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Business Description

We are a limited liability company organized in Delaware on July 2, 2015. We do business under the brand name “Arby’s”. We have offered franchises for Arby’s Restaurants (defined below) since November 2015. We have never operated an Arby’s Restaurant or offered franchises in any other line of business. We have no other business activities except those described here. Our principal business address is Three Glenlake Parkway NE, Atlanta, Georgia 30328. If we have an agent for service of process in your state, we disclose that agent in Exhibit I.

Prior Experience

One of our parent companies, who is also our predecessor, is Arby’s Restaurant Group, Inc. (“ARG”). ARG’s principal business address is the same as our address. ARG offered franchises for Arby’s Restaurants and TJ Cinnamon’s restaurants (described below) from May 2006 until November 2015. ARG has never operated an Arby’s Restaurant or offered franchises in any other line of business. Under a securitization financing transaction that closed in November 2015 (the “Securitization Transaction”), ARG transferred all of the then existing franchise agreements and related agreements for Arby’s Restaurants to us, and we became the franchisor of all existing and future franchise and related agreements. As part of the Securitization Transaction, ARG signed a management agreement with us to provide the required support and services to Arby’s franchisees under their franchise agreements. ARG also acts as our franchise sales agent. We pay management fees to ARG for these services. However, as the franchisor, we are responsible and accountable to you to make sure that all services we promise to perform under your License Agreement or other agreement you sign with us are performed in compliance with the applicable agreement, regardless of who performs these services on our behalf. One of our affiliates, Arby’s International, Inc. (“AII”), has offered and granted franchises and master franchises for Arby’s Restaurants outside of the United States since May 2016. AII has never operated any Arby’s Restaurants or offered franchises in any other line of business. AII’s principal business address is the same as our address. Other current and former affiliates have in the past offered franchises for other restaurant concepts including T.J. Cinnamon’s®. Arby’s, Inc., a former related company, offered T.J. Cinnamon’s franchises from 1996 until 2004. As of December 31, 2018, there were approximately 23 T. J. Cinnamons locations in the United States. T. J. Cinnamon’s stores serve gourmet baked goods.

Business Offered

We grant franchises for, and some of our affiliates operate, restaurants featuring our deli-inspired sandwiches and related items that operate under our trademarks, service marks and tradenames (the “Trademarks”) and our system, all of which are may change periodically (“Arby’s Restaurants”). The Arby’s brand purpose is Inspiring Smiles Through Delicious Experiences®. Arby’s delivers on its purpose by celebrating the art of MeatcraftTM through a long history of menu innovation and quality products. In addition to its signature roast beef, the Arby’s Restaurant menu contains a variety of high-quality proteins including turkey, chicken, steak, bacon, ham, brisket, and corned beef that are crafted into innovative deli-inspired delicious sandwiches. Arby’s Restaurants also offer a number of craveable sides such as curly fries, shakes, turnovers, and other add-ons. Based on the vision of “deli-inspired delicious,” in 2014 Arby’s introduced new restaurant designs and layouts to both increase operational efficiencies and enhance the overall guest experience. Arby’s Restaurants also may offer breakfast items as an option from our approved menu. Arby’s Restaurants feature a distinctive style of limited service restaurant (“LSR”) that features Fast Crafted® service, a unique blend of quick service speed and value combined with the quality and made-for-you care of fast casual. We call the Arby’s Restaurant that you will operate under the License Agreement your “Restaurant.” This disclosure document contains information regarding the following 2 types of Arby’s Restaurants: (1) traditional full-menu, limited service Arby’s Restaurants, which could be in freestanding locations, convenience stores, travel plazas, truck stops, travel plaza/convenience store combos, end cap and inline locations, and malls (“Traditional Restaurants”), the vast majority of which include a drive-through window; and (2) limited menu, limited size and reduced service restaurants intended to meet consumer demand in locations that may not support a full menu and/or full size restaurant (“Non-Traditional Restaurants”). A Non-Traditional Restaurant generally occupies a smaller retail space, offers no or very limited seating and may cater to a captive audience, may have a limited menu and may possibly feature reduced services, labor, storage and different hours of operation. Non-Traditional Restaurant locations include airports, military bases, hospitals, toll plazas, stadiums, theme/amusement parks and arenas which have no seating or shared seating, casinos, colleges, universities, and other institutional facilities which have common area seating. Before signing the License Agreement, you must sign a Development Agreement (Exhibit C). If you will open only one Arby’s Restaurant, the Development Agreement covers the process for your constructing the Restaurant and the training we provide. If you will open multiple Arby’s Restaurants, then the Development Agreement will specify the number of Arby’s Restaurants you will develop over a specified period (the “Development Schedule”) and the territory within which you will develop them (the “Territory”). You will sign our then current form of License Agreement for each Arby’s Restaurant you develop in the Territory, which currently is the form of License Agreement in this disclosure document but could in the future differ from that form. However, if you fully comply with the Development Agreement, each License Agreement that the Development Agreement covers will reflect the royalty and license fee specified in the Development Agreement.

