$3,471

Business Description

We are a Florida limited liability company, doing business as “Subway”. We were originally formed as a Connecticut corporation on October 17, 1967, known as “Doctor’s Associates, Inc.”. We moved from Connecticut to Florida on July 1, 1991 pursuant to a Type F reorganization under Section 368 of the Internal Revenue Code. Pursuant to an internal corporate restructure project (the “Restructure”), we converted from a Florida corporation to a Florida limited liability company on October 29, 2018, and changed our name to “Doctor’s Associates LLC”. Under Florida law, we are still the same entity that existed before the conversion. Our address is 8400 NW 36th Street, Suite 530, Doral, Florida 33166. Our agents for service of process are disclosed in Exhibit I. As of December 31, 2018, we have sold 38,738 franchises, of which 24,798 are open and 191 are in development. We previously offered plush toy business franchises from 1982 to 1983 but did not sell any. Aside from the plush toy business, we have not offered franchises in any other line of business.

Prior Experience

Subway IP LLC (“SIP”), originally a Delaware corporation (formerly known as Subway IP Inc.) formed on December 14, 2015 which converted to a Delaware limited liability company on October 30, 2018 as part of the Restructure, is our former parent company. SIP’s principal business address is 8400 NW 36th Street, Suite 530, Doral, Florida 33166. As of November 5, 2018, SIP transferred all interest in us, through a series of transactions under the Restructure, to Subway US Holdings, LLC, a Delaware limited liability company (“SUSH”). SUSH is our direct parent company, and is a wholly owned subsidiary of Subway Systems Holding, LLC, (“SSH”) a Delaware limited liability company. SSH is a wholly owned subsidiary of Subway Worldwide Holdings, LLC (“SWH”) a Delaware limited liability company, which in turn is a majority owned subsidiary of Subway Worldwide, Inc (“SWI”), a Delaware corporation. SWI, SWH, SSH and SUSH were formed on October 14, 2018 as part of the Restructure. The principal address of each of these companies is 325 Sub Way, Milford Connecticut, 06461. SIP, whose indirect parent as a result of the Restructure is also SWI, is the owner and licensor of the Subway® trademark, and all recipes, formulas, food preparation procedures, business methods, business forms, and business policies (the “System”). SIP licenses the System to us to develop Subway® restaurants in the United States and its territories. SIP has never offered franchises in any line of business.

Business Offered

We offer and sell franchises for Subway® restaurants for locations in the United States and its territories. Though our current policy is to establish all restaurants as franchises, sometimes we may own or operate restaurants previously owned by franchisees until we find a new franchisee. You must purchase through us or lease from us substantially all major items of equipment for your restaurant. We have limited real estate holdings, which include the location of one Subway® restaurant that we lease to a franchisee. We are not engaged in any other business.

