Source: http://www.freefranchisedocs.com/everything-yogurt-UFOC.php
Timestamp: 2019-04-24 13:52:17+00:00

Document:
Everything Yogurt, Inc. was initially incorporated in the State of New York in 1975 and opened the first Everything Yogurt facility in April 1976 in New York. (These restaurants have since closed). In 1978 Everything Yogurt New Jersey, Inc. was formed and in 1983 Everything Yogurt, Inc., was merged into it. The corporation changed its name on April 16, 1988 to Everything Yogurt, Inc. and on March 16, 1995 the name was changed to Restaurant Systems International, Inc., and on February 10, 2003 to Everything Yogurt Brands, Inc. On August 14, 2003 the company stock was acquired by Villa Pizza, Inc. and the franchise agreements were thereafter assigned to Everything Yogurt Brands, LLC, a Delaware limited liability company ("we" or "us"), formed August 14, 2003 and started operating August 14, 2003 offering franchises for South Philly Steaks & Fries, Greenleaf s Grille, Greenleaf s and Bananas Smoothies & Frozen Yogurt. We also maintain support for the franchises assigned us. When describing things belonging to us or giving you information relative to the franchises offered for sale by this Uniform Franchise Offering Circular, we use the word "our"). We maintain our principal place of business at 25 Washington Street, Morristown, New Jersey 07960. We conduct our business under the trade names GREENLEAF'S GRILLE, GREENLEAF'S, BANANAS SMOOTHIES & FROZEN YOGURT, TREAT STREET, EVERYTHING YOGURT & SALAD CAFE, and SOUTH PHILLY STEAKS & FRIES. However, we offer only one franchise, Bananas Smoothies & Frozen Yogurt, under this Uniform Franchise Offering Circular. Our other concepts are offered for sale in our other Uniform Franchise Offering Circulars.
We operate and grant franchises for the operation of various fast-service restaurants. We had granted franchises bearing the name Everything Yogurt since August 1983, and have operated restaurants of that type since April 1981. However, this concept is no longer available for purchase as an independent concept but is only available as a part of a Bananas Smoothies & Frozen Yogurt franchised restaurant (discussed below).
We also operate and formerly offered franchises for restaurants bearing the name Bananas Frosty Fruit Shakes and Bananas Ultimate Juice Bar since August, 1993 and April, 1995 respectively. The two systems were merged into one concept on February 15, 1998 and the concept was renamed Treat Street. It has since been renamed Bananas Smoothies & Frozen Yogurt (discussed below).
Since December 22, 1993, we have operated and granted franchises for the operation of restaurants bearing the name Gretel's Pretzels (originally this concept bore the name The Gourmet Pretzel Company until the name was changed in December 1994 to Gretel's Pretzels). However, this concept is no longer available for purchase as an independent concept but is only available as a part of a Bananas Smoothies & Frozen Yogurt franchised restaurant (discussed below).
We also operate and grant franchises for the operation of restaurants bearing the name Bananas Smoothies & Frozen Yogurt. A Bananas Smoothies & Frozen Yogurt restaurant offers any combination of at least one of our branded products (i.e., Everything Yogurt brand proprietary yogurt, Bananas Smoothies & Frozen Yogurt smoothies and frosties made with our proprietary products, and/or our hand-rolled Pretzels, made with our proprietary pretzel flour.) This franchise has been offered since 1998.
We formerly operated and granted franchises for the concept Everything Yogurt & Salad Cafe. We began offering franchises under this name September 24, 1991 and have operated restaurants using this concept since 1991, but ceased offering the Everything Yogurt & Salad Cafe concept as of 2000.
We formerly granted franchises for the operation of restaurants bearing the trade name Salad Cafe. We began offering such franchises under this tradename on April 30, 1995, but ceased offering Salad Cafe's as of the year 2000.
We also sell franchises for the operation of restaurants bearing the tradename South Philly Steaks & Fries. We have offered franchises under this tradename since September 1986.
We also operate and have since 2004 granted franchises for the operation of restaurants under the tradename Green Leafs Beyond Great Salads. Between 1998 and 2003, we had offered franchises under the tradename Greenleafs Grille. Between 1998 and 2000, we had offered franchises for the operation of restaurants under the tradename Greenleafs.
