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Business Description

We incorporated in Montana on May 1, 1980. We operate under our corporate name and the trademarks “Great Harvest Bread Go. ®” and related logos described in Item 13 (the “Marks”) and no other name. Our principal business address is 28 South Montana Street, Dillon, Montana 59725. If we have an agent in your state for service of process, we disclose that agent in Exhibit B. We have no parent company, affiliates, or predecessors disclosable in this Item.

Prior Experience

We currently (since March 2017) offer franchises only for Great Harvest bakery cafes operating as single-site, new concept bread-baking bakery cafes (described in (5) above) or, if the franchisee intends to have a “hub and Spoke” operation (described in (6) above). Great Harvest bakery cafes that are bread-baking (“hub”) locations and non-bread-baking (“spoke”) locations. (Since March 2017, we no, longer grant new franchises for the type of “traditional” Great Harvest bread companies described in (1) and (2) above or the “limited” bakery cafe concept described in (3) above. Depending on local market conditions, however; we may offer franchises for “new concept” bakery cafes even if they cannot have 35 permanent seats or all the standard features of the “new Concept” bakery cafe.) You may not acquire a franchise for a non-bread-baking location unless you already have a franchised bread-baking location.

Business Offered

We franchise retail bakery cafes that currently produce and sell whole-wheat baked goods, made from-scratch sandwiches, salads, soups granola, breakfast items, and other products. There historically have been 6 principal types of Great Harvest bread companies or bakery cafes (collectively, “Great Harvest Stores”) in our system; (1) a traditional Great Harvest bread company baking bread and other products for retail sale; (2) a traditional Great Harvest bread company that has added sandwiches to its menu with limited seating but without 2 customer restrooms;, (3) a single-site, bread-baking Great Harvest “bakery cafe” with some seating and a menu that includes sandwiches; (4) a multi-unit operation where 2 or more locations described in (3) above loved by the share franchisee work together, with one location baking bread and then supplying it to the other locations; (5) a “new concept” Great Harvest bakery cafe distinguished by permanent seating for 35 or more people; 2 customer restrooms; and a menu that includes breakfast sandwiches, cold and hot sandwiches^ baked goods, salads, and coffee; and (6) a “new concept hub and spoke” with the primary “hub” location baking bread arid other products to supply the “spoke” locations with the baked goods that supplement the cafe products made in the spoke(s) and at least one of the Great Harvest bakery cafes meets the “new precepts” definition outlined in (5).

Initial Fees

Our initial franchise fee for your first Great Harvest bakery cafe is $35,00O. Our initial franchise fee for your second or subsequent bakery cafe currently is $15,000. You must pay us the franchise fee when you sign the Franchise Agreement (except as otherwise provided in a Development Rights Rider, as described below). We offer a 15% discount for honorably-discharged veterans of the United States Armed Forces who control at least 50% of the Bakery Cafe when the Franchise Agreement is signed. All existing franchisees (whether or not Legacy Franchisees) receive an initial franchise fee discount for new Great Harvest, bakery cafes, the amount of which depends on whether they develop the new bakery cafe inside or outside their existing franchise territories. Franchisees that sign Franchise Agreements for new bakery cafes to be developed outside their existing franchise territories will pay a non-refundable $15,000 franchise fee for an Exclusive Franchise Territory covering approximately 50,000 people^ However, franchisees that sign Franchise Agreements for new bakery cafes to be developed inside their existing franchise territories will pay a nonrefundable $10,000 franchise fee for an Exclusive Franchise Territory covering less than 50,000 people If we sell a new Great Harvest bakery cafe franchise to be developed by a franchisee in a Legacy Franchisee's existing territory (because the Legacy Franchisee agrees to “release” part of its territory or the new franchisee's bakery cafe), the initial franchise fee for the new bakery cafe will be $35,O00- The Legacy Franchisee will receive $15,000, and we will keep: $20,000. The new franchisee's Exclusive Franchise Territory will cover less than 50000 people: We may terminate the franchise Agreement at any time and for no reason during the period between its effective date and 30 days after the main Bakery Cafe operator completes "Bakery Cafe School" in Dillon. If we do^ then after your sign a Mutual General Release (Exhibit] Q and return all of our confidential information, the computer you received before Dillon training (if you paid us a $35,000 franchise; fee), and all software and accessories, we will refund (without interest) the franchise fee you paid us when you signed the Franchise Agreement. You may terminate the Franchise Agreement any time, before you open your Bakery Cafe. Except as described below in this Item, we will keep. $10,000 of your franchise fee if you paid us a $35,000 franchise; fee. If you're Franchise Agreement terminates automatically because your Bakery Cafe does not open within 15 months after the Franchise. Agreement's effective date (or, if earlier, by the date provided in a Development Rights Rider to which we and you or your affiliate are parties), or by the end of any extension we agree to grant you, we also will, except as described below in this Item, keep $10,000 of your franchise fee if you paid us a $35,000 franchise fee. In both circumstances, we will refund the rest to you (without interest) after you sign a Mutual General Release (Exhibit I) and return all our confidential information. You may keep the computer you received from us (if you paid us a$35,000 franchise fee) after you send it to us to erase our confidential information and promise to keep no copies of the information we erase. If you terminate the Franchise Agreement before opening the Bakery Cafe or if the Franchise Agreement, terminates automatically and you paid us an initial franchise fee less than $35,000, we will keep all of your non-refundable franchise fee. Despite the franchise fee refund Circumstances described above, if you sign a Franchise Agreement under a Development Rights Rider, we signed with you or your affiliate; granting multi-bakery cafe development rights, we will refund the franchise fee only if the terminated Franchise Agreement covers the first Bakery Cafe you must develop under the Development Rights Rider;, No portion of any franchise fee paid for the second or a subsequent Bakery' Cafe to be developed under the Development Rights Rider (if the terminated Franchise Agreement covers that second or a subsequent Bakery Cafe), whether paid as part of the development fee under the Development Rights Rider or otherwise, is refundable under any circumstances, no matter why the Franchise Agreement was terminated. No portion of the development fee paid under a Development Rights Rider for a second or subsequent Bakery Cafe to be developed is refundable under any circumstances. If you Sign our Development Rights Rider to the Franchise Agreement because you commit to develop 2 or more Great Harvest bakery cafes in an area, we currently charge a development fee you must pay in full when you sign the Development Rights Rider, the development fee due when you sign the first Franchise Agreement and Development Rights Rider equals the full $35,000 initial franchise fee for the first Bakery Cafe, plus $7,500 of each initial franchise fee due for each additional Bakery Cafe you agree to construct, develop, and operate under the development schedule. The balance of the initial franchise fee due for each Bakery Cafe (after the first)—i.e., $7,500—is due when your Bakery Cafe opens. We and you will determine tile number of Bakery Cafes you must develop, and the dates by which you must develop them, before signing the Development. Rights Rider. If you want to change your Exclusive Search Territory any time before signing a lease or purchasing a building for your Bakery Cafe location, we may charge you $250 to consider your request. We have no obligation to grant your request. We provide one on-site location hunting trip ^d may charge you our direct expenses for any additional hunting trips you request, this payment is not refundable. We provide initial training for 2 people at no additional charge. We charge you $2,500 for each additional person attending the initial training program. This payment is not refundable, we provide; 2 Bakery Cafe layout revisions as part of your franchise fee. However, if you request additional assistance beyond what we typically give franchisees, we may charge you our then current hourly rate for that service (currently $65 per hour), this payment is not refundable. If you want to extend your Franchise Agreement before the automatic termination date because you cannot open with the 15-month timeline and we agree that progress will be made during the extension, we will give you a 6-month extension to open your Bakery Cafe. If you cannot open within 21 months, we may (have no obligation to) give you another b-^month extension if you are making adequate progress and pay us a non-refundable $1,500 extension fee.