Initial Fees

The chart below lists the current development fees payable under the Development Agreement and the current initial license fees payable under the License Agreement, based on our current incentive programs. These programs are currently available through March 31, 2020, but we may add to, eliminate or change any of these programs in the future in our sole judgment. You must sign a Development Agreement regardless of the number of Arby’s Restaurants you commit to develop, and you must also sign a License Agreement for each Arby’s Restaurant that you open. The development fees and license fees described here are uniform, are fully earned when paid and are not refundable under any circumstances. You must pay us the development fee when you sign the Development Agreement. We do not apply the development fee towards any initial license fees or other fees you pay under License Agreements. You must sign the License Agreement for each Arby’s Restaurant that the Development Agreement covers, and pay us the initial license fee (if any is due), on the earlier of 90 calendar days before the Restaurant’s opening or when you start construction of the Restaurant. The fees for a standard Traditional Restaurant apply under Development Agreements and License Agreements when no other incentive programs apply to the agreements. This would include Traditional Restaurant development at any locations like freestanding restaurants, convenience stores, travel plazas, truck stops, travel plaza/convenience store combos, end cap and inline locations, and malls. There is no development fee when you sign a Development Agreement for a Non-Traditional Restaurant, but you must pay the initial license fee for a Restaurant when you sign the License Agreement. The USA Development Incentive (“DI”) Program is designed to increase the penetration and presence of the Arby’s brand. If you wish to participate in the DI Program, you must sign a Development Agreement to develop one or more Traditional Restaurants. Under the DI Program you must pay us a development fee of $12,500 for each Restaurant you agree to develop when you sign the Development Agreement, we will waive the initial license fee that otherwise would be due when you sign the License Agreement, and we will reduce your royalty fee to 1% of Gross Sales (defined in Item 6) for the first 12 months of the Restaurant’s operation. The “VetFran Program” is designed to provide career opportunities for honorably discharged military veterans or wounded warriors. It applies if you are a veteran or returning service member (who has not previously signed, or had an affiliate that signed, a License Agreement with us) who qualifies and signs a Development Agreement to develop one or more Traditional Restaurants. Under the VetFran Program you must pay us a development fee of $6,250 (which is a 50% discount off the DI Program development fee) for each Restaurant you agree to develop when you sign the Development Agreement, we will waive the initial license fee that otherwise would be due when you sign the License Agreement, and we will reduce your royalty fee to 1% of Gross Sales for the first 12 months of the Restaurant’s operation. All License Agreements that the Development Agreement covers will contain generally the same terms and conditions as we are then offering to other licensees similarly situated at the time of issuance, including those pertaining to the duration of the License Agreement. However, if you fully comply with the Development Agreement, the royalty fee payable under each License Agreement will reflect the reduced royalty fee listed above for the first 12 months of operation. If you fail to comply with the Development Schedule or any other provision of the Development Agreement, then, without limiting our other rights and remedies, including the right to terminate the Development Agreement, you may no longer receive the benefits of the DI Program or VetFran Program (as applicable) for any subsequent License Agreements that we sign with you under that Development Agreement. The “Proximity Incentive Program,” or “PIP,” is designed to encourage franchisees to seek out development opportunities in markets in which they already operate by providing financial benefits to operators who develop Traditional Restaurants within 2.5 miles of existing Traditional Restaurants. Franchisees who own a “Qualified Existing Arby’s Restaurant” (as defined below) and are in compliance with all of their agreements with us and any other obligation or policy of ours can participate in the program and build a “Qualified Site” (as defined below). A “Qualified Existing Arby’s Restaurant” is either a Traditional Restaurant prototype building/structure or conversion, a Traditional Restaurant travel plaza/truck stop/convenience store combo, or an end cap/strip center location with a drive-thru. A “Qualified Site” is a site for a new Traditional Restaurant prototype building/structure