incurred  directly  relating to the failed  acquisition of
LJS  representing  consulting,  legal and other  costs,  which is  included in
"Other income (expense), net".

(20) Business Segments

     The Company  operates in two major  segments,  restaurants  and beverages
(see Note 2 for a description  of each  segment).  Information  concerning the
segments in which the Company operates is shown in the table below.  Operating
profit  (loss)  is  total  revenues  less  operating  expenses.  In  computing
operating profit (loss),  interest  expense,  general  corporate  expenses and
non-operating  income and expenses,  including interest income,  have not been
considered.  Operating loss for the restaurant segment reflects  provisions in
1995 and 1996 of $14,647,000 and $58,900,000,  respectively, for reductions in
carrying  value of long-lived  assets  impaired or to be disposed of (see Note
4).  Identifiable  assets by  segment  are those  assets  that are used in the
Company's  operations  in  each  segment.  General  corporate  assets  consist
primarily of deferred financing costs.

     No customer  accounted for more than 10% of consolidated  revenues in the
years ended December 31, 1994, 1995 or 1996.



                                      50
<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

                                               1994      1995      1996
                                               ----      ----      ----
                                                    (In thousands)
    Revenues:
      Restaurants.......................... $223,155   $272,739  $288,293
      Beverages............................  150,750    172,644   178,059
                                            --------   --------  --------
        Consolidated revenues.............. $373,905   $445,383  $466,352
                                            ========   ========  ========

    Operating profit (loss):
      Restaurants.......................... $ 15,542   $ (6,437) $(43,341)
      Beverages............................   14,607      1,852    11,947
                                            --------   --------  --------
        Segment operating profit (loss)....   30,149     (4,585)  (31,394)
    Interest expense.......................  (34,433)   (39,565)  (42,883)
    Non-operating income (expense), net....      586     (1,818)      562
    General corporate expenses.............      (75)      (171)     (189)
                                            --------   --------  --------
        Consolidated loss before
          income taxes..................... $ (3,773)  $(46,139) $(73,904)
                                            ========   ========  ======== 

    Identifiable assets:
      Restaurants.......................... $137,943   $187,199  $162,223
      Beverages............................  190,568    195,272   193,300
                                            --------   --------   -------
        Total identifiable assets..........  328,511    382,471   355,523
      General corporate assets.............   12,331     11,749     4,921
                                            --------   --------  --------
        Consolidated assets................ $340,842   $394,220  $360,444
                                            ========   ========  ========

    Capital expenditures:
      Restaurants.......................... $ 34,875   $ 47,444   $15,584
      Beverages............................    1,309      1,474       591
                                            --------   --------   -------
        Consolidated capital expenditures.. $ 36,184   $ 48,918   $16,175
                                            ========   ========   =======

    Depreciation and amortization of properties:
      Restaurants.......................... $  9,335   $ 12,927   $13,096
      Beverages............................      772        841       999
                                            --------   --------   -------
        Consolidated depreciation and
            amortization of properties..... $ 10,107   $ 13,768   $14,095
                                            ========   ========   =======

(21) Condensed Consolidating Financial Information

    The following condensed  consolidating  financial statements set forth, in
separate columns,  (i) RCAC (parent company only), (ii) the aggregate of those
subsidiaries   which  have  fully  and   unconditionally   guaranteed   RCAC's
obligations  with respect to the Senior Notes as of the end of the  respective
years presented, principally Arby's and Royal Crown, (the "Guarantors"), (iii)
those  subsidiaries  which have not guaranteed RCAC's obligations with respect
to the Senior Notes, including ARDC, ARHC, AROC and certain other subsidiaries
of  RCAC  and  Arby's,   (the   "Non-Guarantors"),   (iv)  the   aggregate  of
consolidating  eliminations  and  reclassifications  ("Eliminations")  and (v)
consolidated    totals   of    RC/Arby's    Corporation    and    subsidiaries
("Consolidated").

                                      51
<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996


CONDENSED CONSOLIDATING BALANCE SHEETS
--------------------------------------

                                                       Non-   Elimin-  Consol-
December 31, 1995:                 RCAC  Guarantors Guarantors ations   idated
------------------                 ----  ---------- ---------- ------   ------

        ASSETS

Current assets:
  Cash......................... $    374  $  5,884  $  3,486 $       - $  9,744
  Receivables, net.............        -    29,796       234         -   30,030
  Note receivable from
    affiliate..................        -         -     5,500         -    5,500
  Inventories..................        -    14,074       796         -   14,870
  Deferred income tax benefit..     (258)    6,192        37         -    5,971
  Prepaid expenses and other
   current assets..............      992     5,913       924         -    7,829
                                --------   -------  -------- --------- --------
     Total current assets......    1,108    61,859    10,977         -   73,944

Properties, net................        -    64,459    58,227         -  122,686
Unamortized costs in excess
  of net assets of acquired
  companies....................        -   170,483       210         -  170,693
Intercompany receivables.......  218,355         -         -  (218,355)       -
Investment in subsidiaries.....   14,715         -         -   (14,715)       -
Deferred income tax benefit....   (2,774)    2,767       800         -      793
Deferred costs and other assets    9,846    12,346     3,912         -   26,104
                                --------  --------  -------- --------- --------
                                $241,250  $311,914  $ 74,126 $(233,070)$394,220
                                ========  ========  ======== ========= ========

    LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)

Current liabilities:
  Current portion of long-
    term debt.................. $      -  $  2,271  $  1,426 $       - $  3,697
  Notes payable to affiliates..   13,925         -         -         -   13,925
  Purchase option deposit......        -     6,700    (6,700)        -        -
  Accounts payable.............        -    20,800     1,835         -   22,635
  Accrued expenses.............   15,735    34,724     1,583         -   52,042
                                --------  --------  -------- --------- --------
    Total current liabilities..   29,660    64,495    (1,856)        -   92,299

Intercompany payables..........        -   211,865     6,560  (218,425)       -
Long-term debt.................  275,000    19,434    56,804         -  351,238
Note payable to affiliate......        -         -     6,700         -    6,700
Deferred income and other
  liabilities..................        -     7,749      (356)        -    7,393

Stockholder's equity (deficit):
   Common stock................        1         3       535      (538)       1
   Additional paid-in capital..   44,300    70,932    11,611   (82,543)  44,300
   Accumulated deficit......... (107,711)  (62,564)   (5,872)   68,436 (107,711)
                                --------  --------  -------- --------- --------
    Total stockholder's
      equity (deficit).........  (63,410)    8,371     6,274   (14,645) (63,410)
                                --------  --------  -------- --------- --------
                                $241,250  $311,914  $ 74,126 $(233,070)$394,220
                                ========  ========  ======== ========= ========

                                      52
<PAGE>



                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

                                                       Non-   Elimin-  Consol-
December 31, 1996:                 RCAC  Guarantors Guarantors ations   idated
------------------                 ----  ---------- ---------- ------   ------
     
         ASSETS

Current assets:
  Cash......................... $     56   $ 4,890  $  2,465  $      -  $ 7,411
  Receivables, net.............        -    34,640       511         -   35,151
  Note receivable from
    affiliate..................        -         -     1,650         -    1,650
  Inventories..................        -    11,462       648         -   12,110
  Assets held for sale.........        -    47,596    23,520         -   71,116
  Deferred income tax benefit..     (112)    8,504       176         -    8,568
  Prepaid expenses and other
     current assets............       15     6,030       716         -    6,761
                                --------   -------  --------  --------  -------
      Total current assets.....      (41)  113,122    29,686         -  142,767

Properties, net................        -    11,926        17         -   11,943
Unamortized costs in excess of
  net assets of acquired
  companies ...................        -   159,123         -         -  159,123
Intercompany receivables.......  221,560         -         -  (221,560)       -
Investment in subsidiaries.....  (33,442)        -         -    33,442        -
Deferred income tax benefit....   (2,774)   14,507    12,498         -   24,231
Deferred costs and other assets    7,736    11,279     3,365         -   22,380
                                --------   -------  --------  -------- --------
                                $193,039  $309,957 $ 45,566  $(188,118)$360,444
                                ========  ======== ========  ========= ========
    
   LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
  Current portion of long-
    term debt.................. $      -   $17,802  $ 55,253  $      -  $73,055
  Notes payable to affiliates..   13,765         -         -         -   13,765
  Purchase option deposit......        -     6,700    (6,700)        -        -
  Accounts payable.............        -    22,996     1,031         -   24,027
  Accrued expenses.............   18,242    41,859     1,643         -   61,744
                                --------  --------  --------  -------- --------
    Total current liabilities..   32,007    89,357    51,227         -  172,591

Intercompany payables..........        -   215,579     6,051  (221,630)       -
Long-term debt.................  275,000     2,991     3,119         -  281,110
Note payable to affiliate......        -         -     6,700         -    6,700
Deferred income and other
  liabilities..................        -    15,184    (1,173)        -   14,011

Stockholder's equity (deficit):
   Common stock................        1         3       535      (538)       1
   Additional paid-in capital..   44,300    70,932     7,861   (78,793)  44,300
   Accumulated deficit......... (158,269)  (84,089)  (28,754)  112,843 (158,269)
                                --------  --------  --------  -------- --------
    Total stockholder's equity
     (deficit)................. (113,968)  (13,154)  (20,358)   33,512 (113,968)
                                --------  --------  --------  -------- --------
                                $193,039  $309,957  $ 45,566 $(188,118)$360,444
                                ========  ========  ======== ========= ========

                                      53
<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

                                                       Non-   Elimin-  Consol-
Year Ended December 31, 1994:      RCAC  Guarantors Guarantors ations   idated
-----------------------------      ----  ---------- ---------- ------   ------

Revenues:
   Net sales................... $      -  $317,937  $  4,951  $      - $322,888
   Royalties, franchise fees
     and other revenues........        -    50,998        19         -   51,017
                                 -------   -------  --------  -------- --------
                                       -   368,935     4,970         -  373,905
                                 -------   -------  --------  -------- --------

Costs and expenses:
   Cost of sales...............        -   170,706     4,710         -  175,416
   Advertising, selling and 
     distribution..............        -    95,342        77         -   95,419
   General and administrative..       75    72,649       272         -   72,996
                                 -------   -------  --------  -------- --------
                                      75   338,697     5,059         -  343,831
                                 -------   -------  --------  -------- --------
    Operating profit (loss)....      (75)   30,238       (89)        -   30,074

Interest expense...............  (32,251)   (2,182)        -         -  (34,433)
Allocation of interest expense
   from RCAC...................   21,800   (21,800)        -         -        -
Other income (expense), net....    1,141      (623)       68         -      586
Equity in net earnings of
   subsidiaries................      623         -         -      (623)       -
                                 -------   -------  --------  -------- --------

   Income (loss) before
    income taxes...............   (8,762)    5,633       (21)     (623)  (3,773)

Benefit from (provision for)
   income taxes................    3,285    (4,960)      (29)        -   (1,704)
                                 -------   -------  --------  -------- --------

   Net income (loss)...........  $(5,477)  $   673  $    (50) $   (623)$ (5,477)
                                 =======   =======  ========  ======== ========


                                      54
<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996


                                                       Non-   Elimin-  Consol-
Year Ended December 31, 1995:      RCAC  Guarantors Guarantors ations   idated
-----------------------------      ----  ---------- ---------- ------   ------

Revenues:
   Net sales..................  $      -  $360,747  $ 28,844  $      - $389,591
   Royalties, franchise fees
     and other revenues.......         -    56,933    (1,141)        -   55,792
                                 -------   -------  --------  -------- --------
                                       -   417,680    27,703         -  445,383
                                 -------   -------  --------  -------- --------

Costs and expenses:
   Cost of sales...............        -   216,191    23,679         -  239,870
   Advertising, selling and
     distribution..............        -   105,864     2,720         -  108,584
   General and administrative..      171    86,645       222         -   87,038
   Reduction in carrying value of
    long-lived assets impaired or
    to be disposed of..........        -    11,527     3,120         -   14,647
                                --------  --------  --------  -------- --------
                                     171   420,227    29,741         -  450,139
                                --------  --------  --------  -------- --------
    Operating loss.............     (171)   (2,547)   (2,038)        -   (4,756)

Interest expense...............  (33,742)   (2,164)   (3,659)        -  (39,565)
Allocation of interest expense
   from RCAC...................   23,985   (23,985)        -         -        -
Other income (expense), net....       16    (2,138)      304         -   (1,818)
Equity in net losses of
  subsidiaries.................  (26,107)        -         -    26,107       -
                                --------  --------  --------  -------- -------- 
    Loss before income taxes...  (36,019)  (30,834)   (5,393)   26,107  (46,139)

Benefit from income taxes......    2,369     8,608     1,512         -   12,489
                                --------  --------  --------  -------- --------

   Net loss.................... $(33,650) $(22,226) $ (3,881) $ 26,107 $(33,650)
                                ========  ========  ========  ======== ======== 


                                      55
<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996


                                                       Non-   Elimin-  Consol-
Year Ended December 31, 1996:      RCAC  Guarantors Guarantors ations   idated
-----------------------------      ----  ---------- ---------- ------   ------

Revenues:
   Net sales................... $      -  $357,282  $ 51,818  $      - $409,100
   Royalties, franchise fees
     and other revenues........        -    59,321    (2,069)        -   57,252
                                --------  --------  --------  -------- --------
                                       -   416,603    49,749         -  466,352
                                --------  --------  --------  -------- --------

Costs and expenses:
   Cost of sales...............        -   209,994    42,817         -  252,811
   Advertising, selling and
     distribution..............        -    97,215     5,320         -  102,535
   General and administrative..      188    77,004       147         -   77,339
   Reduction in carrying value of
    long-lived assets impaired or
    to be disposed of..........        -    27,886    31,014         -   58,900
   Facilities relocation and
     corporate restructuring...        -     6,350         -         -    6,350
                                --------  --------  --------  -------- --------
                                     188   418,449    79,298         -  497,935
                                --------  --------  --------  -------- --------
    Operating profit (loss)....     (188)   (1,846)  (29,549)        -  (31,583)

Interest expense...............  (32,869)   (2,457)   (7,557)        -  (42,883)
Allocation of interest expense
   from RCAC...................   23,592   (23,592)        -         -        -
Other income (expense), net....        2       808      (248)        -      562
Equity in net losses of
  subsidiaries.................  (44,407)        -         -     44,407       -
                                --------  --------  --------  -------- --------
   Loss before income taxes....  (53,870)  (27,087)  (37,354)   44,407  (73,904)

