Pinkberry franchise document

Sample UFOC

RECEIVED

INFORMATION FOR PROSPECTIVE FRANCHISEES

M 3 0 2006

REQUIRED BY THE FEDERAL TRADE COMMISSION Deparrm t

TO PROTECT YOU, WE'VE REQUIRED YOUR FRANCHISOR TO GIVE YOU THISINFORMATION. WE HAVEN'T CHECKED IT AND DON'T KNOW IF IT'S CORRECT.IT SHOULD HELP YOU MAKE UP YOUR MIND. STUDY IT CAREFULLY. WHILEIT INCLUDES SOME INFORMATION ABOUT YOUR CONTRACT, DON'T RELYON IT ALONE TO UNDERSTAND YOUR CONTRACT. READ ALL OF YOURCONTRACT CAREFULLY. BUYING A FRANCHISE IS A COMPLICATEDINVESTMENT. TAKE YOUR TIME TO DECIDE. IF POSSIBLE, SHOW YOURCONTRACT AND THIS INFORMATION TO AN ADVISOR, LIKE A LAWYER ORAN ACCOUNTANT. IF YOU FIND ANYTHING YOU THINK MAY BE WRONG ORANYTHING IMPORTANT THAT'S BEEN LEFT OUT, YOU SHOULD LET US KNOWABOUT IT. IT MAY BE AGAINST THE LAW.

THERE MAY ALSO BE LAWS ON FRANCHISING IN YOUR STATE. ASK YOURSTATE AGENCIES ABOUT THEM.

FEDERAL TRADE COMMISSION Washington, D.C. 20580

Pinkberry Franchising Company - UFOC - 05.2006

pinkberry

FRANCHISE OFFERING CIRCULAR

PINKBERRY FRANCHISING COMPANY

A California corporation

2212 West Washington Boulevard

Los Angeles, CA 90018

Our franchise involves a distinctive method for the operation, marketing, promotion,advertising and managing of a Pinkberry® Store, providing a health conscious themed,relaxed and simple environment specializing in natural frozen yogurt with fresh fruitand other toppings, offering a choice of shaved ice and yogurt drinks and relatedproducts and services.

We offer, and grant, to qualified applicants, a franchise to establish and operate asingle Pinkberry® Store Franchise (the "Franchised Business") from one approvedlocation within a prescribed geographical area using the Pinkberry® trademarks,logos, programs, promotional materials and operating methods we've developed (the"Pinkberry® System" or "System"). The Initial Franchise Fee is $40,000 and theestimated initial investment required ranges from $217,030- $406,300.

Risk Factors:

THE FRANCHISE AGREEMENT PERMITS THE FRANCHISEE TO SUE US ONLYIN CALIFORNIA. OUT OF STATE LITIGATION MAY FORCE YOU TO ACCEPTA LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COSTMORE TO SUE US IN CALIFORNIA THAN IN YOUR HOME STATE.

THE FRANCHISE AGREEMENT STATES THAT CALIFORNIA LAW GOVERNSTHE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAMEPROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TOCOMPARE THESE LAWS.

THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE. THERE MAYBE OTHER RISKS CONCERNING THIS FRANCHISE.

Information comparing franchisors is available. Call the state administrators listed inExhibit F or your public library for sources of information.

Registration of this franchise with the state does not mean that the state recommends itor has verified the information in this offering circular. If you learn that anything inthis offering circular is untrue, contact the Federal Trade Commission and theappropriate state authority listed in Exhibit F.

The Effective Date of this Offering Circular is________________, unless otherwise

noted

on an addendum for your state included in Exhibit D of this Offering Circular.


TABLE OF CONTENTS

ITEM PAGE

1. FRANCHISOR, ITS PREDECESSORS AND AFFILIATES 1

2. BUSINESS EXPERIENCE 3

3. LITIGATION 4

4. BANKRUPTCY 4

5. INITIAL FRANCHISE FEE 4

6. OTHER FEES 5

7. INITIAL INVESTMENT 7

8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES 11

9. FRANCHISEE'S OBLIGATIONS 11

10. FINANCING 13

11. FRANCHISOR'S OBLIGATIONS 13

12. TERRITORY 20

13. TRADEMARKS 24

14. PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION 25

15. OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION

OF THE FRANCHISE BUSINESS 25

16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL 26

17. RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION 26

18. PUBLIC FIGURES 30

19. EARNINGS CLAIMS 30


ITEM PAGE

20. LIST OF OUTLETS 31

21. FINANCIAL STATEMENTS 32

22. CONTRACTS 32

23. RECEIPT 32

EXHIBITS

A. FRANCHISE AGREEMENT WITH EXHIBITS

B. FINANCIAL STATEMENTS

C. STATEMENT OF PROSPECTIVE FRANCHISEE

D. STATE ADDENDA TO THE UFOC AND FRANCHISE AGREEMENT

E. OPERATIONS MANUAL TABLE OF CONTENTS

F. LIST OF STATE AGENCIES AND AGENTS FOR SERVICE OF PROCESS

G. RECEIPT


1. THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES

The Franchisor. Business Form. Names. Address

The Franchisor is Pinkberry Franchising Company. To simplify the language in thisOffering Circular, "we," "us" or "our" means Pinkberry Franchising Company. "You" or"your" means the person who buys the Franchise. If a corporation, LLC or partnershipbuys the Franchise, "you" includes the Franchisee's owners, as appropriate. Capitalizedterms not defined in this Offering Circular have the meaning described in thePinkberry Franchise Agreement ("Franchise Agreement" or "Agreement") attached asExhibit A to this Offering Circular.

We were formed in the State of California on May 16, 2006. Our principal place ofbusiness is located at 2122 West Washington Boulevard, Los Angeles, CA 90018. Wehave no predecessors. We do not do business under any other name.

Our agents for service of process in states requiring franchise registration are disclosedin Exhibit F.

Affiliates and Other Information

Pinkberry, Inc., an Affiliate of ours, was formed as a California corporation on January8,

2004. Pinkberry, Inc., through its predecessor, Hye Kuang Hwang, a soleproprietorship, has operated a business of the type being franchised since 2004, andwill continue to do so. Pinkberry Inc.'s principal business address is 2122 WestWashington Boulevard, Los Angetes, CA 90018

Iceberry, Inc., an Affiliate of ours, was formed as a California corporation onNovember 1,

2005. Iceberry, Inc., has entered into a lease in the Los Angeles, CA area with a viewto operating a business of the type being franchised and is planning to open thebusiness at 3300 West. 6th Street, Suite 4, Los Angeles, CA 90020 during 2006. Iceberry,Inc.'s principal business address is 2212 West Washington Boulevard, Los Angeles, CA90018

Pinkberry Production Company, an Affiliate of ours, was formed as a Californiacorporation on May 15, 2006. Pinkberry Production Company has taken over themanufacturing operations that were previously carried out by Pinkberry, Inc.Pinkberry Production Company is now the sole and exclusive manufacturer of thePinkberry proprietary yogurt mix and shall be the sole vendor of the yogurt mixproduct for the franchisees and for all company owned Pinkberry Stores. PinkberryProduction Company will also produce paper goods and other products for use by thefranchise system. Pinkberry Production Company has never operated a business of thetype being franchised. Pinkberry Production Company's principal business address is2122 West Washington Boulevard, Los Angeles, CA90018.

As of May 31, 2006, there were [11] Dealerships licensed to operate [11] PinkberryYogurt Outlets, all of whom are listed on Exhibit D attached to this Offering Circular.The Dealership Agreements were sold to individuals exempt from the requirement fordisclosure under Section 31109 of the California Franchise Investment Laws. Togetherwith Pinkberry, Inc., following the effective date of this Offering Circular, we will offer

each Dealership the opportunity to terminate his or her Dealership Agreement andbecome a Pinkberry Store franchisee and to operate his or her Pinkberry Store underour Franchise Agreement (the "Franchise Agreement") and our Conversion Addendumto Franchise Agreement in the form attached to attached to our Franchise Agreementas Attachment I. Dealerships will not be required to become Pinkberry Storefranchisees. Dealerships who choose not to become Pinkberry Store franchisees willcontinue to operate their Pinkberry Yogurt businesses under their DealershipAgreements until the Dealership Agreement terminates. Dealerships who elect to signour Franchise Agreement and

Pinkberry Franchising Company - UFOC - 6/2006

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Conversion Addendum to Franchise Agreement will not pay an initial franchise fee.Pinkberry, Inc., no longer offers Dealership Agreements.

Our Business Activities and the Franchises to be Offered in this State

We offer, and award to qualified applicants, a franchise to establish and operate asingle Pinkberry Store Franchise (the "Franchised Business") from one approvedlocation within a prescribed geographical area using the Pinkberry trademarks, logos,programs, promotional materials and operating methods we've developed, (the"Pinkberry System" or "System"). As a Pinkberry Franchisee, you will be operating aPinkberry Store providing a health conscious themed, relaxed and simple, environmentspecializing in natural frozen yogurt with fresh fruit and other toppings and offer achoice of shaved ice and yogurt drinks and related products and services.

We believe that the market for services and products offered by Pinkberry StoreFranchises is established and year round. The primary markets for these products andservices consist of health conscious individuals, and families.

If we award you a Franchise, you will be competing with other health food anddessert food stores of all styles, including all varieties of fast food stores, including butnot limited to, frozen yogurt and ice-cream stores, and juice stores. You shouldconsider these competitive factors before deciding to buy a franchise.

Our initial offer of Pinkberry Store Franchises in this state is being made under this

Offering Circular. We have never owned and do not currently own and/or operateany Pinkberry Store Franchises, although we have the right to do so. We have neveroffered franchises in any other line of business. Our Affiliate, Pinkberry, Inc. currentlyowns and operates one Pinkberry Store and will continue to operate this store and isin the process of developing additional stores in California. The locations of theseexisting and future Stores are listed in Item 20.

