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Business Description

We are a subsidiary ofBimbo Bakeries USA, Inc., a Delaware corporation (“BBUSA”). We were formerly a subsidiary of Earthgrains Baking Companies, Inc., a Delaware corporation (“Earthgrains”), which has since merged into BBUSA. Earthgrains, through its predecessors, has been in the baking business and distributing baked goods since 1928. EGD's and BBUSA's principal business address is 255 Business Center Drive, Horsham, Pennsylvania, 19044. The principal address for EGD and its affiliated companies is: 255 Business Center Drive, Horsham, Pennsylvania 19044. The principal address for Grupo Bimbo is Prolongacion Paseo de la Reforma No. 1000, Col. Desarrollo Santa Fe. Del. Alvaro Obgregon, C.P. 01210 Mexico D.F.

Prior Experience

EGD offers to third parties the right to sell and distribute some ofthe affiliates’ Products (as defined below) in specific geographic territories, pursuant to Distribution Agreements (as described below). EGD is not involved in any other business activities other than franchising.

Business Offered

We grant distribution rights that will allow you to sell and distribute certain designated bakery products (“Products”) under some of our trademarks (“Marks”) through direct delivery (“Direct Store Delivery”) to stores and other outlets (collectively, “Outlets”) in the geographic area (“Sales Area”) designated in your distribution agreement (this agreement is sometimes also called a franchise agreement, but for the sake of consistency is referred to in this document as “Distribution Agreement,” and franchisees are also referred to in this document as “Distributors”). The rights granted to you under the Distribution Agreement are referred to as “Distribution Rights.” The terms “Products,” “Marks,” “Direct Store Delivery,” “Outlets,” “Sales Area,” and “Distribution Rights” are more specifically defined in the Distribution Agreement. We determine the boundaries ofthe Sales Areas that we offer as Distribution Rights and the purchase price for each Sales Area that we sell (as opposed to those sold by existing Distributors) according to a formula based on the sales history ofOutlets in the Sales Area or in a nearby orsimilar area. We may offer discounts to existing employees and existing Distributors that purchase Distribution Rights. If you acquire Distribution Rights pursuant to a Distribution Agreement with us, as a Distributor, you will be granted the exclusive right to sell and distribute certain Products under certain brand names or private labels within your designated geographic Sales Area. EGD will have the right to determine which Products will be sold to you for distribution in your Sales Area, and it and/or its affiliates will sell the Products to you for resale to retail food stores (except thrift stores) and/or restaurants, institutions and food service customers whose business includes the sale of food to the general public and who purchase Products by Direct Store Delivery (“Outlets”).( 1) Under your Distribution Agreement, you must provide sales services to the Outlets in your Sales Area consistent with good industry practices and your customers’ (or Outlets’), requirements. These services include, among other things, ordering, rotating Products, providing merchandising and display services by keeping Product shelves and displays full and making them look appealing to consumers, obtaining good positions for Product in Outlets, removing Product according to its “sell by” or “pull by” dates (“OffCode Products”) and damaged Products, and generally building up a supply relationship with the Outlets' owners and/or managers. We require all Distributors to be organized as a corporate or limited liability entity. In some Sales Areas, Products may also include trade customers’ “private label” products that EGD may permit you to sell and distribute at EGD’s discretion. If EGD grants you such distribution rights in your Sales Area, you may sell and distribute such products, and depending on your geographic Sales Area, you may or may not own such rights. Ifyou do not currently own a delivery vehicle that is adequate to service the Sales Area/Territory with the Products, you will be required to provide, purchase or lease a delivery truck from a third party. You may be offered the opportunity to lease a used delivery vehicle from EGD on a temporary basis in connection with the offer ofthe Distribution Rights but you will not be obligated to lease this vehicle from EGD. You must also purchase a hand-held computer system compatible with the system utilized by EGD. In some geographic areas, you may be required to purchase dollies, trays and/or baskets for use in moving and/or delivering the Products. In most cases, you will not be required to purchase or lease any other equipment, office or storage space. Only a limited number ofDistributors may be required to obtain additional storage space.