We offer only Bananas Smoothies & Frozen Yogurt franchises under this Uniform Franchise Offering Circular.
We also offer and grant licenses for the operation of self-service kiosks, mobile carts and self-service units under the mark Bananas Smoothies & Frozen Yogurt which may offer a limited menu of any combination of our Everything Yogurt, Bananas Smoothies & Frozen Yogurt and/or Gretel's Pretzels or Greenleafs items. Such kiosks, carts and/or units are typically operated by large food service providers, hospitals, universities, transportation centers, chain accounts, airports and other institutional facilities. There may or may not be license fees, service fees, royalty fees or advertising fees paid to us in connection with these licenses.
Our agents for service of process are listed in Exhibit D.
As noted above, our predecessor, Everything Yogurt, Inc., a New York corporation, was incorporated in September 1975. In 1978 Everything Yogurt New Jersey, Inc. was formed and in 1983 Everything Yogurt, Inc. was merged into it. The corporation changed its name to Restaurant Systems International, Inc. At the time the company stock was acquired, the company was headquartered at 1110 South Avenue, Staten Island, NY 10814-3403. The company ultimately changed its name to Everything Yogurt Brands, Inc. and on August 14, 2003 was acquired by Villa Pizza, Inc. and the franchise agreements thereafter were assigned to Everything Yogurt Brands, LLC, a Delaware limited liability company.
franchises for the operation of restaurants offering one or more of the following: Gretzel's Pretzels and from 1991 through 2000, offered the Everything Yogurt & Salad Cafe franchise.
Affiliates of Villa Pizza, Inc., including Villa Enterprises Management, Ltd. ("Villa Management") have owned and operated restaurants under the names "Villa Pizza," "Villa Pizza Express," "The Villa Co.," "Cafe Villa," "Villa Pizza Cucina," "Villa Pizza Cucina Italiana", "Villazzo" and Casa Java between 1964 and the present. In June 1999 Villa Pizza, Inc. acquired the rights and obligations from Cozzoli's Pizza Systems, Inc. as franchisor under certain existing Cozzoli's Pizza franchise agreements. These restaurants offer a limited menu of pizza, pasta, Italian specialties and desserts. We do not offer Villa Pizza or Cozzoli's franchises under this offering circular.
Except as described above, none of our affiliates have offered franchises in any other lines of business. Villa Management's principal business address is the same as ours. Villa Management has not offered franchises in any line of business. We, or an affiliate, may establish leasehold corporations that may enter into primary leases for restaurants and sublease the premises to you. None of these affiliates offers or has offered franchises in any line of business or has operated businesses of the type operated by Franchisees. We have no other affiliates that provide products or services to our Franchisees.
If approved by us, you (franchisees, whether individuals, partnerships, corporations, limited liability companies and the partners of partnerships, principals of corporations and members of limited liability companies will be referred to as "you") will have the right to sign a franchise agreement (the "Franchise Agreement") for the establishment and operation of one restaurant business using the Proprietary Marks and System of that business at a specified location (the "Franchised Business").
If you sign a Franchise Agreement for an Bananas Smoothies & Frozen Yogurt restaurant you will be engaged in the business of preparing and selling products from a menu featuring offerings of at least one of our core products: Everything Yogurt brand frozen yogurt, Bananas Smoothies & Frozen Yogurt brand smoothies and frosties and/or Gretel's Pretzels brand hand rolled pretzels made with our proprietary ingredients.
If you sign a Franchise Agreement for an Bananas Smoothies & Frozen Yogurt restaurant which sells Everything Yogurt brand frozen yogurt, you will be engaged in the business of preparing and selling proprietary frozen yogurt with or without toppings, frozen yogurt sundaes and shakes and fresh fruit juices. You will feature frozen yogurt and frozen yogurt sundaes in several sizes and you will prepare them with any or all of the fresh fruit and other candy or nut toppings offered and other food and beverage items approved by us from time to time.
pursuant to our standards, specifications, methods and procedures. Drinks may contain various healthful additives, such as calcium, spirulina and protein powder.
If you sign a Franchise Agreement for an Bananas Smoothies & Frozen Yogurt restaurant which sells Gretel's Pretzels brand hand rolled pretzels, you will be engaged in the business of preparing and selling hand rolled soft pretzels made with a proprietary spice formula flour in a twist, in a dipper or as pretzels topped with a variety of toppings, and related food and beverage items pursuant to our standards, specifications, methods and procedures.
