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Business Description

Golden Corral Franchising Systems, Inc. (“Golden Corral” or “we”) was incorporated in Delaware on December 6, 1985. Our principal place of business is 5151 Glenwood Avenue, Raleigh, North Carolina. We do business under the names “Golden Corral,” “Golden Corral Buffet & Grill,” “Golden Corral Family Steakhouse Restaurant,” and “Golden Corral Steaks, Buffet & Bakery,” and under no other names. We are a wholly-owned subsidiary of Golden Corral Corporation (“GCC”), our parent; in turn, GCC is a wholly-owned subsidiary of Investors Management Corporation (“IMC”). GCC also owns or controls GC Development Corp., which provides real estate site selection services and constructs Golden Corral restaurant premises. GCC has operated companyowned Golden Corral restaurants throughout the United States since 1973 and, as of January 2, 2019, owned and/or operated 38 such restaurants in the United States. GCC has never granted franchises in this or any other line of business. GCC, through its Coastal Equipment Company Division (“Coastal”), also sells restaurant equipment, fixtures, furnishings, and signs to our franchisees. GCC also provides computer hardware and software support to our franchisees. GCC and GC Development Corp. are located at the same address as our principal place of business. IMC conducts business at 801 N. West Street, Raleigh, North Carolina 27603. Coastal conducts business at 130 Coastal Lane, Jacksonville, North Carolina 28546.

Prior Experience

Golden Corral has offered franchises similar to those offered in this disclosure document since April 1986, but has never owned or operated any similar company-owned businesses and has never operated or sold franchises in any other line of business.

Business Offered

Golden Corral offers franchises to an individual, group of individuals, corporation, limited liability company, or partnership (“you”) for a family-oriented buffet/grill style restaurant which features a wide variety of beef, pork, seafood, chicken, cold salads, vegetables, desserts at our in-store display bakery, and other food and beverage items for lunch, dinner, weekend breakfast (daily breakfast offered in some restaurants), and snacks. These restaurants must be operated in strict conformance with Golden Corral’s standards and operations procedures (“System”) and be identified by those trade names, service marks, trademarks, logos, emblems, and indicia of origin (collectively, “Proprietary Marks”) licensed by us to you. Restaurants operated under the System and Proprietary Marks are referred to as “Restaurants.” To obtain a franchise, you must sign the franchise agreement in the form attached in Exhibit D to this disclosure document (“Franchise Agreement”).