Financing

We do not offer direct or indirect financing. We do not guarantee your note, lease, Or obligation.

Franchisee Revenue and Profit

he 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 a 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 be given only 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. The average and median Historical sales numbers and the comparable sales percentages appearing in Charts 1, 2, 3, and 4 below are “gross numbers” and do not reflect costs of sales, operating expenses, or other costs or expenses that must be deducted from the gross revenue or gross sales figures to obtain your net income or profit. You should independently investigate the costs and expenses you will incur in operating your Bakery Cafe. Franchisees of former franchisees, listed in the disclosure document, may be one source of this information.' The bakery cafes described below are substantially similar to the franchises we now offer in all states. All bakery cafes are owner-managed and receive substantially the same services. We obtained all financial information from reports submitted by the franchised bakery cafes. We have not independently audited those reports. As described in Item 1 of this disclosure document, there historically have been 6 principal types of Great Harvest Stores:; (1) a traditional Great Harvest bread company baking bread and other products for retail sale; (2) a traditional Great Harvest bread company that has added sandwiches to its menu with limited seating but without 2 customer restrooms; (3) a single-site, bread-baking Great Harvest “bakery cafe” with some seating and a menu that includes sandwiches; (4). a multi-unit operation where 2 or more locations described in (3), above owned by the same franchisee work together^, with one location baking bread and then supplying it to the other locations; (5) a “new concept” Great Harvest bakery cafe distinguished by permanent seating for 35 or more people; 2 customer restrooms; and a menu that includes breakfast sandwiches, cold and hot sandwiches, baked goods, salads, and coffee; and (6) a “new concept hub ;and spoke” with the primary “hub” location baking bread and other products to supply the “spoke” locations with the baked goods that supplement the cafe products made in the spoke(s) and at least one of the Great Harvest bakery cafes meets the “new concept” definition outlined in (5). We currently offer franchises only for Great Harvest bakery cafes operating as single-site, new concept bread-baking bakery cafes (described in (5) above) or, if the franchisee intends; to have a “hub and spoke” operation (described in (6) above), Great Harvest bakery cafes that are bread-baking (“hub”) locations and non-bread-baking (“spoke”) locations. Depending on local market conditions, however, we may offer franchises for “new concept” bakery cafes even if they cannot have 35 permanent seats or all the standard features of the “new concept” bakery cafe. Chart 1 shows average and median annual Gross Sales for the 12 months ended December 31, 2018, for Great Harvest bakery cafes falling into the following categories (left to right)—(A) a single-site, new concept bakery cafe described in (5) above, and, (B) a new concept hub and spoke described in (6) above when both hub and spoke have been open at least 1 year. “Gross Sales” means the sales of all products, goods, services, and wares, whether for cash or on a charge, credit, or time basis, in connection with the bakery cafe's operation; they do not include sales taxes collected from customers. Column (A) includes 22 single-site, new concept bake cafes, The 6 new concept hub and spoke bakery cafes whose results appear in column (B) are the same 6 hub and spoke bakery cafes that submitted their income statements for purposes of Chart 5. The 22 single-site, new concept bakery Cafes do not include any new concept bakery cafes that are part of a hub and spoke combination. Similarly, the column showing hub and spoke combinations does not include any of the 22 single-site, new concept bakery cafes. [Excluded from Column (A) are 8 new concept bakery cafes that opened during 2018, 5 new concept bakery cafes whose ownership was transferred during 2Q18, and 2 new concept bakery cafes for which related spoke locations opened during 2018.]