You may also sell other related food and beverage items from an Bananas Smoothies & Frozen Yogurt restaurant, such as premium flavored coffees, espresso, cappuccino, muffins, ice cream, nuts, bulk or packaged candy, bagels, cookies, cakes and flavored popcorn as well as specialty items, such as specially made apparel and gifts.
It is anticipated that Bananas Smoothies & Frozen Yogurt restaurants will be typically located in retail malls, airports, food halls, food courts, strip shopping centers, or other in-line locations. A typical Bananas Smoothies & Frozen Yogurt restaurant requires a site of 310 to 1,200 square feet, with a minimum of 14 feet of frontage, depending on how may concepts are purchased. The design and appearance of the restaurants will vary according to location, but must employ our standard decor and signs. It is anticipated that the restaurants will attract people of all ages.
You can expect to compete with numerous restaurants offering a wide range of food and beverage items in a wide variety of service formats. A large number of restaurant chains and franchised fast-food service systems operated by entities much larger than us compete, directly or indirectly, with Bananas Smoothies & Frozen Yogurt restaurants, as do many local and independent operations offering moderately priced food and beverage items. An Bananas Smoothies & Frozen Yogurt restaurant also must compete with other restaurants featuring frozen yogurt, fresh fruit shakes and/or hand rolled pretzels and other items, including but not limited to, premium flavored coffees, espresso, cappuccino, muffins, ice cream, nuts, bulk or packaged candy, bagels, cookies, cakes and flavored popcorn, as well as specialty items, such as specially made apparel and gifts.
The following is the list of directors, principal officers, and other executives who have management responsibility in the operation of our business relating to the licenses described in this offering circular. The principal occupation and business experience of each person during the past five years, including the names and locations of prior employers is described below. Unless otherwise indicated, the location of the employer is Morristown, New Jersey.
Mr. Scotto is the President and a Director of Wishwell International, Inc., the Manager of Everything Yogurt Brands, LLC and has served in that capacity since January 1999. Mr. Scotto has also served as President and a Director of Villa Enterprises Management, Ltd. since June 1983. Mr. Scotto also serves in similar positions and performs similar functions for other entities owned by or affiliated with Villa Enterprises Management, Ltd.
Mr. Scotto is the Executive Vice President and a Director of Wishwell International, Inc., the Manager of Everything Yogurt Brands, LLC and has served in that capacity since January 1999. Mr. Scotto has served as Vice President and a Director of Villa Enterprises Management, Ltd. since July 1991. Mr. Scotto also serves in similar positions and performs similar functions for other entities owned by or affiliated with Villa Enterprises Management, Ltd.
Mr. Pugliese is the Secretary and a Director of Wishwell International, Inc., the Manager of Everything Yogurt Brands, LLC since January 1999. Mr. Pugliese has served as Secretary and a Director of Villa Enterprises Management, Ltd. since March 1980. Mr. Pugliese also serves in similar positions and performs similar functions for other entities owned by or affiliated with Villa Enterprises Management, Ltd.
Mr. Kuehn became Senior Vice President of Operations of Everything Yogurt Brands, LLC. on August 14, 2003. He also serves as Senior Vice President of Operations of Villa Enterprises Management, Ltd. and has held that position since October 2000. Prior thereto, since April 1999, he was a Regional Director with Villa Enterprises Management, Ltd. Mr. Kuehn also serves in similar positions and performs similar functions for other entities owned by or affiliated with Villa Enterprises Management, Ltd. Prior to working for Villa Enterprises Management, Ltd., Mr. Kuehn was a Vice President of Sbarro, Inc headquartered in New York.
Marketing and Recruiting of Villa Enterprises Management, Ltd. and from June 1994 to November 1999 he served as Director of Marketing. Mr. Torine also serves in similar positions and performs similar functions for other entities owned by or affiliated with Villa Enterprises Management, Ltd.
Mr. Ron became the Director of Franchise Development of Villa Enterprises Management on October 17, 2005. From January 2001 until September 2005, he was the Franchise Manager of Dunkin' Brands covering the New York, New Jersey, and Maryland regions. Prior to that, 1998 - 2001, he was the Director of Franchise Development for Restaurant Systems International, Inc. During the years of 1994 - 1998, he served as the Regional Manager/Business Consultant for the same company.
