Exhibit 10.34

MODIFICATION AGREEMENT

WHEREAS,
on August 30, 2002DFW RESTAURANT TRANSFER CORP., a Texas corporation ("Borrower) executed and delivered to NS ASSOCIATES I, LTD., a Texas
limited partnership ("Lender"), a Promissory Note in the original principal amount of Twenty-Three Million Two
Hundred Sixty-Eight Thousand Dollars ($23,268,000) payable to the order of Lender (the "Note"); and

WHEREAS,
the Note is secured by a Security Agreement of even date therewith between Borrower and Lender (the "Security Agreement"), covering certain Collateral described therein, and by
a Guaranty of Payment of even date therewith (the "Guaranty") executed by Schlotzsky's Inc., a Texas corporation ("Guarantee) for the benefit of Lender; and

WHEREAS,
Lender and Borrower have agreed to modify the terms of payment of the Note and to amend the Note in certain other respects, and wish to reduce their agreement to writing;

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and Borrower do hereby agree as follows:

1.Principal Balance. The parties acknowledge that the outstanding principal balance of the Note as of January 27,
2003, the effective date hereof (the "Effective Date") is $21,799,057.01.

2.Modification of Payment Terms. From and after the Effective Date, the Note shall be payable as follows:



3.Other Note Modifications.



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4.Fee. In consideration of Payee's execution and delivery of this Agreement, Maker shall pay to Payee, on or before
February 15, 2003, a modification fee in the amount of $52,000.00.

5.Notices. All notices, requests, consents, demands and other communications required or which any party desires to give
under the Note or the Security Agreement shall (notwithstanding anything now contained in Section 7(a) of the Security Agreement) be in writing and shall be deemed sufficiently given or
furnished if delivered by personal delivery, by telegram, telex, or facsimile, by expedited delivery service with proof of delivery, or by registered or certified United States Mail, postage
pre-paid, at the addresses specified below (unless changed by similar notice in writing given by the particular party whose address is to be changed). Any such notice or communication
shall be deemed to have been given either at the time of personal delivery or, in the case of delivery service or mail, as of the date of first attempted delivery at the address and in the manner
provided herein, or, in the case of telegram, telex or facsimile, upon receipt. Notwithstanding the foregoing, no notice of change of address shall be effective except upon receipt. Any notice given
hereunder shall be addressed as follows:

IF TO BORROWER:

DFW Restaurant Transfer Corp.
203 Colorado Street
Austin, Texas 78701
Facsimile No.: 512/236-3650
Attention: PresidentWith Copies to:

Schlotzskys, Inc.
203 Colorado Street
Austin, Texas 78701
Facsimile No.: 512/236-3650
Attention: Chief Executive OfficerSchlotzsky's, Inc.
203 Colorado Street
Austin, Texas 78701
Facsimile No.: 512/236-3650
Attention: Chief Financial Officer


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Schlotzsky's, Inc.
203 Colorado Street
Austin, Texas 78701
Facsimile No.: 512/236-3740
Attention: General CounselIF TO LENDER:

NS Associates I, Ltd.
5720 LBJ Freeway, Suite 625
Dallas, Texas 75240
Facsimile No.: 972/788-2399
Attention: Morris P. NewbergerWith Copy to:

Lester V. Baum
Powell & Coleman, LLP
8080 N. Central Expressway
Suite 1380
Dallas, Texas 75206
Facsimile No.: 214/373-8768


6.No Default. Lender hereby confirms that no Event of Default under the Note has occurred.

7.Representation Concerning Liens. Borrower acknowledges and represents that the liens and security interests created by the
Security Agreement are valid and existing liens and security interests against the Collateral, and Borrower and Guarantor acknowledge and agree that there exists no offset, claim or defense of any
kind to the Note as modified hereby, the Security Agreement or the Guaranty.

8.Binding Effect. This Modification Agreement shall bind the parties hereto and their respective heirs, personal
representatives, successors and assigns.

9.Costs. Borrower agrees to pay all costs incurred by Lender in connection with or the preparation, execution and
consummation of this Agreement, including, without limitation, Lender's attorneys' fees and other out-of-pocket expenses relating thereto.

10.No Prior Agreements. This Modification Agreement supersedes any and all prior commitments, agreements, representations
and understandings, whether written or oral, relating to the subject matter hereof and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or
discussions of Borrower and Lender.

11.Continued Effect. Except as modified hereby the Note, Security Agreement and Guaranty remain in full force and effect
according to the terms and conditions contained therein, including, without limitation the terms of the Note which give Lender the right to accelerate the indebtedness evidenced by the Note and
require Borrower to prepay all outstanding principal and accrued interest due thereunder upon the occurrence of a "charge in control of Guarantor or Holder," as defined in the Amended and Restated
Option Agreement dated as of February 7, 2001 between Borrower, Lender and Guarantor.

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IN
WITNESS WHEREOF, Lender, Borrower and Guarantor have executed this Modification Agreement and made it effective as of the 27th day of January, 2003.

| |  | BORROWER:                             
| |  | --------------------------------------
| |  | DFW RESTAURANT TRANSFER CORP.         
| |  | By:                                   
| |  | LENDER:                               
| |  | NS ASSOCIATES I, LTD.                 
| |  | By:                                   
| |  | By:                                   
| |  | GUARANTOR:                            
| |  | SCHLOTZSKY'S, INC.,a Texas corporation
| |  | By:                                   

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