or conversion, or a Traditional Restaurant travel plaza/truck stop/convenience store combo, or an end cap/strip center location. Non-Traditional Restaurant locations and certain other locations are excluded from the PIP and therefore may not participate or have the opportunity to object to a new site. The locations excluded from the PIP are: inline, malls, college and university campus locations and other similar institutional type facilities, hospitals, toll plazas, military bases, theme/amusement parks, airports, casinos, special location activity centers, such as sports arenas, and sovereign nations. Also, transfers of locations (relocations) are excluded from the PIP. If you wish to participate in the PIP, you must sign a Development Agreement requiring you to open a Qualified Site within a 2.5-mile radius of one of your Qualified Existing Arby’s Restaurants within 12 months. You must pay us a $12,500 development fee upon signing that Development Agreement and a $37,500 initial license fee upon signing the License Agreement, which you must do before the earlier of either 90 calendar days before the opening or upon the commencement of construction of the Qualified Site. If you open the Qualified Site within that 12-month period, then your royalty fee for the Arby’s Restaurant will be 1% of monthly Gross Sales for the first 12 months of operation, 2% of monthly Gross Sales for the next 12 months of operation, 3% of monthly Gross Sales for the next 12 months of operation, and 4% of monthly Gross Sales going forward, except that the royalty fee will immediately become 4% of monthly Gross Sales if the Qualified Existing Arby’s Restaurant closes. The PIP may not be available if unique proximity situations occur with a nearby operating Arby’s Restaurant. We reserve the right to change the PIP in the future in our sole judgment. We provide initial training to you and your personnel when you sign the License Agreement and before you begin operating the Restaurant. Currently you must at all times employ 3 managers for your first and second Restaurants (6 total) who have completed the Management Training Program (“MTP”), or a comparable training program we approve, at a Nationally Certified Training Restaurant (“NCTR”). For all of your subsequent Arby’s Restaurants, you must at all times employ one manager for each Restaurant who has completed MTP at an NCTR. The current fee for this training $1,700 per attendee, but we waive the training fee for 3 managers in your first Restaurant and one manager in your second Restaurant. You must pay the nonrefundable and uniform training fee for all your other attendees, and you pay your trainees’ expenses. We estimate that your training fees will range from $0 to $3,400.

Financing

ARG has an agreement with PNC Equipment Finance, LLC (“PNC”) relating to financing that PNC will provide to qualified franchisees who are remodeling their Arby’s Restaurants. PNC is not our affiliate and neither we nor our affiliates receives any payment or other consideration for placing financing with PNC. To be eligible for this loan program, you must be current in your payment obligations to us. If you receive a loan from PNC under this program, you will use the loan proceeds to remodel your Restaurant, including for various items of equipment, furniture, fixtures, mill work, and improvements (“Equipment”), architectural and other professional fees, construction costs, leasehold improvements, deferred maintenance costs (such as, for example, for reconditioned or repaired roofs, flooring, parking lots, bathrooms, buildings and fixtures), soft costs such as shipping, software and installation, incremental retraining and hiring costs, and all other project costs, along with sales tax, freight costs, delivery/installation costs, the documentation fee ($250) and commitment fee (ranging from 1% to 2% of the principal amount) payable to PNC, if applicable, and interim interest (collectively, the “Remodel Costs”). PNC will fund the Remodel Costs through disbursements of the loan that it makes to Equipment and other vendors and, in some cases, to you. If you qualify for a loan from PNC under this program, you and PNC will sign the Loan Agreement (Exhibit L1). PNC often will finance up to 100% of the Remodel Costs, up to $500,000 for each remodeled Arby’s Restaurant, but in certain cases PNC might require a down payment, up to 25% of the Remodel Costs. Your interest rate will vary depending on market conditions, your credit history and other factors, but interest rates currently range from 5.5% to 8.5% per year. PNC will fix the interest rate for each loan, and interest will begin to accrue, on the first date upon which PNC funds any portion of the loan. That interest rate will apply for the entire term of the loan, except that a temporary interest rate premium of up to 100 basis points for up to 30 days may apply to any portions of the loan that PNC funds after the date which is 