Mr. Valavanis became Director of Franchise Operations for Villa Enterprises Management, Ltd. on August 14, 2003 which position includes overseeing, with Michael Miller, the operations of Everything Yogurt Brands, LLC. . He has served as Franchise Operations Manager of Villa Enterprises Management, Ltd. since April 2002. From June 1999 through March 2002 he was District Manager for Villa Enterprises Management, Ltd. Mr. Valavanis also serves in similar positions and performs similar functions for other entities owned by or affiliated with Villa Enterprises Management, Ltd. Prior to working for Villa Enterprises Management, Ltd., from July 1997 to May 1999, he was owner of Spaghetti Jacks, a restaurant located in Pewaukee, Wisconsin. Prior to that, from October 1995 to May 1997, he was an Area Training Director for Sbarro Inc., located in Pewaukee, Wisconsin.
Cheryl Kempf has served as Sales and Leasing Manager since she joined us in August 2003. She was also Sales and Leasing Manager for Everything Yogurt Brands, Inc. from August 2000 through August 2003. From December 1997 through August 2000 she was the Sales Assistant of Everything Yogurt Brands, Inc. (then known as Restaurant Systems International, Inc.) and from January 1997 through December 1997, she held the position of Design/Marketing Coordinator for the same company.
Mr. Sara became Director of Franchise Operations for Everything Yogurt Brands, LLC. and Villa Enterprises Management, Ltd. on April 4, 2005. Since July 2004, he has acted as District Manager for Everything Yogurt Brands, LLC. Mr. Sara also serves in similar positions and performs similar functions for other entities owned by or affiliated with Villa Enterprises Management, Ltd. Prior to working for Villa Enterprises Management, Ltd. he was a Regional Director with Sbarro, Inc. headquartered in New York from May 1994 to August 2004.
Mr. Lahouari was hired by Villa Enterprises Management, Ltd. in November 2004 as Franchise Operations Consultant for Everything Yogurt Brands, LLC. Prior to that, from February 2004 to October 2004 he was employed by Sbarro, Inc. as General Manager and prior to that was employed for RSC Group as Director of Operations from July 1997 to February 2004.
Mr. Mahmoud was hired by Villa Enterprises Management, Ltd. in June 2003. From March 1998 to May 2003, Mr. Mahmoud was a General Director of Operations with Golden M Enterprises in Egypt.
Franchise Brokers: The following person has been engaged by the company as Franchise Broker.
Since January 2002, Mr. Lamb has served as an independent franchise broker located in Miami, Florida. Mr. Lamb served as Vice President, Real Estate and Franchising of Villa Enterprises Management, Ltd. from June 1999 until December 2001. From 1982 until December 2001, he also served as President of Cozzoli's Pizza Systems, Inc. in Miami, Florida.
The Business Alliance, Inc. is a Georgia Corporation incorporated in 1999. Its principal place of business is 100 Hartsfield Centre, Suite 500, Atlanta, Georgia, 30354, and its telephone number is 404-763-2244. The Business Alliance, Inc. is a national franchise referral company. (See Exhibit E for a list of its broker network).
On August 14, 2003, Villa Pizza, Inc. acquired the stock of Everything Yogurt Brands, Inc. (previously known as Everything Yogurt, Inc. and also Restaurant Systems International, Inc. (hereinafter the "Company"). Everything Yogurt Brands, Inc. thereafter assigned the franchise agreements to Everything Yogurt Brands, LLC, a Delaware limited liability company.
1. In October 1991, a lawsuit entitled Marcelo Caraveo v. Everything Yogurt. Inc.
a mall location in El Paso, Texas. The case was settled by the Company for the sum of $16,000.00 in the summer .of 1997.
