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Business Description

The franchisor is Freddy’s, L L C and to simplify the language m this Disclosure Document “we,” “us,” and “FREDDY’S” mean Freddy’s, L L C , but do not include FREDDY’S officers, members, or managers “You” means the person that buys the franchise, and if you are a corporation, partnership, or limited liability company, certain provisions of the License Agreement and the Development Agreement will include your owners Freddy’s Frozen Custard, L L C (“FFC”) is commonly owned with us, and we acquired the Marks and other proprietary aspects used in the System from FFC FFC is an affiliate of Freddy’s Freddy’s, L L C , a Kansas limited liability company, was organized on October 17, 2003 We do business as Freddy’s Frozen Custard & Steakburgers The principal business address of Freddy’s and FFC IS 260 North Rock Road, Suite 200, Wichita, Kansas 67206 We do not have a parent entity or any predecessors We franchise the right to operate restaurants featuring steakburgers, hot dogs, and frozen custard for sale to the general public under the name “FREDDY’S FROZEN CUSTARD & STEAKBURGERS® ” These restaurants operate under a unique system developed by us for the efficient management and operation of attractive and distinctive restaurants Our system includes distinctive design, decor, color scheme, and furnishings, standards, specifications, and procedures for operations, procedures for quality control, training and assistance, and advertising and promotional programs (the “System”) The System is identified by means of certain trade names and service marks, mcludmg the marks “FREDDY’S®,” “FREDDY’S FROZEN CUSTARD®” and “FREDDY’S FROZEN CUSTARD & STEAKBURGERS®” and any other trade names, service marks, or trademarks as we may designate for System identification (the “Marks”) We currently do not own or operate any restaurants.

Prior Experience

The first Freddy’s Frozen Custard & Steakburgers Restaurant was opened in Wichita, Kansas m 2002 by FFC, and, though Freddy’s, L L C does not currently operate any Restaurants, our affiliate, FFC, currently operates 14 Restaurants under the System FFC also manages our gift card program We began franchising Restaurants under the System in 2004 We are not involved m any business activities other than the sale of Freddy’s Frozen Custard & Steakburgers franchises, and we have not offered franchises for any other type of business Our affiliate does not sell or franchise any business, including any business similar to the Restaurants under the System.

Business Offered

We offer a development agreement (the “Development Agreement”) m the form attached as Exhibit A The Development Agreement grants the right and obligation to establish and operate a certain number of Freddy’s Frozen Custard & Steakburgers restaurants (collectively, the “Restaurants,” individually, a “Restaurant”) m a specified area (the “Assigned Area”) at specific locations to be designated m separate license agreements You will establish each Restaurant under the development schedule m the Development Agreement The Development Agreement provides exclusivity and, upon successful completion ofthe development schedule, a right of first refusal to you for additional Restaurants within the Assigned Area As a condition to exercising the development right for each Restaurant, you must secure a location located m the Assigned Area approved by us After you provide us with all information required by the Development Agreement for site approval, we have 30 days to approve or reject your proposed site See Item 11 After we approve the location for the Restaurant, you must sign a license agreement (the “License Agreement”) m the form attached as Exhibit B for each right to develop a Restaurant exercised under the Development Agreement The License Agreement governs the construction and operation of the Restaurant at the approved location and provides an area of exclusivity within a radius ofthe approved location (the “Assigned Territory”) In certain areas, we may offer individual License Agreements for the establishment and operation of one Restaurant at a specified location You will pay separate fees for the Development Agreement and the License Agreement The franchise offered is for the establishment and operation of a Restaurant under the License Agreement