60 days from the first disbursement date. PNC will include interest accruing during the disbursement period in the final loan balance that PNC computes after fully funding the loan. (Loan Agreement - Introduction) PNC also may adjust interest rates for future loans based on changes to the like term swap rates published on Bloomberg.com or as a result of unforeseen events materially affecting the financial markets. You will repay the loan in monthly installments, although PNC may structure loan payments to accommodate your cash flow position considering seasonality concerns, variable payment streams and reduced or delayed initial payments. PNC will automatically debit loan payments from your account. (Loan Agreement - Section 4) The repayment period typically will range from 36 months to 72 months, but PNC will amortize the loan for up to 120 months. (Loan Agreement - Introduction) To secure all of your obligations to PNC under the Loan Agreement, you must grant PNC a security interest in (i) the Equipment to the extent of your interests in the Equipment and all other personal property, whether presently owned or acquired later, including all goods, equipment, fixtures, furniture, inventory, accounts, accounts receivable, leasehold interests and cash located in or related to the Restaurant, but excluding any of our or our affiliates’ intellectual property (the “Collateral”), (ii) anything attached or added to the Collateral at any time, (iii) any money or property proceeds from the sale of the Collateral, and (iv) any money from an insurance claim if the Collateral is lost or damaged and not replaced. (Loan Agreement - Introduction and Section 7) You must ensure that granting PNC these rights does not breach or result in a default under any existing credit or loan facility you maintain relating to the Restaurant (the “Other Financing”). However, PNC understands that its security interest might be subordinate to the security interests or other rights to the Collateral you granted under the Other Financing. If you are a corporation, partnership or other entity, each of your owners owning 15% or more of your ownership interests must personally guaranty your obligations to PNC under the Loan Agreement. (Loan Agreement - Guaranty) In addition to the required payments of principal and interest, you may voluntarily prepay without penalty during each Year (defined below) an amount equal to 15% of the loan’s original principal amount (the “Permitted Prepayment Amount”). (Loan Agreement - Section 4) A “Year” means a 12-month period beginning on the Loan Agreement’s commencement date or an anniversary of the commencement date. You may not voluntarily prepay the loan during the first Year in any amount that is more than the Permitted Prepayment Amount. You will default under the Loan Agreement if (a) PNC does not receive any loan or other payment due within 10 days after its due date (and no prior notice from PNC to you of that default is necessary), or (b) certain bankruptcy-related events impact you or any of your guarantors, or (c) (for individuals) you or any of your guarantors die, or have a guardian appointed, or (d) any representation you make in the Loan Agreement is false or misleading in any material aspect, or (e) any of your guarantors breaches the guaranty by not correcting the default within 10 days after PNC sends you written notice of the default, or (f) your LA with us for the Restaurant expires or terminates, regardless of the reason, or (g) you default under any other agreement between you and PNC. (Loan Agreement - Section 14) After your default, PNC may provide written notice to you of default and/or as liquidated damages for loss of a bargain and not as a penalty, declare due and payable the present value of all amounts then due and payable to PNC under the Loan Agreement, plus all loan payments remaining through the end of the Loan Agreement’s term, discounted at the higher of the interest rate under the Loan Agreement or the lowest rate allowed by law. PNC also may require you to make the Equipment available to PNC for repossession during reasonable business hours or PNC may repossess the Equipment. If PNC takes possession of the Equipment, it may sell or lease the Equipment at public or private sale or lease and/or exercise any other rights that applicable law allows. If PNC does sell the Equipment, it will apply any proceeds it receives to reduce your obligations under the Loan Agreement and return any surplus remaining to you. PNC only needs to give you 10 days’ advance notice of any sale and no notice of advertising, you must pay all of the reasonable costs PNC incurs to enforce its rights against you including reasonable attorney’s fees. PNC will retain all of its rights against you even if it chooses not to enforce them at the time of your default. (Loan Agreement - Section 15) If a default occurs under the Loan Agreement, upon notice from PNC, you must immediately return