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                                                                EXHIBIT 10.36(B)
                                       
                              EMPLOYMENT AGREEMENT

         AGREEMENT dated to be effective as of March 1, 1998, made and 
entered into by and between Schlotzsky's, Inc., a Texas corporation (the 
"Company") and Jeffrey J. Wooley ("Wooley").

         The Board of Directors of the Company has determined that it is in 
the best interest of the Company to set forth the terms of employment of 
Wooley as Sr. Vice President and Secretary of the Company and Wooley has 
agreed to such terms. The Company and Wooley wish to promote their mutual 
best interest by setting forth the terms and conditions in writing.

         NOW, THEREFORE, in consideration of the covenants and agreements set 
forth in this Agreement, the parties agree as follows:

         1.  EMPLOYMENT. The Company employs Wooley and Wooley agrees to the 
terms and conditions set forth in this Agreement. Wooley agrees to serve as 
Sr. Vice President and Secretary of the Company to be responsible for general 
management of the affairs of the Company, reporting directly to President of 
the Company, and to devote good faith efforts on behalf of the Company.

         2.  TERM OF EMPLOYMENT. Wooley's employment with the Company shall 
continue for three years from the effective date hereof, provided that such 
term shall be automatically extended from year to year thereafter, unless 
terminated by Wooley or the Company in accordance herewith.

         3.  BASE SALARY, BONUS AND OTHER COMPENSATION. The Company shall pay 
to Wooley a base salary at the annual rate of $160,000 for the balance of 
1998, $170,000 during 1999, $185,000 during 2000 and for each year 
thereafter, unless increased by agreement between the parties. Wooley's 
salary shall be payable on the same schedule that salary is paid to other 
employees. Wooley shall be entitled to a cash bonus for 1998 calculated in 
accordance with the attached Exhibit A. Wooley shall also be entitled to such 
other bonuses and compensation as the Compensation Committee of the Board of 
Directors shall approve for each year thereafter.

         4.  BENEFITS. Wooley shall receive, in addition to the base salary 
and the bonuses set forth in Section 3 hereof, such other benefits as are 
provided by the Company to its executive officers, such as group life, 
medical and disability insurance. In addition, Wooley is receiving stock 
options to acquire shares of Common Stock of the Company, certain of such 
options being subject to approval by the shareholders of an increase in the 
number of shares issuable under the Company's stock option plan at the 1998 
Annual Meeting of Shareholders.

         5.  WOOLEY COVENANTS.

         (a) CONFIDENTIAL INFORMATION. Wooley acknowledges that the 
information, observations and data obtained by him while employed by the 
Company (including 
                                       


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those obtained by him while employed at the Company prior to the date of this 
Agreement) concerning the business or affairs of the Company ("Confidential 
Information") are the property of the Company. Therefore, Wooley agrees that 
he shall not disclose to any unauthorized person or use for his own account 
any Confidential Information, unless and to the extent that the 
aforementioned matters become generally known to and available for use by the 
public other than as a result of Wooley's act or omissions to act. Wooley 
shall deliver to the Company at the termination of employment, or at any 
other time the Company may request, all memoranda, notes, plans, records, 
reports and other documents (and copies thereof) relating to the Confidential 
Information or the business of the Company which he may then possess or have 
under this control.

         (b) INVENTIONS AND PATENTS.

             (i)  Wooley agrees that all inventions, innovations, 
improvements, developments, methods, designs, analyses, drawings, reports, 
and all similar or related information which relates to the Company's actual 
or anticipated business, research and development or existing or future 
products or services and which are conceived, developed or made by Wooley 
while employed by the Company ("Work Product") belong to the Company. Wooley 
will promptly disclose such Work Product to the Company and perform all 
actions reasonably requested by the President or the Board of Directors to 
establish and confirm such ownership.

             (ii) Wooley is hereby advised that Section 5(b)(i) of this 
Agreement regarding the Company's ownership of intellectual property does not 
apply to any invention for which no equipment, supplies, facilities or trade 
secret information of the Company was used and which was developed entirely 
on Wooley's own time, unless (i) the invention relates to the business of the 
Company or to the Company's actual or demonstrably anticipated research or 
developments, or (ii) the invention results from any work performed by Wooley 
of the Company.

         (c) NON-COMPETE, NON-SOLICITATION

             (i)  Wooley acknowledges that in the course of his employment 
with the Company he will become familiar, and during his employment with the 
Company he has become familiar, with the Company's trade secrets and with 
other confidential information concerning the Company and that his services 
will be of special, unique and extraordinary value to the Company. Therefore, 
Wooley agrees that, during employment and for twenty-four months thereafter, 
he shall not directly or indirectly own, manage, control, participate in, 
consult with, render services for, or in any manner engage in any business 
competing with the business of the Company or any foreign country where the 
Company is authorized to do business. For purposes of this Agreement, a 
business shall be deemed competitive if it is a restaurant, sandwich shop or 
food service operation offering principal menu entrees or items which are the 
same or confusingly similar to those then offered at any Schlotzsky's 
restaurant or outlet worldwide. Nothing herein shall prohibit Wooley from 
being a passive owner of not more than 5% of the outstanding stock of any 
class of a corporation which is publicly 
                                       


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traded, so long as Wooley has no active participation in the business of such 
corporation.

             (ii) During employment Wooley shall not, except in the course of 
properly dispensing his duties (i) induce or attempt to induce any employee 
of the Company to leave the employ of the Company or in any way interfere 
with the relationship between the Company and any employee thereof, (ii) hire 
directly or through another entity any person who was an employee of the 
Company at any time during employment or (iii) induce or attempt to induce 
any customer, supplier, licensee or other business relation of the Company to 
cease doing business with the Company or in any way interfere with the 
relationship between any such customer, supplier, licensee or business 
relation and the Company.

