$891

Business Description

PHLLC conducts business under the name “Pizza Hut.” Its principal address is 7100 Corporate Drive, Plano, TX 75024. The identity and principal business addresses of its agents for service of process and registered agents are listed in Exhibit B. PHLLC’s predecessor is Pizza Hut, Inc. (“PHI”). References to “we”, “us” or “our” may include our predecessor. PHI was originally incorporated as “Pizza Hut of San Diego, Inc.” in 1967 and changed its name on September 25, 1997. PHI offered and sold franchises in the United States until on or about May 20, 2016, when PHI merged into PHLLC. Following the merger, PHLLC became the franchisor of Pizza Hut restaurants in the United States and acquired all domestic Pizza Hut franchise, license and development agreements and substantially all of PHI’s assets, including its intellectual property. PHLLC’s direct parent company is Pizza Hut Guarantor, LLC (“PH Guarantor”), a Delaware limited liability company formed on November 30, 2016. PHLLC’s indirect parent company is Pizza Hut Holdings, LLC (“PH Holdings”), a Delaware limited liability company formed on March 30, 2016. The principal address of PH Guarantor and PH Holdings is 7100 Corporate Drive, Plano, Texas 75024. PHLLC’s ultimate parent is YUM! Brands, Inc. (“YUM”). YUM’s offices are located at 1441 Gardiner Lane, Louisville, Kentucky 40213.

Prior Experience

We and certain current and former affiliates have operated Pizza Hut Restaurants in the United States since 1958 and have offered franchises for Pizza Hut Restaurants in the United States since 1959. Company-owned Pizza Hut Express restaurants have been operated since 1987. We do not directly operate any non-traditional sites, but in the past our subsidiaries have operated a limited number of non-traditional sites (primarily concession stands). Since 1989, we and our predecessors have offered licenses to third parties to sell Pizza Hut pizza and other products from kiosks, concession stands, and other concepts in non-traditional channels of distribution. During the past 10 years, we have not directly offered franchises in any other line of business.

Business Offered

We operate (directly and/or through our subsidiaries and affiliates) and offer franchises for single-purpose Pizza Hut restaurants, which offer various combinations of dine-in, carryout, and delivery services. We also offer licenses to sell Pizza Hut pizza and related products at nontraditional locations. In most cases, Pizza Hut licensees already operate businesses in nontraditional channels and are incorporating the licensed Pizza Hut concept into those existing businesses, instead of operating it as a stand alone operation. We distinguish between our “franchisees”, who operate traditional Pizza Hut restaurants under a franchising program that is described in a separate disclosure document, and our “licensees”, who are granted rights under the Pizza Hut Express licensing program described in this disclosure document. You will sign a Master License Agreement (Exhibit C) and one or more Schedules to that Agreement (Exhibits D-1 through D-7) which grant you a license to use our recipes and trademarks to produce and sell Pizza Hut pizza and, in some cases, related products ("Licensed Products"). This is an ancillary business conducted within a non-restaurant facility ("Licensed Location").The Master License Agreement describes the general licensing relationship, and the Schedules describe the specifics that apply to your Licensed Location. If the Licensed Location is located in the territory of a Pizza Hut franchisee who holds a territorial franchise agreement, that franchisee may have to consent to the operation of the licensed concept at the Licensed Location. If it does, you must sign a Franchise Location Addendum to the appropriate Schedule (Exhibit D-8). The Franchise Location Addendum modifies only the Schedule for the Licensed Location in the affected franchisee's territory and describes certain limitations as a result of operating the franchisee's territory. We currently offer a number of different non-traditional concepts ("Licensed Concepts"), depending (among other factors) on the nature of the proposed location, the identity of the proposed licensee, and the nature and quantity of other existing or proposed foodservice operations at the proposed location. The Licensed Concepts include: Pizza Hut Express Hotel/Resort Pizza Kitchens; Pizza Hut Express Retail Snack Bars; Pizza Hut Express Recreation Centers; Pizza Hut Express Institutional Kiosks; Pizza Hut Express Stadium and Arena Concession Stands; Pizza Hut Express Airports/Tollways Concepts and the Pizza Hut Express School Commissary. The Licensed Concepts are characterized by a proprietary system that consists of special recipes, seasonings, and menu items; distinctive design, decor, color scheme, and furnishings; standards, specifications, and procedures for operations; procedures for quality control; training and assistance programs; and advertising and promotional programs (the "System"). Trademarks, service marks, slogans, logos, and emblems that we authorize for use (the "Marks" or the “Pizza Hut Marks”) identify the Licensed Concepts. Each Licensed Concept involves the preparation of a limited menu of Licensed Products, typically including pizza, breadsticks and beverages, and self-service or counter-service sales. Depending on the Licensed Concept, Licensed Products may also include pasta, sandwiches, wings, salads, breakfast items and various side items. In some circumstances, licensees also may offer the WingStreet Express menu which includes various chicken wings and related items. The Licensed Products that you are authorized to sell will be identified in the Schedules and may be modified by changes to the Manual for the Licensed Concept. You must sell all Licensed Products identified in your Schedule. For product testing, as a limited time offer, or for other business reasons, we may also approve or designate additional food items to be offered from specific Licensed Locations or within specific distribution channels that may or may not encompass all Licensed Locations for a particular Licensed Concept (“Specially Licensed Products”). If we designate or approve the offer and sale of a Specially Licensed Product at one or more of your Licensed Locations, we may direct that part or all of your Marketing Fee be spent to promote the Specially Licensed Product. A Licensed Concept includes ovens, a hot-hold merchandiser, and a cut table, where pizzas can be prepared, baked, cut, boxed, and displayed. Licensed Concepts are typically located in a larger foodservice facility (like a cafeteria or food court) or other type of facility (like a convenience or retail store). Retail Snack Bars are designed for high traffic areas like mass merchandisers, retail stores, malls, Taco Bell Restaurants, KFC Restaurants and the like. Stadium and Arena Concession Stands are intended as high-volume units for use in stadiums, arenas, and convention centers. The Hotel/Resort Pizza Kitchen is designed to allow an existing foodservice operation at a hotel or resort to add branded Licensed Products to its existing product mix. The Recreation Centers are licensed primarily to amusement parks, race tracks or other recreational centers. Institutional Kiosks are licensed to institutional feeders who operate facilities that serve a wide range of products in educational institutions, healthcare facilities, zoos, museums, business and industry facilities. The Airports and Tollways Concept is licensed for use at airports, railway stations, tollway plazas and other transportation areas. The School Commissary is licensed for use at primary and secondary schools. Delivery is not generally allowed from any of the Licensed Concepts except selected military bases and hotels and resorts (but only if the hotel or resort customers are already being serviced by the facility’s centralized food service operation, and the hotel or resort is not already being serviced by an existing full service Pizza Hut restaurant.) Previous offers of the Licensed Concepts may have been on terms different from those described in this disclosure document, and we may in the future enter into arrangements on substantially different terms and conditions for Pizza Hut concepts at locations that are different in their character from those at which the Licensed Concepts are generally operated. These may include (a) locations in foreign countries, (b) certain airport, food service and hotel locations not realistically accessible to you and which, in certain cases, are operated under an agreement with a contract feeder, (c) certain sports arenas, and (d) private sector food service locations controlled by the operator or owner. We also may periodically grant licenses to operate or distribute Licensed Products through special distribution outlets. These include licenses for distribution at airports, universities, and at motor fuel or other retail outlets. These special arrangements may require special agreements or modifications to our standard form Master License Agreement. Our agreement to these modifications may be based upon, the licensee’s business experience, control and accounting systems, financial resources, or rights to provide food service to the locations in question, among other things. We do not represent that modified terms will be granted to any prospective licensee.