2. A former 47.5% shareholder of the predecessor Company had in 1992 and 1994 commenced two actions, Beninati v. Nicotra. Kaplan, adv. Everything Yosurt. Inc.. (NY Supreme Ct., Richmond Cnty, Index No. 1518/92) and Beninati v, Nicotra. Remaro. Kaplan. Colombo. Inc. and FDIC. (NY Supreme Ct., Kings Cnty, Index No. 41615/94) which were consolidated for hearing in Richmond County. The actions were based upon the contention of Mr. Beninati that he was wrongfully excluded from participating in the management of the Company, that the remaining shareholders and executives were mismanaging the Company, and that the Federal Deposit Insurance Corporation and Colombo Inc. had entered into a conspiracy with Company insiders to deprive him of his shareholder status. In March, 2002, the cases were settled whereby Mr. Beninati exchanged a release of claims and his transfer of stock for the payment of $678,000 from the Company and Richard Nicotra (a former 47.5% shareholder) and his wife Lois Nicotra., which sum is to be paid over time in accordance with an agreed upon schedule.
3. In November 1998, American Food Consultants II, Inc ("Franchisee"), entered into three separate Franchise Agreements with the Company to operate a South Philly Steak & Fries, a Treat Street, and a Greenleaf s Grille outlet, all at Willowbrook Mall, Wayne, New Jersey. In January, 2000 the Franchisee commenced an action against the Company in connection with the Greenleaf s Grille store, alleging, among other things, that the Company breached the Greenleaf s Grille Franchise Agreement by "fail(ing) to meet (its) obligations under the Agreement"; fraudulently enticed the Franchisee to enter into the Agreement by making false representations "as to support services and earnings to be realized"; and interfered with the Franchisee's lease with its landlord. Franchisee also alleged that the Company's offering circular did not comply with applicable law. Soon after commencing the action, the Franchisee abandoned operating the Greenleaf s Grille store, while continuing to operate the Treat Street and South Philly Steak & Fries stores. For procedural reasons, the action was twice dismissed without prejudice - once by agreement of the parties and once by the Court. In March 2002, the Company commenced a new action against the Franchisee and its guarantors for wrongful repudiation of the Greenleaf s Grille franchise, the Franchisee reasserted as counterclaims its previously dismissed claims. Everything Yogurt Brands, Inc. v. American Food Consultants II. Inc.. et al.. (Docket # MRSL-2599-02). In October 2004, the case was settled for a $110,000 payment from the Franchisee to the Company.
4. In 2005, Everything Yogurt Brands, Inc. brought another action against American Food Consultants II and its guarantors in the New Jersey Superior Court, Morris County entitled Everything Yogurt Brands, Inc. v. American Food Consultants II. Inc.. et al. (Docket # MRSL-000612-05), this time for breach of the Treat Street Restaurant and South Philly Steaks & Fries Restaurant Franchise Agreements and failure to pay royalties. In their defensive pleading, the defendants asserted neither a breach of the Franchise Agreement nor any fraud by the Company. The Court ultimately granted summary judgment to EYB for the total sum of $49,026.53, for royalties, fees and attorneys' fees. As no appeal was taken, the judgment is final.
Everything Yogurt Brands, LLC v. American Food Consultants II, Inc., et al. (Docket # MRSL-1209-06) again for breach of the Treat Street Restaurant and South Philly Steaks & Fries Restaurant Franchise Agreements and failure to pay royalties. The defendants asserted a counterclaim alleging that the Company engaged in intentional and unlawful actions. There is a motion for summary judgment brought by the Company pending in this case.
6. In 1998, the Company was named as one of the defendants in a lawsuit filed in a state district court in Colorado by Tree Top Development Corp. and its principals, Ronald and Wendy Systma, entitled Tree Top Development Inc. et al. v. Bain's Deli Franchise Associates, L.P., et al. The lawsuit concerned the sale by Bains Deli Franchise Associates, L.P. (the "Bains Deli Franchisor") of a Bain's Deli franchise to Tree Top as well as the quality of franchise services provided to Tree Top after the sale. At the time of the franchise sale, and for a portion of the time that Tree Top was a Bain's Deli franchisee, the Company provided services to the Bains Deli Franchisor under a management agreement. With respect to the Company, the Tree Top lawsuit claimed that the Company was responsible for alleged UFOC misrepresentations concerning Bain's Deli franchise store revenues. It also claimed that its representatives made oral misrepresentations concerning (1) Bain's Deli franchise store revenues, (2) the Bain's Deli food and supplies distribution system, and (3) Tree Top's anticipated access to that system. The plaintiff also claimed that the Company was responsible for not meeting certain service and support obligations that it claimed were found in the Bains Deli franchise agreement with Tree Top.
