CONTENT • COMPANY CONTACT AND REGISTRATION DETAILS • ABOUT US

DINER CONCEPT

• DINER CONCEPT INTRODUCTION • DINER CONCEPT TYPICAL LAYOUT • FINANCIALS • DINER MENU

• ADDITIONAL FRANCHISE CONCEPTS • HOW TO APPLY FOR A HOT DOG CAFÉ FRANCHISE • HOT DOG CAFÉ (PTY) LTD SERVICES • AFFILIATED ASSOCIATIONS • BLACK BUSINESS ECONOMIC EMPOWERMENT

DEFINITIONS "BEE Act" means the Broad-Based Black Economic Empowerment Act 53 of 2003; "BEE" means black economic empowerment, a national strategy and regulatory system of the government of the Republic of South Africa intended to bring about the integration of black people within the South African economy. "Black people" bears the meaning defined in the BEE Act; "Codes" means the Codes of Good Practice on BEE issued in draft by the DTI on 8 December 2004 under section 9 of the BEE Act for public Comment; "DTI" means the Department of Trade and Industry of the Government of the Republic of South Africa; "Enterprise Type" means the differentiation applied to different levels of enterprise in the Codes and

which typically distinguishes between the obligations of SMME enterprises and others; "FASA" means the Franchising Association of Southern Africa; "Franchise Industry" means the Franchising Industry in the Republic of South Africa regardless of the sector in which a particular Franchise System operates; "Franchise System" means a franchise including its Franchisors and Franchisees; "Franchisee" means an enterprise that has acquired the right to trade as a Franchisee of a Franchise System from a Franchisor; "Franchisor" means the South African enterprise holding the rights to a Franchise System in South Africa; "SMME" means an enterprises falling within the parameters set forth in the National Small Enterprises Act 102 of 1996;

CONTACT AND REGISTRATION DETAILS Legal Name: Hot Dog Café (Pty) Ltd

Registration Number: 2001/013907/07

Trading Name: Hot Dog Café

Street Address: Kruger Avenue Lyttelton Centurion 0140 Postal address: P.O Box 14562 Lyttelton Centurion 0140 Telephone No: 012 664 7213

Fax No: 012 664 0042

Email: newbusiness@hotdogcafe.co.za

Website: www.hotdogcafe.co.za

FASA Member: Yes

BEE certified: Yes

Business Started: Since 1998

Franchising a Franchised Business: Since 2001

ABOUT US

Hot Dog Café was founded in 1998 and has been a South African favourite for over 14 years, exceeding expectations and always providing only the freshest and tastiest products at value for money prices.

We strive to complement the Hot Dog Café experience with excellence and a variety of convenient outlets to suit your every need. We strive to compliment the variety of convenient outlets with excellence and friendly and efficient service, topped off with an array of delicious menu offerings whether you are on the run or looking for a casual sit down meal.

CONCEPTS

• Our concepts are successful due to the meticulous attention to detail regarding the needs of our customer base. They are designed to suit any space and all special events, filling stations, food courts, shopping malls, cinema complexes, in fact practically any location requiring an on the go food offering. Starting with the larger fixed space concept, the diner, down to the compact and versatile cart option, there is a Hot Dog Café outlet to suit your needs.

EMPOWERMENT

• In 2004 Hot Dog Café made a conscious decision with regards to employment and shook South Africa like a sauce bottle. In conjunction with various government funding groups and other organizations we set a new standard for the empowerment of those who had been previously disadvantaged. Hot dog Café set to work on training, funding and supporting new franchisees to help lead the brand into a new generation.

MENU

• Best traditional value on a roll. Hot Dog Café is committed to creating a nostalgic journey back to the good old times. A time when people took pride in their products, providing user friendly, mess free on-the-go meals. We specialize in Hot Dogs of all sorts crafted by a Fleishmeister to an original recipe ensuring an exceptional experience with every bite. Through the years we have added different varieties of Hot Dogs to our menu to suit the taste preference of all our customers.