Pinkberry is a franchise concept that has only been franchised for short time, and is forthe most part untested as a franchise opportunity. Further, although we have operateda business of the type being franchised in the past, we are not an experiencedFranchisor. You should expect that additional changes in the System will take place;our limited experience makes it impossible to predict results; and no guarantee can bemade that you will be successful in operation of your Franchised Business.

Industry Regulations

In addition to any city or county business licenses applicable to the services you willbe providing, you must comply with all local, state and federal laws, pertaining tofood-service businesses, including any business, retail sales, zoning, environmental,labor relations, sanitation, safety, fire, food-service, and health codes, regulations andordinances, as well as laws and regulations relating to the use of video gamesmachines and access by persons with disabilities. You are solely responsible foridentification of and compliance with all laws, ordinances and/or regulationsapplicable to your Pinkberry Store Franchised Business. We strongly recommend thatyou undertake these investigations in the operation of your Franchised Business to theextent that you are lawfully permitted.

Pinkberry Franchising Company - UFOC - 6/2006 2

You should independently research and review the legal requirements of the foodservices industry with your own attorney before vou sign any binding documents ormake any investments.

It is your sole responsibility, on an ongoing basis, to investigate and satisfy allemployment, worker's compensation, insurance, corporate, tax and similar laws andregulations, since they vary from place to place, can change over time, and may affect

the operation of your business.

This Offering Circular describes the terms and conditions on which we currently offerFranchises in this state. We reserve the right, in our sole discretion, to grant, or not togrant, a Pinkberry Store Franchise to any prospective franchisee, regardless of the stageof the franchise contract process, costs expended by the prospective franchisee orotherwise. We may offer Pinkberry Store Franchises in other states or countries, oneconomic and/or other terms, which differ from those offered by this OfferingCircular and there may be instances where we have varied, or will vary, the terms onwhich we offer franchises to suit the circumstances of a particular transaction. Westrongly urge you to carefully review all documents, including a comparison to anyprior Agreement if a renewal or transfer of an existing franchise agreement isinvolved, as well as this Offering Circular, with independent advisors who canprovide legal, business and/or economic guidance, such as a lawyer and/oraccountant.

You should understand that every detail of your Franchise will be important not onlyto you, but also to us and to all Franchisees. Therefore, during the term of theFranchise Agreement, you must, at all times, develop and operate your FranchisedBusiness in compliance with all System Standards, as we may modify them in thefuture. Note that changes in the System Standards may require additional investmentsby you in your Franchised Business.

This Offering Circular contains a summary of various provisions of our program andthe Franchise Agreement and other documents. We have summarized the mainfeatures of our program above and further information appears at appropriate pointsthroughout this Offering Circular. Of course, the descriptions in this Offering Circularare required to be brief and are for general informational purposes only. In manycases, the Offering Circular contains only excerpts or summaries of other documents.The actual provisions of these documents will control in every case and you shouldrefer to the Franchise Agreement and other documents for more complete information.

The Franchised Business involves substantial business risks that cannot be eliminated.The risk may be greater for a new franchise concept/franchisor with limitedexperience, such as this one. Significant investment beyond that outlined in thisOffering Circular may be required to succeed. Your volume, profit and possiblesuccess are primarily dependent on your financial, management and other resources,your personal business, marketing, management judgment and other skills, your

willingness to work hard and smart as well as your proper use of the System. Wecannot and do not guarantee your success.

2. BUSINESS EXPERIENCE

President - Hve Kvunq ("Shelley") Hwang

Hye Kyung Hwang has been serving as President for Pinkberry, Inc., since itsincorporation in January 2004. Prior to that from 2001 to 2004, Ms. Hwang wasPresident of Seoul Textile, a garment manufacturing company located in Los Angeles,CA. Between 1999 and 2000, Ms. Hwang worked as the Manager of Marina Restaurantin Los Angeles, CA. From 1998-1999, she was manager of a Coco's restaurant in LosAngeles, CA.


Chief Operating Officer - Kavlev Kim

Ms. Kim was appointed as our Chief Operations Officer upon our incorporation. Ms.Kim joined our affiliate Pinkberry, Inc. in August 2004 as Operations Manager and shealso retains that position today. Prior to that, from February 2004 to August 2004, Ms.Kim was Assistant Manager to Jamison Properties located in Los Angeles. FromNovember 2001 through July 2003, Ms. Kim was employed as an Accounting Managerby Kabuki Restaurants in Los Angeles. From June 1999 to January 2001, Ms. Kim wasemployed as Assistant Manager at the Shogun Restaurant in Pasadena California.

3. LITIGATION

No litigation is required to be disclosed in this Offering Circular.

Neither we nor any person listed in Item 2 of the UFOC is subject to any currentlyeffective order of any national securities association or national securities exchange, asdefined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending orexpelling such persons from membership in such association or exchange.

4. BANKRUPTCY

No person previously identified in Items 1 or 2 of this Offering Circular has beeninvolved as a debtor in proceedings under the U.S. Bankruptcy Code required to bedisclosed in this Item.

5. INITIAL FRANCHISE FEE

The Initial Franchise Fee is $40,000, is entirely n on-refundable and is uniform as to allfranchises currently being offered. You must pay the Initial Franchise Fee in a lumpsum when you sign the Franchise Agreement. The Initial Franchise Fee becomes partof our general funds and there is no limit on its use.

If in our Business Judgment you are not able to acquire a site within the time providedin the Franchise Agreement in your Territory due to special circumstances within yourTerritory, then we may offer you an alternate Territory and amend the FranchiseAgreement accordingly. In those special circumstances, which shall only occur in ourBusiness Judgment, the payment of the Initial Franchise Fee will be credited againstthe payment for the new Territory, but only if you sign a General Release and aFranchise Agreement Amendment document acceptable to us.

Release.

As a condition to the occurrence of any of the following events, you and/or anyaffiliate/owner of yours will sign a General Release, excepting only (where the releasesare expressly prohibited by applicable law) those claims solely related to the offer andsale of the new Franchise:

1) the awarding of any future, additional or other franchise;

2) the renewal of this franchise and/or awarding of a successor franchise; anyassignment or transfer (as defined in the Franchise Agreement) by you and/or anyaffiliate/owner of you; and/or

3) any other event described in the Franchise Agreement as being conditioned inwhole or in part upon such a General Release (as defined in Section 22 of theAgreement).


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The Initial Franchise Fee covers an initial training program for either one or twoindividuals, who must include you and the initial Pinkberry Store manager, who maybe you. There is no reduction or refund of any part of the Initial franchise Fee if oneindividual attends the initial training program. (See Item 11 for more information onour Training Program).

6. OTHER FEES

Name of Fee11' Amount Due Date Remarks

Royalty Fee3% of Gross Revenues'2' orthe then current minimum,whichever is greater.

10th of themonthfoliowingthe end ofthe priorcalendarmonth'sroyaltyperiod.

Royalty payments are due commencingwith the royalty period in which youopen your Pinkberry Store FranchisedBusiness or 180 days after the EffectiveDate of the Franchise Agreement,whichever is sooner.

Interest andLate Fees

Interest will be charged onunpaid royalties at thehighest rate allowed by lawnot to exceed 1.5% permonth, and a late of fee of$50.00 per failure to pay ordeliver a report will becharged.

Ondemand

Interest on all amounts owed us. Wemay require payment by cashier's checkfor repeated late payments. SeeFranchise Agreement section 9.4.

Successor Fee20% of the then-currentInitial franchise fee(minimum of $8,000)

At the timeof yourelection torenew

Non-refundable unless we do not granta successor agreement to you. Minimumamount subject to inflation adjustment.

NationalMarketingFundContributions(3)

2% of Gross Revenues'3'Not ineffect atthis time

Not in effect at this time

LocalMarketingExpenses'2'

2% of Gross Revenue'3' Asincurred

Paid to local vendors. Subject to inflationadjustment.

MinimumWorkingCapital

$30,000 to $60,000 As needed

You will need a minimum of $30,000 inworking capital in your bank account tosupport ongoing costs of your business,such as supplies, payroll, utilities, taxes,loan payments, ongoing franchise feesand other expenses, to the extent thatrevenues do not cover business costs.

Customer

Satisfaction,Quality Control

To be determined. Ondemand.

We may institute various programs forauditing customer satisfaction and/orother quality control measures; you may

Quality ControlPrograms

demand. be required to pay the costs of theseprograms.

Audit ExpensesCost of audit, andunderstatement plusinterest.

Within 15days ofinvoice.

Costs of audit payable if a discrepancyof Gross Class Revenues is greater than5%.

Internet ServiceFee $50 Monthly If required pursuant to Franchise


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NameofFee(1) Amount Due Date RemarksAgreement Section 11.

MandatoryConvention

To bedetermined,

Asarranged. You are required to attend all

Attendance based onattendance mandatory meetings unless

fees, travel,living and excused by us.

incidentalexpenses.

Transfer Fee $5,000 plusthe then-

At thetime of the In our sole discretion, we may

currentInitialFranchise

permittedtransfer require the transferee to sign a

Fee. of theFranchised Franchise Agreement and other

Business.documents for the full term then being offered and pay thepro, rated initial fee in addition to any transfer or otherfees. Franchise Agreement section 14.3 .

ManagementFee

$500 perday plus

Deductedfrom Expenses include compensation,

(only ondefault by expenses funds of

your other costs, travel and living

you) Businesses expenses of appointed manager. Subject to inflationadjustment.

(1) All fees described in this Item are applicable to each Pinkberry Store Franchiseunless otherwise noted. All fees are imposed by and payable to us and are non-refundable.

(2) Gross Revenues includes all charges and/or revenues which are, or could be,received or earned by you {and/or any Affiliate):

A. B.

C. D.

E.

by, at or in connection with your Pinkberry Store Franchise;

relating to the kinds of goods or services available now or in the future through a

Pinkberry Store Franchise and/or distributed in association with the Marks or the

Pinkberry Store Franchise System;

relating to the operation of any Similar Business;

with respect to, any tenants and/or subtenants of yours on the Premises

(including rent and other lease payments); and/or

with respect to any co-branding activities.