As between the plaintiffs and the Company (as well as certain of our then employees), the litigation was settled under which terms we paid the plaintiffs the sum of $20,000.00. The Company also reimbursed the Bain's Deli Franchisor for a portion of its legal fees in the action. The other defendants, i.e., the Bain's Deli Franchisor (and certain formerly affiliated entities and persons) and Quizno's Corporation also reached settlement with the plaintiffs of the claims asserted between them.
7. On January 26,' 2000, the Company commenced a lawsuit against Traveler Food Service, Inc. and John Bernardin in the United States District Court for the Eastern District of New York arising out of the defendants-franchisees' operation of a South Philly Steak & Fries franchise store in Pheasant Lane Mall in Nashua, New Hampshire. The Company sought damages for trademark infringement that arose after it- had terminated the defendants-franchisees' Franchise Agreement for failing to pay royalties and other fees. In answering this lawsuit, the franchisee asserted a counterclaim against the Company alleging that it made fraudulent representations to them when it sold them the Franchise. The Company denied those allegations. The litigation settled, under which terms the franchisees paid to the Company the sum of $35,000.00.
8. Sweet Street Desserts, Inc. v. Restaurant Systems International, Inc (hereinafter "RSI"). United States Patent and Trademark Office, Trademark Trial and Appeal Board.
the Mark is similar in sound, appearance and meaning to Opposer's pre-existing "SWEET STREET" mark and that upon seeing Opposer's marks, persons would likely believe that Opposer's goods and services originated from RSI. No money damages were sought by Opposer and Opposer has not sought to prevent RSI from operating franchises under the Mark. The litigation was settled, under which the Mark is to be phased out by December 31, 2007.
9. AEF Enterprises, Inc. vs. Restaurant Systems International, Inc. , (N.Y. Supreme Court, Richmond County, Index # 13115/02.) The Franchisee initiated an action for breach of franchise agreement, fraud and negligent misrepresentation. The Complaint was served on September 27, 2002. RSI interposed an answer and counterclaims for non-payment of royalties and future lost profits. The parties entered into a settlement agreement whereby they exchanged mutual releases and AEF Enterprises paid the Company $3,500.
10. On November 14, 2002, the Company commenced a lawsuit against Five Stars of Jersey Gardens, Inc. and its guarantors in New York Supreme County, Richmond County entitled Restaurant System International, Inc. v. Five Stars of Jersey Gardens, Inc. et al. (Index No. 13615/05) for breach of a Greenleafs Grille and Treat Street Franchise Agreements. The defendant asserted a defense alleging the Company's breach of the Franchise Agreements. The Court ultimately granted summary judgment to the Company for the total sum of $299,098.56, for royalties, fees and attorneys' fees. As no appeal was taken, the judgment is final.
11. California Splendor, Inc. vs. Restaurant Systems International On or about May 28, 2003 California Splendor Inc. ("CSI") formerly a supplier of strawberries to distributors sold to EYB franchisees, filed a complaint (the "Complaint") in the United States District Court for the Eastern District of New York, entitled California Splendor, Inc. v. Restaurant Systems International, Inc., et al.. Case No. CV 03 2663. The Complaint named as defendants, RSI, EYB (collectively "EYB"), the Nicotra Group, LLC, Richard A. Nicotra, Lois T. Nicotra and Dianne M. Aronica. The Complaint alleged that EYB ordered, but failed to pay for, product (frozen strawberries) invoiced to EYB in the amount of $743,671.10. Of that amount, $166,302.40 was sought for product that was shipped by CSI. The additional amounts are for product that was not shipped, but which (CSI alleged) EYB agreed to purchase. CSI sought to recover $743,671.10 plus attorneys fees, under various legal theories, including breach of contract, violation of the Perishable Agricultural Commodities Act of 1930, as amended ("PACA"), enforcement of an alleged statutory trust under PACA and unjust enrichment.
The matter was settled by written agreement dated January 26, 2004 wherein defendants paid $210,360.80 to plaintiff.
paid a civil fine of $1,000 in satisfaction of a Consent Agreement that resolved the matter.