Initial Fees

We offer a Development Agreement to establish more than one Restaurant under a development schedule We also offer m certain geographical areas a License Agreement to establish one Restaurant Under the Development Agreement, you must pay us an imtial fee of $5,000 per Restaurant (“Development Fee”) required to be developed m the Assigned Area The number of Restaurants is determined by agreement between you and us before the Development Agreement IS signed In addition to establishing the number of Restaurants you must develop m the Assigned Area, the development schedule in the Development Agreement will also specify when each ofthe Restaurants must be constructed and opened You must pay the entire amount ofthe Development Fee in a lump sum to us at the time the Development Agreement is signed The Development Fee is nonrefundable If you sign a Development Agreement to develop multiple Restaurants, you still must operate each Restaurant under a separate License Agreement The License Agreement requires an initial franchise fee of $25,000 (“Franchise Fee”), which is payable at the time of signing the License Agreement If you enter into a Development Agreement, the Development Fee for each Restaurant is credited against the Franchise Fee for each Restaurant After you provide us with all information required by the Development Agreement for site approval, we have 30 days to approve or reject your proposed site See Item 11 If we do not approve your proposed site, you may choose to submit a second and subsequent site proposal, provided that a proposed site must be approved within the period specified m the development schedule under the Development Agreement If you choose not to submit a second or subsequent site proposal or if no site is approved within the period specified in the development schedule, you will not receive a refund of the development fee, which we will retain m payment oftime spent and seiwices provided m connection with site selection In areas where we offer a License Agreement to establish one restaurant, you must sign a License Agreement before beginning development of the Restaurant site You must pay the Franchise Fee, which is payable at the time ofsigning the License Agreement You must operate each Restaurant under a separate License Agreement The Franchise Fee is nonrefundable.

Financing

FREDDY’S does not offer direct or indirect financing FREDDY’S does not guarantee your note, lease, or obligation

Franchisee Revenue and Profit

As of December 30, 2015, there were 14 restaurants which are operated by our affiliate, FFC, under the name “FREDDY’S FROZEN CUSTARD & STEAKBURGERS®” and there were 163 franchisee restaurants The FFC operating Restaurants and the franchisee Restaurants are a mix of stand-alone units located m former restaurant or other retail buildings, stand-alone and m-lme new construction, and m-hne m former restaurant or other retail sites This financial performance representation is based on the actual operating results of the 13 FFC stores and the franchisee-reported sales ofthe 122 franchise stores that were open prior to the beginning of the fiscal year ended December 30, 2015, although no accountant independently audited the specific data from which the following information was derived Sales for Affiliate Qvmed and Franchise Owned Restaurants The following table shows figures from the fiscal year ended December 30, 2015 The table shows the average weekly gross receipts for stores open prior to the beginning ofthe fiscal year then ended The row titled “Average” shows, for the stores shown in the column heading, the 2015 fiscal year total gross receipts divided by the number ofstores shown m the first row of the table divided by 52 weeks “Lowest Average” shows the single store average for the store m the respective group with the lowest average, and “Highest Average” shows the same for the individual store with the highest average. Some affiliate and franchise stores have performed to these levels A new franchisee’s individual financial results may differ from the results stated in this financial performance representation The financial performance repiesentation figures do not reflect all of the costs or expenses that must be deducted from the gross revenues or gross sales figures to obtain your net income or profit You should conduct an independent investigation of the costs and expenses you will incur m operating your franchised business Franchisees or former franchisees, listed in the Disclosure Document, may be one source ofinformation We will provide you with written substantiation ofthe data used to prepare this financial performance representation upon your reasonable request These figures are based on the results of 13 FREDDY’S FROZEN CUSTARD & STEAKBURGERS® restaurants operated by our affiliate, and sales only from 122 franchised stores The information presented for franchised FREDDY’S FROZEN CUSTARD & STEAKBURGERS® restaurants are the result of information included in royalty reports and other financial reports provided by the franchisees We have not audited this information nor have we verified its accuracy Actual results may vary from restaurant to restaurant, and we cannot estimate the results of any particular franchise Other than the preceding financial performance representation, FREDDY’S 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 FREDDY’S management by contacting Mark Scholler, 260 North Rock Road, Suite 200, Wichita, Kansas 67206, 316-719-7800, the Federal Trade Commission, and the appropriate state regulatory agencies.