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Business Description

The Franchisor is Breadsmith Franchising, Inc., a corporation organized under the laws of the State of Wisconsin. To simplify the language in this Disclosure Document, Breadsmith Franchising, Inc., will be referred to as “we,” “us,” or “BFI.” “You” means the person who buys the franchise. If you are a corporation, limited liability company, or partnership, “you” includes the stockholders, members or partners of that entity. We do not have any predecessors. We also do not have any affiliates with whom you will do business, or who are offering franchises in any line of business.

Prior Experience

BFI was incorporated on September 21, 1993. We do business as BREADSMITH. We do not do business under any other name. Our principal business address is 409 East Silver Spring Drive, Suite U11, Whitefish Bay, Wisconsin 53217. BFI does not have a parent company. BFI offers and sells franchises that allow franchisees to operate BREADSMITH retail stores, and to service bulk and wholesale bread accounts. We have offered franchises since September 1993. Until 1999, the focus of our system was to establish and operate retail stores. In 1999, we began changing our focus from a bread store to a “bread company” that operates retail stores and develops and services bulk and wholesale accounts. We started developing national and regional wholesale accounts that our stores could service and encouraged our franchisees to develop bulk and wholesale accounts in their local markets. In 2009, we began developing additional opportunities for primary full-service retail locations to open satellite locations. The satellite location has minimal baking at the location and receives the bulk of the product from the primary store. Only franchisees that have existing primary stores are allowed to open satellite locations. We are not engaged in any other business. We have never offered franchises for any other type of business. We do not operate any company-owned stores, but we have an affiliated company that operates a company-owned store and a satellite store, and services wholesale accounts. The affiliated company is Breadsmith Inc. and its address is 420 East Silver Spring Drive, Whitefish Bay, WI 53217. We use the store operated by the affiliated company as our training and research and development facility. The first of these stores opened in June 1993.

Business Offered

The franchises we are offering will allow you to operate one or more premium European-style bread stores and satellite locations in a specific territory and to sell breads, foods, and other products to bulk and wholesale accounts in that territory. BREADSMITH bakeries feature a wide assortment of premium quality fresh, hearth baked breads, hearth baked products, food products, and other complementary items. We also have special confidential recipes and techniques we allow you to use in your BREADSMITH business. You will sell only the highest-quality baked goods using BFI-taught BREADSMITH FDD 2 2019 baking processes in an efficient open-kitchen concept, with a generous sampling program in your store. There are two or three distinct markets your business will serve. Your retail and satellite store will sell directly to the customer. This customer includes all consumers, but particularly middle and upper income level consumers. Your stores will compete with other businesses that sell fresh baked goods, including grocery stores. The branded wholesale market consists primarily of grocery stores to whom you can sell breads on a wholesale basis. The commercial wholesale market for bulk sales consists of restaurants and country clubs that purchase baked goods to serve to their customers. In these markets, you will be competing with other bread producers who sell their products to restaurants and through grocery stores and other retail outlets.

Initial Fees

The Initial Franchise Development Fee is $30,000. BFI offers a reduced franchise fee in the amount of $27,000 to veterans of the United States military. You pay this entire fee to us in a lump sum when you sign the Franchise Agreement. You will also purchase your oven and other large initial equipment from us. The price for these items will range from $70,000 to $90,000, but may increase due to exchange rates, because certain equipment we sell to you is imported from Europe. There are no other fees or payments due to BFI for goods and services you receive before you open your franchised business. The Development Fee for a satellite location is $5,000. You pay this entire fee to us in a lump sum when you sign the Satellite Store Franchise Agreement. All the fees described in this section are non-refundable. We have waived the Initial Franchise Development Fee for franchises that are owned in whole or in part by officers, directors and employees of BFI and/or their immediate families.

Financing

We do not offer direct or indirect financing. We do not guarantee any note, lease or other obligation you might incur.

Franchisee Revenue and Profit

The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is any reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may only be given if (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances. We do not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor's management by contacting Kevin Schuk at 409 East Silver Spring Drive, Whitefish Bay, Wisconsin 53217, (414) 962-1965, the Federal Trade Commission, and the appropriate state regulatory agencies.