Benefit from income taxes......    3,312     5,562    14,472         -   23,346
                                --------  --------  --------  -------- --------

   Net loss.................... $(50,558) $(21,525) $(22,882) $ 44,407 $(50,558)
                                ========  ========  ========  ======== ======== 


                                      56
<PAGE>
                                   
 

                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

CONDENSED CONSOLIDATING STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
                                    
                                                       Non-   Elimin-  Consol-
                                   RCAC  Guarantors Guarantors ations   idated
                                   ----  ---------- ---------- ------   ------
Common stock:
   Balance at December 31, 1993  $   104   $     2  $    564  $   (566) $   104
     Recapitalization..........     (103)        -         -         -     (103)
     Capital contributions.....        -         -         3        (3)       -
     Dissolution of
       subsidiaries............        -         -       (36)       36        -
                                 -------   -------  --------  --------  -------
   Balance at December 31, 1994  $     1   $     2  $    531  $   (533) $     1
     Capital contributions.....        -         -         6        (6)       -
     Designation of certain Non-
     Guarantors as Guarantors..        -         1        (2)        1        -
                                 -------   -------  --------  --------  -------
   Balance at December 31, 1995
     and 1996..................  $     1   $     3  $    535  $   (538) $     1
                                 =======   =======  ========  ========  =======

Additional paid-in capital:
   Balance at December 31, 1993  $35,332   $67,298  $  4,097  $(71,395) $35,332
     Recapitalization..........      103         -         -         -      103
     Capital contributions.....        -         -     2,293    (2,293)       -
     Return of capital.........        -         -      (300)      300        -
     Dissolution of
       subsidiaries............        -         -       (54)       54        -
                                 -------   -------  --------  --------  -------
   Balance at December 31, 1994   35,435    67,298     6,036   (73,334)  35,435
     Capital contributions.....    8,865         -    14,733   (14,733)   8,865
     Return of capital.........        -         -    (5,500)    5,500        -
     Designation of certain Non-
       Guarantors as Guarantors        -     3,634    (3,658)       24        -
                                 -------   -------  --------  --------  -------
   Balance at December 31, 1995   44,300    70,932    11,611   (82,543)  44,300
     Return of capital.........        -         -    (3,750)    3,750        -
                                 -------   -------  --------  --------  -------
   Balance at December 31, 1996  $44,300   $70,932  $  7,861  $(78,793) $44,300
                                 =======   =======  ========  ========  =======

Accumulated deficit:
   Balance at December 31, 1993 $(68,584) $(22,727) $ (5,492) $ 28,219 $(68,584)
     Dissolution of
       subsidiaries............        -       146      (146)        -        -
     Net loss..................   (5,477)      673       (50)     (623)  (5,477)
                                 -------   -------  --------  -------- --------
   Balance at December 31, 1994  (74,061)  (21,908)   (5,688)   27,596  (74,061)
     Designation of certain Non-
       Guarantors as Guarantors        -    (3,697)    3,697         -        -
     Dividend..................        -   (14,733)        -    14,733        -
     Net loss..................  (33,650)  (22,226)   (3,881)   26,107  (33,650)
                                 -------   -------  --------  -------- --------
   Balance at December 31, 1995 (107,711)  (62,564)   (5,872)   68,436 (107,711)
     Net loss..................  (50,558)  (21,525)  (22,882)   44,407  (50,558)
                                 -------   -------  --------  -------- --------
   Balance at December 31,
     1996......................$(158,269) $(84,089) $(28,754) $112,843$(158,269)
                               =========  ========  ========  ======== ======== 


                                      57
<PAGE>



                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS


                                                       Non-   Elimin-  Consol-
Year Ended December 31, 1994:      RCAC  Guarantors Guarantors ations   idated
-----------------------------      ----  ---------- ---------- ------   ------

Net cash provided by (used in)
  operating activities.......... $(33,983) $24,747  $   (166) $      -  $(9,402)
                                 --------  -------  --------  --------  -------

Cash flows from investing activities:
   Business acquisitions........       -   (13,120)     (466)        -  (13,586)
   Capital expenditures.........       -   (33,689)      (37)        -  (33,726)
   Proceeds from sales of
     properties.................       -     7,314         -         -    7,314
   Other........................  (2,296)     (157)    1,250         -   (1,203)
                                 -------   -------  --------  --------  -------
Net cash provided by (used in)
   investing activities.........  (2,296)  (39,652)      747         -  (41,201)
                                 -------   -------  --------  --------  -------

Cash flows from financing activities:
   Borrowings and collections
    from affiliates, net........  (8,348)   14,273         -         -    5,925
 Repayments of long-term debt...  (6,470)   (2,203)        -         -   (8,673)
                                 -------   -------  --------  --------  -------
Net cash provided by (used in)
   financing activities......... (14,818)   12,070         -         -   (2,748)
                                 -------   -------  --------  --------  -------

Net increase (decrease) in cash. (51,097)   (2,835)      581         -  (53,351)
Cash at beginning of year.......  51,985     3,060       191         -   55,236
                                 -------   -------  --------  --------  -------
Cash at end of year............. $   888   $   225  $    772  $      -  $ 1,885
                                 =======   =======  ========  ========  =======


                                      58
<PAGE>



                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996


                                                       Non-   Elimin-  Consol-
Year Ended December 31, 1995:      RCAC  Guarantors Guarantors ations   idated
-----------------------------      ----  ---------- ---------- ------   ------

Net cash provided by (used in)
  operating activities.......... $(24,449) $17,901  $  6,571  $      -  $    23
                                 --------  -------  --------  --------  -------

Cash flows from investing activities:
   Business acquisitions........       -   (14,335)        -         -  (14,335)
   Capital expenditures.........       -   (32,442)  (16,114)        -  (48,556)
   Investment in preferred stock
    of affiliate................       -    (1,000)        -         -   (1,000)
   Return of capital............   5,500         -    (5,500)        -        -
   Proceeds from sales of
     properties.................       -    33,599   (31,602)        -    1,997
   Other........................      (6)        -         6         -        -
                                 -------   -------  --------  --------  -------
Net cash provided by (used in)
   investing activities.........   5,494   (14,178)  (53,210)        -  (61,894)
                                 -------   -------  --------  --------  -------

Cash flows from financing activities:
   Proceeds from issuance of debt      -     2,950    58,670         -   61,620
   Purchase option deposit......       -     6,700    (6,700)        -        -
   Borrowings and collections
     from affiliates, net.......   9,576    (4,826)    1,200         -    5,950
   Repayments of long-term debt.       -    (2,918)     (440)        -   (3,358)
   Capital contribution from
    CFC Holdings Corp...........   8,865         -         -         -    8,865
   Deferred financing costs.....       -         -    (3,347)        -   (3,347)
                                 -------   -------  --------  --------  -------
Net cash provided by financing
  activities....................  18,441     1,906    49,383        -    69,730
                                 -------   -------  --------  --------  -------

Net increase (decrease) in cash.    (514)    5,629     2,744         -    7,859
Designation of certain Non-
  Guarantors as Guarantors......       -        30       (30)        -        -
Cash at beginning of year.......     888       225       772         -    1,885
                                 -------   -------  --------  --------  -------
Cash at end of year............. $   374   $ 5,884  $  3,486  $      -  $ 9,744

                                 =======   =======  ========  ========  =======

                                      59
<PAGE>

 

                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 31, 1996


                                                       Non-   Elimin-  Consol-
Year Ended December 31, 1994:      RCAC  Guarantors Guarantors ations   idated
-----------------------------      ----  ---------- ---------- ------   ------

Net cash provided by (used in)
  operating activities.......... $(4,982)  $18,354  $     95  $      -  $13,467
                                 -------   -------  --------  --------  -------

Cash flows from investing activities:
   Business acquisitions........       -    (4,754)    2,782         -   (1,972)
   Capital expenditures.........       -   (13,543)   (2,632)        -  (16,175)
   Proceeds from sales of
     properties.................       -     2,591    (1,183)        -    1,408
   Return of capital............   3,750         -    (3,750)        -        -
                                 -------   -------  --------  --------  -------
Net cash provided by (used in)
   investing activities.........   3,750   (15,706)   (4,783)        -  (16,739)
                                 -------   -------  --------  --------  -------

Cash flows from financing activities:
   Proceeds from issuance of debt      -         -     4,027         -    4,027
   Borrowings and collections
     from affiliates, net.......     914    (1,074)    3,850         -    3,690
   Repayments of long-term debt.       -    (2,568)   (3,885)        -   (6,453)
   Deferred financing costs.....       -         -      (325)        -     (325)
                                 -------   -------  --------  --------  -------
Net cash provided by (used in)
   financing activities.........     914    (3,642)    3,667         -      939
                                 -------   -------  --------  --------  -------

Net decrease in cash............    (318)     (994)   (1,021)        -   (2,333)
Cash at beginning of year.......     374     5,884     3,486         -    9,744
                                 -------   -------  --------  --------  -------
Cash at end of year............. $    56   $ 4,890  $  2,465  $      -  $ 7,411
                                 =======   =======  ========  ========  =======


                                      60
<PAGE>



Item 9. Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure.

    Not applicable.


                                   PART III

Items 10, 11, 12 and 13.

    Items 10, 11, 12 and 13 are omitted  because RCAC meets the conditions set
forth in General Instruction J(1)(a) and (b) of Form 10-K.

                                   PART  IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

    (a) 1. Financial Statements

           See Index to Financial Statements (Item 8)

        2. Financial Statement Schedules:

           All schedules are omitted because they are not  applicable  or  the
           required  information  is  shown  in  the  consolidated   financial
           statements or notes thereto.

        3. Exhibits:

           Copies of the following exhibits are available at a charge of $.25
           per page upon written request to the Secretary of the  Company  at
           1000 Corporate Drive, Fort Lauderdale, FL  33334.


           Exhibit
             No.                   Description
             ---                   -----------

            3.1   Certificate  of  Incorporation   of  RC/Arby's   Corporation
                  ("RCAC"), incorporated herein by reference to RCAC's Current
                  Report on Form 8-K dated November 14, 1996.

            3.2   Articles  of  Amendment  of  RCAC  incorporated   herein  by
                  reference  to Exhibit 3.2 to the Annual  Report on Form 10-K
                  of RCAC for the year  ended  December  31,  1993 (the  "1993
                  10-K").

            3.3   Certificate  of  Merger  Merging  RCAC into RCC Investments,
                  Inc. incorporated  herein by reference to Exhibit 3.3 to the
                  1993 10-K.

            3.4   By-Laws of RCAC, incorporated herein by reference to Exhibit
                  3.2 to RCAC's  Current Report on Form 8-K dated November 14,
                  1996.

            3.5   Certificate  of  Incorporation of Royal Crown Company, Inc.,
                  then   known   as  Royal  Crown Cola  Co.  ("Royal  Crown"),
                  incorporated herein by reference to Exhibit 3.3 to the S-1.



                                      61
<PAGE>


            3.6   Certificate of Amendment of Certificate of  Incorporation of
                  Royal Crown incorporated  herein by reference to Exhibit 3.6
                  to the 1993 10-K.

            3.7   By-Laws of Royal Crown,  incorporated herein by reference to
                  Exhibit 3.4 to the S-1.

            3.8   Restated   Certificate  of  Incorporation  of  Arby's,  Inc.
                  ("Arby's"),  incorporated herein by reference to Exhibit 3.5
                  to the S-1.

            3.9   Amended Code of Regulations of Arby's,  incorporated  herein
                  by reference to Exhibit 3.6 to the S-1.

            3.10  Certificate  of  Merger  Merging  Arby's,  Inc. into  Arby's
                  Merger  Corp. incorporated  herein  by  reference to Exhibit
                  3.10 to the 1993 10-K.

            4.1   Indenture  dated as of April  23,  1993  among  RCAC,  Royal
                  Crown, Arby's and The Bank of New York,  incorporated herein
                  by reference to Exhibit 5 to Triarc Companies, Inc.'s., then
                  known as DWG Corporation ("Triarc"),  Current Report on Form
                  8-K dated April 23, 1993 (SEC file #1-2207).

            4.2   Note  Purchase  Agreement  dated as of April 23,  1993 among
                  RCAC, Triarc, RCRB Funding,  Inc. and Merrill Lynch, Pierce,
                  Fenner  &  Smith   Incorporated,   incorporated   herein  by
                  reference  to Exhibit 4 to Triarc's  Current  Report on Form
                  8-K dated April 23, 1993 (SEC file #1-2207).

            4.3   Form of Indenture  among RCAC,  Royal Crown,  Arby's and The
                  Bank of New York, as Trustee,  relating to the 9-3/4% Senior
                  Secured Notes Due 2000,  incorporated herein by reference to
                  Exhibit 4.1 to the S-1.

            4.4   Loan  Agreement  dated as of May 1, 1995 by and between FFCA
                  Acquisition  Corporation and Arby's  Restaurant  Development
                  Corporation  ("ARDC"),  incorporated  herein by reference to
                  Exhibit 4.1 to RCAC's Quarterly Report on Form 10-Q for the
                  quarter ended March 31, 1995.

            4.5   Amended and Restated Loan Agreement  dated as of October 13,
                  1995 by and between FFCA  Acquisition  Corporation and ARDC,
                  incorporated  herein by  reference to Exhibit 10.1 to RCAC's
                  Quarterly   Report  on  Form  10-Q  for  the  quarter  ended
                  September 30, 1995.

            4.6   Loan  Agreement  dated as of October 13, 1995 by and between
                  FFCA Acquisition  Corporation and Arby's Restaurant  Holding
                  Company  ("ARHC"),   incorporated  herein  by  reference  to
                  Exhibit 10.2 to RCAC's Quarterly Report on Form 10-Q for the
                  quarter ended September 30, 1995.

            4.7   Letter  Agreement  dated December 15, 1996 among ARHC,  ARDC
                  and FFCA  Acquisition  Corporation,  incorporated  herein by
                  reference  to Exhibit 4.7 to the Annual  Report on Form 10-K
                  of RCAC for the year ended December 31, 1995.

            4.8   Loan Agreement  dated as of September 5, 1996 by and between
                  FFCA Mortgage  Corporation and ARHC,  incorporated herein by
                  reference  to Exhibit 4.1 to RCAC's  Current  Report on Form
                  8-K, dated November 14, 1996.