Initial Fees

Initial License Fee The initial license fee is specified in the Schedules and is $5,000, unless you are authorized to offer medium-sized or larger pizzas, in which case the initial license fee is $10,000 to $15,000, depending on the license term and the Licensed Concept. We will determine whether you are allowed to sell medium-sized or larger pizzas based on criteria which include (among others) the location of your Licensed Concept in relation to company-owned or franchised Pizza Hut restaurants. The decision to allow you to sell medium-sized or larger pizzas, and under what terms, is entirely in our discretion. You must pay us the initial license fee with each signed Schedule to the Master License Agreement prior to opening. We reserve the right to increase the initial license fee annually consistent with the rate of inflation. The “rate of inflation” means the percent increase in the “CPI” from the time of the last fee increase (“CPI” means the Consumer Price Index For All Urban Consumers (CPI-U) - - All Items (1982-1984 equals 100) for the United States published by the Bureau of Labor Statistics of the U.S. Department of Labor). In certain situations, we may adjust the initial license fee in exchange for a higher or lower monthly service fee rate. Our predecessor occasionally reduced the initial license fee to zero in exchange for a monthly service fee rate in excess of 10%, or increased the initial license fee to $10,000 in exchange for a monthly service fee rate below 10%. We reserve the right to adjust the initial license fee in a similar manner on a case by case basis. In addition, to provide development incentives for an increased number of locations within a specified time, we may periodically negotiate incentive programs for a particular Licensed Concept, typically involving a reduction to or rebate of some or all of the initial fee or monthly service fee. We also may negotiate lower initial fees where we determine a variation to the standard fee is appropriate due to special or unusual circumstances. The initial fee is not refundable under any circumstances. Annual Marketing Fee Before opening, you must pay us your first Marketing Fee payment, with each subsequent payment billed annually. The annual marketing fee ranges from $1,000 to $2,000 depending on the Licensed Concept. In return for the Marketing Fee, we will provide you marketing materials designed for the Licensed Concept. The Marketing Fee is uniform within the same type of Licensed Concept and is not refundable.

Financing

We do not offer direct or indirect financing for the Licensed Concepts offered by this disclosure document. We do not guarantee your note, lease or other obligation. We are unable to predict whether you will be able to obtain financing for any part or all of your investment and, if so, the terms of the financing.

Franchisee Revenue and Profit

We do not make any representations about a franchisee’s or licensee’s future financial performance or the past financial performance of company-owned or licensed 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 our management by contacting Chequan A. Lewis, 7100 Corporate Drive, Plano, Texas 75024 and 972-338-7700, the Federal Trade Commission, and the appropriate state regulatory agencies.