• Good old fashioned juicy burgers are also available at selected outlets as well as our own Coffee Brand “Jonny K’s”, which is taking South Africa by storm.

Producing a high-quality product in line with world standards in the vending environment is a challenge few would attempt, but which Hot Dog Café has achieved with resounding success. Not only have we assisted unemployed individuals from disadvantaged backgrounds through development and training, but also assisted corporations and organisations seeking to meet BEE scorecard credentials effectively and sustainably.

We continuously aim to empower those previously disadvantaged with a generous amount of business, training and financial support on an on-going basis to ensure sustainable and genuine empowerment.

Whether you are a customer, potential franchisee or organisation dealing with Hot Dog Café, you will never settle for anything less than the best.

Total Capital investment From R 450 000.00 excl. Vat

Estimated Return on initial investment (ROI) p/a 27%

The Hot Dog Café Diner, designed and built to mimic the traditional 1930’s retro diner feel, is a compact, user friendly fast food outlet with powerful branding and hand etched murals. With state of the art equipment that aid in the fast and efficient delivery of quality products under meticulous hygiene conditions, you can expect a winning combination of nostalgic memories with the quality service you expect in the new day and age. Good old fashioned Diner tables and chairs, provide for a relaxing sit down option if you are not on the run.

DINER CONCEPT

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< _____ Dry Wall _____ >

Lockable Storeroom (with shelving for storage)

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Dry Walling

Glass Panel to be "Blacked" ou

Plastered Brick Wall

Shop Front - Glass Panels

Electrical Points

1) Bulkhead for Menu Boards to be placed above the Soft Serve Machine, Serving Counter & 2 Bin Bain-Ma2) Serving Counter to be fitted with cupboards below for computer hard-drives, cabling, stationery, etc.

1) Extractor Unit to only cover 2 Bin Chip Fryer & Gas Braai area.

1) 1 x Chest Freezer, 1 x 2.5 Door Under Bar Fridge, Wash-Up & Prep Area.2) Surfaces of Chest Freezer & Under Bar Fridge to serve as work surfaces for prep.

1) Lockable Storeroom (with shelving for storage): Cold Drinks, Sauces, Packaging, Rolls, etc.

< __ Front Entrance __ >

Gas Braai

2 BinChip Fryer

Chip Bin

WorkSurface

Serving Counter Condiments

Table+ 4

Chairs

Table+ 4

Chairs

Table+ 4

Chairs

Double SlidingDoor Fridge

Table+ 4

Chairs

Table+ 4

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Bain Marie

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Chest Freezer(Sausages, Wors &

Fries)

2.5 DoorUnder Bar Fridge(Sauces, Vegetables,

SoftServe

Machine

DINER FEATURES: • State-of-the-art customised Point of Sale computer system (Optional). • Stainless steel kitchen equipment. • Backlit menu layout and design – Fresh, funky and high impact. • Front-of-house design with, rippled stainless steel durable counters, tiling throughout and options

such as mirror ceilings. • Back-of-house design with compact layout, storage facilities, tiling (wall and floor) throughout, and

efficient operational flow considerations. • Highly visible signage – to aid in drawing consumers to the Diner. • Custom designed, stainless steel retro table and chairs designed to complement the Front-of-house

design. • Optional Jonny K’s custom fitted coffee machine with added branding visibility of the Jonny K’s Coffee

offering. SIZE:

The size of the Diner can vary, from 18m² to 30m², depending on the Landlord specifications and layout variations.