                                      62
<PAGE>


            4.9   Supplement to Loan Agreements as of June 26, 1996 among FFCA
                  Acquisition  Corporation,  ARHC, ARDC and Triarc  Companies,
                  Inc.,  incorporated  herein by  reference  to Exhibit 4.2 to
                  RCAC's Current Report on Form 8-K, dated November 14, 1996.

            4.10  Agreement     Regarding      Cross-Collateralization     and
                  Cross-Default  Provisions  as of June 26,  1996 by and among
                  FFCA  Acquisition   Corporation,   ARDC,  ARHC  and  Arby's,
                  incorporated  herein by  reference  to Exhibit 4.3 to RCAC's
                  Current Report on Form 8-K, dated November 14, 1996.

            10.1  Tax Sharing  Agreement  dated as of April 23,  1993  between
                  RCAC and Triarc, incorporated herein by reference to Exhibit
                  10.1 to the S-1.

            10.2  Management  Services  Agreement  dated  as of April 23, 1993
                  between  Triarc  and  Royal Crown,  incorporated  herein  by
                  reference  to  Exhibit  10.3  to  Amendment No. 1 to the S-1
                  dated July 12, 1993 (the "Amendment No. 1").

            10.3  Management  Services  Agreement  dated  as of April 23, 1993
                  between  Triarc and Arby's, incorporated herein by reference
                  to Exhibit 10.4 to Amendment No. 1.

            10.4  Employment  Agreement dated as of April 24, 1993 among Royal
                  Crown,  Triarc and John C.  Carson,  incorporated  herein by
                  reference  to Exhibit 8 to Triarc's  Current  Report on Form
                  8-K dated April 23, 1993 (SEC file #1-2207).

            10.5  Employment  Agreement  dated as of April  24,  1993  between
                  Arby's  and  Donald  L.  Pierce,   incorporated   herein  by
                  reference  to Exhibit 7 to Triarc's  Current  Report on Form
                  8-K dated April 23, 1993 (SEC file #1-2207).

            10.6  Concentrate  Sales  Agreement  dated as of January  28, 1994
                  between  Royal  Crown  and  Cott  Corporation,  incorporated
                  herein by reference to Exhibit  10.12 to Amendment  No. 1 to
                  Triarc's  Registration  Statement  Form S-4 dated  March 11,
                  1994 (SEC file #1-2207).

            10.7  Triarc's 1993 Equity Participation Plan, incorporated herein
                  by  reference  to  Exhibit E to  Triarc's  Definitive  Proxy
                  Statement   relating   to   Triarc's   annual   meeting   of
                  stockholders held on June 9, 1994 (SEC file No. 1-2207).

            10.8  Form of Non-Incentive  Stock Option Agreement under Triarc's
                  Amended  and  Restated  1993  Equity   Participation   Plan,
                  incorporated  herein by  reference to Exhibit 12 to Triarc's
                  Current  Report on Form 8-K dated  April 23,  1993 (SEC file
                  #1-2207).

            10.9  Form of Restricted  Stock Agreement  under Triarc's  Amended
                  and Restated 1993 Equity  Participation  Plan,  incorporated
                  herein by reference to Exhibit 13 to Triarc's Current Report
                  on Form 8-K dated April 23, 1993 (SEC file #1-2207).

            10.10 Stock  Purchase  Agreement  dated  February  13, 1997 by and
                  among  Arby's,  ARDC,  ARHC,  Arby's  Restaurant  Operations
                  Company,  RTM,  Inc. and RTM  Partners,  Inc.,  incorporated
                  herein by reference to Exhibit 10.1 to RCAC's Current Report
                  on Form 8-K dated February 20, 1997.


                                      63
<PAGE>


            27.1 Financial Data Schedule for the year ended December 31, 1996,
                 submitted  t o the  Securities  and  Exchange  Commission  in
                 electronic format.*
     
            ---------------
            *     Filed herewith

      (b)   Reports on Form 8-K:

            During the three months ended  December 31, 1996,  the  registrant
            filed  reports on Form 8-K dated  October 29, 1996 with respect to
            Item 5, "Other  Events," and dated  November 14, 1996 with respect
            to Item 7, "Exhibits."

      (d)   Financial Statements:

            Consolidated  financial  statements  of Arby's as of December  31,
            1995 and 1996 and for the years ended December 31, 1994,  1995 and
            1996.

            Consolidated  financial  statements  of Royal Crown as of December
            31, 1995 and 1996 and for the years ended December 31, 1994,  1995
            and 1996.

                                      64
<PAGE>


                                  SIGNATURES


      Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934,  the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                          RC/ARBY'S CORPORATION
                                                (Registrant)


                                              /s/ NELSON PELTZ
                                          By:.................... 
                                             Nelson Peltz
                                             Chairman and Chief
Dated:  April 15, 1997                       Executive Officer

      Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this report has been signed below on April 15, 1997 by the  following  persons
on behalf of the registrant in the capacities indicated.

         Signature                                   Titles
         ---------                                   ------


      /s/  NELSON PELTZ                      Chairman and Chief Executive
 .................................            Officer, and Director
      (Nelson Peltz)                         (Principal Executive Officer)


      /s/  PETER W. MAY                      President and Chief Operating
 .................................            Officer, and Director
      (Peter W. May)                         (Principal Operating Officer)


      /s/  JOHN L. BARNES, JR.               Senior Vice President and
 .................................            Chief Financial Officer
      (John L. Barnes, Jr.)                  (Principal Financial Officer)


      /s/  FRED H. SCHAEFER                   Vice President and Chief
 .................................             Accounting Officer
      (Fred H. Schaefer)                      (Principal Accounting Officer)


      /s/  ALEXANDER E. FISHER                Director
 .................................
      (Alexander E. Fisher)



                                      65


<PAGE>


                                 ARBY'S, INC.
                                 ------------

                       CONSOLIDATED FINANCIAL STATEMENTS
                       ---------------------------------

                               DECEMBER 31, 1996
                               -----------------






<PAGE>



                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                           Page

Independent Auditors' Report...............................................  1
Consolidated Balance Sheets as of December 31, 1995 and 1996...............  2
Consolidated Statements of Operations for the years ended
    December 31, 1994, 1995 and 1996.......................................  3
Consolidated Statements of Stockholder's Equity for the years ended
    December 31, 1994, 1995 and 1996.......................................  4
Consolidated Statements of Cash Flows for the years ended
    December 31, 1994, 1995 and 1996.......................................  5
Notes to Consolidated Financial Statements.................................  7

                                     (i)


<PAGE>










INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholder of
Arby's, Inc.:

   We have audited the  accompanying  consolidated  balance  sheets of Arby's,
Inc. (a wholly-owned  subsidiary of RC/Arby's Corporation) and subsidiaries as
of December  31, 1996 and 1995,  and the related  consolidated  statements  of
operations, stockholder's equity and cash flows for each of the three years in
the period  ended  December  31,  1996.  These  financial  statements  are the
responsibility of Arby's, Inc. management. Our responsibility is to express an
opinion on these financial statements based on our audits.

   We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those  standards  require  that we plan and  perform  the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial  statements.  An audit
also  includes  assessing  the  accounting  principles  used  and  significant
estimates  made by  management,  as well as evaluating  the overall  financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

   In our opinion,  such consolidated  financial statements present fairly, in
all material respects, the financial position of Arby's, Inc. and subsidiaries
as of December 31, 1996 and 1995 and the results of their operations and their
cash flows for each of the three years in the period  ended  December 31, 1996
in conformity with generally accepted accounting principles.

   As discussed in Note 1 to the consolidated  financial  statements,  in 1995
Arby's, Inc. changed its method of accounting for the impairment of long-lived
assets and for long-lived assets to be disposed of.




DELOITTE & TOUCHE LLP
Certified Public Accountants

Fort Lauderdale, Florida
March 31, 1997

                                      1

<PAGE>



                                 ARBY'S, INC.
                          CONSOLIDATED BALANCE SHEETS



                                                                 December 31,
                                                               --------------
                                                               1995      1996
                                                               ----      ----
                                                               (In thousands)
                                    ASSETS

Current assets:
  Cash.....................................................  $ 5,121   $ 4,090
  Receivables, net (Note 4)................................    6,966     6,821
  Inventories..............................................    2,203     2,157
  Assets held for sale (Note 3)............................        -    47,596
  Deferred income tax benefit (Note 8).....................    4,155     4,026
  Prepaid expenses and other current assets................    1,173     2,341
                                                             -------   -------
    Total current assets...................................   19,618    67,031

Properties, net (Note 5)...................................   57,564     6,699
Unamortized costs in excess of net assets
  of acquired companies (Note 1)...........................   28,109    21,666
Deferred income tax benefit (Note 8).......................    4,379    15,840
Deferred costs and other assets............................    9,140     7,324
                                                            --------  --------
                                                            $118,810  $118,560
                                                            ========  ========

            LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
  Current portion of long-term debt (Note 7)............... $  2,271   $17,802
  Due to Parent and affiliates, net (Note 10)..............   11,588    10,410
  Accounts payable.........................................    8,912    10,306
  Purchase option deposit from affiliate (Note 10).........    6,700     6,700
  Accrued expenses (Note 6)................................   24,320    31,529
                                                            --------   -------
    Total current liabilities..............................   53,791    76,747

Long-term debt (Note 7)....................................   19,434     2,991
Deferred income and other liabilities......................    6,456    14,258
Commitments and contingencies (Notes 2, 3, 7, 8, 12 and 13)

Stockholder's equity (Note 7):
  Common stock, $1.00 par value; 1,000 shares authorized,
    issued and outstanding.................................        1         1
  Additional paid-in capital...............................   24,872    24,872
  Retained earnings (accumulated deficit)..................   14,256      (309)
                                                            --------  --------
    Total stockholder's equity.............................   39,129    24,564
                                                            --------  --------
                                                            $118,810  $118,560
                                                            ========  ========

         See accompanying notes to consolidated financial statements.


                                      2

<PAGE>



                                 ARBY'S, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS



                                                     Year ended December 31,
                                                     1994       1995      1996
                                                   ---------   ------    -----
                                                          (In thousands)

Revenues:
   Net sales.....................................$171,858   $188,144   $179,275
   Royalties.....................................  46,670     51,277     55,708
   Franchise fees................................   3,653      4,648      2,834
   Other revenues................................     700      1,008        779
                                                  -------   --------   --------
                                                  222,881    245,077    238,596
                                                  -------   --------   --------

Costs and expenses:
   Cost of sales................................. 139,744    159,119    148,374
   Advertising and selling (Note 1)..............  17,156     19,638     20,292
   General and administrative (Notes 10 and 11)..  50,390     59,204     53,288
   Reduction in carrying value of long-lived
      assets impaired or to be disposed of
      (Notes 1 and 3)............................       -     11,527     27,886
   Corporate restructuring (Note 9)..............       -          -      2,400
                                                  -------   --------   --------
                                                  207,290    249,488    252,240
                                                  -------   --------   --------

      Operating profit (loss)....................  15,591     (4,411)   (13,644)

Interest expense.................................  (2,166)    (2,188)    (2,457)
Allocation of interest expense from Parent
  (Note 10)......................................  (1,800)    (3,985)    (3,592)
Other income (expense), net (Note 14)............    (872)    (1,341)       522
                                                  -------    -------   --------

      Income (loss) before income taxes .........  10,753    (11,925)   (19,171)

Benefit from (provision for) income taxes
  (Note 8).......................................  (4,761)     3,764      4,606
                                                  -------    -------   --------

      Net income (loss).......................... $ 5,992    $(8,161)  $(14,565)
                                                  =======    =======   ========

         See accompanying notes to consolidated financial statements.


                                        3

<PAGE>



                                 ARBY'S, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                   For the three years ended December 31, 1996








                                                                      
                                         Common Stock                          
                                     ------------------  Additional   Retained  
                                      Number              Paid-in     Earnings
                                     of Shares   Amount   Capital     (Deficit)
                                     ---------   ------   -------     ---------
                                                    (Dollars in thousands)


Balance at December 31, 1993........    1,000   $      1    $24,872    $31,158
   Net income.......................        -          -          -      5,992
                                     --------   --------    -------    -------
Balance at December 31, 1994........    1,000          1     24,872     37,150
   Dividend (Note 10)...............        -          -          -    (14,733)
   Net loss.........................        -          -          -     (8,161)
                                     --------   --------    -------    -------
Balance at December 31, 1995........    1,000          1     24,872     14,256
   Net loss.........................        -          -          -    (14,565)
                                     --------   --------    -------    -------
Balance at December 31, 1996........    1,000   $      1    $24,872    $  (309)
                                     ========   ========    =======    =======

         See accompanying notes to consolidated financial statements.


                                        4

<PAGE>




                                 ARBY'S, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                       Year ended December 31,
                                                       1994     1995     1996
                                                    --------   ------   -----
                                                                (In thousands)
Cash flows from operating activities:
   Net income (loss)............................. $  5,992  $ (8,161) $(14,565)
   Adjustments to reconcile net income (loss) to
     net cash provided by operating activities:
      Reduction in carrying value of long-lived
        assets...................................         -    11,527   27,886
      Depreciation and amortization of properties     9,324    11,098    8,947
      Amortization of costs in excess of net
        assets of acquired companies and other
        intangibles..............................     2,029     3,334    2,919
      Provision for corporate restructuring......         -         -    2,400
      Payments on facilities relocation and
        corporate restructuring..................    (1,375)        -        -
      Benefit from deferred income taxes.........    (1,135)   (3,524) (11,332)
      Provision for doubtful accounts............       420       566      424
      Loss (gain) on disposal of properties, net.      (124)    1,492     (305)
      Other, net.................................    (1,761)   (4,782)    (213)
      Changes in operating assets and liabilities:
        Decrease (increase) in:
          Receivables............................       444    (1,173)    (279)
          Inventories............................      (226)      444       46
          Prepaid expenses and other current
           assets................................      (241)      675   (1,168)
        Increase (decrease) in:
          Accounts payable.......................     6,007    (3,551)  (1,844)
          Accrued expenses.......................     3,967     4,383    4,838
                                                   --------  --------  -------
Net cash provided by operating activities........    23,321    12,328   17,754
                                                   --------  --------  -------
Cash flows from investing activities:
   Business acquisitions:
     Properties, net.............................    (9,894)   (9,219)  (2,782)
     Trademarks, favorable lease acquisition costs
       and non-compete agreement.................      (878)   (1,876)  (1,972)
     Costs in excess of net assets of acquired
       companies.................................    (5,074)   (2,708)       -
     Net current assets..........................         -      (335)       -
     Capitalized leases assumed..................     2,726     2,726        -
                                                   --------  --------  -------
                                                    (13,120)  (11,412)  (4,754)
   Capital expenditures..........................   (32,430)  (30,968) (12,952)
   Proceeds from sales of properties.............     7,306    33,012    2,563
   Other  .......................................      (157)        -        -
                                                   --------  --------  -------
Net cash used in investing activities............   (38,401)   (9,368) (15,143)
                                                   --------  --------  -------
Cash flows from financing activities:
   Repayments of long-term debt..................    (2,097)   (2,918)  (2,568)
   Borrowings from (advances/repayments to) Parent
     and affiliates, net.........................    14,273    (4,826)  (1,074)
   Purchase option deposit received from affiliate        -     6,700        -
   Proceeds from issuance of long-term debt......         -     2,950        -
                                                   --------  --------  -------
Net cash provided by (used in) financing activities  12,176     1,906   (3,642)
                                                   --------  --------  -------
Net increase (decrease) in cash .................    (2,904)    4,866   (1,031)
Cash at beginning of year........................     3,159       255    5,121
                                                   --------  --------  -------
Cash at end of year..............................  $    255  $  5,121  $ 4,090
                                                   ========  ========  =======

                                  (continued)

          See accompanying notes to consolidated financial statements.


