Blimpie International, Inc

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International Guild of Hospitality & Restaurant Managers

Blimpie International, Inc. engages in franchising, subfranchising and master licensing the BLIMPIE trademarks, trade names, service marks, logos, marketing concepts and marketing programs. The Company franchises BLIMPIE Subs & Salads and PASTA CENTRAL and is the majority owner of Maui Tacos International, Inc. (MTII), the franchisor of MAUI TACOS and SMOOTHIE ISLAND. The Company also provides professional store design services and equipment sales through its wholly owned subsidiary, B I Concept Systems, Inc.

As of June 30, 2000, there were five PASTA CENTRAL restaurants operating in the United States and Puerto Rico, eight MAUI TACOS restaurants operating in the United States, including three in which the Company owns all or part of the operation, 50 SMOOTHIE ISLAND locations located throughout the United States, and 3 Company-owned SMOOTHIE ISLAND JUICE BAR locations operating in Houston, TX.

The Company markets and sells franchises, subfranchises and master licenses through advertisements placed in local and national periodicals, through presentations at trade shows and franchise conventions, through referrals from existing franchisees, Subfranchisors and Master Licensors and through informational materials placed in operating outlets.

As of June 30, 2000, there were 85 existing domestic BLIMPIE subfranchisors, at least one of which is located in each of the 46 states in which the 1,933 domestic BLIMPIE outlets are located; five Canadian BLIMPIE subfranchisors, one of which is located in each of the Provinces of Alberta, British Columbia, Manitoba and Ontario in which 15 BLIMPIE outlets are located; one BLIMPIE subfranchisor in Puerto Rico in which seven BLIMPIE outlets are located; and 14 Master Licensors for the countries of Argentina, Bahrain, Cyprus, Dominican Republic, Great Britain, Greece, Guam, Kuwait, Lebanon, Mexico (primarily states in the northeastern part of the country), Northern Ireland, Oman, Panama, Poland, Portugal, Qatar, The Republic of Ireland, Romania, Saipan, Saudi Arabia, South Africa, United Arab Emirates, Uruguay and Venezuela, in which collectively there are 35 outlets located. Included in these BLIMPIE outlets were five BLIMPIE / PASTA CENTRAL co-branded outlets, one in Alabama and four in Puerto Rico.

Also as of June 30, 2000, there were 14 domestic MAUI TACOS subfranchisors. There were three MAUI TACOS outlets in operation in Georgia, two in New York, two in Hawaii, and one in Minnesota. The Company owns all or part of three of these locations.

The Company derives its revenue primarily from four sources: store equipment sales; continuing franchise fees based upon each franchisee's gross sales; fees from the grant of individual outlet franchises; and fees from the grant of subfranchises to Subfranchisors and the grant of master licenses to Master Licensors worldwide.

The BLIMPIE Outlet Franchise

A BLIMPIE outlet is a non-cooking sandwich outlet characterized by portion-controlled meat and cheese combinations generally sold on six-inch or twelve-inch French/Italian white or wheat bread garnished with special BLIMPIE spices and dressings along with salads and other food items. The sandwich products sold in these outlets are known as BLIMPIE sandwiches and the outlets themselves are known as BLIMPIE outlets.

The Company requires each of its franchisees to offer food products from a list of products authorized by the Company. Such products for a BLIMPIE outlet include hot sandwiches, including items such as Italian meatball sandwiches and chicken breast sandwiches, and cold sandwiches, including items such as roast beef and club sandwiches. Its signature item is the "BLIMPIE Best" sandwich, which consists of ham, salami, cappacola, prosciuttini and provolone. In addition, all BLIMPIE sandwiches are dressed at no additional charge with tomatoes, lettuce, onions, oil and vinegar and oregano.

In addition to the authorized BLIMPIE sandwich line, BLIMPIE outlets also offer a variety of salads, baked products, and a variety of other products produced mostly from raw frozen dough products and baked in the approved BLIMPIE deck oven installed in each BLIMPIE outlet. Prices for all authorized products vary depending upon geographic location.

The PASTA CENTRAL Outlet Franchise

A PASTA CENTRAL outlet offers Italian-style baked pasta dishes, gourmet pizzas, and salads for in-store dining, take-away, or for final preparation and consumption at home. The concept is currently being developed as a co-brand with its BLIMPIE Subs & Salads franchises as a way to increase the sales potential, particularly during the dinner day part for co-branded locations, with only a small increase in the initial investment. PASTA CENTRAL's menu items include baked pasta dishes, gourmet pizzas, salads, and dessert items. Its signature item is the "Central Special," which consists of penne pasta tossed with a cream-based tomato sauce and served with grilled chicken and shaved cheese. Menu items are offered individually or in various combinations at recommended price points, which the franchisee may or may not adopt.

The MAUI TACOS Outlet Franchise

A MAUI TACOS outlet offers quality Mexican items like tacos and burritos in a quick-service restaurant atmosphere. The menu includes typical Mexican offerings using beef, chicken or seafood that has been marinated in Hawaiian spices. The outlets are known as MAUI TACOS outlets. The MAUI TACOS product line consists of traditional Mexican items such as tacos, quesadillas, and burritos filled with charbroiled steak, chicken, and seafood entrees marinated in pineapple and lime juices with Hawaiian spices. As an accompaniment, tortilla chips, guacamole, and a variety of salsas are available.

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