13. Everything Yogurt Brand, LLC v. Sepstar, Inc., et al. (N.J. Superior Court, Morris County, Docket No. 2779-05). Sepstar, Inc. (along with its principals as guarantors) was a South Philly Steaks and Fries franchise of Everything Yogurt Brands, LLC ("EYB") at the Springfield Mall in Virginia. In late 2004, Sepstar gave EYB notice that it was terminating the franchise. It then began to operate another steak sandwich restaurant on the premises. Sepstar's notice of termination essentially claimed that it had a right to terminate the franchise at will; it gave no reason for the termination. In 2005, EYB brought suit for wrongful termination of the franchise, making claim for its loss of royalties and fees through the balance of the franchise term. Although Sepstar has not asserted any counterclaims, it has asserted as defenses that it has right to terminate the franchise (a) at will, (b) because EYB allegedly had subjected it to intolerable conditions of anti-Korean discrimination, and (c) because EYB (and/or its predecessor) allegedly had not provided a sufficient level of training and marketing support. The Court ruled as a matter of law that (contrary to Sepstar's contention) the Franchise Agreement did not permit a franchisee to terminate its obligations at will (during the term). The Company denies Sepstar's other allegations. The litigation is in the discovery stage.
R&S Ventures leased a premises at the Willow Grove Mall in Willow Grove, Pennsylvania and subleased same to Yash Paul Chawla. Mr. Chawla did not pay rent pursuant to his sublease. The Landlord obtained a judgment against R&S Ventures in ■ the amount of $19,512.00.
Other than the above fourteen mentioned actions, no litigation is required to be disclosed by this offering circular.
No entity identified in Item 1 or officer identified in Item 2 of this offering circular has been involved as a debtor in proceedings under the U.S. Bankruptcy Code required to be disclosed herein.
When we complete our pre-opening obligations, you must pay us an Initial Franchise Fee of $22,000. We may negotiate the amount of an Initial Franchise Fee. Since our formation on August 14, 2003, we have not negotiated any Initial Franchise Fee and we are under no obligation to do so.
The Initial Franchise Fee is non-refundable. The purpose of the Initial Franchise Fee is to reimburse us for costs, including but not limited to, training and design assistance.
Wc have created a National Advertising Fund ("Fund") for which you must contribute a minimum of 1% of Gross Sales each week if the Franchised Business is located in a Regional Shopping Mall, Urban Retail Center, Major Office Building, Airport or Institutional Feeding Facility.
Wc may increase the required minimum, but in no case shall the Fund be increased to more than a total of 3% of Gross Sales.
Wc will or we may, at our sole option, require payment by check drafts or require you to submit reports manually and send in a check.
For out-of-pocket expenses incurred in connection with replicating and shipping architectural and construction plans.
1 All fees are payable to us and are non-refundable.
2 Gross Sales means all revenues generated by the Franchised Business, including cash, check, credit charge, account or exchange from the sale of food or merchandise for service performed including catering and delivery, but excluding customer refund meals, use or excise taxes.
3 Before opening you must sign and deliver to us check drafts from your bank needed to permit us to debit your bank account for each week's Royalty payments and other payments that you make to us. If you fail to report Gross Sales, we may debit your bank account in an amount equal to the amount transferred from your account the last reporting period for which a report of Gross Sales of the Franchised Business was provided to us, together with a late fee and/or interest for that amount at the maximum rate allowed by law. We will credit any overpayment against the next week's amount due. Any deficiency is debited from your account.
open the franchise restaurant for business. This sponsorship program only applies to the Restaurant described in Item 7 (excluding any conversions). We reserve the right to discontinue this program at anytime, however, we will honor any sponsorship made during the existence of the program.
5 If the Franchised Business is not located in a Regional Shopping Mall, Urban Retail Center, Major Office Building, Airport or Institutional Feeding Facility (as defined in the Franchise Agreement), you must spend a minimum of 3% of Gross Sales quarterly as a Local Advertising Expenditure and submit reports by the tenth of each month following the end of the calendar quarter by facsimile, electronic mail or such other system or systems as we may designate on a system wide basis.
6 If Franchisor implements a site evaluation fee in the future, you will be responsible for a franchise representative's travel and living expenses and a daily charge for the representative. Travel expenses include airline and/or rental vehicle, while living expenses would include motel and food cost. Currently the cost of a representative per day ranges between $100 to $250.