                                        5

<PAGE>




                                 ARBY'S, INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)



                                                    Year ended December 31,
                                                   --------------------------
                                                    1994      1995      1996
                                                   ------    ------    ------
                                                          (In thousands)

Supplemental  disclosures of cash flow information:
  Cash paid during the year for:
     Interest..................................   $ 2,134   $  2,537   $ 2,440
                                                  =======   ========   =======
     Income taxes..............................   $ 1,384   $    685   $   142
                                                  =======   ========   =======

Supplemental disclosures of noncash investing
  and financing activities:
     Total capital expenditures................   $34,873   $ 31,330   $12,952
     Amounts representing capitalized leases...    (2,443)      (362)        -
                                                  -------   --------   -------
      Capital expenditures paid in cash........   $32,430   $ 30,968   $12,952
                                                  =======   ========   =======

     As  described  in Note 10, in May 1995  Arby's  made a non-cash  dividend
aggregating  $14,733,000 to the Parent  consisting of the land,  buildings and
related improvements of 39 restaurants.

          See accompanying notes to consolidated financial statements.


                                        6

<PAGE>

                                 
                                 ARBY'S, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              December 31, 1996


(1) Summary of Significant Accounting Policies

Principles of Consolidation

   The consolidated  financial statements include the accounts of Arby's, Inc.
("Arby's"), a wholly-owned subsidiary of RC/Arby's Corporation (the "Parent"),
which  is a  direct  wholly-owned  subsidiary  of  CFC  Holdings  Corp.  ("CFC
Holdings") and an indirect wholly-owned  subsidiary of Triarc Companies,  Inc.
("Triarc") and its  subsidiaries.  All significant  intercompany  balances and
transactions  have been  eliminated in  consolidation.  The Parent has certain
wholly-owned  subsidiaries  other than Arby's,  including Royal Crown Company,
Inc.  ("Royal  Crown") and  certain  subsidiaries  involved  in quick  service
restaurant operations,  principally Arby's Restaurant Development  Corporation
("ARDC"),  Arby's  Restaurant  Holding Company ("ARHC") and Arby's  Restaurant
Operations Company ("AROC").

Inventories

   Inventories,  consisting  principally of raw  materials,  are stated at the
lower  of cost  (determined  on the  first-in,  first-out  basis)  or  market.
Substantially  all  inventories  are pledged as collateral for certain debt of
the Parent (see Note 7).

Properties and Depreciation and Amortization

   Properties   are  stated  at  cost  less   accumulated   depreciation   and
amortization. Depreciation and amortization is calculated on the straight-line
basis  using the  estimated  useful  lives of the  related  major  classes  of
properties:  15-20  years  for  buildings  and 3-8  years  for  machinery  and
equipment.  Leased assets capitalized and leasehold improvements are amortized
over  the  shorter  of  their  estimated  useful  lives  or the  terms  of the
respective leases.

Unamortized Costs in Excess of Net Assets of Acquired Companies

   Costs in excess of net assets of acquired companies  ("Goodwill") are being
amortized  on  the  straight-  line  basis  over  15  to 40  years.  Aggregate
accumulated  amortization  of Goodwill was  $7,263,000  and  $7,522,000  as of
December 31, 1995 and 1996, respectively.

Impairments

   Goodwill

     The amount of  impairment,  if any, in  unamortized  Goodwill is measured
based on projected future results of operations.  To the extent future results
of  operations  through  the  period  such  Goodwill  is being  amortized  are
sufficient to absorb the related  amortization,  Arby's has deemed there to be
no impairment of Goodwill.


                                      7

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



   Long-Lived Assets

   Effective October 1, 1995 Arby's adopted Statement of Financial  Accounting
Standards  ("SFAS") No. 121,  "Accounting  for the  Impairment  of  Long-Lived
Assets and for  Long-Lived  Assets to Be Disposed Of". This standard  requires
that long-lived assets and certain  identifiable  intangibles held and used by
an  entity  be  reviewed  for  impairment   whenever   events  or  changes  in
circumstances  indicate  that  the  carrying  amount  of an  asset  may not be
recoverable.  In 1996 Arby's  recorded a provision of  $27,886,000 in order to
reduce the  carrying  value of  certain  long-lived  assets  and  identifiable
intangibles  relating to the  estimated  loss on the  anticipated  sale of all
company-owned restaurants (see Note 3).

Advertising Costs

   The Company  accounts for  advertising  production  costs by expensing such
production  costs  the  first  time  the  related   advertising  takes  place.
Advertising costs amounted to $16,742,000, $19,072,000 and $19,868,000 for the
years ended December 31, 1994, 1995 and 1996, respectively.

Income Taxes

   Arby's is included in the  consolidated  Federal income tax return filed by
Triarc.  Under a tax sharing agreement  between Triarc and the Parent,  Arby's
provides for Federal  income taxes on the same basis as if it filed a separate
consolidated  return.  Deferred income taxes are provided to recognize the tax
effect of temporary  differences  between the bases of assets and  liabilities
for tax and financial statement purposes.

Franchise Fees and Royalties

   Franchise  fees are  recognized  as income when a franchised  restaurant is
opened.  Franchise fees for multiple area developments represent the aggregate
of the franchise fees for the number of  restaurants  in the area  development
and are recognized as income when each restaurant is opened in the same manner
as  franchise  fees  for  individual  restaurants.  Royalties  are  based on a
percentage of  restaurant  sales of the  franchised  outlet and are accrued as
earned.

Reclassifications

   Certain  amounts  included  in  the  prior  years'  consolidated  financial
statements  have  been   reclassified  to  conform  with  the  current  year's
presentation.

(2) Significant Risks and Uncertainties

Nature of Operations

   Arby's primarily franchises and operates (see Note 3 regarding the February
1997  agreement to sell all  company-owned  restaurants)  Arby's quick service
restaurants  representing the largest franchise restaurant system specializing
in roast beef  sandwiches.  Arby's  operations  principally are throughout the
United States.

                                      8

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



Use of Estimates

   The  preparation of  consolidated  financial  statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure  of  contingent   assets  and   liabilities  at  the  date  of  the
consolidated  financial  statements  and the  reported  amount of revenues and
expenses during the reporting  period.  Actual results could differ from those
estimates.

Significant Estimates

   Arby's  significant  estimates are for costs related to (i)  provisions for
impairment of long-lived  assets and for  long-lived  assets to be disposed of
(see Note 3) and (ii) provisions for legal contingencies (see Note 13).

Certain Risk Concentrations

   Arby's believes that its  vulnerability to risk  concentrations  related to
significant  customers  and  vendors,  products  sold and  sources  of its raw
materials  is not  significant.  Risk of  geographical  concentration  is also
minimized since Arby's  generally  operates  throughout the United States with
limited foreign exposure.

(3) Planned Transactions

Spinoff

   In October 1996 Triarc  announced  that its Board of  Directors  approved a
plan to  offer up to  approximately  20% of the  shares  of its  beverage  and
restaurant  businesses  (including  those of Arby's) to the public  through an
initial  public  offering and to spin off the  remainder of the shares of such
businesses to Triarc stockholders (collectively,  the "Spinoff Transactions").
Consummation  of the  Spinoff  Transactions  will be subject  to,  among other
things,  receipt of a  favorable  ruling  from the  Internal  Revenue  Service
("IRS")  that the  Spinoff  Transactions  will be  tax-free  to Triarc and its
subsidiaries  and its  stockholders.  The  request for the ruling from the IRS
contains several complex issues and there can be no assurance that Triarc will
receive the ruling or that Triarc will  consummate  the Spinoff  Transactions.
The  Spinoff  Transactions  are not  expected to occur prior to the end of the
second quarter of 1997. Triarc is currently  evaluating the impact, if any, of
its proposed  acquisition of Snapple Beverage Corp. (which Triarc announced on
March 27, 1997) on the anticipated structure of the Spinoff Transactions.

Sale of Restaurants

   In February 1997 Arby's, ARDC, ARHC and AROC entered into an agreement (the
"RTM Agreement") with RTM, Inc. ("RTM"),  the largest franchisee in the Arby's
system,  to  sell  to an  affiliate  of RTM  all of  their  355  company-owned
restaurants.  In connection therewith,  Arby's will sell its 274 company-owned
restaurants to the Parent in exchange for a note of approximately  $31,500,000
and  the  assumption  of  approximately   $15,000,000  of  capitalized   lease
obligations.  The  consummation  of the sale is subject to  customary  closing
conditions,  including receipt of necessary consents and regulatory approvals,
and is expected to occur during the second quarter of 1997.


                                      9

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



   In 1996 Arby's  recorded a  $27,886,000  charge to (i) reduce the  carrying
value of the long-lived  assets to be sold (reported as "Assets held for sale"
in the  accompanying  consolidated  balance  sheet as of December 31, 1996) by
approximately $15,469,000 to estimated fair value consisting of adjustments to
"Properties, net" of $5,812,000, "Unamortized costs in excess of net assets of
acquired  companies"  of $5,214,000  and "Deferred  costs and other assets" of
$4,443,000  and (ii) provide for associated  net  liabilities of  $12,417,000,
principally  reflecting the present value of certain equipment operating lease
obligations  which will not be assumed by the purchaser and estimated  closing
costs.  The estimated fair value was determined  based on the terms of the RTM
Agreement  including  anticipated  sales price.  During 1996 the operations of
Arby's  restaurants  to be  disposed  of had net sales of  $179,275,000  and a
pretax loss of $651,000.  Such loss reflects  $10,071,000 of allocated general
and administrative  expenses and $1,930,000 of interest expense related to the
capitalized  lease  obligations  directly  related  to the  operations  of the
restaurants being sold to RTM.

   In 1995,  Arby's  recorded a  provision  of  $11,527,000  consisting  of an
$8,899,000  reduction in the net  carrying  value of certain  restaurants  and
other  restaurant-related  long-lived  assets  which  were  determined  to  be
impaired  and a $2,628,000  reduction  to a net carrying  value of $975,000 of
certain  restaurants  and related  equipment  to be disposed.  Such  provision
reduced "Properties, net" by $10,347,000,  "Unamortized costs in excess of net
assets of acquired  companies"  by $1,040,000  and  "Deferred  costs and other
assets" by $140,000 to reflect the fair value of the  respective  assets.  The
fair value was generally  determined by applying a fair market  capitalization
rate to the  estimated  expected  future  annual  cash  flows.  The results of
operations  of the  restaurants  to be disposed  resulted in a pre-tax loss of
$806,000 for the year ended December 31, 1995.

(4) Receivables, net

   The following is a summary of the components of receivables (in thousands):

                                                             December 31,
                                                          -----------------
                                                          1995         1996
                                                          ----         ----
       Receivables:
           Trade.......................................  $ 6,079     $ 6,837
           Other.......................................    1,861       1,004
                                                         -------     -------
                                                           7,940       7,841
       Less allowance for doubtful accounts (trade)....      974       1,020
                                                         -------     -------
                                                         $ 6,966     $ 6,821
                                                         =======     =======

   The following is an analysis of the allowance for doubtful accounts for the
years ended December 31 (in thousands):
                                                  1994       1995       1996
                                                  ----       ----       ----
                                                
       Balance at beginning of year...........  $    818   $   748    $    974
       Provision for doubtful accounts........       420       566         424
       Recoveries of doubtful accounts........       101        44          21
       Uncollectible accounts written off.....      (591)     (384)       (399)
                                                --------   -------    --------
       Balance at end of year.................  $    748   $   974    $  1,020
                                                ========   =======    ========

   Substantially all receivables are pledged as collateral for certain debt of
the Parent (see Note 7).

                                      10

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



(5) Properties

    The following is a summary of the  components of  properties,  at cost (in
thousands):

                                                             December 31,
                                                          -----------------
                                                          1995         1996
                                                          ----         ----

       Land ...........................................  $ 4,234     $ 2,689
       Buildings and improvements and leasehold
         improvements..................................   39,491       6,918
       Machinery and equipment.........................   36,612       7,016
       Leased assets capitalized.......................   16,343         888
                                                         -------      ------
                                                          96,680      17,511
       Less accumulated depreciation and amortization..   39,116      10,812
                                                         -------      ------
                                                         $57,564      $6,699
                                                         =======      ======

    The  decrease in  properties  from  December 31, 1995 to December 31, 1996
principally  resulted  from the 1996  reduction  in carrying  value of certain
long-lived  assets to be disposed of and  reclassification  as of December 31,
1996 of such assets to "Assets held for sale" (see Note 3).

    Substantially all properties are pledged as collateral for certain debt of
Arby's and the Parent (see Note 7).