All sales and/or billings, whether collected or not, will be included in Gross Revenue,with no deduction for credit card or other charges. Gross Revenue does not includesales tax collected and paid when due to the appropriate taxing authority and actualcustomer refunds, adjustments and credits.

We may choose in our Business Judgment to require you to pay the MinimumRoyalties for Pinkberry Store Franchises. The Minimum Royalties will be implementedand become effective upon 30 days' written notice to you. The Minimum Royaltiesshall not be implemented until there are at least ten (10) Pinkberry Store Franchisesopen and operating for a period of at least 6 months.

Period Open*

Minimum Royalties (adjusted every 6 months)


Less than Six Months 5% of PUA**

6 months or more 6% of PUA**

*Measured from the earlier of: actual opening date, or the date by which the Store isrequired to be open.

**"PUA" or "Per Unit Average": The average Gross Revenues for all Pinkberry StoreFranchises in the United States during the most recent 6 month period before themeasuring date.

(3) We reserve the right to establish a Marketing Fund for advertising, publicity,marketing, promotion and related purposes and require you to pay a reasonablemonthly contribution to support the fund. The amount of the Marketing FundContribution may be adjusted from time to time by us in accordance with inflationadjustments as set out in the Franchise Agreement.

7. INITIAL INVESTMENT

Certain estimated costs for opening and operating during the initial phase of thebusiness.

Description EstimatedAmount

Method ofPayment When Due To Whom Payable

Initial Franchise Fee11' $40,000 Lump Sum

On signing

Franchise

Agreement

Us

Design Fee*1* $10,000 LumpSum Prior toOpening Approved Architect

Expenses While Training'21 $4,000-$10,000

Asarranged

Asincurred

TransportationLines, Hotels, etc.

Acquisition of Real Estate / Deposits andInitial Rent (minimum five year lease)(3)

$10,000-$25,000

Asarranged

Asincurred Landlord/Mortgagee

Construction and remodeling14' $40,000 -$100,000

Asarranged

Prior toOpening Vendors

Furnishings15' $35,000 -$45,000

Asarranged

Prior toOpening Approved Vendors

Fixtures'6' $31,000- Asarranged


Equipment*7' $15,000-$25,000

Asarranged

Prior toOpening Vendors

Inventory'8' $3,000 -$6,000

Asarranged


Utility Deposits and Fees w $0-$10,000 Asarranged

Prior toOpening Utilities

Business Licenses110' $1,000-$5,000

Asarranged

Prior toopening

Government andagencies

Wages for $10,000- Asarranged

Prior toopening Employees


Description EstimatedAmount

Method ofPayment When Due To Whom Payable

employees $20,000

Insurance'11' $1,000-$2,000

Asarranged Prior to Opening Insurance

AgenciesGrand Opening $2,000 As

arrangedDuring one week beforeand 30 days after opening To vendors

Computerhardware/software/ POSSystem (12)

$12,000 Asarranged Prior to opening Vendors

Telephone $0 -$200 Asarranged Prior to opening Vendors

Internet Connection'13' $30-$100 Asarranged Prior to opening Vendors

Signage'1*' $2,000 -$3,000

Asarranged Prior to opening Vendors

Additional Funds -3months'16'

$20,000 -$60,000

Asarranged As incurred

ApprovedSuppliers,Vendors, etc.

TOTAL117' $217,030-$406,300

(1) This table shows the estimated expenditures required to develop a singlePinkberry Store Franchised Business pursuant to a Pinkberry Store FranchiseAgreement. If you are developing more than one unit, your costs will be (generally)proportionately higher. The Initial Franchise Fee is non-refundable. We do not financeany fees. You must pay the Initial Franchise Fee in a lump sum when you sign theFranchise Agreement.

(2) You are responsible for arranging your transportation and paying theexpenses for transportation, meals and lodging for you and your manager whileattending the 10 day training program. The amount you spend will depend on severalfactors, including the distance you have to travel and the type of accommodations youchoose. We based this estimate upon attendance of 1 person.

(3) Real estate costs can vary widely depending upon a multitude of factors

related to location, including whether the property is purchased or leased, local marketconditions, the size, type, condition and location of the property and zoningrequirements. The size of a typical site is between 650 and 1,250 square feet. Thesefigures are based on this square footage and the assumption that a landlord willrequire first and last months rent.

(4) The cost of construction and remodeling depends on the size and condition ofthe premises, the local cost of contract work and the location of your Pinkberry Store.The amount may be less if the lessor provides a construction allowance for tenantimprovements and on how you negotiate the terms of your lease. These figures arebased on the assumption of an average build out cost of $165 per square foot.

(5) Figures for Furnishings include tables, chairs, lights, menu board, and tradedress.

(6) Figure for fixtures includes required yogurt machines.


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(7) Figures for Equipment include sinks, prep tables, refrigeration and utensils andmusic system, lights, counters, restrooms and floorings.

(8) Figures for Inventory include Food stuffs, plastic and paper goods, menus, t-shirts etc., may have COD requirements at outset if franchisee doesn't meet creditcriteria.

(9) The figures provided for utility deposits do not include any special connectionand/or tap fees, EDD or sales taxes which are based upon projected sales.

(10) You may also be required to obtain a license to do business in the City orCounty where you conduct businesses will depend upon your local city or countyordinances.

(11) You must maintain in force policies of insurance issued by carriers we haveapproved covering various risks. We may specify the types and amounts of coveragerequired under these policies and require different and/or additional kinds of

insurance at any time, including excess liability insurance. Each insurance policy mustname us and our Affiliates as additional named insureds, will contain a waiver of allsubrogation rights against us and our Affiliates and any successors and assigns, andmust provide for 30 days' prior written notice to us of any material modifications,cancellation, or expiration of the policies. Our insurance requirements are:

Personal Injury and Liability $1,000,000 per occurrence

Personal Property Damage $50,000 per occurrence

Kitchen Equipment $50,000 per occurrence

General Liability $2,000,000 aggregate

Business interruption Actual Loss

Workers Compensation According to statute

These requirements are subject to change. You must give us a certificate of insurance,in a form acceptable to us, evidencing this coverage, naming Pinkberry FranchisingCompany. and Pinkberry, Inc. as "Additional Insureds"

(12) This figure includes costs for 2 POS terminals. We have not included thepurchase price of the required hardware and software maintenance agreements in thefigures. See Item 8.

(13) You must obtain DSL or cable internet connection services, which may not bedial up, or linked to a telephone line. Your initial investment will depend on yourlocation, and any modifications needed for hook up and installation.

(14) One exterior and one interior signage required and included in figures.

(15) Miscellaneous Costs includes items such as incorporation costs and purchaseof career apparel; however, does not include rent, or security deposit. AdditionalFunds is an estimate of certain funds needed to cover business (not personal) expensesduring the first 3 months of operation of your business. You will need capital tosupport on-going costs of your business, such as payroll, utilities, taxes, loan paymentsand other expenses, to the extent that revenues do not cover business costs. This isonly an estimate, and we can't guarantee that the amounts specified will be adequate.

You may need additional funds during the first 3 months of


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initial operation or afterwards. We do not furnish or authorize our salespersons or anyother persons or entities to furnish estimates as to the capital or other reserve fundsnecessary to reach "break-even" or any other financial position, nor should you rely onany such estimates. The 3-month period from beginning your business covers the timeby which most Franchisees are fully operational but does not necessarily mean thatyou will have reached "break-even", "positive cash flow", or any other financialposition. In addition, the estimates presented relate only to costs associated with theFranchised Business and do not cover any personal, "living," unrelated business orother expenses you may have, such as royalty payments, debt service on any loans,state sales, and/or use taxes on goods and services, and a variety of other amounts notdescribed above. Although we make no estimates or representations regardingfinancial performance of a Pinkberry Store Franchise Business, we recommend that, inaddition to the additional funds shown, you have sufficient personal savings and/orincome so that you will be self-sufficient for at least 3 months.

(16) All of the above figures are estimates of certain initial start up expenses. It is notall-inclusive as noted above, and we cannot guarantee you will not have additionalexpenses in starting your Pinkberry Store Franchise Business. The total figure listed inthe above chart does not include compensation for your time or labor or costs forobtaining a vehicle (if needed). Your costs will vary depending on such factors as:how much you follow the Pinkberry Store System; your management and marketingskills, experience and general business ability; and local and general economicconditions.

Miscellaneous costs to begin operations and other financial requirements may be moreor less than the figures specified above. Many of these factors are primarily underyour control in your independent operation of the business, and may includenecessary licenses, permits or certifications. You are solely responsible for identifyingand complying with all applicable laws, regulations and ordinances, including alllicenses and permits that may be required for your Pinkberry Store FranchisedBusiness. We have made no provision for capital or other reserve funds necessary for

you to reach "break-even" or any other financial position nor do any of these estimatesinclude any finance charges, interest or debt service obligations. You should notassume that revenues from your customers will necessarily cover your initial (or other)expenses. You should review these figures carefully with a business advisor (such asan accountant) before making any decision to purchase the franchise. In preparing thefigures in this chart, we relied on our Affiliate's 2 years operating Pinkberry Store inCalifornia and the over 10 additional years of experience of certain of our personnel inindustries unrelated to Pinkberry Stores.

Since costs can vary with each Franchisee, we strongly recommend that vou fa) obtainindependent estimates from third-party vendors and your accountant of the costswhich would apply to your proposed establishment and continued operation of aPinkberry Franchise, (b) discuss with current Pinkberry Franchisees their economicexperiences (including initial costs) in opening and operating a Pinkberry Franchise(although there may be a limited number of franchisees to speak with because we are astart up franchise company), (c) research applicable regulations and their impact onyour costs and operations and (d) carefully evaluate the adeouacv of your totalfinancial resources and reserves.