the Equipment, manuals and accessories to any location(s) and aboard any carrier(s) PNC designates in the continental United States. You must properly crate the Equipment in packaging according to manufacturer’s recommendations or specifications, freight prepaid and insured, properly maintained, free of markings, and in a condition that is immediately available for use by a third party buyer, user or borrower, other than you, without the need for any repair or refurbishment. You must pay PNC for any missing or defective parts or accessories. PNC will charge you a processing fee, up to the maximum the law allows, as reasonable compensation for PNC’s costs in terminating the Loan Agreement. (Loan Agreement - Section 16) If the law allows, any late payment or non-payment of any past due amount will accrue interest at the lower of 18% per year or the highest legal rate from the due date until paid. (Loan Agreement - Section 20) PNC may, without notifying you, sell, assign, or transfer its rights (but not its obligations) under the Loan Agreement and its interests in the Equipment. If PNC does so, the new owner (and any subsequent owners) will have the same rights and benefits that PNC has, but will not have to perform PNC’s obligations. PNC would remain responsible for performing those obligations, whether arising before or after the assignment, sale or transfer. The new owner’s rights will not be subject to, and you may lose, any claims, defenses, or set offs that you may have against PNC as a result of the sale, assignment or transfer. If PNC gives you notice of a new owner of the Loan Agreement, you must respond to any requests about the Loan Agreement and, if PNC directs, pay the new owner all payments and other amounts due under the Loan Agreement. (Loan Agreement - Section 19) PNC in the past has sold, assigned or discounted to a third party all or part of the rights under financing arrangements similar to this loan program. Under the Loan Agreement, you waive defenses based on Montgomery County, Pennsylvania’s being an inconvenient forum to resolve disputes with PNC, the right to challenge the authenticity of your electronic signature, and the right to a jury trial. (Loan Agreement - Introduction and Section 23) Your guarantors waive all defenses and notices, including those of protest, presentment, and demand. (Loan Agreement - Guaranty) Except as described above, no provision of the Loan Agreement bars you from asserting defenses against PNC, its assignee or us. ARG has agreed, under certain conditions, to provide a limited credit enhancement/guarantee for some franchisee remodel loans (“Credit-Enhanced Loans”). Under this credit enhancement, ARG (or an affiliate) will reimburse PNC for some of its losses if franchisees default under Credit-Enhanced Loans. If you receive a Credit-Enhanced Loan, then when you sign the Loan Agreement, ARG and you also will sign the Loan Amendment to LA (Exhibit L2), and we (or an affiliate), you and your landlord will sign the Lease Option Agreement (Exhibit L3). Under the Amendment to LA, we (or our affiliate) and PNC may share information with each other and cooperate with each other if you default under the Loan Agreement or LA. (Loan Amendment to LA - Section 1) Your failure at all times to fully comply with the Loan Agreement (including by making all payments when due) is a breach of the LA, and we may terminate the LA immediately for this breach. (Loan Amendment to LA - Sections 1 and 2) Under the Lease Option Agreement we or our assignee has the right to cure your defaults under, or failures to comply with, the Restaurant’s lease and to assume the Restaurant’s lease if that lease is in default, the LA expires or terminates, or you fail to cure a default under the Loan Agreement. You remain responsible for your liabilities and obligations under the lease. You must reimburse us for any amounts we spend to cure your defaults or failures to comply with the lease or the Lease Option Agreement, including interest, reasonable collections costs and de-identification costs. (Lease Option Agreement - Section 2) Except as described above, we and our affiliates do not offer direct or indirect financing for your Arby’s business, and we do not guaranty your note, lease, or any other obligation. We do not receive any payments from any third-party financing institutions to whom we might refer franchisees for potential financing assistance. We might be able to provide you a list of lending organizations that can provide financing options relative to your investment needs/requirements. We are unable to estimate whether you will be able to obtain full or partial financing relative to your investment needs/requirements and, if you are able to obtain financing, we cannot predict the terms of that financing. Franchisees of the Arby’s system are eligible for expedited and streamlined SBA loan processing through the SBA’s Franchise Registry, www.franchiseregisty.com.