(6) Accrued Expenses

    The  following  is a summary of the  components  of accrued  expenses  (in
thousands):

                                                             December 31,
                                                          -----------------
                                                          1995         1996
                                                          ----         ----

       Accrued taxes...................................  $ 6,223     $12,589
       Accrued compensation and related benefits.......    9,105       8,972
       Reserve for closed stores.......................    2,952       2,145
       Other...........................................    6,040       7,823
                                                         -------     -------
                                                         $24,320     $31,529
                                                         =======     =======

(7) Long-term Debt

    Long-term debt consisted of the following (in thousands):

                                                             December 31,
                                                           ----------------
                                                           1995        1996
                                                           ----        ----

    Capitalized lease obligations....................... $17,313      $15,928
    Notes, bearing interest at 7.94% to 13 1/2%,
      due through 2002 secured by equipment and
      buildings.........................................   4,392        4,865
                                                         -------      -------
       Total debt ......................................  21,705       20,793
    Less amounts payable within one year................   2,271       17,802
                                                         -------      -------
                                                         $19,434      $ 2,991
                                                         =======      =======

                                         11

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996




    Aggregate annual maturities of long-term debt, including capitalized lease
obligations, are as follows as of December 31, 1996 (in thousands):

       Year ending December 31,
       ------------------------

       1997 ........................................... $ 17,802
       1998 ...........................................    1,129
       1999 ...........................................      956
       2000 ...........................................      254
       2001 ...........................................      260
       Thereafter......................................      392
                                                         -------
                                                         $20,793
                                                         =======

   As discussed in Note 3, in February  1997 Arby's  entered into an agreement
to sell all of its  restaurants  and, if such sale is  consummated on terms as
they  currently  exist,  the  purchaser  would  assume all  capitalized  lease
obligations   associated  with  the  restaurants  currently  estimated  to  be
approximately $15,000,000.

   The fair values of  long-term  debt are assumed to  reasonably  approximate
their  carrying  amounts  since (i) for  capitalized  lease  obligations,  the
weighted average implicit interest rates  approximate  current levels and (ii)
for notes payable, the remaining maturities are relatively short-term.

   The Parent has outstanding  $275,000,000 of 9 3/4% senior secured notes due
2000 (the "Senior Notes") which mature on August 1, 2000. Arby's has fully and
unconditionally guaranteed the Parent's obligations with respect to the Senior
Notes  jointly  and  severally  with  Royal  Crown.  Arby's  common  stock and
substantially all of its personal property secure such guarantee.

(8) Income Taxes

   As  discussed  in Note 1, Arby's is included  in the  consolidated  Federal
income tax return of  Triarc.  Pursuant  to a tax  sharing  agreement  between
Triarc and the Parent,  Arby's  provides for Federal  income taxes on the same
basis as if it filed a separate consolidated return. Amounts currently payable
for income  taxes are  included  in  "Accrued  expenses"  in the  accompanying
consolidated balance sheets.

   The income (loss) before income taxes consists of the following  components
for the years ended December 31 (in thousands):
                                                   1994      1995      1996
                                                   ----      ----      ----
                                                 
      Domestic..................................  $10,631  $(11,554) $(15,933)
      Foreign...................................      122      (371)   (3,238)
                                                  -------  --------  --------
                                                  $10,753  $(11,925) $(19,171)
                                                  =======  ========  ======== 


                                      12

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



    The benefit from  (provision  for) income taxes  consists of the following
components for the years ended December 31 (in thousands):

                                                   1994      1995      1996
                                                   ----      ----      ----
                                                
    Current:
      Federal...................................  $(3,940) $    543   $(5,368)
      State.....................................     (773)       59      (988)
      Foreign...................................   (1,183)     (362)     (370)
                                                  -------  --------   -------
                                                   (5,896)      240    (6,726)
                                                  -------  --------   -------
    Deferred:
      Federal...................................      323     2,936    10,931
      State.....................................       59       588       401
      Foreign...................................      753         -         -
                                                  -------  --------   -------
                                                    1,135     3,524    11,332
                                                  -------  --------   -------
                                                  $(4,761) $  3,764   $ 4,606
                                                  =======  ========   =======

    The current  deferred  income tax asset and the net  non-current  deferred
income tax asset resulted from the following components (in thousands):

                                                            December 31,
                                                          -----------------
                                                          1995         1996
                                                          ----         ----

    Current deferred income tax assets:
       Accrued employee benefit costs.................  $ 2,266      $ 1,922
       Closed store reserve...........................    1,061          834
       Allowance for doubtful accounts................      334          397
       Accrued legal and advertising..................       70          279
       Other, net.....................................      424          594
                                                        -------      -------
                                                          4,155        4,026
                                                        -------      -------

    Non-current deferred income tax assets (liabilities):
       Depreciation and other properties basis
         differences..................................    2,383       15,668
       Deferred franchise fees........................    1,303        1,330
       Reserve for income tax contingencies...........     (653)      (1,644)
       Other, net.....................................    1,346          486
                                                        -------      -------
                                                          4,379       15,840
                                                        -------      -------
                                                        $ 8,534      $19,866
                                                        =======      =======


                                      13

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



    The difference between the reported income tax benefit (provision) and the
tax  benefit  (provision)  that would  result  from  applying  the 35% Federal
statutory  rate to the income  (loss)  before  income taxes is  reconciled  as
follows (in thousands):
                                                    1994      1995     1996
                                                    ----      ----     ----
                                                  
    Income tax benefit (provision) computed at
      Federal statutory rate....................$  (3,764)  $ 4,174    $6,710
    Decrease (increase) in Federal taxes 
     resulting from:
      Effect of net operating losses for which
       no tax carryback benefit is available....        -         -    (1,133)
      State income (taxes) benefit, net of Federal
        income tax effect.......................     (464)      421      (382)
      Amortization of non-deductible Goodwill...     (336)     (284)     (284)
      Foreign tax rate in excess of United
        States Federal statutory rate and
        foreign withholding taxes, net of 
        Federal income tax benefit...............    (265)     (308)     (241)
      Non-deductible amortization of
        restricted stock.........................       -      (274)        -
      Other, net................................       68        35       (64)
                                                  -------  --------   -------
                                                  $(4,761) $  3,764   $ 4,606
                                                  =======  ========   =======

    The IRS has completed its examination of the Federal income tax returns of
Triarc and its  subsidiaries  for the tax years from 1989 through 1992 and has
issued notices of proposed  adjustments  relating to Arby's increasing taxable
income by  approximately  $600,000,  the tax  effect of which has not yet been
determined. Triarc is contesting the majority of the proposed adjustments and,
accordingly,  the amount of any payments  required as a result  thereof cannot
presently be determined. Management of Arby's believes that adequate aggregate
provisions have been made in prior periods for any tax liabilities,  including
interest, that may result from the 1989 through 1992 examination and other tax
matters.

(9) Corporate Restructuring

    The  "Corporate  restructuring"  charge  of  $2,400,000  set  forth in the
accompanying   consolidated  statement  of  operations  for  1996  relates  to
estimated  costs of  planned  subleases  (principally  for the  write-  off of
nonrecoverable  unamortized leasehold improvements and furniture and fixtures)
of surplus office space in excess of anticipated sublease proceeds as a result
of the RTM sale (see Note 3).

(10) Related Party Transactions

    The following is a summary of transactions  between Arby's and its related
parties (in thousands):

                                                   1994      1995       1996
                                                   ----      ----       ----
                                                 
    Costs allocated to Arby's by Triarc under a
      management services agreement (a).........  $ 4,100  $  4,100   $ 3,850
    Interest expense allocated to Arby's
      from Parent (b)...........................    1,800     3,985     3,592
    Royalty income from affiliates (c)..........        6     1,132     2,067
    Purchase of restaurants from affiliates (d).        -         -     2,782
    Proceeds from sales of restaurants to
      affiliates (e)............................        -    31,602     1,600 


                                      14

<PAGE>

                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



                                                   1994      1995       1996
                                                   ----      ----       ----
                                                  
    Compensation costs charged (credited) to
      Arby's by Triarc for restricted stock
      and below market stock options (Note 11)..      794       870      (104)
    Dividend of restaurants to Parent (f).......        -    14,733         -
    Purchase option deposit from affiliate (g)..        -     6,700         -
    Payments to affiliates for usage of aircraft      168        58         -
    Sale of certain  promissory notes from
      franchisees to Southeastern Public
      Service Company, a subsidiary of Triarc,
      at remaining outstanding principal amount.    1,239         -         -

  (a) Arby's  receives  from Triarc  certain  management  services,  including
legal,  accounting,  tax, insurance,  financial and other management services,
under a management services  agreement.  Arby's was allocated costs under such
agreement of  $4,100,000,  $4,100,000  and  $3,850,000  during the years ended
December  31,  1994,  1995 and 1996,  respectively  included in  "General  and
administrative"  in the  accompanying  consolidated  statements of operations.
Such costs were  allocated  to Arby's by Triarc based upon the relative sum of
the greater of income before income taxes,  depreciation  and amortization and
10% of revenues.  Management of Arby's believes that such allocation method is
reasonable.  Further,  management  of Arby's  believes  that  such  allocation
approximates  the  costs  that  would  have  been  incurred  by  Arby's  on  a
stand-alone basis.

  (b) A  substantial  portion of  interest  expense  on the Senior  Notes (the
"Senior Notes  Interest") has been allocated by the Parent to Arby's and Royal
Crown based upon the  approximate  proportion of Goodwill pushed down to those
subsidiaries in connection  with their original  acquisition by Triarc and its
subsidiaries,  which  resulted in interest  allocated to Arby's of  $1,800,000
during each of the years ended December 31, 1994,  1995 and 1996. In addition,
during  1995 and 1996,  the Parent  allocated  to Arby's  interest  expense of
$2,185,000 and $1,792,000, respectively incurred in connection with borrowings
from  Triarc  in 1995 and 1996 and  Southeastern  Public  Service  Company,  a
subsidiary of Triarc, in 1995 (the "Triarc and SEPSCO Interest"), the proceeds
of which were  principally  advanced  by the Parent to Arby's to fund  capital
expenditures,  acquisitions and other cash requirements of Arby's.  Management
of Arby's  believes such  allocations  are reasonable and, with respect to the
Triarc  and SEPSCO  Interest,  approximated  the  interest  Arby's  would have
incurred in the open  market.  However,  the  allocation  of the Senior  Notes
Interest may not be  indicative  of interest  expense  which Arby's would have
incurred on a stand-alone  basis, the amounts of which would be dependent upon
Arby's capital structure on such stand-alone basis.

  (c)  Arby's  entered  into  franchise  license  agreements  for  each of the
restaurants  operated by AROC (51 restaurants) and ARHC (30 restaurants) under
terms similar to those for unaffiliated parties except that franchise fees are
not required.  During 1995 and 1996, Arby's  recognized  royalties of $879,000
and  $1,347,000  from AROC and $253,000 and $720,000 from ARHC,  respectively.
Triarc has,  under certain  circumstances,  guaranteed  the payment by AROC of
royalty  payments  to Arby's  under  AROC's  license  agreements.  Arby's also
entered into  management  agreements with each of AROC, ARDC and ARHC pursuant
to which Arby's provides certain management services, as well as financial and
accounting services to such companies for reimbursement of the direct costs to
Arby's of such  services  plus an  annual  fee of  $10,000  from each of those
companies.


                                      15

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



  (d) During 1996, Arby's purchased the land,  buildings and related equipment
of 4 restaurants  from ARDC and AROC for cash of $2,782,000,  representing the
net book value of the related assets.

  (e) During 1995, Arby's sold the land, buildings and related equipment of an
aggregate 29 restaurants  and the equipment of the 39 restaurants  referred to
in (f) below to ARDC and ARHC for proceeds of  $31,602,000,  representing  the
approximate net book value of the related assets.  During 1996 Arby's sold the
land,  buildings and related  equipment of 3 restaurants with a net book value
of $785,000 to ARHC for proceeds of $1,600,000.

  (f) In May 1995, Arby's dividended land,  buildings and related improvements
of 39 restaurants with a net book value of $14,733,000 to the Parent.

  (g) In connection with the acquisition by Arby's of 35 previously franchised
restaurants  in  February  1995,  Arby's  received a  $6,700,000  non-interest
bearing  refundable  purchase  option  deposit from Arby's  Restaurants,  Inc.
("ARINC"), a newly-formed  wholly-owned  subsidiary of the Parent, which gives
ARINC the right to  purchase  any or all of such 35 acquired  restaurants  and
apply up to the full amount of the option payment  against the purchase price.
The option's  expiration  date is August 31, 1997. To the extent the option is
not utilized, such deposit or portion thereof will be refunded to ARINC. It is
currently  expected  that the option will be  terminated  if the RTM sale (see
Note 3) is consummated.

(11) Pension and Stock Compensation Plans

    Triarc maintains a 401(k) defined contribution plan covering all of Arby's
employees  who meet certain  minimum  requirements  and elect to  participate.
Employees may contribute up to 15% of their  compensation,  subject to certain
limitations.  The plan provides for company  matching  contributions of 50% of
employee contributions up to the first 5% of an employee's contributions.  The
plan also provides for annual additional  contributions at Arby's  discretion.
In connection with these employer  contributions,  Arby's  provided  $338,000,
$959,000 and $689,000 in 1994, 1995 and 1996, respectively.

    Arby's  employees  who  were  eligible  to  participate  prior to 1989 are
covered  under a defined  benefit  pension plan (the "Plan")  sponsored by the
Parent  which  covers  employees  of Arby's,  Royal  Crown and  certain  other
affiliates.  Prior to 1994 the plan was  frozen.  Net  periodic  pension  cost
(credit) under the Plan was immaterial in each of the years presented.

    Prior to 1994 and during 1994,  respectively,  Triarc  granted  70,500 and
6,250  restricted  shares of Triarc  Class A common  stock to  certain  Arby's
senior executives under Triarc's 1993 Equity  Participation  Plan (the "Triarc
Equity Plan").  The aggregate  values of the awards at the respective dates of
grant of  $1,482,000  for 1993 and  $131,000  for 1994 were  being  charged to
Arby's as  compensation  expense over the applicable  vesting  periods through
1996. On December 7, 1995,  the  Compensation  Committee of Triarc's  Board of
Directors authorized  management of Triarc to accelerate the vesting of all of
the  then  outstanding  shares  of  restricted  stock.  On  January  16,  1996
management of Triarc accelerated the vesting and Arby's recorded the resulting
additional  amortization  expense of  $454,000  in its  entirety  in 1995.  In
addition,  Triarc has granted stock options to certain key employees of Arby's
under the Triarc Equity Plan. Of such options,  100,000  granted prior to 1994
were at an option  price of $20.00  per share  which was lower than the $31.75
fair  market  value of  Triarc's  Class A common  stock at the date of  grant,
representing  an  aggregate  difference  of  $1,175,000.  Such amount is being
charged to Arby's as compensation  expense over the applicable  vesting period
through 1998, net of reversals of prior charges arising from the forfeiture of


                                      16
<PAGE>

                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996


certain  of those  options  in  connection  with  employee  terminations  (the
"Forfeiture  Adjustments").  Compensation expense resulting from the grants of
restricted  shares and below  market  stock  options  aggregated  $794,000 and
$870,000   (including  the  $454,000  from  the  accelerated  vesting  of  the
restricted  stock and net of $231,000 of Forfeiture  Adjustments)  during 1994
and 1995,  respectively.  During 1996, the Company recorded a net compensation
credit of $104,000 with respect to below market stock options (which  reflects
$173,000 of Forfeiture Adjustments).  All such stock compensation expenses and
credits are  included  in "General  and  administrative"  in the  accompanying
consolidated statements of operations.