Although we make no estimates or representations regarding financial performance ofa Pinkberry Store Franchise, we recommend that, in addition to the additional fundsshown, you have sufficient personal savings and/or income so that you will be self-sufficient and need not draw funds from the Franchised Business for at least 3 monthsafter start-up. We cannot predict if you will have reached positive cash flow by thattime or not.


8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

How We Issue and Modify Standards and Approvals of Suppliers and Products

You must purchase, use and offer each of, and only, the types, brands and/or qualityof marketing and merchandizing products and services we designate. You may notoffer or deal with any products, services or suppliers not approved by us from time totime. We formulate and will provide you (through the Manuals or other means) with

any applicable specifications for menu items, ingredients, equipment, inventory,vending machines, customer service requirements and other items, all of which aresubject to change by us. Approved suppliers may include, and may be limited to, usand/or companies affiliated with us. We may designate a single supplier or multiplesuppliers, and may concentrate purchases with one or more suppliers.

We may approve, revoke or deny approval of particular items or suppliers in ourBusiness Judgment. You can request the approval of an item, service or supplier bynotifying us in writing and submitting any information and/or materials we mayrequest. Generally, we condition our approval of a supplier based on several criteriaincluding, but not limited to, (i) the proposed item meeting our exact specifications,(ii) the supplier's ability to handle the volume requirements of supplying the productin the quantities and timely as required, and (iii) the consistency of the quality of theproduct delivered. It is our practice to require the right to audit our approvedsuppliers in order to audit the supplier relationship and the quantity of goods orderedby you. We have no contractual obligation to notify you within a specific period oftime whether or not you are authorized to purchase or use the proposed item or todeal with the proposed supplier. However, we plan to notify you within 30 days ofreceiving adequate information and/or materials relating to the item being evaluated.Currently, we do not receive revenue or other benefits from suppliers in relation toitems purchased by our Franchisees, but we reserve the right to do so in the future.

Proportions of Required Purchases

We estimate that assuming the estimated minimum initial costs to begin operationsand other financial obligations are within the ranges described in Item 7 of thisOffering Circular, the proportion of your purchases and leases of goods and servicesfrom approved suppliers or of products that meet our specifications to beapproximately 2% of all the purchases and leases in establishing your FranchisedBusiness and approximately 6% to 10% of your ongoing costs of operating yourFranchised Business.

Negotiation of Purchase Arrangements

Currently, we do not negotiate purchase arrangements, such as volume discounts,with approved suppliers for the benefit of our Franchisees, but we may do so in thefuture.

Purchasing or Distribution Cooperatives

Currently, there are no formal or mandatory purchasing or distribution cooperatives inthe System, but we reserve the right to institute them in the future.

9. FRANCHISEE'S OBLIGATIONS

THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE FRANCHISEAND OTHER AGREEMENTS. IT WILL HELP YOU FIND MORE DETAILEDINFORMATION ABOUT YOUR OBLIGATIONS IN THESE AGREEMENTS AND INOTHER ITEMS OF THIS OFFERING CIRCULAR.


Obligation Section in franchise AgreementItem inOfferingCircular

a. Site selection and acquisition/lease 3.1,3.2 11,12b. Pre-opening purchases/leases 3.1,3.2, 3.3,3.4,3.5 5, 6, 7, 8c. Site development and other pre-opening requirements 3.1,3.2,3.3,3.4,3.5 3.6, 3.7 10 5,7

d. Initial and ongoing training 5.1,5.2, 10.5 5,6,7, 11e. Opening 3.1,3.3,3.6,3.7 7, 11f. Fees 3.7,5.1, 9.1 -9.8, 10.8, 11.1-11.3, 13.3, 14.3,

15.3, 16.5, 16.9 5,6,7,11

g. Compliance with standards andpolicies/Operations Manual

1.1,2.1,3.2,5.1,5.3,7.1, 8.1,9.2, 10.1, 10.4, 11.3,14.3, 15.2, 16.2-16.5 17.2, 19.8,20. 8, 11

h. Trademarks and proprietaryinformation 2.2,6.1 -6.4,8.2, 10.1, 11.3, 14.1 14.7, 16. 19.1 13, 14, 17

i. Restrictions on products/servicesoffered 2.2,3.3-3.5, 10.2 8, 12,16

j. Warranty and customer servicerequirementsk. Territorial development and salesquotas 2.2, 16.5 12

1. Ongoing product/servicepurchases 4, 10.2 8

m. Maintenance, appearance andremodeling requirements 3.3-3.5, 10.1 17

n. Insurance 10.6 6o. Advertising 2.3,3.6,3.7, 11.1 -11.4 7, 11p. Indemnification 5.3,7.4, 14.5, 14.6, Exhibit 1.2, Noneq. Owner's participation/management/staffing 2.4,5.1,8.1, 10.5, 14.2, 15.3. 6,7, 15

r. Records/Reports 12.1 -12.2 6s. Inspections/Audits 4,9.4, 10.2, 12.1 -12.2, 13.1, 13.2 6t. Transfer 14.1 -14.7 6, 17u. Renewal 15.1-15.3 6, 17v. Post-Termination obligations 8.1, 8.2, 17.1-17.4 17w. Non-Competition covenants 8.2, 17.2 17x. Dispute resolution'1* 19.1 -19.16 9, 17y. Other None None

(1) The Franchise Agreement contains a simple dispute resolution clause which statesthat if the parties cannot resolve their differences amicably they will proceed tolitigation. There are no mandatory arbitration clauses. You should read Sections 17and 19 of the Franchise Agreement and you may want to consult an attorneyregarding the effect of these provisions.


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10. FINANCING

We do not offer direct or indirect financing.

11. FRANCHISOR'S OBLIGATIONS

Except as listed below, we need not provide any assistance to you.

Our Pre-Opening Obligations to You. We have the following obligations to youbefore you open your Pinkberry Store to the public:

A. We will provide you with an initial orientation to provide you with materialsand guidance for site selection, leasing requirements and guidelines (FranchiseAgreement, Section 3.1).

B. We will provide you with initial training (Franchise Agreement, Section 5.1).

C. We will furnish you with standards, specifications and other requirements foryour Pinkberry Store Franchise Business. (Franchise Agreement, Section 3.3).

D. We will loan you a copy of (or provide you electronic access to) the Manual

(Franchise Agreement, Section 5.3). The Manual is currently in the editing process, andcontains a total of 75 to 100 pages. A copy of the Table of Contents to the Manual isattached to this Offering Circular as Exhibit E.

E. We will furnish guidance on your Grand Opening (Franchise Agreement,Section 3.7).

Our Obligations During the Operation of Your Pinkberry Store Franchise. We havethe following obligations to you during the operation of your business:

A. We will provide you with updates to the Manual (Franchise Agreement,Section 5.3). A copy of the Table of Contents to the Manuals is attached to this OfferingCircular as Exhibit E.

B. We'll provide limited guidance in the operation of your Pinkberry StoreFranchise Business. We may provide this guidance electronically, in writing ortelephonically, through training programs and/or on site consultations, among othermethods. {Franchise Agreement, Section 5.3)

C. We'll furnish advice and guidance to you with respect to our Grand OpeningProgram. {Franchise Agreement, Section 3.7)

National Advertising

We can, in our Business Judgment, elect to establish an advertising, publicity andmarketing fund {the "Marketing Fund") to promote Pinkberry Stores and the Brand.You must contribute to the Marketing Fund 2% of Gross Volume per royalty period,subject to inflation adjustment. Such percentage will be calculated and payable at thesame time and in the same manner as percentage and minimum royalties.


We have sole discretion over all matters relating to the Marketing Fund, operational,marketing or any other matter. The Marketing Fund may be used for (among otherthings) product development; signage; creation, production and distribution ofmarketing, advertising, public relations and other materials in any medium, includingthe Internet; administration expenses; brand/image campaigns; media; national,

regional and other marketing programs; activities to promote current and/or futurePinkberry Store and the Brand; agency and consulting services; research; any expensesapproved by us and associated with FAC or other Franchisee advisory groups. Amongother things, Marketing Fund Contributions may be used for web sitedevelopment/operation and to pay Internet, Intranet, URL, 800 or similar number, andother charges, fees and/or expenses. A brief statement regarding the availability ofPinkberry Store franchises may be included in advertising and other items producedusing the Marketing Fund.

We and/or any Franchisor-Related Persons/Entities can provide goods, services,materials, etc. (including administrative services and/or "in-house advertising agency"services) and be compensated and/or reimbursed for the same by the Marketing Fund,provided that any such compensation must be reasonable in amount. We can arrangefor goods, services, materials, etc. (including administrative services) to be provided byindependent persons/companies and all related costs, fees, etc. will be paid by theMarketing Fund. While we are not required to do so, any matter we submit for FACapproval for which approval is granted, will be binding on you.

The Marketing Fund will be accounted for separately and may be used to pay alladministrative and other costs of the Marketing Fund related to its activities andpurposes and/or as authorized by the relevant Franchise Agreements. All taxes of anykind incurred in connection with or related to the Marketing Fund, its activities,contributions to the Marketing Fund and/or any other Fund aspect, whether imposedon us, the Marketing Fund or any other related party, will be the sole responsibility ofthe Marketing Fund. We will prepare financial statements for the Marketing Fundannually, which will be furnished to you upon written request. Such statements maybe audited and any related accounting/auditing costs will be paid by the MarketingFund. Funds in the Marketing Fund must be expended, prior to termination of theMarketing Fund, only for the purposes authorized by the relevant FranchiseAgreement(s). No profit, gain or other benefit will directly accrue to us from theMarketing Fund. All interest earned on monies contributed to, or held in, theMarketing Fund will be remitted to the Marketing Fund and will be subject to therestrictions of the relevant Franchise Agreement(s).