Initial Fees

Development Fee Your Development Agreement will specify the number and type of Restaurants you must open during the mutually agreed-upon time frame. The development fee is $20,000 for each Restaurant to be developed. The development fee is due when you sign the Development Agreement and is non-refundable. However, if you are in full compliance with your development obligations under your Development Agreement, Golden Corral will credit $20,000 towards the initial franchise fee payable under each Franchise Agreement executed under the Development Agreement. Franchise Fee A. Franchise Agreements Signed Under a Development Agreement If you have a Development Agreement, when you sign the Franchise Agreement for each Restaurant, you will pay our then-current initial franchise fee. As of the date of this disclosure document, our initial franchise fee is $50,000. A portion of your development fee will be credited against your initial franchise fee. Depending on the form of Development Agreement you signed, you will pay us either $25,000 or $15,000 when you sign the Franchise Agreement, with the remaining balance of the franchise fee payable 14 days before the opening of the Restaurant. The initial franchise fee is non-refundable. B. Franchise Agreements Signed Without a Development Agreement The initial franchise fee, regardless of building design, is $50,000, payable as follows: $20,000 when you sign the Franchise Agreement, $15,000 when we notify you of site approval for the Restaurant, and $15,000 at least 14 days before opening the Restaurant. The initial franchise fee is non-refundable. In 2018, all franchisees who signed a Franchise Agreement without a Development Agreement paid a uniform initial franchise fee of $50,000, except for a number of franchisees who obtained franchises for shorter initial term(s) and thus paid prorated initial franchise fees. Incentive Programs As noted in Item 1, we have a program to encourage Golden Corral franchisees to pursue possible acquisition of sites vacated or to be vacated by Ovation Brands restaurants. If you notify us that that a vacated Ovation Brands site is available to you, we will determine whether the market is available for a Golden Corral franchise and, if so, we will make a preliminary assessment of whether the site meets our development criteria and how it would affect existing Golden Corral restaurants and planned development. If (a) the former Ovation Brands location passes our preliminary assessment; (b) you sign a site-specific Franchise Agreement for that location; and (c) you open a Golden Corral restaurant in the location by December 31, 2019, then you will pay us a non-standard, non-refundable franchise fee of $10,000. If Items (a) – (c) are not satisfied, then the franchise fee will be $30,000. In addition, we have an incentive program to encourage expansion by franchisees that have owned and operated a Golden Corral restaurant for at least one year as of December 31, 2018. Eligible franchisees who sign a new area development agreement by December 31, 2019 will pay an initial franchise fee of $15,000. This non-refundable fee represents the entire franchise fee if the approved Restaurant is under construction within eighteen (18) months of executing the area development agreement. If the Restaurant is not under construction within eighteen (18) months, the franchise fee would be the standard amount of $50,000. * * * In addition to the franchise fee and development fee, you will incur expenses for the following categories of goods and services that you must or may obtain from Golden Corral or one of its affiliates before you open your Restaurant. None of the following payments that are made to us or an affiliate are refundable. The refundability of payments not made to us or an affiliate will depend on the arrangement you make with the supplier you choose. The estimated expenses are: Training of Additional Managers If an additional General Manager is required, there will be a $400 training fee. $185 Incidental Goods and Office Services $1,400 to $1,600 Equipment, Fixtures, Furnishings, Signs and Computer Hardware and Software You may secure all or a portion of these items from non-affiliated third parties whom we have previously approved in writing. $640,960 to $830,500 Construction of Restaurant Premises Improvements $1,000,000 to $3,600,000 You may use non-affiliated suppliers to construct all or a portion of the improvements. Our affiliate is not obligated to provide these services, even if you request that it do so. We do not collect any monies on behalf of third parties. If you use us or one of our affiliates to secure any of the goods and services described above, the payments will go directly to whomever you use. If you are able to use and, in fact, do use, entities other than us or an affiliate, the amounts shown above will be reduced by the amount paid to these other entities.

Financing

We do not offer direct or indirect financing. We do not guarantee your note, lease or other obligations.

Franchisee Revenue and Profit

The following Tables present certain historical financial information for franchised and company-owned Golden Corral Restaurants. The explanatory notes accompanying the Tables are an important part of the information presented. A. STATEMENT OF 2018 AVERAGE GROSS SALES, SELECTED EXPENSES, AND OPERATING INCOME OF FRANCHISED RESTAURANTS Table A-1 provides the average gross sales for the period January 3, 2018 through January 2, 2019, by building design, for 258 franchised Restaurants utilizing the GC-11S or GC-11M building design. Table A-1 excludes all franchised Restaurants using a building design other than the GC-11S and GC-11M, because only those two designs are available to new franchisees as of the date of this disclosure document (see Item 1). Table A-1 also excludes 4 GC-11M franchised Restaurants that had been in operation for less than 6 months as of January 2, 2019. Including Restaurants with other building designs, we had 451 franchised Restaurants at the end of 2018. The financial performance representations appearing in the Tables are historic information and not a forecast of future financial performance. Some outlets have sold this amount. Your individual results may differ. There is no assurance that you will sell as much. Written substantiation for these financial performance representations will be made available to prospective franchisees upon reasonable request. We recommend that you make your own independent investigation to determine whether or not the franchise may be profitable, and consult with an attorney and other advisors before signing the Area Development Agreement or Franchise Agreement. Other than the preceding financial performance representations, Golden Corral does not make any financial performance representations. 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 R. Chappell Phillips, in writing at Golden Corral Franchising Systems, Inc., P.O. Box 29502, Raleigh, North Carolina 27626, the Federal Trade Commission, and the appropriate state regulatory agencies.