(12) Lease Commitments

     Arby's leases  buildings and  improvements  and machinery and  equipment.
Some leases provide for contingent rentals based upon sales volume.

     Rental  expense  under   operating   leases  consists  of  the  following
components for the years ended December 31 (in thousands):

                                               1994      1995      1996
                                               ----      ----      ----
                                            
      Minimum rentals...................... $  9,548   $ 14,873   $16,190
      Contingent rentals...................    1,454        879       793
                                             -------   --------   -------
                                              11,002     15,752    16,983
      Less sublease income.................      336        688       489
                                             -------   --------   -------
                                             $10,666   $ 15,064   $16,494
                                             =======   ========   =======

    Arby's  future  minimum  rental  payments and sublease  rental  income for
leases  having an initial  lease term in excess of one year as of December 31,
1996 are set forth  below.  Such future  minimum  rental  payments  exclude an
aggregate $11,540,000 of future operating lease payments relating to equipment
to be  transferred to RTM assuming  consummation  of the RTM sale (see Note 3)
but the  obligations  for which will  remain with  Arby's.  As such Arby's has
provided  for the  present  value of  $9,677,000  of such  lease  payments  in
"Reduction in carrying value of long-lived  assets  impaired or to be disposed
of". Such future  minimum  rental  payments  include an aggregate  $91,754,000
($9,160,000, $8,580,000, $7,715,000, $7,111,000, $6,759,000 and $52,429,000 in
1997, 1998, 1999, 2000, 2001 and thereafter, respectively) of future operating
lease payments and, in addition,  substantially all of the future  capitalized
lease payments which will be assumed by RTM assuming  consummation of the sale
to RTM.  Such rental  payments and sublease  rental income were as follows (in
thousands):


                                      17

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996


                                      Rental Payments       Sublease Income
                                      ---------------       ---------------
                                 Capitalized  Operating  Capitalized Operating
   Year Ending December 31,         Leases      Leases      Leases     Leases
   ------------------------         ------      ------      ------     ------

   1997........................... $16,120      $11,634    $    81     $   481
   1998...........................     105       10,358         60         454
   1999...........................      87        9,063         60         410
   2000...........................      87        8,438         57         396
   2001...........................      87        8,086         43         342
   Thereafter.....................     397       58,865        219       1,300
                                   -------      -------    -------     -------
   Total minimum payments.........  16,883     $106,444    $   520     $ 3,383
                                               ========    =======     =======
   Less interest..................     955
                                   -------
   Present value of minimum
     capitalized lease payments... $15,928
                                   =======

   The present value of minimum  capitalized  lease  payments is included,  as
applicable,  with "Long-term  debt" or "Current  portion of long-term debt" in
the accompanying consolidated balance sheets (see Note 7).

   In August 1994,  Arby's  completed  the sale and  leaseback of the land and
buildings of fourteen company-owned  restaurants.  The net cash sales price of
the properties was $6,703,000. Arby's entered into individual twenty-year land
and building leases for such  properties and capitalized the building  portion
of such leases  while the land  portion is being  accounted  for as  operating
leases, reflected in the table above. Such sale resulted in a gain of $605,000
which was being  amortized to income over the twenty- year lives of the leases
(see Note 3).

(13) Legal Matters

   On February 19, 1996, Arby's  Restaurantes S.A. de C.V. ("AR"),  the master
franchisee  of Arby's in  Mexico,  commenced  an action in the civil  court of
Mexico  against  Arby's for breach of contract.  AR alleged that a non-binding
letter of intent dated  November 9, 1994 between AR and Arby's  constituted  a
binding  contract  pursuant to which Arby's had obligated itself to repurchase
the master  franchise  rights from AR for  $2,500,000.  AR also  alleged  that
Arby's had  breached a master  development  agreement  between AR and  Arby's.
Arby's promptly  commenced an arbitration  proceeding  since the franchise and
development agreements each provided that all disputes arising thereunder were
to be  resolved  by  arbitration.  Arby's  is  seeking  a  declaration  in the
arbitration to the effect that the November 9, 1994 letter of intent was not a
binding contract and, therefore,  AR has no valid breach of contract claim, as
well  as  a  declaration  that  the  master  development  agreement  has  been
automatically  terminated  as a result of AR's  commencement  of suspension of
payments  proceedings  in February  1995. In the civil court  proceeding,  the
court denied Arby's motion to suspend such proceedings  pending the results of
the arbitration, and Arby's has appealed that ruling. In the arbitration, some
evidence  has been  taken but  proceedings  have been  suspended  by the court
handling  the  suspension  of  payments  proceedings.   Arby's  is  vigorously
contesting  AR's  claims and  believes  it has  meritorious  defenses  to such
claims.

   Arby's has accrued an amount  which it believes  represents  the minimum of
the range of the  potential  liability as a result of such legal matter and no
other  amount  within the range is any more likely than the amount  accrued by
Arby's. Based on currently available  information and given Arby's reserve for


                                      18

<PAGE>

                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996


such legal matter as of December  31,  1996,  Arby's does not believe that the
legal  matter  referred  to  above,  as well as  ordinary  routine  litigation
incidental  to its  business,  will  have a  material  adverse  effect  on its
consolidated results of operations or financial position.

(14) Business Acquisitions

   Arby's consummated several business acquisitions during 1994, 1995 and 1996
for cash of $13,120,000,  $11,412,000 and  $4,754,000,  respectively,  and the
issuance  of debt in 1996 of  $1,750,000.  All  such  acquisitions  have  been
accounted  for in  accordance  with the  purchase  method  of  accounting.  In
addition,  in 1994 Triarc entered into a definitive merger agreement with Long
John Silver's Restaurants,  Inc. ("LJS"), an owner, operator and franchisor of
quick service fish and seafood  restaurants,  whereby Triarc would acquire all
of the  outstanding  stock of LJS. In  December  1994,  Triarc  decided not to
proceed  with  the  acquisition  of  LJS  due  to  the  higher  interest  rate
environment  and  difficult  capital  markets  which  would have  resulted  in
significantly   higher  than  anticipated  costs  and  unacceptable  terms  of
financing. Accordingly, Arby's recorded a charge of $1,122,000 in 1994 for the
expenses  it  incurred  directly  relating  to the failed  acquisition  of LJS
representing  consulting,  legal and other costs,  which is included in "Other
income (expense), net".

                                      19



<PAGE>




                           ROYAL CROWN COMPANY, INC.
                           -------------------------
                       CONSOLIDATED FINANCIAL STATEMENTS
                       ---------------------------------
                               DECEMBER 31, 1996
                               -----------------





<PAGE>



                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                           Page
                                                                           ----

Independent Auditors' Report...............................................  1
Consolidated Balance Sheets as of December 31, 1995 and 1996...............  2
Consolidated Statements of Operations for the years ended December 31,
    1994, 1995, and 1996...................................................  3
Consolidated Statements of Stockholder's Equity (Deficit) for the years
    ended December 31, 1994, 1995, and 1996................................  4
Consolidated Statements of Cash Flows for the years ended December 31,
    1994, 1995, and 1996...................................................  5
Notes to Consolidated Financial Statements.................................  7



                                      (i)


<PAGE>






INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholder of
Royal Crown Company, Inc.:

    We have  audited the  accompanying  consolidated  balance  sheets of Royal
Crown Company, Inc. (a wholly-owned  subsidiary of RC/Arby's  Corporation) and
subsidiary  ("Royal  Crown") as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholder's equity (deficit) and cash
flows for each of the three years in the period ended December 31, 1996. These
financial  statements are the responsibility of Royal Crown's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.

    We conducted our audits in accordance  with  generally  accepted  auditing
standards.  Those  standards  require  that we plan and  perform  the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial  statements.  An audit
also  includes  assessing  the  accounting  principles  used  and  significant
estimates  made by  management,  as well as evaluating  the overall  financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, such consolidated  financial statements present fairly, in
all material  respects,  the financial  position of Royal Crown as of December
31, 1996 and 1995 and the results of their operations and their cash flows for
each of the three years in the period ended  December  31, 1996 in  conformity
with generally accepted accounting principles.




DELOITTE & TOUCHE LLP
Certified Public Accountants

Fort Lauderdale, Florida
March 31, 1997

                                      1

<PAGE>



                           ROYAL CROWN COMPANY, INC.
                          CONSOLIDATED BALANCE SHEETS


                                                                December 31,
                                                               --------------
                                                               1995      1996
                                                               ----      ----
                                                               (In thousands)
                                    ASSETS

Current assets:
  Cash.................................................... $     763  $    800
  Receivables, net (Note 4)...............................    22,830    27,819
  Inventories (Note 5)....................................    11,871     9,305
  Deferred income tax benefit (Note 10)...................     2,037     4,478
  Prepaid expenses and other current assets...............     3,883     3,746
                                                            --------  --------
    Total current assets..................................    41,384    46,148

Properties, net (Note 6)..................................     6,895     5,227
Unamortized costs in excess of net assets of
  acquired companies (Note 7).............................   142,374   137,457
Deferred costs and other assets (Note 8)..................     3,206     3,955
                                                            --------  --------
                                                            $193,859  $192,787
                                                            ========  ========

          LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
  Accounts payable......................................... $ 11,875  $ 12,677
  Accrued expenses (Note 9)................................   14,828    20,704
                                                            --------  --------
    Total current liabilities..............................   26,703    33,381

Due to Parent and affiliates, net (Note 13)................  196,363   196,219
Deferred income taxes (Note 10)............................    1,550     1,271
Other liabilities (Note 14)................................    1,293       926
Commitments and contingencies (Notes 2, 3, 10, 11, 15 and 16)

Stockholder's equity (deficit) (Note 11):
  Common stock, $1.00 par value; 1,000 shares authorized,
    issued and outstanding.................................        1         1
  Additional paid-in capital...............................   42,426    42,426
  Accumulated deficit......................................  (74,477)  (81,437)
                                                            --------  --------
    Total stockholder's deficit............................  (32,050)  (39,010)
                                                            --------  --------
                                                            $193,859  $192,787
                                                            ========  ========

         See accompanying notes to consolidated financial statements.


                                      2

<PAGE>



                           ROYAL CROWN COMPANY, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS



                                                    Year ended December 31,
                                                   -------------------------
                                                   1994      1995       1996
                                                   ----      ----       ----
                                                        (In thousands)

Net sales......................................  $146,146  $172,603   $178,007
                                                 --------  --------   --------

Costs and expenses:
   Cost of sales...............................    31,076    57,072     61,620
   Advertising, selling and distribution (Note 1). 78,186    86,226     76,923
   General and administrative (Notes 13 and 14).   22,298    27,441     23,716
   Facilities relocation and corporate
     restructuring (Note 12)...................         -         -      3,950
                                                 --------   -------   --------
                                                  131,560   170,739    166,209
                                                 --------   -------   --------

     Operating profit..........................    14,586     1,864     11,798

Interest expense...............................       (16)      (13)         -
Allocation of interest expense from Parent
  (Note 13)....................................   (20,000)  (20,000)   (20,000)
Other income (expense), net (Note 13)..........       243      (760)       286
                                                ---------   -------   --------

   Loss before income taxes....................    (5,187)  (18,909)    (7,916)

Benefit from (provision for) income taxes
 (Note 10).....................................      (201)    4,844        956
                                                ---------  --------   --------

   Net loss ................................... $  (5,388) $(14,065)  $ (6,960)
                                                =========  ========   ========

         See accompanying notes to consolidated financial statements.


                                      3

<PAGE>



                           ROYAL CROWN COMPANY, INC.
           CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
                  For the three years ended December 31, 1996



                                        Common Stock     
                                        ------------    Additional
                                     Number               Paid-In  Accumulated
                                    of Shares   Amount    Capital    Deficit
                                    ---------   ------    -------    -------
                                                   (Dollars in thousands)

Balance at December 31, 1993.......    1,000   $     1   $ 42,426    $(55,024)
   Net loss........................        -         -          -      (5,388)
                                    --------   -------   --------    ---------
Balance at December 31, 1994.......    1,000         1     42,426     (60,412)
   Net loss........................        -         -          -     (14,065)
                                    --------   -------   --------    --------
Balance at December 31, 1995.......    1,000         1     42,426     (74,477)
   Net loss........................        -         -          -      (6,960)
                                    --------   -------   --------    --------
Balance at December 31, 1996.......    1,000   $     1   $ 42,426    $(81,437)
                                    ========   =======   ========    ========


         See accompanying notes to consolidated financial statements.