HOT DOG CAFÉ: DINER FRANCHISE FINANCIALS

Year 1 Year 2 Year 3 Year 4 Year 5BUDGETED INCOME STATEMENT Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

GROSS PROFIT

Sales (excl VAT) 117 000 117 000 117 000 117 000 117 000 117 000 117 000 117 000 117 000 117 000 117 000 117 000 1 404 000 1 502 280 1 607 440 1 719 960 1 840 358

Cost of SalesPurchases 52 650 52 650 52 650 52 650 52 650 52 650 52 650 52 650 52 650 52 650 52 650 52 650 631 800 676 026 723 348 773 982 828 161 Movement in Stock

Gross (Profit) / Loss 64 350 64 350 64 350 64 350 64 350 64 350 64 350 64 350 64 350 64 350 64 350 64 350 772 200 818 532 884 092 945 978 1 012 197 GP Percentage 55% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0%Cost price 45% 45% 45% 45% 45% 45% 45% 45% 45% 45% 45% 45% 45% 45% 45% 45% 45%OPERATING EXPENSES

51 479 51 479 51 479 51 479 51 479 51 479 51 479 51 479 51 479 51 479 51 479 51 479 610 548 647 181 686 012 727 172 770 803 Bank Charges 1 500 1 500 1 500 1 500 1 500 1 500 1 500 1 500 1 500 1 500 1 500 1 500 18 000 - - - Cleaning 850 850 850 850 850 850 850 850 850 850 850 850 10 200 - - - Computer Expenses 500 500 500 500 500 500 500 500 500 500 500 500 6 000 - - - - Consumables 250 250 250 250 250 250 250 250 250 250 250 250 3 000 - - - - Franchise Fees - Royalties 12 870 12 870 12 870 12 870 12 870 12 870 12 870 12 870 12 870 12 870 12 870 12 870 154 440 - - Insurance 750 750 750 750 750 750 750 750 750 750 750 750 9 000 - - - - Motor Vehicle Expenses 650 650 650 650 650 650 650 650 650 650 650 650 7 800 8 424 9 098 9 826 10 612 Printing & Stationery 250 250 250 250 250 250 250 250 250 250 250 250 3 000 - - - Rent Paid 8% of turnover 17 550 17 550 17 550 17 550 17 550 17 550 17 550 17 550 17 550 17 550 17 550 17 550 210 600 - - Repairs & Maintenance 2 500 2 500 2 500 2 500 2 500 2 500 2 500 2 500 2 500 2 500 2 500 2 500 30 000 - - - - Admin/finance 600 600 600 600 600 600 600 600 600 600 600 600 - - - - - Salaries & Wages (manager & 3 kitchen staff) 12 166 12 166 12 166 12 166 12 166 12 166 12 166 12 166 12 166 12 166 12 166 12 166 145 992 - - - - Salaries & Wages - Employer Contibutions 243 243 243 243 243 243 243 243 243 243 243 243 2 916 - - - - Small Equipment (Less than R 2 000) 300 300 300 300 300 300 300 300 300 300 300 300 3 600 - - - - Telephone & Fax 350 350 350 350 350 350 350 350 350 350 350 350 4 200 - - - - Uniforms 150 150 150 150 150 150 150 150 150 150 150 150 1 800 - - - -

Proffit before tax 12 871 12 871 12 871 12 871 12 871 12 871 12 871 12 871 12 871 12 871 12 871 12 871 161 652 171 351 198 080 218 806 241 394

Profit margin 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.5% 11.4% 12.3% 12.7% 13.1%Return oninitial investment (ROI) 27% 29% 33% 36% 40%

AssumptionsGp 55%Rent and operating cost building incl utilities 15%Year on year growth 1.07 Expense year on year growth 106.00%Capital investment 600 000 Tax rate 28%If sold in year 5 Price earnings ratio of 4.5 Net proffit after tax year 5 173 804 Potential selling price 782 116 Accumalated income over 5 years 991 283 Proffit on capital investment 182 116 Total potential income after 5 years 1 173 399 Total nominal potential return on investment after 5 years 196%

• Total Set Up costs required from R450, 000.00 to R600, 000.00 excl. Vat. This will depend on various

factors such as the size of the proposed outlet, the land lord contributions (if any), etc. Set up Cost includes: Turnkey including: • Initial Training • Fully Equipped Outlet (as per signed off quote) • Computer POS System (as per signed off quote) • Marketing Material (as per signed off quote) • Marketing Material

• Shop fitting and Building (as per signed off quote) • Initial operations support

• A franchise Fee of R50 000.00 (excluding VAT) will be required upfront, which will be applied to access intellectual property, training costs, legal and financial charges, etc.