Financial management of the Marketing Fund will be our sole responsibility. We can,in our Business Judgment, do any of the following:

1) compensate ourselves and/or any Franchisor-Related Person/Entity for

salaries, administrative costs, overhead and other expenses incurred in MarketingFund related programs/activities, including but not limited to production, research,insurance, and collection expenses, as well as any legal expense related to the activitiesand purposes of the Marketing Fund;

2) charge the Marketing Fund for attorneys' fees and other costs related in anyway to claims against us and/or any of the Franchisor-Related Persons/Entities, theMarketing Fund and/or the FAC, regarding the Marketing Fund. However, we will berequired to reimburse the Marketing Fund for any attorneys' fees and/or costs paid bythe


Marketing Fund in connection with any action in which we are finally found to haveacted unlawfully or to be guilty of wrongdoing with respect to the Marketing Fund;

3) spend in any fiscal year an amount greater or less than the aggregatecontributions to the Marketing Fund in that year, and the Marketing Fund mayborrow from us or other lenders to cover deficits of the Marketing Fund or cause theMarketing Fund to invest any surplus;

4) collect for remission to the Marketing Fund any advertising or promotionalamounts offered by any supplier based upon franchisee purchases. Any suchcontributions, whether or not made with respect to purchases by you, will not counttoward your required Fund contributions;

5) pay the advertising, marketing, public relations and related costs involved inany co-branding, dual franchising or other such multi-sponsor programs;

6) revise marketing and other programs, and/or make expenditures from theMarketing Fund, to take account of cultural and other differences (and/or we candelegate management of a portion of the Marketing Fund in connection therewith);

7) defer, waive and/or compromise claims for current/future contributions to,and/or claims against or with respect to, the Marketing Fund and fund the same withthe Marketing Fund;

8) take legal or other action against any Franchisee in default of their obligationsto the Marketing Fund;

9) merge the Marketing Fund with any marketing fund otherwise established forPinkberry Store, so long as the restrictions of the relevant Franchise Agreement(s)continue to apply to contributions made by Franchisees under such arrangements;

10) maintain Marketing Fund assets in one or more accounts designated as "trustaccounts" for purposes of protecting such assets from claims of third-party creditors(however, such action will not be deemed to create any "trust," "fiduciary relationship"or similar special arrangement);

11) incorporate the Marketing Fund or operate it through an entity separate fromus, which is subject to all rights and duties of ours relating to the Marketing Fund;

12) take such other actions in connection with the Fund as we consider to beappropriate and as are consistent with the Franchise Agreement.

You acknowledge and agree that we have no obligation to ensure that expenditures bythe Marketing Fund are or will be proportionate or equivalent to contributions to theMarketing Fund by Pinkberry Store operating in any geographic area, or that anyPinkberry Store will benefit directly, indirectly or in proportion to its contribution tothe Marketing Fund. We have no obligation to cause other Pinkberry Stores tocontribute to the Marketing Fund or engage in local marketing, and we can permit aFranchisee to make direct advertising expenditures in place of


contributions to the Marketing Fund. You understand that some Pinkberry StoreFranchisees may have Marketing Fund obligations that are different from yours, if any.However, all Pinkberry Stores owned by us will make contributions to the MarketingFund as if they were subject to the then-current form of Franchise Agreement.

Neither we (nor any of the Franchisor-Related Persons/Entities, including theMarketing Fund and/or the FAC) will be liable for any act or omission in connectionwith the Marketing Fund which is consistent with the Franchise Agreement or whichis done in subjective good faith. You and we expressly agree that none of the

relationships with you in connection with the Marketing Fund are in the nature of a"trust," "fiduciary" or similar special arrangement.

Subject to the express requirements of this Agreement that your contributions willonly be spent as authorized herein, you agree that we can deny access to any and allprograms and/or materials created by, and benefits of, the Marketing Fund to youand to any Franchisees who are not in Good Standing.

Your Participation in the Marketing Fund.

You agree to participate in all Marketing Fund programs. You have the right to setyour own prices, except that we can specify maximum prices for goods or services tothe greatest degree permitted by law. You must fully honor all coupons, pricereduction and other promotions/programs as directed by us. The Marketing Fundmay furnish you with marketing, advertising and promotional materials; however, wecan require that you pay the cost of producing, shipping and handling for suchmaterials.

Your Local Pinkberry Store Marketing Activities.

You must spend for local advertising and promotion of your Pinkberry Store eachroyalty period 2% of Gross Volume, subject to inflation adjustment as set forth in theFranchise Agreement Section 9.6. If we request it, you will submit verification of yourexpenditures in a form prescribed by us in our Business Judgment. Appropriate localadvertising expenditures may include, but are not limited to, classified telephonedirectory listings and advertising. Discounts and/or products or services givenwithout charge will not be considered to meet your local advertising obligation underthis Section.

Your advertising must be in good taste and conform to ethical and legal standards andour requirements. Samples of all advertising and promotional materials (and any useof the Marks and/or other forms of commercial identification) for any media,including the Internet, World Wide Web or otherwise, must be submitted to us for ourreview and consent prior to use, which approval we can condition or withhold in ourBusiness Judgment. You agree not to use any materials or programs disapproved byus at any time in our Business Judgment and you must use all materials and programsdesignated by us as mandatory. We can require that a brief statement regarding theavailability of Pinkberry Store franchises be included in advertising used by you

and/or that brochures regarding purchase of Pinkberry Store franchises be displayedin your Pinkberry Store.

Any use of the Internet, World Wide Web or other electronic media by you inconnection with your Pinkberry Store will be as specified by us in our BusinessJudgment from time to time, whether in the Manuals or otherwise. Among otherthings, we can require that any such use be


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through us, using a designated Internet/Intranet Service Provider {which can be us oran Affiliate), and that all pages be accessed through a designated site and/or meet ourspecifications. In such an event, we can require you to pay by credit card, bankautodraft, or other method required by us, an Internet/Intranet.Service Fee of $50 permonth, which we can collect in advance on an annual or other basis. Such Fee issubject to annual adjustment by us.

Computer Hardware and Software and Cash Register

You must purchase, use, maintain and update at your expense software, computer andother POS systems meeting our specifications. There are no contractual limitations onthe frequency and cost of upgrades and updates to the systems or programs. You mustcomply with our then-current terms of use policies and any other requirementsregarding any inter/intranet sites we establish for Pinkberry Store FranchisedBusinesses. We have one approved supplier for this system who is Sunrise Tech.Groups located at 1511 W. Alton Ave., Santa Ana, CA 92704 telephone number 714-444-2844.

You must obtain and maintain at your own expense accounting, sales, reporting andrecords retention systems conforming to any requirements set by us. We reserve theright to use, and to have full access to, all cash register, computer and any othersystems, and the information and data they contain. We may charge a reasonable feefor the license, modification, maintenance or support of software or any other goodsand/or services that we furnish to you in related to any of the systems.

In the future, we may introduce to the System additional computer software and

hardware (including point of sale and additional back office systems) which you mustpurchase, use, maintain and update at your expense, as specifications andrequirements may be modified over time. In some cases, these components may onlybe available through us or approved vendors. You may be required to maintain yourrecords in a future Pinkberry System Database. You will be responsible for paying allsupplier and/or licensor {which may include us) charges for use, maintenance,support and/or updates to any future required systems. We do not have a contractualobligation under the Franchise Agreement to provide any maintenance, repairs,upgrades or updates on any software or hardware. There are no contractuallimitations on the frequency and cost of upgrades and/or updates to the systems orprograms. (Franchise Agreement, Sections 4 and 12.1)

You will use the computer for basic accounting practices, receiving and responding toemails, submitting monthly reports. We will have access to all data captured by thesecomputers. There is no contractual limitation on our use of the data, although any useby us shall be for reasonable business purposes.

We do not warrant or have any responsibility for the software or hardware you arerequired to obtain. Any warranty you may have on equipment or software will belimited to that provided by the applicable manufacturer or licensor.

Selection of the Location of Your Pinkberry Store

You must locate a site acceptable to us and sign a lease, within 3 months from the dateof the Franchise Agreement. We have no contractual requirement to consent to thelocation you select for your Pinkberry Store within a specified period of time. Youmust open your Pinkberry Store within 6 months of signing the Franchise Agreement.You must obtain certification from a state approved provider as required by Stateagencies before opening. Factors we consider in


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reviewing a proposed site include the real estate characteristics (parking, access, etc.)area demographics, trade area population and education.

We will require that the Lease you sign will include certain rights the Collateral

Assignment attached to the Franchise Agreement as Exhibit 3.2.B.

Typical Length of Time to Open Your Business

The typical length of time between the signing of the Franchise Agreement and thepayment of the Initial Franchise Fee and the opening of a Franchise ranges betweenapproximately 3 - 6 months. Factors affecting this length of time include locating a site,completion of training, construction, financing, permits or licenses.

If you do not meet all of your pre-opening obligations (see Sections 3.1 and 3.2 and 3.6of the Franchise Agreement) within one year of execution of the franchise agreement,we may terminate the Agreement and you will not receive a refund. You may notopen your Pinkberry Store until we give you your opening notice.

Training

You must attend an initial orientation at which we will provide you with materialsand guidelines for selecting a site for your Pinkberry Store as well as leasingrequirements and guidelines.

You must complete our Training Program before operating your Pinkberry StoreFranchise Business. The Initial Franchise Fee covers an initial training program foreither one or two individuals, who must include you and the initial Pinkberry Storemanager, who may be you. There is no reduction or refund of any part of the Initialfranchise Fee if one individual attends the initial training program. We may charge areasonable fee for training of additional and/or subsequent managers. We mayeliminate or shorten training for persons previously trained or with comparableexperience, however, any manager that has not successfully completed our TrainingProgram must pass the then-current version of competency exam by a grade of 80% orhigher.

Initial training lasts approximately two weeks and is held as needed, which weestimate will be approximately three times a year. The training will be held at acorporate unit located in California. Shelley Hwang will oversee the training program.

You'll be responsible for all travel, living, incidental and other expenses for you andyour personnel attending the Training Program and any other voluntary or mandatorytraining programs, seminars or meetings. We may charge a tuition fee for trainingprograms (other than for your initial training).