Franchisee Revenue and Profit

First FPR: New Restaurants One of our primary goals is, and for the past several years has been, to transform and modernize the Arby’s brand for our next chapter of growth. Our efforts included an in depth research effort to better understand the tastes and preferences of Arby’s target consumers, including the types of new sandwiches consumers are looking for and the type of dining experience they would prefer. The first financial performance representations (“FPRs”) illustrate the results that these changes are having on restaurant performance, as reflected in the results of the Arby’s Restaurants that we and our licensees have developed within our last 2 fiscal years. As of December 30, 2018, which is the last day of our 2018 fiscal year, there were 3,329 Arby’s Restaurants operating in the United States. 188 of those Arby’s Restaurants opened (whether as newly built or relocated restaurants) after January 2, 2017, which is the first day of our 2017 fiscal year. Licensees opened 154 and our affiliates opened 34 of these new or relocated Arby’s Restaurants between January 2, 2017 and December 30, 2018. Of the 188 restaurants, there are 131 (the “New Restaurants”) that operated for at least 6 full months as of December 30, 2018. We have based this first FPR on the results of the New Restaurants. No Arby’s Restaurant that opened after January 2, 2017 closed during our 2018 fiscal year. In our experience, many newly-constructed Arby’s Restaurants experience atypical Gross Sales, and in some cases significant fluctuations in Gross Sales, during the first 3 months after the restaurant’s opening, so in this first FPR we excluded from all calculations the results from those first 3 months. We also believe that it requires at least another 3 months (meaning 6 months after opening) for a newly-constructed Arby’s Restaurant to develop a sufficient record of Gross Sales from which to prepare an FPR. Therefore, the first FPR reflects the average monthly Gross Sales of the 112 New Restaurants that our licensees owned and operated (the “Licensed New Restaurants”), and the average monthly Gross Sales of the 19 New Restaurants that we or our affiliates owned and operated (the “Company-Owned New Restaurants”), for the period beginning on the fourth month after their opening date and continuing through December 30, 2018. To calculate the average monthly Gross Sales for each group of New Restaurants, we first calculated the average monthly Gross Sales over the relevant time period for each particular New Restaurant, and we then calculated the average of those figures for all New Restaurants contained in the applicable group. The figures for the median, highest and lowest average Gross Sales reflect the median, highest and lowest of the average monthly Gross Sales over the entire relevant time period (i.e., not on a month-by-month basis) of all New Restaurants contained in the applicable group. All of the New Restaurants reflect our new Inspire image, the design sets for which we finalized in winter 2014. The New Restaurants all offer essentially the same products and services, face the same kinds of competitive challenges, and receive the same level of support from us that we expect new licensees will experience. Licensed New Restaurants Licensed New Restaurants (other than restaurants in travel plazas and food courts) typically range in size from 2,023 to 3,273 square feet, with an average of 2,413 square feet, although there are some atypical Licensed New Restaurants whose size exceeds 3,000 square feet. The size of Licensed New Restaurants located in travel plazas and food courts varies with the type of location, and most provide shared seating. 107 of the 112 Licensed New Restaurants operate with drivethru windows. The 2 tables below reflect the average, median, highest and lowest monthly Gross Sales during the relevant time period for all Licensed New Restaurants in the particular group. Second FPR: Remodeled Restaurants For the past few years, our affiliates and licensees have remodeled their Arby’s Restaurants to our Inspire image. We currently offer a few different remodel options to licensees. One option is a full Inspire image remodel, which includes an exterior and interior remodel comparable to a new Arby’s Restaurant, including new signage. If an existing Arby’s Restaurant is an approved Pinnacle or Pinnacle Modified (“PM”) building, 2 other Inspire full remodel options are available. The first option is called "Inspire Delight – 15," which involves a resurfaced exterior, new signage, added red banding and painted exterior to current colors and a full interior Inspire remodel. Licensees who renew their License Agreements and choose the Inspire Delight – 15 option receive up to a 15-year License Agreement term. The second option is called "Inspire Refresh – 10," and it involves a painted exterior to current colors, new signage, like-new awnings and a full interior Inspire remodel. Licensees who renew their License Agreements and choose the Inspire Refresh – 10 option receive up to a 10-year License Agreement term. We excluded from this FPR any Arby's Restaurants for which our affiliates or licensees chose to remodel only the interior, but not the exterior, of the restaurant to the Inspire image. We believe that the results of restaurants implementing an interior-only remodel are not similar to what we expect for restaurants implementing an exterior and interior remodel. In our experience, like newly-opened Arby’s Restaurants, many remodeled Arby’s Restaurants experience atypical Gross Sales, and in some cases significant fluctuations in Gross Sales, during the first 13 weeks/3 months (as described below) after the restaurant’s post-remodel opening, so in this second FPR we excluded from all calculations