                                      4

<PAGE>



                           ROYAL CROWN COMPANY, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                       Year ended December 31,
                                                       -----------------------
                                                       1994     1995     1996
                                                       ----     ----     ----
                                                           (In thousands)

Cash flows from operating activities:
   Net loss  .......................................$ (5,388)$(14,065) $(6,960)
   Adjustments to reconcile net loss to net cash
     provided by operating activities:
      Depreciation and amortization of properties...     767      838      999
      Amortization of costs in excess of net assets
        acquired and other intangibles..............   5,661    5,961    5,432
      Provision for facilities relocation and
        corporate restructuring.....................       -        -    3,950
      Payments on facilities relocation and 
        corporate restructuring.....................  (4,240)    (711)    (224)
      Provision for (benefit from) deferred
        income taxes................................   3,241   (1,712)  (2,720)
      Write-off of investment in affiliate..........       -    1,000        -
      Provision for doubtful accounts...............     185    1,402    2,655
      Noncash charges (benefit) from Parent.........  21,524   15,129     (322)
      Other, net....................................    (479)     524     (403)
      Changes in operating assets and liabilities:
        Decrease (increase) in:
         Receivables................................  (9,542)  (4,078)  (7,004)
         Inventories................................  (1,234)  (2,256)     926
         Prepaid expenses and other current assets..  (1,871)    (180)     137
        Increase (decrease) in:
         Accounts payable...........................   2,390    2,568      802
         Accrued expenses...........................  (9,818)   1,153    3,332
                                                     -------  -------  -------
Net cash provided by operating activities...........   1,196    5,573      600
                                                     -------  -------  -------

Cash flows from investing activities:
   Capital expenditures.............................  (1,296)  (1,474)    (591)
   Proceeds from sales of properties................       8      587       28
   Business acquisition.............................       -   (2,923)       -
   Investment in affiliate..........................       -   (1,000)       -
                                                     -------  -------  -------
Net cash used in investing activities...............  (1,288)  (4,810)    (563)
                                                     -------  -------  -------

Cash flows from financing activities................       -        -        -
                                                     -------  -------  -------

Net increase (decrease) in cash ....................     (92)     763       37
Cash at beginning of year...........................      92        -      763
                                                     -------  -------  -------
Cash at end of year................................. $     -  $   763  $   800
                                                     =======  =======  =======

                                  (continued)


                                      5

<PAGE>



                           ROYAL CROWN COMPANY, INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)




                                                       Year ended December 31,
                                                      ------------------------
                                                      1994      1995     1996
                                                      ----      ----     ----
                                                           (In thousands)

Supplemental disclosures of cash flow information:
  Cash paid (received) during the year for:
     Interest.......................................  $   16   $   13   $    -
                                                      ======   ======   ======
     Income taxes...................................  $  (25)  $   55   $ (245)
                                                      ======   ======   ======

Supplemental disclosures of noncash investing
  and financing activities:
     Total capital expenditures.....................  $1,296   $1,474   $  591
     Amounts representing capitalized leases........       -        -        -
                                                      ------   ------   ------
      Capital expenditures paid in cash.............  $1,296   $1,474   $  591
                                                      ======   ======   ======








         See accompanying notes to consolidated financial statements.


                                      6

<PAGE>

                          ROYAL CROWN COMPANY, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              December 31, 1996



(1)  Summary of Significant Accounting Policies

     Principles of Consolidation

     The consolidated financial statements include the accounts of Royal Crown
Company,  Inc.  ("Royal  Crown"),  a  wholly-owned   subsidiary  of  RC/Arby's
Corporation (the "Parent"),  which is a direct wholly- owned subsidiary of CFC
Holdings Corp.  ("CFC  Holdings") and an indirect  wholly-owned  subsidiary of
Triarc  Companies,  Inc.  ("Triarc") and its wholly-owned  subsidiary,  TriBev
Corporation  ("TriBev"),  which  commenced  operations  in January  1995.  All
significant intercompany balances and transactions have been eliminated.

Inventories

     Inventories are stated at the lower of cost  (determined on the first-in,
first-out basis) or market.

Properties and Depreciation and Amortization

     Properties  are  stated  at  cost  less   accumulated   depreciation  and
amortization. Depreciation and amortization is calculated on the straight-line
basis  using the  estimated  useful  lives of the  related  major  classes  of
properties:  15-40  years  for  buildings  and 3-15  years for  machinery  and
equipment.  Leased assets capitalized and leasehold improvements are amortized
over  the  shorter  of  their  estimated  useful  lives  or the  terms  of the
respective leases.

Amortization of Intangibles

     Costs in excess of net assets acquired  ("Goodwill")  are being amortized
on the straight-line  basis over 40 years.  Trademarks and distribution rights
are being amortized on the straight-line basis principally over 7 to 10 years.

Impairments

     Intangible Assets

     The amount of  impairment,  if any, in  unamortized  Goodwill is measured
based on projected future results of operations.  To the extent future results
of  operations  through  the  period  such  Goodwill  is being  amortized  are
sufficient to absorb the related amortization, Royal Crown has deemed there to
be no impairment of Goodwill.

     Long-Lived Assets

     Effective  October 1, 1995,  Royal Crown  adopted  Statement of Financial
Accounting  Standards  ("SFAS") No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for Long-Lived Assets to be Disposed Of". This standard
requires that long-lived assets and certain identifiable  intangibles held and
used by an entity be reviewed  for  impairment  whenever  events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may not be
recoverable.  The  adoption of this  standard  had no effect on Royal  Crown's


                                      7
<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



consolidated  results of  operations  or  financial  position  in the  periods
presented.

Advertising Costs

     Royal Crown accounts for advertising  production  costs by expensing such
production  costs  the  first  time  the  related   advertising  takes  place.
Advertising costs amounted to $67,877,000, $73,703,000 and $61,704,000 for the
years ended December 31, 1994, 1995 and 1996, respectively.

Income Taxes

     Royal  Crown is included in the  consolidated  Federal  income tax return
filed by Triarc. Under a tax- sharing agreement between Triarc and the Parent,
Royal Crown provides for Federal income taxes on the same basis as if it filed
a  separate  consolidated  return.  Deferred  income  taxes  are  provided  to
recognize the tax effect of temporary  differences between the bases of assets
and liabilities for tax and financial statement purposes.

Reclassifications

     Certain  amounts  included  in the prior  years'  consolidated  financial
statements  have  been   reclassified  to  conform  with  the  current  year's
presentation.

(2)  Significant Risks and Uncertainties

Nature of Operations

     Royal Crown produces and sells a broad selection of carbonated  beverages
and  concentrates  under the  principal  brand names RC COLA,  DIET RC,  ROYAL
CROWN,  ROYAL CROWN DRAFT COLA, DIET RITE, NEHI, NEHI LOCKJAW,  UPPER 10, KICK
and THIRST THRASHER.  Royal Crown's operations  principally are throughout the
United States.

Use of Estimates

     The preparation of consolidated  financial  statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure  of  contingent   assets  and   liabilities  at  the  date  of  the
consolidated  financial  statements  and the  reported  amount of revenues and
expenses during the reporting  period.  Actual results could differ from those
estimates.

Significant Estimates

     Royal  Crown's only  significant  estimates  are for costs related to (i)
provisions for  examinations of its income tax returns by the Internal Revenue
Service  ("IRS")  (see  Note  10)  and  (ii)   provisions  for   environmental
contingencies (see Note 16).

                                      8
<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996




Certain Risk Concentrations

     Royal Crown had two  significant  customers which accounted for 12.5% and
12.2% of net sales for the year ended  December 31, 1994,  10.5% and 12.3% for
the year ended  December 31, 1995 and 17% and 13% for the year ended  December
31, 1996. Royal Crown believes that its  vulnerability to risk  concentrations
related  to  significant  vendors  and  sources  of its raw  materials  is not
significant. Risk of geographical concentrations is also minimized since Royal
Crown  products  are  produced  in the  United  States  and  principally  sold
throughout  the United States.  However,  the industry Royal Crown competes in
contains a small group of competitors and Royal Crown's  proportionate  market
share is comparatively small.

(3)  Planned Transactions

Spinoff

     In October 1996 Triarc  announced that its Board of Directors  approved a
plan to  offer up to  approximately  20% of the  shares  of its  beverage  and
restaurant  businesses  (including those of Royal Crown) to the public through
an initial public offering and to spin off the remainder of the shares of such
businesses to Triarc stockholders (collectively,  the "Spinoff Transactions").
Consummation  of the  Spinoff  Transactions  will be subject  to,  among other
things,  receipt  of  a  favorable  ruling  from  the  IRS  that  the  Spinoff
Transactions  will  be  tax-free  to  Triarc  and  its  subsidiaries  and  its
stockholders. The request for the ruling from the IRS contains several complex
issues and there can be no  assurance  that Triarc will  receive the ruling or
that Triarc will consummate the Spinoff Transactions. The Spinoff Transactions
are not  expected  to occur  prior to the end of the  second  quarter of 1997.
Triarc is currently evaluating the impact, if any, of its proposed acquisition
of Snapple  Beverage Corp.  (which Triarc  announced on March 27, 1997) on the
anticipated structure of the Spinoff Transactions.

(4)  Receivables

     The  following  is  a  summary  of  the  components  of  receivables  (in
thousands):

                                                             December 31,
                                                          -----------------
                                                          1995         1996
                                                          ----         ----
       Receivables:
           Trade.......................................  $21,308      $28,394
           Other.......................................    2,458        3,054
                                                         -------      -------
                                                          23,766       31,448
       Less allowance for doubtful accounts...........       936        3,629
                                                         -------      -------
                                                         $22,830      $27,819
                                                         =======      =======

                                      9
<PAGE>

                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996




     The following is an analysis of the  allowance for doubtful  accounts for
the years ended December 31 (in thousands):

                                                     1994      1995      1996
                                                     ----      ----      ----
                                                   
       Balance at beginning of year............... $    284  $    239  $   936
       Provision for doubtful accounts (Note 13)..      185     1,402    2,655
       Recoveries of doubtful accounts............        9         -      174
       Uncollectible accounts written off.........     (239)     (705)    (136)
                                                   --------  --------  -------
       Balance at end of year..................... $    239  $    936  $ 3,629
                                                   ========  ========  =======

     Substantially  all  receivables are pledged as collateral for the certain
debt of the Parent (see Note 11).

(5) Inventories

   The following is a summary of the components of inventories (in thousands):

                                                             December 31,
                                                          -------------------
                                                          1995           1996
                                                          ----           ----
                                                         
        Raw materials.................................   $ 8,689       $ 5,394
        Work in process...............................       479           467
        Finished goods................................     2,703         3,444
                                                         -------       -------
                                                         $11,871       $ 9,305
                                                         =======       =======

    Substantially  all  inventories are pledged as collateral for certain debt
of the Parent (see Note 11).

(6)  Properties

     The following is a summary of the components of  properties,  at cost (in
thousands):

                                                              December 31,
                                                           -----------------
                                                           1995         1996
                                                           ----         ----

           Land........................................  $   724      $   724
           Buildings and leasehold improvements........    5,168        4,487
           Machinery and equipment.....................    5,200        6,343
                                                         -------      -------
                                                          11,092       11,554
           Less accumulated depreciation and 
             amortization..............................    4,197        6,327
                                                         -------      -------
                                                         $ 6,895      $ 5,227
                                                         =======      =======

    Substantially all properties are pledged as collateral for certain debt of
the Parent (see Note 11).


                                      10
<PAGE>



                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



(7)  Unamortized Costs in Excess of Net Assets of Acquired Companies

     The  following is a summary of the  components  of  unamortized  costs in
excess of net assets of acquired companies (in thousands):

                                                             December 31,
                                                           ----------------
                                                           1995        1996
                                                           ----        ----
       Costs in excess of net assets of acquired
         companies.....................................  $194,533     $194,533
       Less accumulated amortization...................    52,159       57,076
                                                         --------     --------
                                                         $142,374     $137,457
                                                         ========     ========

(8)  Deferred Costs and Other Assets

     The following is a summary of the components of deferred costs and others
assets (in thousands):

                                                             December 31,
                                                          ------------------
                                                          1995          1996
                                                          ----          ----

       Trademarks......................................  $2,770       $ 3,128
       Less accumulated amortization of trademarks.....     397           736
                                                         ------       -------
         Trademarks, net...............................   2,373         2,392
       Other...........................................     833         1,563
                                                         ------       -------
                                                         $3,206       $ 3,955
                                                         ======       =======

(9)  Accrued Expenses

     The  following  is a summary of the  components  of accrued  expenses (in
thousands):

                                                              December 31,
                                                           ------------------
                                                           1995          1996
                                                           ----          ----
                                                         
       Accrued advertising.............................  $ 10,007      $11,609
       Facilities relocation and corporate
         restructuring.................................         -        2,650
       Accrued compensation and related benefits.......     1,044        1,989
       Reserve for guarantee of MetBev, Inc. accounts
           payable (Note 13)...........................     1,194        1,194
       Other...........................................     2,583        3,262
                                                         --------      -------
                                                         $ 14,828      $20,704
                                                         ========      =======

(10) Income Taxes

     As  discussed  in Note 1, Royal  Crown is  included  in the  consolidated
Federal  income tax  return of Triarc.  Pursuant  to a  tax-sharing  agreement
between  Triarc and the Parent,  Royal Crown provides for Federal income taxes


                                      11
<PAGE>

                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



on the same  basis  as if it filed a  separate  consolidated  return.  Amounts
currently  payable or receivable for Federal income taxes are included in "Due
to Parent and affiliates, net".

     The benefit from  (provision  for) income taxes consists of the following
components for the years ended December 31 (in thousands):

                                                    1994      1995       1996
                                                    ----      ----       ----
    Current:                                             
      Federal...................................  $ 2,762    $ 2,918   $(1,644)
      State.....................................      278        214      (120)
                                                  -------    -------   -------
                                                    3,040      3,132    (1,764)
                                                  -------    -------   -------

    Deferred:
       Federal..................................   (3,020)     1,586     2,535
       State....................................     (221)       126       185
                                                  -------    -------   -------
                                                   (3,241)     1,712     2,720
                                                  -------    -------   -------
                                                  $  (201)   $ 4,844   $   956
                                                  =======    =======   =======

     The current  deferred income tax asset and the net  non-current  deferred
income tax (liability) resulted from the following components (in thousands):

                                                              December 31,
                                                           ------------------
                                                           1995          1996
                                                           ----          ----
                                                         
    Current deferred income tax assets:
      Allowance for doubtful accounts, including
        affiliates....................................   $   343       $ 1,333
      Facilities relocation and corporate restructuring       68           974
      Accrued advertising.............................       295           526
      Accrued incentive compensation..................       241           503
      Reserve for guarantee of MetBev, Inc. accounts
        payable.......................................       437           437
      Deferred revenue................................       366           275
      Other, net......................................       287           430
                                                         -------       -------
                                                           2,037         4,478
                                                         -------       -------

    Non-current deferred income tax assets (liabilities):
        Reserve for income tax contingencies..........    (1,588)       (1,588)
        Write-off of investment in affiliate..........       366           366
        Depreciation and other properties basis 
          differences.................................      (388)            8
        Other, net....................................        60           (57)
                                                         -------       -------
                                                          (1,550)       (1,271)
                                                         -------       ------- 
                                                         $   487       $ 3,207
                                                         =======       =======

                                      12
<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996




     The difference  between the reported  income tax benefit  (provision) and
the tax benefit that would result from applying the 35% Federal statutory rate
to the loss before income taxes is reconciled as follows (in thousands):

                                                      1994      1995     1996
                                                      ----      ----     ----
    Income tax benefit computed at Federal
      statutory rate.............................  $  1,815  $  6,618  $ 2,771
    Decrease (increase) in Federal taxes
     resulting from:
      Amortization of non-deductible Goodwill....    (1,721)   (1,721)  (1,721)
      State income taxes, net of Federal income
        tax effect...............................        37       221       42
      Other, net.................................      (332)     (274)    (136)
                                                   --------  --------  -------
                                                   $   (201) $  4,844  $   956
                                                   ========  ========  =======

     The IRS has completed its  examination  of the Federal income tax returns
of Triarc and its  subsidiaries  for the tax years from 1989  through 1992 and
has issued notices of proposed  adjustments relating to Royal Crown increasing
taxable income by  approximately  $3,000,000,  the tax effect of which has not
yet been  determined.  Triarc  is  contesting  the  majority  of the  proposed
adjustments and, accordingly,  the amount of any payments required as a result
thereof  cannot  presently be  determined.  Management of Royal Crown believes
that adequate aggregate provisions have been made in prior periods for any tax
liabilities,  including  interest,  that may result from the 1989 through 1992
examination and other tax matters.