Purchase Price: Estimated from R450 000 to R600 000 for Diner + (Franchise fee) = ± R650 000 Excl. Vat

Estimated Budgeted income Statement for Typical Diner Simulated over 5 year

At Hot Dog Café we believe that if a prospective franchisee wishes to join our franchise, he/she will need to have a sound financial footing and have a minimum of 50% of set up costs available in unencumbered cash. Suitably qualified BEE candidates may be considered for special financing facilities and loans at preferential rates. Other costs to be considered: • Rent and Electricity Deposit (dependent on site) • First month’s Rent (dependent on site) • Opening Stock, Uniforms, stationary and Smalls • Accommodation and Travel during training • Salaries / wages • Servicing of any loans

Potential selling price based on ideal scenario after a trading period of 5 years

(Operating profit) / (Max purchase price) = %

FORMULA/CALCULATION TO DETERMINE AN ESTIMATED SELLING PRICE The valuation in determining the selling price of an existing franchise can be determined as follows:

Multiple of 4,5 times annual profit of the business after taxation before interest. The profit shall be

calculated from 12 months trading prior to valuation E.g. As per Budgeted income statement = R 173 804.00 x 4,5* = R 782 118.00

Having been approved as a Hot Dog Café franchisee you will be entitled to: • Use the established trademark • Initial training for yourself and team members • Advice regarding the set-up of your shop • Access to established infrastructure and trade contracts Hot Dog Café (Pty) Ltd offers the franchisees the following: • Operational Support • Recommend a list of suppliers for all products • Turnkey Development • Comprehensive Operations Manual • Management Training • Marketing Support • On-going Product Development

* Potential multiple of future earnings is dependent on inter alia the following factors: Rental, Location, Turnover, GP Control, Growth potential in area, Management control etc.

ADDITIONAL FRANCHISE CONCEPTS A franchisee has the ability to customise the outlet concept by adding additional product offerings by Hot Dog Café (Pty) Ltd to the standard concept.

Hot Dog Café offer these additional products:

Gazebo set = This is a free standing roof top unit with a branded bright yellow top cover, similar side walls and ground sheet. These units are usually used for the braai option or shaded sit down facility for customers.

Braai stand = This is a fully equipped braai unit with as gas bottle and drip trays. This option offers customer additional menu items such as Wors and Burgers.

Jonny K’s = An optional coffee offering in the Diner, Mini E Diner and Mini E Diner II concepts. Jonny K’s is a concept on its own, with branding and a menu selection which includes coffee, muffins and cookies.

Hot Dog Café Mascot = A 3000mm fully dimensional fiberglass Hot Dog Man is a fun and very successful way of advertising and drawing feet into any outlet.

Hot Dog Café dustbin = A big red branded dustbin that fits in nicely with the Hot Dog Café outlet

SISTER BRANDS ALSO PART OF THE HOT DOG CAFÉ (PTY) LTD GROUP Jonny K’s is a Coffee brand with its own unique branding and menu. The concept offers customers with a selection of coffee offerings, muffins and chocolate chip cookies.

The Coffee Stop is a Black Economic Empowerment initiative concept. It is a coffee shop concept located within selected Builder Warehouse and Makro Outlets.

Slap Fish & Chips is a fast food fish and chips outlet based on the Hot Dog Café Mini E Diner Concept with its own branding and menu offerings.

Hot Dog café (Pty) Ltd offers the following with the All Concepts:

• Warehousing and distribution • National Marketing projects • Project Management • Store Design • Training • Operational support • Continuous Product Development • Continuous Equipment Development • Continuous Concept Development • Financial Administration • And more………….

1. Applicants must be willing to spend 85% of the outlet operating hours in store.

2. Applicants must have 50% of set up cost available in unencumbered cash.

3. Applicants must qualify for finance (proof to be presented on request) of the balance still owing on the purchase amount.