the results from those first 13 weeks/3 months. We also believe that it requires at least another 13 weeks/3 months of operating history after the remodel is complete (meaning 26 full weeks/6 months after post-remodel opening) for an Arby’s Restaurant to develop a sufficient record of Gross Sales from which to prepare an FPR. Therefore, this second FPR excludes those remodeled Arby’s Restaurants that do not yet have at least 26 weeks/6 full months of post-remodel results. This second FPR also excludes 19 Arby’s Restaurants that licensees remodeled to the Inspire image that remained closed for 6 months or more after the remodel began, because we do not have at least 26 weeks/6 months of postremodel results for those restaurants. Finally, this second FPR also excludes 4 Arby’s Restaurants that we either sold to a licensee or acquired from a licensee during the Remodel Reporting Period (defined below). Licensed Remodeled Restaurants The first part of this second FPR reflects the Average Monthly Sales (defined below) and the PostRemodel SSS% (defined below) during the Remodel Reporting Period of the 157 Arby’s Restaurants that licensees remodeled to the Inspire image, both interior and exterior, from January 2, 2017 until December 30, 2018, and that they operated for at least 6 months after the remodel was complete as of December 30, 2018 (the “Licensed Remodeled Restaurants”). None of these remodeled restaurants closed during our 2018 fiscal year. Licensees own and operate all the Licensed Remodeled Restaurants. We report monthly sales for the Licensed Remodeled Restaurants, rather than weekly sales for the Company-Owned Remodeled Restaurants (defined below) in this FPR, because our licensees report their results in calendar months and we report our results in fiscal quarters comprised of 3 periods of 5/4/4 weeks. Licensed Remodeled Restaurants typically range in size from 1,920 to 3,670 square feet, with an average of 2,849 square feet. 152 of the 157 Licensed Remodeled Restaurants operate with drive-thru windows. Licensees typically follow the same remodel process that we follow for the Company-Owned Remodeled Restaurants (which we describe in more detail below), although some licensees might decide not to close their Licensed Remodeled Restaurants, or to close them for a shorter or longer period during the remodel process, and these decisions could impact the restaurants’ post-remodel results. Also, a licensee may choose not to conduct retraining for its Licensed Remodeled Restaurant’s staff or not to implement a post-remodel marketing program, both of which we describe below for the Company-Owned Remodeled Restaurants. Those decisions also could impact the restaurant’s post-remodel results. Otherwise the Licensed Remodeled Restaurants all offer essentially the same products and services, and face the same kinds of competitive challenges, that we expect other licensees remodeling their Arby’s Restaurants will experience. In the table below, “Average Monthly Sales” means the average monthly Gross Sales for the Licensed Remodeled Restaurants during the Remodel Reporting Period. To calculate the Average Monthly Sales for each group of Licensed Remodeled Restaurants, we first calculated the average monthly Gross Sales over the Remodel Reporting Period for each particular Licensed Remodeled Restaurant, and we then calculated the average of those figures for all Licensed Remodeled Restaurants contained in the applicable group. The figures for the median, highest and lowest Average Monthly Sales reflect the median, highest and lowest of the average monthly Gross Sales during the entire Remodel Reporting Period (i.e., not on a month-by-month basis) of all Licensed Remodel Restaurants contained in the applicable group. “Post-Remodel SSS%” means the increase, reflected as a percentage, between the aggregate Gross Sales for the group of Licensed Remodeled Restaurants or Company-Owned Remodeled Restaurants during the Remodel Reporting Period and the aggregate Gross Sales for that group of Licensed Remodeled Restaurants or Company-Owned Remodeled Restaurants for the same period during the previous fiscal year. To calculate the average Post-Remodel SSS% for each group of restaurants, we first calculated the Post-Remodel SSS% over the relevant time period for each particular restaurant, and we then calculated the average of those figures for all restaurants contained in the applicable group. The median, highest and lowest Post-Remodel SSS% for each group of restaurants reflect the median, highest and lowest of the Post-Remodel SSS% over the entire relevant period (i.e., not on a period-by-period basis) of all the restaurants contained in that group. The “Remodel Reporting Period” for each Licensed Remodeled Restaurant or Company-Owned Remodeled Restaurant means the period beginning 3 full months/13 full weeks after the restaurant first opens for business after remodeling and ending on the earlier of (a) December 30, 2018, or (b) the last day of the week which is the one-year anniversary of the date upon which the remodel construction work started for that restaurant. An Arby’s Restaurant’s Gross Sales could drop significantly during the remodel construction period depending on the type of construction work. For example, if the restaurant derives a significant percentage of Gross Sales from the drive-thru, then that restaurant’s Gross Sales would drop significantly during the period when the remodel work required the drive-thru to close. A same store sales comparison of the post-remodel period to the previous year’s construction period for that restaurant would reveal a significant post-remodel same store sales increase attributable solely to the fact that the drivethru was closed during the pre-remodel period and open during the post-remodel