You and your manager must attend additional and/or refresher training programs, aswe may reasonably require to correct, improve and/or enhance your operations, theSystem and its members. In addition, we can require successful completion of trainingby all of your supervisory personnel.

Your training program will be personally designed for each individual based on priorStore and business experience and the position and responsibilities that the relevantindividual will hold


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in the Pinkberry Store Franchised Business. Each training program will includeclassroom training and on the job training at an existing Pinkberry Store. Thecurriculum will include, but not be limited to, the following:

Subject InstructionalMaterial

Hours of

Classroom

Training

Hours of On-The JobTraining

TrainingTeam

Orientation. OperationManual 2 Hours N/A

ShelleyHwang ordesignee

Hiring Interviewworksheets 2 Hours N/A


Training philosophy foremployees

TrainingManual 2 Hours N/A


Human Resource standardforms and record keeping

EmployeeManual 1 Hours N/A


Customer Service (thePinkberry Culture)

TrainingManual 1 Hours N/A


Food Preparation Operationsmanual N/A Total of 2.5 days within the

2 weeks training periodShelleyHwang ordesignee

Plate Presentation Operationsmanual N/A Total of 1.5 days within the

two week training periodShelleyHwang ordesignee


Subject Instructional Material

HOURSOF

ClassroomTraining

Hours of On-The JobTraining

TrainingTeam

Ordering -ProductSpecification and InventoryControl

Order book with bill toworksheet and purveyorlist

N/A

Total of 2.5days within the

2 weekstraining period


Marketing

Advertising and

local promotions

manual

2hrsShelleyHwang ordesignee

Store Sanitation

and

Maintenance

Operations manual N/A

Total of 2.5days within

the 2 weekstraining

period


Each participant will receive information packages which may be in the form of paperor electronic materials.

Ongoing Training

We can require that you and/or your Manager attend additional and/or refreshertraining programs, including national and regional conferences, conventions andmeetings, as we may reasonably require to, correct, improve and/or enhance youroperations, the System and its members. You will be responsible for all travel, living,incidental and other expenses for you and any Manager attending optional ormandatory training programs, seminars or meetings. We may charge a reasonable feefor any training program, conference, convention or other event.

12. TERRITORY

Location and Customers

The Franchise awarded is for the operation of a single Pinkberry Store at an approvedlocation within a prescribed geographical area {the "Territory"). You may not change

the location from which you operate your Pinkberry Store without our prior writtenconsent, which may be granted at our sole discretion. Our current policy allows you tosolicit or service customers located anywhere, except (i) in another Pinkberry Storefranchisee's Territory and (ii) except that you may not solicit or service national orregional accounts which are currently being serviced or solicited by us, our Affiliate, orother Pinkberry Store Franchises. If you would like to use the Marks or System atanother location, then you must have our prior written consent from us. We mayaward you additional Territory or franchises, but only at our sole discretion.

Territory

Subject to our rights as set forth below, we will not enter into a Franchise Agreementlicensing a Traditional Pinkberry Store, or ourselves open a Traditional PinkberryStore, inside the area (the "Territory") described in Exhibit 2.2 of the FranchiseAgreement. Your rights in the Territory are exactly (and only) as expressly below.Except for the location of a Traditional


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Pinkberry Store within the Territory, you have no right to exclude, control or imposeconditions on the location or operation of present or future Pinkberry Store (or anyother brand) units or distribution channels of any type, franchised or Pinkberry Storeowned, regardless of their location or proximity to the Premises. You are not grantedany rights with respect to other and/or related businesses, products and/or services,in which we or any Franchisor Related Persons/Entities may be involved, now or inthe future.

B. We and the Franchisor-Related Persons/Entities expressly reserve all other

rights, and can (along with anyone we designate):

1) own and/or operate ourselves, and/or authorize others to own and/oroperate:

a) any kind of business in the Territory, except for a Traditional Pinkberry Store,whether or not using the Pinkberry Store Marks and System; and

b) any kind of business outside of the Territory, including without limitation,Traditional Pinkberry Store, whether or not using the Pinkberry Store Marks andSystem;

2) sell Pinkberry Store brand (or any other brand) Products and Services(whether or not competitive) to customers located anywhere (including within theTerritory) using any channel of distribution other than a Traditional Pinkberry Storelocated in the Territory;

3) develop or become associated with other concepts (including dual brandingand/or other franchise systems), whether or not using the Pinkberry Store Systemand/or the Marks, and award franchises under such other concepts for locationsanywhere;

4) acquire, be acquired by, merge, affiliate with or engage in any transaction withother businesses (whether competitive or not), with units located anywhere. Suchtransactions may include (but are not limited to) arrangements involving competingoutlets and brand conversions {to or from the Pinkberry Store Marks and System).Such transactions are expressly permitted under the Franchise Agreement, and youagree to participate at your expense in any such conversion as instructed by us.

A "Traditional Pinkberry Store" is defined in Article 22 of the Franchise Agreement.The term does not include non-Traditional Pinkberry Store or other distributionopportunities. A non-Traditional Pinkberry Store concept may include (but is notlimited to) limited square footage outlets like an "express" unit or a kiosk; unitshoused within other retail facilities, such as a department store, hotel or casino,Internet sites and/or direct mail operations.

Our current policy is to allow you and other Pinkberry Store Franchisees to acceptorders from any customer located anywhere, but we can change this policy in ourBusiness Judgment. You agree to comply with any policy changes.

Exhibit 2.2 to the Franchise Agreement will state if the location and Territory for yourTraditional Pinkberry Store has not been identified by the date that you sign theFranchise Agreement. If applicable, we will identify the Territory on a document to be

initialed by you and us within 48 hours from our notice to you of our acceptance of thelocation for your Traditional Pinkberry Store. If:

1) you disagree with such Territory; and

2) you provide us with written notice of your disagreement within 48 hours ofyour receipt of the Territory boundaries; and


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3) you and we fail to arrive at a mutually acceptable Territory definition;

then,

we will cancel all of our obligations under the Franchise Agreement, and.receive fromyou (and each Affiliate of yours) a General Release. The Post Termination Provisionsof this Agreement will survive such cancellation.

If at any time during the Franchise Agreement, you are not in Good Standing, we canreduce, eliminate or otherwise modify your territorial rights. We do not make anyrepresentation or assurance that you can or will achieve such performance minimumscontained in the Franchise Agreement.

Distribution Channels

We, our Affiliates and/or any Franchisor-Related Persons/Entities expressly reservethe rights to sell Pinkberry Store Brand (or any other brand) Products and Services(whether or not competitive) to customers located anywhere (including within yourTerritory), using any channel of distribution located anywhere, subject to certainconditions for specific opportunities in relation to national or regional accounts asdescribed below. In addition, you will comply with any future System Standardsregarding inter-franchise sales and System-wide co-operation.

Changes

We (and/or our Affiliates) can acquire, be acquired by, merge, affiliate or dual brandwith, or engage in any transaction with other businesses {whether competitive or not),with franchises/outlets located anywhere. We (and/or our Affiliates) may also acquire,be acquired by, merge, affiliate with or engage in any transaction with otherbusinesses (whether competitive or not), with units located anywhere. We can developor become associated with other concepts (including dual branding and/or otherfranchise systems), whether or not using the Pinkberry Store System and/or theMarks, and award franchises under other concepts for locations anywhere). Thesetransactions may include arrangements involving competing outlets and brandconversions (to or from the Pinkberry Store Marks and System. These transactions areexpressly permitted under this Agreement, and you agree to participate at yourexpense in any such conversion as instructed by us, without any liability to you.

E-Commerce/Email Business and Special Accounts

Your use of the Internet, World Wide Web, and other electronic or other means ofmarketing and distribution of goods and/or services can be restricted by us in ourBusiness Judgment. As a pre-opening condition you must have provided us with theinformation for us to compiete and upload your approved Pinkberry Store locationand contact information on our Pinkberry Store website located atwww.pinkberryusa.com. You will not market or sell through any venue{s) or channeisof distribution other than your Pinkberry Store Franchise without our writtenpermission. You agree to participate in any Special Account(s) {as defined in Article 22of the Franchise Agreement) only as we may direct.

We, the Franchisor-Related Persons/Entities and anyone we designate mayoffer/provide any Products and/or Services or otherwise through the Internet, WorldWide Web, direct mail and/or other similar venues (no matter where the customer islocated), whether or not in connection with any use of the Marks and/or System.


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Relocation

If you need to make a change to the location of your Pinkberry Store, you mustprovide us with written notice of your intent to relocate. Any relocation for any reason

http://www.pinkberryusa.com/

requires our prior written consent, must be within your Territory, and will be at yourexpense.

Modification of Your Rights in the Territory

We grant a Franchise based on our expectation that you will continuously anddiligently follow all System requirements. If you fail to meet any PerformanceStandards as described in this section and the Franchise Agreement, or are nototherwise in Good Standing, we may reduce, eliminate or otherwise modify yourrights in the Territory, including any right of first refusal. "Performance Standards"includes both Pinkberry Store System Standards and Financial Standards (as set out inthe Franchise Agreement, this section, the Manuals or otherwise). We do not make anyrepresentation or assurance that you can or will achieve any performance minimums.

System Standards

We may evaluate your Pinkberry Store (including inspections, field service visits,customer comments/surveys and secret shopper reports for compliance withPinkberry Store System Standards using the same methodology and scoring system aswe use to evaluated any Pinkberry Store owned and/or operated by us and/or ourAffiliates. Your Pinkberry Store will receive a System Standards Score for categoriesbeing scored at that time. We will compare your scores with the average score in eachcategory as achieved by all Pinkberry Store in the United States (including thoseowned and/or operated by us and/or our Affiliates), or other geographic area as webelieve appropriate for evaluation purposes.