4. Applicants must have a potential site available.

5. Applicants must be willing to submit to a credit check.

6. Applicants must be willing to come to Hot Dog Café (Pty) Ltd head office for an interview.

Please fill in the Pre-Application form with as much detail as possible and forward to the Hot Dog Café Head Office via email address newbusiness@hotdogcafe.co.za or fax 0126640042.

- A new business consultant will contact you as soon as we have received and processed your application.

- Should your application be successful you will be contacted for an interview, credit check, psychometric test and site evaluation.

Site selection is very important! Visibility and feet through the centre will be important factors in your success. At Hot Dog Café Head Office we have the philosophy that if a Hot Dog Café representative is not theoretically willing to use their own money to invest in the site location; we will not recommend you to do so. Please feel free to contact us with any queries about owning a Hot Dog Café franchised outlet at 0126647213.

HOT DOG CAFÉ™ is a full member of FASA. FASA is the watchdog of ethical franchising in South Africa and to become a member, one must subscribe to the strict Code of Ethics and business practices.

To view more information about FASA, go to www.fasa.co.za

HOT DOG CAFÉ™ has a master agreement with B.P. throughout South Africa, and currently has carts operating on various forecourts of these busy service stations. HOT DOG CAFÉ™ is also a part of the B.P. concept – Wild Bean Café that is available in various B.P. Express Shops. HOT DOG CAFÉ™ linked up with the I.D.C. to pilot an empowerment project of its E Diner Concept. The I.D.C. has undertaken to back the empowerment project, giving HOT DOG CAFÉ™ the opportunity to be involved in real empowerment of the previously disadvantaged. To view more information about the IDC, go to www.idc.co.za HOT DOG CAFÉ™ has undergone an Audit on the Franchise System by FRAIN (A division of the Department of Trade and Industry.) This Audit has been performed by Franchising Plus, who is the service provider to FRAIN. The audit ensures that the highest financial and operational standards are being met by the franchise company. HOT DOG CAFÉ™ is the first Franchise Company to be awarded a certificate of compliance in this regard. To view more information about the IDC, go to www.franchisingplus.co.za The Small Enterprise Development Agency (Seda) is an agency of the South African Department of Trade and Industry (the dti). HOT DOG CAFÉ™ in partnership with SEDA implemented two cadet programs to develop business skills. On completion of these programs, candidates were employed either within the Hot Dog Café franchise or were offered business opportunities. The winner of each program received 100% finance to start their own Hot Dog Café franchise outlet. HOT DOG CAFÉ™ and the NEF, who’s vision is to become the leading provider of innovative transformation solutions for an economically inclusive South Africa, entered

into a corporation agreement for funding of previously disadvantaged black individuals seeking to enter the franchising industry. To view more information about the NEF, go to www.nefcorp.co.za The Masisizane Fund, a non-profit division of Old Mutual has supported HOT DOG CAFÉ™ with the facilitation of the Development of Women-owned Enterprise Development. To view more information about the Masisizane fund, go to www.oldmutual.co.za The HOT DOG CAFÉ™ MASSMART Umsobomvu Youth Fund assists BBBEE suitable franchise candidates with funding for their new business. The NYDA contributed towards a HOT DOG CAFÉ Cadet training program for the Hot Dog Café sister brand The Coffee Stop, which awarded the winner of each program with funding for their new franchise outlet situated in Builders Warehouse. To view more information about the NYDA, go to www.nyda.gov.za To view more information about Massmart, go to www.massmart.co.za The Public Investment Corporation assists HOT DOG CAFÉ™ prospective franchisees with preferential rental rates and funding for new franchise opportunities The BBSDP Grants governs funding for the development of businesses owned by BBBEE candidates. The grants help the HOT DOG CAFÉ franchisees operate their business and continue on a sustainable business without the financial burden of having to pay back a loan or struggle to set up a business without the proper set up capital.