period. Therefore, we ended the Remodel Reporting Period at the first anniversary of the date the remodel construction work began. For this reason, the Licensed Remodeled Restaurants and Company-Owned Remodeled Restaurants with longer construction periods will have fewer weeks in their Remodel Reporting Periods than restaurants with shorter construction periods. The minimum Remodel Reporting Period for each Licensed Remodeled Restaurant and CompanyOwned Remodeled Restaurant is 3 months/13 weeks. Third FPR: Average Unit Volume (“AUV”) for Mature Restaurants As of December 30, 2018, there were 3,329 Arby’s Restaurants operating in the United States. For 609 of those Arby’s Restaurants either (a) the restaurant did not operate continuously for the full year from January 1, 2018 until December 30, 2018, whether it was closed for part of the year or it first opened during the year; or (b) we (or our affiliate) sold the restaurant to a licensee or acquired the restaurant from a licensee during the year. We excluded those 609 Arby’s Restaurants from this third FPR. We also excluded the 5 affiliate-owned and 43 licensed Arby’s Restaurants that closed during 2018 from this third FPR and the third and fourth FPRs, as relevant. This third FPR covers those 2,720 Arby’s Restaurants that we (or our affiliate) or a licensee operated continuously for the full year from January 1, 2018 until December 30, 2018 (the “Mature Restaurants”). Our affiliates own and operate 1,064 of the Mature Restaurants and licensees own and operate the other 1656. Mature Restaurants (other than restaurants in travel plazas and food courts) typically range in size from 2,500 to 3,500 square feet, with an average of 2,941 square feet, although there are some atypical Mature Restaurants whose size falls outside this range. The size of Mature Restaurants located in travel plazas and food courts varies with the type of location, and most provide shared seating. 2,631 of the Mature Restaurants operate with drive-thru windows and the remaining 89 Mature Restaurants do not. The Mature Restaurants have operated for an average of 24.1 years. The Mature Restaurants all offer essentially the same products and services, face the same kinds of competitive challenges, and receive the same level of support from us that we expect new licensees will experience. The Mature Restaurants are located in various markets across the United States. The following tables reflect average annual Gross Sales (also called the Average Unit Volume, or “AUV”) during the period from January 1, 2018 through December 30, 2018 for all companyowned Mature Restaurants that our affiliates operate and the AUV during the period from January 1, 2018 through December 30, 2018 for all Mature Restaurants that our licensees operate. The restaurants identified as “other” include various freestanding or non-freestanding conversion and/or prototype Arby’s Restaurants (including former prototypes) not included in the previouslyidentified categories. The figures for the median, highest and lowest sales reflect the median, highest and lowest annual Gross Sales of all Mature Restaurants in the applicable group. The figures in the columns titled Top 3rd, Middle 3rd and Bottom 3rd reflect the average annual Gross Sales for the Mature Restaurants in that group, which fall within the top third, middle third and bottom third of the AUVs for all Mature Restaurants in that group. Fourth FPR: AUV and SSS% Growth The following graphs reflect the historical AUVs and average same store sales increases (reflected as a percentage) (“SSS%”) for our company-owned Arby’s Restaurants, licensed Arby’s Restaurants, and the entire network of Arby’s Restaurants in the United States for the periods listed. Fifth FPR: Profit & Loss Data for Covered Restaurants As of December 30, 2018, our affiliates operated 1,132 Arby’s Restaurants in the United States. They operated 1068 of those Arby’s Restaurants continuously throughout our 2018 fiscal year (the “Covered Restaurants”). Our 2018 fiscal year is from January 1, 2018 through December 30, 2018. This fifth FPR reflects the average Gross Sales, the average of certain expenses, and the average Restaurant EBITDAR (defined below) for the 1068 Covered Restaurants. The Covered Restaurants include only Arby’s Restaurants that our affiliates own, and not Arby’s Restaurants that our licensees own, because we do not have sufficient expense data from licensed Arby’s Restaurants to include in this fifth FPR. Covered Restaurants (other than restaurants in travel plazas and food courts) typically range in size from 2,500 to 3,310 square feet, with an average of 2,947 square feet, although there are some atypical Covered Restaurants whose size falls outside the range. The size of Covered Restaurants located in travel plazas and food courts varies with the type of location, and most provide shared seating. 1,053 of the Covered Restaurants operate with drive-thru windows and the remaining 15 Covered Restaurants do not. The Covered Restaurants have operated for an average of 26.6 years. The Covered Restaurants all offer essentially the same products and services, and face the same kinds of competitive challenges, that we expect new licensees will experience. Covered Restaurants are located in various markets across the United States. Some restaurants have sold or earned this amount. Your individual results may differ. There is no assurance that you’ll sell or earn as much. Other than the preceding financial performance representations, we do 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 the Franchise Counsel, Lisa Storey, Esq., at Arby’s Franchisor, LLC, Three Glenlake Parkway NE, Atlanta, Georgia 30328, telephone (678) 514- 4100, the Federal Trade Commission, and the appropriate state regulatory agencies.