(11) Guaranty

     The Parent has  outstanding  $275,000,000  of 9 3/4% rate senior  secured
notes due 2000 (the  "Senior  Notes")  which  mature on August 1, 2000.  Royal
Crown has fully and unconditionally  guaranteed the Parent's  obligations with
respect  to  the  Senior  Notes  jointly  and  severally  with  Arby's,   Inc.
("Arby's"),  a  wholly-owned  subsidiary of the Parent.  Royal Crown's  common
stock and substantially all of its personal property secure such guarantee.

(12) Facilities Relocation and Corporate Restructuring

     The  "Facilities  relocation  and  corporate   restructuring"  charge  of
$3,950,000 set forth in the accompanying  consolidated statement of operations
for 1996  relates  to costs  associated  with (i)  estimated  costs of planned
subleases  (principally  for  the  write-off  of  nonrecoverable   unamortized
leasehold  improvements and furniture and fixtures) of surplus office space in
excess of anticipated sublease proceeds as a result of the relocation of Royal
Crown's  headquarters  which is being  centralized  with the offices of Mistic
Brands,  Inc., Triarc's other beverage  subsidiary,  in White Plains, New York
($1,300,000),  (ii) employee severance costs associated with the relocation of
Royal  Crown's  headquarters  ($2,200,000)  and  (iii) the  shutdown  of Royal
Crown's Ohio production facility ($450,000).

                                      13
<PAGE>



                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996




(13) Related Party Transactions

     The  following is a summary of  transactions  between Royal Crown and its
related parties (in thousands):
                                                    1994      1995      1996
                                                    ----      ----      ----
       Interest expense allocated to Royal
        Crown from Parent (a)...................  $20,000  $ 20,000    20,000
       Costs allocated to Royal Crown by Triarc
        under a management services agreement (b)   4,900     4,900     3,150
       Net sales to MetBev, Inc. ("MetBev"), net
        of marketing support credits (c)........        -       551     8,985
       Guarantee of MetBev accounts payable (c).        -     1,194         -
       Provision for uncollectible receivables from
        sales to MetBev and guarantee of MetBev
        accounts payable (c)....................        -     1,745     2,000
       Investment in preferred stock of MetBev (c).     -     1,000         -
       Compensation costs charged to Royal Crown by
        Triarc for restricted stock and below market
        stock options (Note 14).................      658       742       178
       Lease payments to NPC Leasing Corp. ("NPC"),
        an affiliate (d)........................      178        21         -
       Payments to affiliates for usage of aircraft   189        15         -

(a) A  substantial  portion of interest  expense on the Senior  Notes has been
allocated by the Parent to Royal Crown and Arby's  based upon the  approximate
proportion of Goodwill  pushed down to those  subsidiaries  in connection with
their  original  acquisition  by Triarc and its  subsidiaries,  an  allocation
method  which   management  of  Royal  Crown  believes  is  reasonable.   Such
allocations may not be indicative of interest  expense which Royal Crown would
have incurred on a stand-alone  basis, the amounts of which would be dependent
upon Royal Crown's capital structure on such stand-alone basis.

(b) Royal Crown receives from Triarc certain  management  services,  including
legal,  accounting,  tax, insurance,  financial and other management services,
under a management services  agreement.  Royal Crown was allocated costs under
such agreement of  $4,900,000,  $4,900,000,  and  $3,150,000  during the years
ended December 31, 1994, 1995 and 1996,  respectively included in "General and
administrative"  in the  accompanying  consolidated  statements of operations.
Such costs were allocated to Royal Crown by Triarc based upon the relative sum
of the greater of income before income taxes,  depreciation  and  amortization
and 10% of revenues.  Management of Royal Crown believes that such  allocation
method is  reasonable.  Further,  management of Royal Crown believes that such
allocation approximates the costs that would have been incurred by Royal Crown
on a stand-alone basis.

(c) During 1995 Royal Crown paid  $1,000,000  and  contributed a license for a
period of five years for the Royal Crown distribution  rights for its products
in New York City and certain  surrounding  counties to MetBev in exchange  for
preferred  stock in MetBev  representing a 37.5% voting interest and a warrant
to acquire 37.5% of the common stock of MetBev.  The remaining 62.5% was owned


                                      14
<PAGE>

                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



by  other  parties  and  was  subject  to  certain  vesting  provisions.  Upon
consummation of the sale of the MetBev distribution rights (see below),  Royal
Crown's  voting   interest  in  MetBev  was  44.7%   principally  due  to  the
cancellation of nonvested stock.  MetBev has incurred  significant losses from
its inception and had stockholders'  deficits as of December 31, 1995 and 1996
of $2,524,000 and $8,943,000, respectively. In December 1996, the distribution
rights  of  MetBev  were  sold to a  third  party  and  MetBev  commenced  the
liquidation of its remaining assets and liabilities.  In connection therewith,
in 1995 Royal  Crown  wrote off its  $1,000,000  investment  to "Other  income
(expense),  net".  Further,  Royal Crown  provided  $1,745,000  and $2,000,000
(included  in  "General  and  administrative"  and  "Advertising,  selling and
distribution") in 1995 and 1996, respectively,  for uncollectible  receivables
from sales (with minimal  gross  profit) of finished  product to MetBev and in
1995 a guarantee of a MetBev third party accounts payable.

(d) During 1994 and 1995 Royal Crown leased  vehicles and other equipment from
NPC, an indirect  wholly-owned  subsidiary of Triarc,  under  long-term  lease
obligations.  Lease  payments  to NPC by Royal  Crown were based on the actual
costs to NPC plus a small profit factor.

     The "Due to Parent and affiliates,  net" of $196,363,000 and $196,219,000
at December 31, 1995 and 1996, respectively, carries no stated maturity.

(14) Pension and Other Benefit Plans

     Triarc maintains a 401(k) defined contribution plan covering all of Royal
Crown's  employees  who  meet  certain  minimum   requirements  and  elect  to
participate. Employees may contribute up to 15% of their compensation, subject
to certain limitations.  The plan provides for company matching  contributions
of 50% of annual  employee  contributions  up to the first 5% of an employee's
contributions.  The plan also provides for annual additional  contributions at
Royal Crown's  discretion.  In connection  with these employer  contributions,
Royal  Crown  provided  $58,000,  $216,000  and  $331,000  for the years ended
December 31, 1994, 1995 and 1996, respectively.

     Royal Crown's  employees who were eligible to  participate  prior to 1989
are covered under a defined benefit pension plan (the "Plan") sponsored by the
Parent  which  covers  employees  of Royal  Crown,  Arby's and  certain  other
affiliates. Prior to 1994 the plan was frozen.

     Components  of net  periodic  pension  cost related to Royal Crown are as
follows for the years ended December 31 (in thousands):

                                                     1994      1995      1996
                                                     ----      ----      ----
                                                   
   Current service cost (represents plan expenses) $     56  $     61  $    61
   Interest cost on projected benefit obligation        197       212      205
   Return on plan assets (gain) loss............         44      (483)    (264)
   Net amortization and deferrals...............       (209)      340      101
                                                   --------  --------  -------
   Net periodic pension cost....................   $     88  $    130  $   103
                                                   ========  ========  =======

                                      15
<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996



     The following table sets forth Royal Crown's portion of the Plan's funded
status as of December 31 (in thousands):

                                                             1995        1996
                                                             ----        ----

   Actuarial present value of benefit obligations:
     Vested benefit obligation..........................   $ 2,996     $ 2,906
     Nonvested benefit obligation.......................        15          14
                                                           -------     -------
   Accumulated and projected benefit obligation.........     3,011       2,920
   Plan assets at fair value............................    (2,098)     (2,462)
                                                           -------     -------
   Funded status........................................       913         458
   Unrecognized net gain from plan experience...........       214         316
                                                           -------     -------
   Accrued pension cost included in "Other liabilities".   $ 1,127     $   774
                                                           =======     =======

     Significant  assumptions  used in measuring the net periodic pension cost
for the Plan included the following: (i) the expected long-term rate of return
on plan assets was 8% and (ii) the discount  rate was 7% for 1994, 8% for 1995
and 7% for 1996. The discount rate used in determining the benefit obligations
above was 7% at December 31, 1995 and 7 1/2% at December 31, 1996. The effects
of the  1995  increase  and the 1996  decrease  in the  discount  rate did not
materially  affect the net periodic  pension  cost.  The 1996  increase in the
discount  rate used in  determining  the  benefit  obligations  resulted  in a
decrease in the accumulated and projected benefit obligations of $117,000.

     Plan assets as of December  31, 1996 are  invested in managed  portfolios
consisting of government and government agency obligations (51%), common stock
(39%), corporate debt securities (5%) and other investments (5%).

     Royal Crown maintains unfunded  postretirement  medical and death benefit
plans for a limited  number of employees  who have  retired and have  provided
certain  minimum  years of  service.  The  medical  benefits  are  principally
contributory while death benefits are noncontributory.  The net postretirement
benefit cost for 1994, 1995 and 1996 as well as the accumulated postretirement
benefit obligation as of December 31, 1996 were insignificant.

     Prior to 1994 and during 1994,  respectively,  Triarc  granted 42,500 and
14,500 restricted shares of Triarc Class A common stock to certain Royal Crown
senior executives under Triarc's 1993 Equity  Participation  Plan (the "Triarc
Equity Plan").  The aggregate  values of the awards at the respective dates of
grant of $834,000 for 1993 and  $327,000 for 1994 were being  charged to Royal
Crown as  compensation  expense over the applicable  vesting  periods  through
1996. On December 7, 1995,  the  Compensation  Committee of Triarc's  Board of
Directors authorized  management of Triarc to accelerate the vesting of all of
the  then  outstanding  shares  of  restricted  stock.  On  January  16,  1996
management  of Triarc  accelerated  the vesting and Royal Crown  recorded  the
resulting additional amortization expense of $208,000 in its entirety in 1995.
In  addition,  Triarc has granted  stock  options to certain key  employees of
Royal Crown under the Triarc  Equity Plan.  Of such  options,  65,000  granted
prior to 1994 were at an option price of $20.00 per share which was lower than
the $31.75 fair market  value of Triarc's  Class A common stock at the date of
grant representing an aggregate  difference of $764,000.  Such amount is being


                                      16
<PAGE>

                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996


charged to Royal Crown as  compensation  expense over the  applicable  vesting
period  through  1998.  Compensation  expense  resulting  from the  grants  of
restricted  shares  and  below  market  stock  options   aggregated   $658,000
(including  $66,000 for 3,500  previously  unvested shares of restricted stock
which were vested and repurchased from the grantee),  $742,000  (including the
$208,000 from the  accelerated  vesting of the restricted  stock) and $178,000
during  1994,  1995 and 1996,  respectively,  and is included in "General  and
administrative" in the accompanying consolidated statements of operations.

(15) Lease Commitments

     Royal  Crown  leases   buildings  and   improvements  and  machinery  and
equipment.  Rental expense under  operating  leases  consists of the following
components for the years ended December 31 (in thousands):

                                                     1994      1995      1996
                                                     ----      ----      ----
                                                   
        Minimum rentals.........................   $    608  $    725  $   866
        Less sublease income....................        396       447      313
                                                   --------  --------  -------
                                                   $    212  $    278  $   553
                                                   ========  ========  =======

    Royal Crown's future minimum  rental  payments and sublease  rental income
for operating  leases having an initial lease term in excess of one year as of
December 31, 1996 were as follows (in thousands):

                                                            Rental    Sublease
    Year Ending December 31,                               Payments    Income
    ------------------------                               --------    ------

    1997................................................   $   704     $   374
    1998................................................       601         227
    1999................................................       540          72
    2000................................................       525          42
    2001................................................       499           -
    Thereafter..........................................     2,464           -
                                                           -------     -------
                                                           $ 5,333     $   715
                                                           =======     =======

(16) Legal and Environmental Matters

     In  1993  Royal  Crown  became  aware  of  possible   contamination  from
hydrocarbons in groundwater at two abandoned bottling  facilities.  Tests have
confirmed hydrocarbons in the groundwater at both of the sites and remediation
has commenced. Management estimates remediation costs will aggregate $685,000,
of which $439,000 has been expended to date,  with  approximately  $225,000 to
$260,000  expected to be  reimbursed by the State of Texas  Petroleum  Storage
Tank Remediation Fund (the "Texas Fund") at one of the two sites.

     Based  on  currently  available   information  and  given  (i)  potential
reimbursements  by the  Texas  Fund  described  above and (ii)  Royal  Crown's
reserve for such environmental matter of approximately  $250,000,  Royal Crown


                                      17
<PAGE>

                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                               December 31, 1996


does not believe that the  environmental  matter referred to above, as well as
ordinary routine litigation  incidental to its business,  will have a material
adverse  effect  on  its  consolidated  results  of  operations  or  financial
position.

(17) Business Acquisitions

     In January 1995, Royal Crown reacquired the distribution rights for Royal
Crown's branded  products in the New York  metropolitan  area and acquired the
trademark and distribution rights for C&C products, which includes cola, mixer
and flavor lines and existing inventories through its newly-formed subsidiary,
TriBev,  for cash of $2,923,000.  This  acquisition  has been accounted for in
accordance  with the purchase method of accounting.  In accordance  therewith,
the cost of the acquisition was assigned as follows (in thousands):

       Deferred costs and other assets:
        Trademarks.............................................  $ 2,100
        Distribution rights....................................      400
       Inventories.............................................      707
       Prepaid expenses and other current assets
         (return of deposit)...................................     (284)
                                                                 ------- 
                                                                 $ 2,923
                                                                 =======

                                      18