Initial Fees

You must pay an initial purchase fee (a.k.a. a "purchase price”) to acquire your Distribution Rights. When acquiring Distribution Rights directly from EGD, this purchase fee/price is calculated using a given multiple times a 52-week historical average of weekly net sales of different categories ofcertain specified Products to Outlets located in your Sales Area. (As discussed in more detail in Item 10, this fee/price may be able to be financed.) The multiples may vary with the Product Category and Sales Area, depending on a variety offactors, including but not limited to the following: the type of area (e.g., urban, suburban or rural); the size ofthe Sales Area; the physical features ofthe land {e.g., bridges, mountains, etc.); the area ofthe country; the population density ofthe area; the density ofthe business population; the average type ofretail store in the Sales Area; the average size of an average retail store; and other socioeconomic factors common to the area. There can be no assurance that the actual Sales you achieve in your Sales Area will match or exceed the historical 52-week average net sales used by EGD in determining your initial purchase fee/price for your Distribution Rights as past performance is not a guaranty offuture results. See Item 19 below. When purchasing Distribution Rights directly from an already existing Distributor, the initial purchase fee/price is established by, and payable to, the selling Distributor; although EGD will facilitate the transfer ofthe Distribution Rights to you. EGD estimates that the total of all initial fees in connection with the purchase of your Distribution Rights will range from $8,160 (before adjustments for any applicable discounts or credits) to $316,400 based on the factors described above. This initial fee is to be paid in one lump sum payment at the time ofthe delivery ofthe Bill of Sale and execution ofthe other agreements (i.e., any other agreements applicable to you that are included with this disclosure document, e.g.. Distribution Agreement, any applicable financing documents, and any security agreements), some or all ofwhich may be financed as detailed in Item 10 and Exhibit B and Exhibit J to this disclosure document. This initial fee is non-refundable. Whether you buy the Distribution Rights directly from us or buy them from another Distributor in a transaction that constitutes a transfer, if you have entered into a Buy Back Agreement with us, at any time within the period specified in the Buy Back Agreement: (a) we may exercise an option to purchase all or a portion of your Distribution Rights by paying you the purchase price set forth in the Buy Back Agreement; or (b) you may exercise an option to sell your Distribution Rights to us at the purchase price set forth in the Buy Back Agreement. In each case, such purchase price shall be the fair market value of your Distribution Rights (and any related assets, e.g., computer hardware and accessories, as agreed to by the parties), taking into consideration various factors, including the history and trajectory of your performance (including weekly sales and returns data), general economic conditions and economic conditions within the relevant industries (including those of EGD and its affiliates, suppliers, and vendors), geographic factors (including competition and opening/closing ofOutlets and Sales Areas). We may deduct from the purchase price any money that you owe to us, a reasonable reserve against open accounts, and our reasonable costs and expenses for the sale (including the cost to remove any damaged or OffCode Products in your Sales Area). As a condition to receiving the purchase price, you must execute and deliver a General Release to us. If you lease your delivery vehicle through BUSH Truck Leasing, Inc.; B & G Leasing, Inc.; or PNC Equipment finance, LLC, at our option, we may also assume the lease ifyour vehicle is in the same condition as when you took possession, excepting ordinary wear and tear. (Examples ofthe forms ofthe Buy Back Agreement, and General Release are included as Exhibit D and Exhibit G, respectively, to this disclosure document.) In addition, prior to operating your business, you must pay a fee of approximately $2,50043,500 to EGD or a non-affiMated vendor or seller of equipment to purchase a hand-held computer system. This fee along with the initial fee noted above in connection with your Distribution Rights, are the only fees that you are required to pay for goods and/or services provided by EGD (assuming, in the case ofthe hand-held computer fee, that you opt to purchase the system from EGD) prior to operating under your Distribution Rights. You must also purchase a sufficient opening inventory of Products (typically ranging from $2,500 to $15,000) from EGD s designated affiliates for proper and adequate distribution to Outlets in your Sales Area, which is purchased on credit; the cost will likely vary depending upon the mix and quantities of product that your customers require.

Financing

As we note above, optional financing may be available through ACF. ACF typically finances 90% ofthe initial purchase fee/price of your Distribution Rights, up to certain maximum caps that differ by geographical area. Other restrictions may also apply. You must meet ACF’s lending criteria in order to qualify forfinancing. We do not require that you finance your investment or use one ofour selected lenders. Assuming that you need financing to purchase Distribution Rights, you are free to select a different lender ofyour own choosing other than ACF), provided that the terms and conditions of any agreements or documents that such lender requires you to sign in order to obtain financing do not conflict with any documents or agreements that we require that you sign as part of becoming a Distributor. We may discontinue or modify this financing program, and add or change lenders, at any time without notice. Different Distributors may receive different terms for their financing. Any changes that we make will not affect financing that is then in place. Your loan may be sold, assigned or discounted to a third party. Note that the loans offered by ACF are for a fixed amount and not an equity line that you can draw on periodically. Regardless ofwhether you obtain financing from ACF or another lender, underthe Distribution Agreement, you grant us a security interest in all of the assets of your business under the Distribution Agreement, including your contract rights, accounts receivable, and proceeds from the sale of assets. This security interest gives us additional rights, as a secured party, ifyou default under the Distribution Agreement.

Franchisee Revenue and Profit

Representations Regarding Financial Performance 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 Craig Pizer or Matthew Wright at 255 Business Center Drive Horsham, Pennsylvania 19044 / (215) 347-5549, the Federal Trade Commission, and the appropriate state regulatory agencies.