         (d) FULL-TIME. Wooley agrees to devote his best efforts to the 
business and affairs of the Company. Wooley shall seek written consent from 
the Compensation Committee of the Board of Directors of the Company to 
provide service to a third party for compensation. Consent to such activities 
may be withheld in the sole judgment of the Compensation Committee. Consents 
granted may be referenced in an addendum to this Agreement.

         (e) ENFORCEMENT. If, at the time of enforcement of paragraphs 5(a), 
(b), (c), or (d) of this Agreement, a court holds that the restrictions 
stated herein are unreasonable under circumstances then existing, the parties 
hereto agree that the maximum period, scope or geographical area reasonable 
under such circumstances shall be substituted for the stated period, scope or 
area. Because Wooley's services are unique and because Wooley has access to 
Confidential Information and Work Product, the parties hereto agree that 
money damages would be inadequate remedy for any breach of this Agreement. 
Therefore, in the event a breach or threatened breach of this Agreement, the 
Company or its successors or assigns may, in addition to other rights and 
remedies existing in their favor, apply to any court of competent 
jurisdiction for specific performance or injunction or other relief in order 
to enforce, or prevent any violations of, the provisions hereof.

         6.  TERMINATION.

             (a) Wooley or the Company may terminate the employment of Wooley 
for cause or without cause by giving written notice at least 60 days in 
advance of the effective date of termination. For purposes of this Agreement 
"for cause" means termination by the Company of the employment of Wooley upon 
any of the following grounds and no others: (i) any act of dishonesty or 
violation of law on the part of Wooley resulting or intended to result 
directly or indirectly in personal gain or benefit at the expense of the 
Company, fraud, misappropriation, embezzlement or willful and material damage 
of or to property of the Company; (ii) any intentional act on the part of 
Wooley preventing him from discharging his duties for a material length of 
time; or (iii) a material breach of this Agreement, including willful and 
habitual neglect of duties, which is not cured within ten days following 
receipt of written notice.
                                       


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         (b) Upon termination of Wooley's employment for any reason, he shall 
be entitled to receive the base salary and any bonuses earned through the 
date of termination. In addition, the Company shall continue to use good 
faith efforts to remove Wooley from all guaranties in favor of the Company as 
soon as practicable.

         (c) Upon termination of Wooley's employment without cause, he shall 
be entitled to receive the base salary and any bonuses earned through the 
date of termination, plus the base salary through the end of the term then in 
effect, or for one year, whichever is longer. Wooley may elect to treat a 
substantial reduction in responsibilities and duties as termination without 
cause. In the event of any dispute between the Company and Wooley concerning 
the status of a reduction in responsibilities and duties as "substantial," 
the dispute shall be submitted to an independent third party arbitrator 
acceptable to the Company and Wooley for a determination which shall be 
binding on both parties.

         7.  DISABILITY OR DEATH.

             (a) If as a result of illness, injury or other disability, 
Wooley is unable to perform his duties hereunder on a substantially full time 
basis for any period of twelve months or more, the Company may at its option 
terminate Wooley's employment hereunder and shall pay to Wooley the base 
salary and any bonuses through the date of termination, plus the base salary 
through the end of the term then in effect, or for one year, whichever is 
longer.

             (b) If Wooley shall die during the term of this employment by 
the Company, the Company shall pay to Wooley's estate the base salary and any 
bonuses through the date of his death, plus the base salary through the end 
of the term then in effect, or for one year, whichever is longer.

         8.  MISCELLANEOUS. This Agreement contains the entire agreement of 
the parties regarding the subject matter hereof. This Agreement may not be 
changed orally but only by an agreement in writing signed by the parties 
hereto. This Agreement shall be binding upon and inure to the benefit of the 
parties and, to their respective successors and assigns. This Agreement shall 
be construed under and enforced in accordance with the laws of the State of 
Texas, and shall be performable in Travis County, Texas.

             IN WITNESS WHEREOF, the parties have executed this Agreement as 
of the date set forth above.

                                            COMPANY:

                                            SCHLOTZSKY'S, INC.



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                                            By:  /s/
                                                --------------------------------

                                            Its:
                                                --------------------------------


                                            WOOLEY:


                                            /s/
                                            ------------------------------------
                                            Jeffrey J. Wooley



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                                    EXHIBIT A

Mr. Wooley shall be entitled to a cash bonus for 1998, based on the following 
criteria: (i) $60,000 if at least 34 units developed by the Company's Turnkey 
real estate development department are opened by June 30, 1998 (Milestone 1), 
51 units are opened by September 30, 1998 (Milestone 2), or 68 units are 
opened by December 31, 1998 (Milestone 3); (ii) $80,000 if at least 38 units 
developed by the Company's Turnkey real estate development department are 
opened by Milestone 1, 56 units are opened by Milestone 2 or 75 units are 
opened by Milestone 3; (iii) $80,000 if two of the three criteria in (i) 
above are met; (iv) $100,000 if two of the three criteria in (ii) above are 
met; (v) $100,000 if all three of the criteria in (i) above are met; or (vi) 
$160,000 if all three of the criteria in (ii) above are met. Wooley shall be 
entitled to the cash bonus in items (i) through (vi) above which yields the 
highest amount, but shall not be entitled to more than the amount reflected 
in the single item for which he has met the highest applicable criteria 
(i.e., no aggregation of the bonuses is permitted).



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