7 The Franchisor will not charge you for operating assistance unless you fail to comply with any provision of the Franchise Agreement, or fail to maintain the standards of quality we set. In those circumstances, we have the right to assign a person to your restaurant to train your employees, and to ensure the standards of quality and service are maintained. You are responsible for that person's travel and living expenses. We also have the right to make reasonable changes for forms and other materials provided to you in connection with this assistance.
Our current estimates of your initial investment for the franchised businesses offered are set forth below. The various schedules presented illustrate your initial investment if you acquire the franchised businesses separately or in combination. The actual amounts you incur may be higher, however, if particular circumstances apply to the location of your Franchised Business or to your region of the country. We calculate the initial phase of business to be three months following the completion of construction. We relied on our past experience in the franchised restaurant industry with franchisee and company-owned stores when preparing these figures..
The initial franchise fees are discussed in detail in Item 5.
2 You will need to purchase certain types of equipment for the operation of your Bananas Smoothies & Frozen Yogurt restaurant depending on what types of products you intend to sell from your Bananas Smoothies & Frozen Yogurt restaurant. This equipment includes for example, soft serve machines (in the event that you offer Everything Yogurt brand yogurt), commercial refrigeration and freezer units, smallwares, blenders and juice dispensers (if you offer Bananas Smoothies & Frozen Yogurt brand frosties and smoothies), dough mixing machines (if you offer Gretel's Pretzel's brand pretzels), heated/humidified pretzel display case, convection ovens, ice cream case, coffee, espresso and cappuccino machines, showcases, computer hardware and software, cash registers or Point of Sale System, and other kitchen equipment for quick service restaurants.
Some or all of the equipment may be subject to local use taxes as required by the State jurisdiction governing your Franchised Business. Shipping and handling charges also vary based on size of the order and shipping destination. The costs are not included in the equipment amounts provided. The low-end equipment costs anticipate that the location was a food service business and contains certain equipment that could be used by your Franchised Business.
3 You will need to purchase the required signs including signs for the exterior of the restaurant(s) and interior menu signs.
You must purchase or lease the site approved by us for the Franchised Business. The cost of purchase or rental for such real estate will vary considerably depending on local real estate values, the size and location of the property purchased or leased, and other local conditions. You should investigate the cost of real estate and rental costs in the particular area in which you wish to establish a Franchised Business. You may be required to provide the Landlord with a security deposit. Since the rental costs vary considerably and because the number of months comprising the security deposit will vary, we cannot estimate the amount of the initial investment necessary for real estate.
Bananas Smoothies & Frozen Yogurt franchised restaurants or combinations of restaurants are situated in shopping malls or other high volume commercial districts. The following chart describes the size requirements.
Actual minimums and maximums will vary depending upon food court seating versus restaurant seating as available/needed.
You are free to purchase, lease, or sublease a site for the franchised restaurants from any source, provided that any lease or sublease for the premises of the franchised restaurant must meet our standards. As noted in Item 1 and in Item 9 of this offering circular, our affiliates may sometimes sublease the premises for the Franchised Business to you.
5 You must pay for or provide financing for the construction of each Franchised Business, including, but not limited to, the installation of fixtures, equipment, interior decor as well as design and construction. The cost of design and construction of the typical Franchised Business will vary considerably depending on the size of the store, whatever demolition of the existing space is required, local financing and other local conditions, including but not limited to, labor costs and materials as well as local building ordinances which may mandate higher construction costs. Construction costs at the lower end are based on the assumption that the location was previously a food service operation. Therefore, it is anticipated that construction in a location formerly used for food service may be completed at considerable savings over construction at a non-food service site. Each Franchised Business must be constructed in compliance with plans and specifications furnished by you subject to Landlord's and our discretion or approval.
6 You must have certain specified insurance. The timing of your payments is a matter to be resolved between you and your insurer. Various factors will affect your ultimate cost and therefore, we estimate the total cost with the precaution that you should get quotes from the carrier of your choice before proceeding.
7 Opening inventory will include all approved products and may also include a trial inventory for training. You will gauge the amount of inventory by projected sales.
Utility deposits are for gas, electric, water, sewer and telephone service.
9 Local, municipal, county and state regulations vary on what licenses and permits are required by you to operate a franchised restaurant. Such fees are paid to governmental authorities, when incurred before commencing business.

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