Financial Standards

We can, in our Business Judgment, compare your Gross Revenue with the then-current"Financial Standard". If we make such an election with respect to your Pinkberry Store,we won't do it any more frequently than as of every six months. The FinancialStandard will be determined as follows:

Period Open* Financial Standards (adjusted every 6 months)Less than Three Years 50% of PUA**Three Years or More, But Less Than Four Years 65% of PUA**Four Years or More 75% of PUA**

*Measured from the earlier of your actual opening date, or the date by which your

Pinkberry Store is required to be open.

**"PUA" or "Per Unit Average": The average Gross Revenue for all Pinkberry Stores inthe United States during the most recent 6 month period before the measuring date.


13. TRADEMARKS

We have granted you the non-exclusive right to use the trademark "Pinkberry " andany other trademarks, trade names, service marks, designs and logos currently used inthe Franchised Business (the "Marks"), or that we may authorize in the future. TheMarks may only be used at the location we approve for your Franchised Business andfor the sale of products and services we authorize.

Our affiliate, Pinkberry Franchising Company filed the following applications forregistration with the United State Patent and Trademark Office ("USPTO"):

Wordmark "Pinkberry" - filed May 3, 2006 - Serial No. 78876538

Stylized wordmark, design and logo - filed May 3, 2006 - Serial No. 78876477

By not having Principal Register federal registrations for the above referencedtrademarks at the present time, we do not have certain presumptive legal rightsgranted by a registration.

All required affidavits in connection with all of the foregoing Marks have been filed.

Pinkberry Franchising Company has granted us, through a license agreement, the rightto use and grant franchisees the right to use the Marks. Termination or expiration ofthe license agreement will not affect your right to use the Marks. This licenseagreement does not significantly limit our rights to use or license the trademark in amanner material to you.

Other than as specified above, there are currently no effective determinations of thePatent and Trademark Office, Trademark Trial and Appeal Board, the trademarkadministrator of this state or any court; pending infringement, opposition orcancellation; or pending material litigation involving our trademark. There are no

agreements currently in effect which significantly limit our rights to use or license theuse of these trademarks, service marks, trade names, logotypes or other commercialsymbols in any manner material to you. There are no infringing uses of which we areaware.

You will use the Marks solely for the identification of your Pinkberry Store Franchise.You may not use any of our Marks (or any modified version) as part of your businessentity or trade name. We must approve your corporate and/or trade name prior to itsuse. You may not use our Marks in connection with the sale of an unauthorizedproduct or service or in a manner not authorized in writing by us. Currently, there areno agreements that limit our right to use or license our Marks.

You must notify us immediately of any apparent or actual infringement of, orchallenge to your use of the Marks, or any claim by any person of any rights in theMarks. You will not communicate with any third party concerning any claim. We havethe exclusive right to control any settlement, litigation or proceeding arising out of orrelated to these matters. The Franchise Agreement does not require us to participate inyour defense and/or indemnify you for expenses or damages if you are a party to anadministrative or judicial proceeding involving a trademark licensed to you by us, or ifthe proceeding is resolved unfavorably to you.

You must comply at your expense with any directions from us to discontinue, modify,substitute or add Marks. We cannot and do not guarantee that a modification,discontinuance or otherwise may not be required for any reason, and we will have noliability or obligation to you.


You will not make any claim related to any modification, discontinuance or otheraction, and/or with any dispute regarding the Marks.

You should understand that there is always a possibility there might be one or morebusinesses, similar to the businesses covered by the franchises offered in this OfferingCircular, operating in or near the area(s) where you may do business, using a nameand/or trademarks similar to ours and with superior rights to the name and/or ourMarks. We strongly suggest that you research this possibility, using telephone

directories, local filings and other means, before you pay any money, sign any bindingdocuments or make any binding commitments.

14. PATENTS. COPYRIGHTS AND PROPRIETARY INFORMATION

There are no patents material to the Franchise.

There currently are no effective determinations of the Copyright Office (Library ofCongress) or any court regarding any of the copyrighted materials, although we claimcommon law copyrights in our Manuals and other materials. There are no agreementsin effect which significantly limit our right to use or license the copyrighted materials.Finally, there are no infringing uses actually known to us that could materially affectyour use of the copyrighted materials in any state. No agreement requires us to protector defend any copyrights or you in connection with any copyrights.

In general, our proprietary information includes "Confidential Information" as definedin Section 8 of the Franchise Agreement, and involves, among other things: 1) manuals,training, techniques, processes, policies, procedures, systems, data and knowledgeregarding the development, marketing, operation and franchising of a Pinkberry StoreFranchise; 2) programs, designs, specifications and information regarding Productsand Services; 3) all information regarding customers and suppliers, including anystatistical and/or financial information. We disclose to you Confidential Informationand your only interest in it is the right to use it under your Franchise Agreement.

You agree to maintain the confidentiality of all Confidential Information during andafter the term of the Franchise Agreement. You must agree that you will not use anyof the Confidential Information in any other business or in any manner we do notspecifically authorize in writing. You also agree to fully and promptly disclose allideas, techniques and other similar information relating to the Franchised Business thatare conceived or developed by you and/or your employees. We will have an ongoingright to use, and to authorize others to use, these ideas, etc., without compensation orother obligation.

You must have each of your employees, agents, principals, and Affiliates sign anddeliver to you an agreement containing substantially the same provisions described inthis Item 14 {in forms specified by us) and will deliver to us copies on request.(Franchise Agreement, Section 8.1). If your Pinkberry Store Franchise is to be locatedand/or operated within, in conjunction with or as part of another business, you must

arrange for the other business and its personnel {as specified by us) to enter into theappropriate arrangements to protect our Intellectual Property and other interests,including signing agreements with us regarding non-competition, confidentiality, non-solicitation of employees and customers and indemnity/insurance arrangements.

15. OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THEFRANCHISE BUSINESS

Your Pinkberry Store Franchise must be personally managed on a full-time basis by aperson who has successfully completed all training required by us and who meets allof our other


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then-current standards. Unless you have a Manager who has been approved by us inour Business Judgment, we require that you personally manage your Pinkberry StoreFranchise. You must keep us advised of the identities of any new potential Managerand other supervisors of your Pinkberry Store Franchise. We have the right to dealwith any Manager on matters pertaining to day-to-day operations of, and reportingrequirements for your Pinkberry Franchise. You are solely responsible for the hiring,management and training of all employees of your Pinkberry Store Franchise and forthe collection of the employee confidentiality agreements as required by section 10.5 ofthe Franchise Agreement.

Neither you nor any Manager can have an interest or a business relationship with anycompetitor of ours. You and any Manager must sign a confidentiality and non-competition agreement embodying the terms of Article 8 of the Franchise Agreement.

You may be required to participate in an in-person annual review process which maybe conducted by a Pinkberry Store corporate trainer, corporate representative orRegional Director.

16. RESTRICTIONS ON WHAT THE FRANCHISE MAY SELL

You must operate your Franchised Business in accordance with the System Standards{including required products and services), which we may modify occasionally. You

may not use your Franchised Business for any other purposes other than the operationof a Franchised Business in full compliance with the Franchise Agreement andManuals, without our prior written approval. You must purchase, use and offer eachof and only the types, brands and or quality of Products and Services we designate.

17. RENEWAL, TERMINATION. TRANSFER AND DISPUTE RESOLUTION

This table lists certain important provisions of the Franchise Agreement and relatedagreements. You should read these provisions in their entirety in the Agreementattached as Exhibit A to this Offering Circular.

ProvisionSection inFranchiseAgreement

Summary

a. Term of thefranchise 2.1 5 years for a new Franchise.

b. Renewal orextension ofthe term

15.1 5 year terms subject to compliance with certain requirements.

c.Requirementsfor you torenew orextend

15.2-15.3Written notice from you of election for renewal; be in Good Standing;compliance with all Agreements, current operational, qualification andtraining requirements; execution of new agreements and GeneralRelease.

d.Terminationby you

None None

e.Terminationby us withoutcause

None None

f. Terminationby us withcause

2.2,5.1,13.3, 16.1-16.5

We can terminate your Franchise if you commit any of the violationslisted below. We can terminate your right to certain territory ifperformance standards



Summary

are not met.

g. "Cause"defined-defaultswhich can be

13.3, 16. 2,A and B.

Gross Revenue is understated for any period by more than 5%; or;any understatement is determined by us to be intentional; failure tocomply with any payment obligation or any other provision of theFranchise Agreement {including the System Standards as set out in

cured the Manuals), other than those listed below and in section 16 (A), ofthe Agreement.

h. "Cause"defined-defaultswhich cannot becured

2.2,3.1,5.1,16.1

Failure to: agree to a Territory, comply with opening requirements;failure to satisfactorily complete training, misrepresentations oromissions by you in application for Franchise; make anunauthorized transfer; abandon or fail to operate your PinkberryStore for more than 7 consecutive calendar days; lose right to useapproved location and do not relocate; bankruptcy; conviction offelony or other misconduct that adversely affects the PinkberryStore Franchise; unauthorized use of Confidential Information, theMarks or Manuals; 5 or more customer complaints in any 12-monthperiod; commit 2 or more applicable defaults within any 12consecutive months, or 3 or more applicable defaults within any 24consecutive months.

i. Yourobligations ontermination/non-renewal

17.1-17.4

Cease operations; cease use of Marks; de-identify business; returnManuals and other Confidential Information; cancel ait fictitiousbusiness name registrations; discontinue representation as aPinkberry Store franchisee; pay alt amounts owed. Certainobligations continue, including payment, indemnity,noncompetition and confidentiality.

j. . Assignment ofcontract by us 14.1 No restrictions on our right to


ProvisionSection inFranchiseagreement

Summary

transfer.k."Transfer"by you-definition

14.2Includes any voluntary or involuntary assignment, sale, gift, pledge or anygrant of any security or other interest (partial or whole, direct or indirect),by you.

1. Ourapprovalof transferby you

14.2 Transfer subject to our prior written consent-

m.Conditionsfor ourapprovalof transfer

14.3

You must be in compliance with all agreements and the Manuals;Transferee qualifies; Transferee assumes your obligations; all amounts andreports due us are remitted; all debts payable to third parties are assumedby transferee; all required reports or other documents submitted;Transferee completes training program; Transferee obtains all requiredpermits, licenses and insurance; required third parties consent to transfer;execution of Franchise Agreement by transferee; payment of the greater ofeither: (i) a nonrefundable transfer fee of $5,000 plus the then current InitialFranchise Fee as described in out then current uniform franchise offeringcircular, or (ii) in lieu of those fees, one third of the gross sales price for theFranchised Business; execution of release; amount financed subordinate toobligations of transferee to us; execution of non-competition agreement;Compliance with laws and regulations. Additional requirements fortransfer to a controlled corporation.

n. Ourright-of-first-refusal toacquireyourbusiness

14.7 We have the right to match offer, require terms and conditions.

o. Ouroption topurchaseyourbusiness

None

p. Yourdeath ordisability

14.5Any transfer in the event of death or disability must be completed within 6months and will be governed by the transfer provisions of Article 14 of theFranchise Agreement.



Summary

q. Non-competitioncovenants duringthe term

8.1 No involvement in any Similar Business.

r. Non-competitioncovenants after thefranchise isterminated orexpires

8.2, 17.2,19.6

No involvement in Similar Business for 24 months withinmarketing area or the Territory. Under certain circumstances,time period may be extended an additional 12 months.

s. Modification ofthe agreement 19.8

Agreement may be modified in writing by all parties. Manualsand System are subject to change by us and you must promptlycomply.

t.Integration/mergerclause

21Only the terms of the Franchise Agreement are binding(assuming they comply with State law). Any other promises arenot enforceable.

u. Disputeresolution byarbitration ormediation

19.1 -19.16

Except for a few types of claims, all disputes are resolved throughface-to-face meeting, mediation, and/or binding arbitration at aneutral site in the county in which our then current headquartersis located; limited rights of appeal and pre-trial discovery; waiverof jury or court trial; limitation of types and amount of damagesand periods to bring claims;

v. Choice of forum 19.1, 19.2Face-to-face meeting, mediation, arbitration and litigation at aneutral site in the county in which our then current headquartersis located. Please see the state-specific addenda to the OfferingCircular and Franchise Agreement in Exhibit D.

w. Choice of law 19.14Laws of the State of California apply. Please see the state-specificaddenda to the Offering Circular and Franchise Agreements inExhibit D to this Offering Circular.

The Franchise Agreement provides for a good faith negotiation to settle disputes. Thegood faith negotiation will occur at a location to be decided by the parties. Failingresolution of the dispute, the parties may proceed directly to litigation in the county inwhich our then current headquarters is located, and that may cost you more than ifthose proceedings took place near your residence or business. You and we willgenerally bear each of our own costs in any dispute, but the court can assess costs andattorneys' fees against a losing party.


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You should understand that we intend to fully enforce all of the provisions of thedocuments you sign (including the Franchise Agreement). Statements made by us hereor in an Addenda, as a condition or registration in a state, should not be construed asany indication that you and we have not had a meeting of the minds on any subjectcovered by those statements. As to any law that might make void or unenforceableany provision contained in any of the documents you sign, whether as a result ofstatements we are required to make or otherwise, we reserve the right to challenge theenforceability and/or effect of that law in any legal proceeding.

Various states, including but not limited to the following, have statutes which maysupersede the Franchise Agreement in your relationship with the franchisor includingareas of termination and renewal of your franchise: ARKANSAS [Code Sections 4-72-201-4-72-210], CALIFORNIA [Bus. & Prof. Code Sections 20000-200043],CONNECTICUT [42-133e et seq.J, DELAWARE [Code, Title 6, Chapter 25, Sections2551-2556], HAWAII [Rev. Stat. 482E-6], ILLINOIS [815 ILCS 705/1 - 705/44],INDIANA [Code Sections 23-2-2.7 (1) - (7)], IOWA [Sections 523H.1-523H.17],MICHIGAN [19.854 (27)], MISSISSIPPI [Code Sections 75-24-51-75-24-63], MISSOURI[Stat. Sections 407.400-407.410] NEBRASKA [Re. Stat. Sections 87-401 - 87-410], NEWJERSEY [Rev Stat. Sections 56:10-1-56:10-12], SOUTH DAKOTA [Codified LawsSection 37-5A-51], VIRGINIA [Code Sections 13.1-557 through 13.1-574],WASHINGTON [Code Section 19.100.180], WISCONSIN [Stat. Section 135.03],DISTRICT OF COLUMBIA [Code Sections 29-1201-29-1208], PUERTO RICO[Annotated Laws Sections 278 - 278d], VIRGIN ISLANDS [Annotated Code Sections130 - 139], These and other states may have court decisions which may supersede the

Franchise Agreement in your relationship with us, including the areas of terminationand renewal of your Franchise.

The provision in the Franchise Agreement which provides for termination upon yourbankruptcy may not be enforceable under Federal Bankruptcy Law {11 U.S.C. §101,etseq).

18. ARRANGEMENTS WITH PUBLIC FIGURES

We do not use any public figure to promote our Franchise.

19. EARNINGS CLAIMS

We do not provide or authorize any representations, express or implied, or any otherinformation, regarding potential sales, costs, earnings or other results of yourPinkberry Franchised Business.

Even though our Affiliate has operated a Pinkberry Store for 2 years, we would not beable to predict what results we might achieve, and we certainly have no way ofknowing what results you will achieve. How well you might do depends almostentirely on factors outside our control, including your general business ability, yourresources, how closely you follow our System, your location, competition and howgood a businessperson you are. We do not authorize any sales, cost or incomeprojections, or estimates of any kind to you, nor should you rely on any projections orestimates of any type from anyone.

We do not authorize our employees, salespersons or anyone else to make any claimsor statements regarding prospects or chances of success, actual or potential sales, costs,earnings, income or profits of, or other financial matters regarding any PinkberryFranchise. We are not able to predict gross revenues, expenses, profit or other resultsfor franchised or Company-Owned Pinkberry Stores and do not, and will not, reviewor comment on your proposed budget, business plan or otherwise.


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If, at any time, you believe that any claim(s) or statement(s) regarding prospects or

chances of success, actual or potential sales, costs, earnings, income or profits of, orother financial matters regarding, any Pinkberry Store have been made to you, youmust provide a written statement regarding the same next to your signature on theFranchise Agreement. If any such claim or statement has been made to vou, it was notauthorized, and is inherently unreliable. You agree that vou will not and do not relyupon any such claim, statement, information, promise. representation and/or warrantyand further agree that we are not bound by it. If vou do rely upon any unauthorizedclaim or statement information, promise, representation and/or warrantynotwithstanding this instruction, vou do so at your own risk.

Before signing any binding documents or making any investment, you should makeyour own independent investigation regarding the possible purchase of a PinkberryStore Franchise. This investigation should include speaking with current and pastPinkberry Store Franchisees (if any); although you understand that any of theseFranchisees would have relatively short term experience with the Pinkberry StoreFranchise. You should also speak with independent advisors, such as an attorneyand/or accountant, to assist your determination of the suitability of your possibleinvestment in a Pinkberry Store Franchise.

20.

LIST OF OUTLETS

As of April, 2006, we had no Pinkberry Store Franchisees. Therefore, no franchiseeshad an outlet terminated, canceled, transferred, not renewed or otherwise voluntarilyor involuntarily ceased to do business under our franchise agreement, and nofranchisee has failed to communicate with us within ten weeks prior to the applicationdate. In the interest of providing you with appropriate data, we have provided similarinformation with respect to the two affiliate owned Pinkberry Stores currentlyoperated by our Affiliate, Pinkberry, Inc.

STATUS OF COMPANY OWNED UNITS

FOR YEARS 2005/2004/2003

STATE UNITS CLOSEDDURING YEAR

UNITS OPENEDDURING YEAR

TOTAL UNITS OPERATINGAT YEAR END

California* 0/0/0 1/0/0 1/0/0Total: 0/0/0 1/0/0 1/0/0

* Our affiliate Pinkberry, Inc. has 100% ownership of the California Pinkberry Storecurrently in operation. This Store is located at 868 Huntley Drive, West Hollywood,CA 90069. Additional company owned stores may open in 2006 at the WestfieldTopanga mall in Canoga Park, at 3300 W. 6th St Los Angeles, CA 90020, and at theWestfield Mall in Valencia, CA.

2005 PROJECTED OPENINGS

State

FranchiseAgreements

Signed ButUnits Not

Opened

ProjectedFranchised

New Units inFiscal Year

2006

Projected Company-Owned Units Opening inFiscal Year 2006

California 0 10 1Totals: 0 10 1


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PINKBERRY STORE FRANCHISED UNITS STATUS SUMMARY FOR THEFISCAL YEARS ENDING DECEMBER 31, 2005 / DECEMBER

31, 2004 / DECEMBER 31, 2003

State/Country TransfersCancelled

orTerminated

NotRenewed

Reacquired

byFranchisor

Left

the System -Other

Total

from

Left

Columns

Franchises

Operating

at Year

EndCalifornia 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0Total 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0

21. FINANCIAL STATEMENTS

Exhibit B contains our audited financial statements as of June 20, 2006. Our fiscal yearend is December 31.

22. CONTRACTS

The following agreements are attached as exhibits to this Offering Circular:

Exhibit A Franchise Agreement with Exhibits

Exhibit C Statement of Prospective Franchisee

Exhibit G Receipt of Offering Circular

23. RECEIPT

2 copies of an acknowledgment of your receipt of this Offering Circular appear asExhibit G. Please sign and date one copy and return it to us. Retain the other copy foryour records. You should also complete and return the Statement of ProspectiveFranchisee {Exhibit C) to us before you sign any Franchise Agreement or pay anysums.


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Pinkberry franchise document

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Transcript of Pinkberry franchise document