Initial Fees

Franchise Fees. INITIAL FRANCHISE FEE $ 15,000 REDUCED FRANCHISE FEE FOR: $ 7,500 ? ADDITIONAL FRANCHISE PURCHASE (IF QUALIFIED) ? INITIAL FRANCHISE FEE FOR AFFILIATE COMPANY SUBWAY® FRANCHISE OWNERS AND BUSINESS DEVELOPMENT AGENTS (IF QUALIFIED) ? INITIAL FRANCHISE FEE FOR FRANCHISE OWNERS AT SAME SITE OF OVER 50 SYSTEM, CO-BRANDED PARTNER OR ORGANIZATION MEMBER (IF QUALIFIED) ? HONORABLY DISCHARGED VETERANS OF THE UNITED STATES ARMED FORCES PURCHASING FIRST FRANCHISE (IF QUALIFIED) ADD-ON FEE (IN ADDITION TO REDUCED FRANCHISE FEE) $ 3,750 SATELLITE FRANCHISE FEE $ 5,000 SHORT TERM SATELLITE FRANCHISE FEE $ 1,000 SCHOOL LUNCH PROGRAM FRANCHISE FEE $ 0 COMMUNITY DEVELOPMENT PROGRAM FRANCHISE FEE $ 0 All franchise fees are payable in full when you sign the Franchise Agreement. We do not consider any amount a deposit. All fees are fully earned when received and are not refundable, except as described below. We may collect taxes from you that the law requires you to pay. You will pay or reimburse us for payment of any Sales Tax or other tax imposed by law on the franchise fee, royalty, advertising fees, and any other amounts payable under this Agreement, whether assessed on you or on us. We will pass on to you taxes we must pay directly to any taxing authority. We do not have to sell you a franchise or additional franchises or consent to your purchase of existing franchises. We or your Business Development Agent may decide in our business judgment that you should not own additional restaurants, even if you are in full compliance with your existing Franchise Agreements and the Operations Manual. If our Business Development Agent rejects your application to buy a franchise, you may ask us to review that decision by calling the Franchise Sales Team of FWH in Connecticut. We may offer incentives of up to $2,000 per referral to people who refer prospects. We may also offer to credit franchisees for their qualifying airfare or mileage up to $1,500 if they visit our offices in Milford, Connecticut, and then purchase a franchise during their visit, subject to compliance with disclosure requirements and other policies. We may change the amount of these incentives, including eliminating or reducing the credit for the cost of the airfare or mileage. This incentive is not valid for travel related to attending training. The standard franchise fee for a Subway® restaurant franchise is $15,000 for all first-time franchisees except: (i) qualified United States Armed Forces Veterans (“US Veterans”) as stated below, or (ii) a qualified Subway® restaurant franchisee of our affiliates, or (iii) those purchasing under our School Lunch or Community Development Programs, or (iv) those purchasing for a qualified Non-Traditional location. If you are purchasing your first franchise and you qualify under our minority loan program, we offer to finance $10,000 of the full franchise fee of $15,000. We may offer a similar loan program for franchisees purchasing a franchise for a restaurant to be located in a low density market. We may stop or modify any loan programs we offer at any time. We offer the reduced franchise fee of $7,500 for the purchase of additional restaurants to qualified existing franchise owners operating restaurants in substantial compliance (as defined in the Operations Manual) and with no material defaults under any of their Franchise Agreements with us. If you do not qualify for the reduced fee, you must pay the full fee of $15,000. We are testing a program for existing franchisees who own 50 or more Subway® restaurants (the “Mega Multi-Unit Owners” or “MMUO”) and would like to purchase additional franchises. The program requires MMUOs to: 1) attend and pass special training programs released during the term of the franchise agreement; 2) attend at least 4 owners meetings sponsored by DAL or their Business Development Agent annually; 3) ensure that all of their restaurant managers pass our training program; and 4) maintain a specified performance rating during the term of the franchise agreement. There may be additional costs associated with your participation in this program. We may expand the test after the effective date of this Disclosure Document to existing franchisees who own less than 50 Subway® restaurants and would like to purchase additional franchises. We may modify or eliminate this test program based upon our findings during the test phase. If you qualify for the reduced franchise fee when you sign the Franchise Agreement, but any of your existing restaurants are out of substantial compliance (based upon your most recent store-evaluation) when your restaurant opens, you must pay us the $7,500 balance of the full franchise fee. Certain large institutional-type franchisees who may buy over 50 franchises negotiated the right to buy additional franchises at the former rate of $2,500, but there are certain time limits and quantity limits for them to buy at this lower rate. They must also meet the reduced fee requirements. We also offer the $7,500 reduced franchise fee to qualified Subway® franchisees of our affiliates that offer Subway® franchises. To qualify, we must approve you and you must be in substantial compliance (as defined in the Operations Manual) with no material defaults under any of your Franchise Agreements with our affiliates that offer Subway® franchises. We and our affiliates may change or eliminate this cross-discount. We offer the reduced franchise fee to qualified honorably discharged US Veterans purchasing their first franchise. We may modify or discontinue this program for US Veterans at any time. You may not sell, transfer, or assign a franchise you purchase at a reduced fee unless you sell it in conjunction with an open and operating restaurant associated with that franchise. We may change the amount of the initial franchise fee, including eliminating or reducing the discount. If you do qualify for the reduced fee and you want to add an individual who is not already a Subway® franchisee, you must also pay an add-on fee of $3,750. We may change or eliminate this add-on fee in the future. We will waive the add-on fee if you are adding your parent, child, or spouse to your Franchise Agreement. You will pay the reduced franchise fee if you are purchasing a franchise for a non-traditional location and: 1) you are an approved convenience store operator, a food service management company, or other company that provides its own food services (and you have 50 or more locations or you have a net worth of at least $10 million as shown on an audited balance sheet); 2) you are a cooperative, foundation, a qualified non-profit charity, hospital, university, college, other school, or an Indian nation, or governmental agency or entity; 3) you are purchasing your franchise for a non-traditional location we approved to be located in a portion of an existing facility you own, lease or otherwise control under a management agreement and you are a franchisee in good standing of a nationally branded gasoline or convenience store retailer; or 4) you are a qualified honorably discharged US Veteran purchasing your first franchise. If any of these representations are not true when your restaurant opens (based upon the most recent store evaluation), you agree to pay an additional $7,500. If we do not approve your location within 90 days after you sign the Franchise Agreement, we may cancel your Franchise Agreement and refund your initial franchise fee. If you own an oil company that has at least 50 locations and you convert an existing sandwich shop business you created, own and operate at your facility into a Subway® restaurant, we will waive the initial franchise fee. To qualify to purchase additional franchises for non-traditional locations at the reduced franchise fee, at least 90% of the Subway® restaurants you operate must be in substantial compliance (as defined in the Operations Manual), and must follow all operating policies and procedures for the other chain at the location where you will establish your restaurant. There must also be no material defaults under any of your Franchise Agreements with us. The initial franchise fee for a satellite restaurant is $5,000; however, this fee will be waived if your satellite will be located in the same facility as your Base Restaurant. We may refund the satellite franchise fee if we terminate the Franchise Agreement after 90 days because we or our designated affiliate does not obtain a lease or license for the premises which contains basic economic terms (for example rent, square footage, and length of term), previously consented to by you, and offer you a Sublease or Sublicense. However, this refund will not be issued if: 1) you fail to sign a Sublease or Sublicense that was previously consented to which contains basic economic terms; 2) if it is your fault we disapprove the location or we cannot obtain the lease or license; or 3) you attend training, pass our standardized test (if required) and receive a copy of the Operations Manual in either electronic or print form. The term of the Satellite Franchise Agreement will be from the date of the Franchise Agreement until the expiration or termination of the Base Restaurant Franchise Agreement, with the right for additional 20 year renewals in line with the Base Restaurant Franchise Agreement term. There is no renewal fee. The satellite franchise fee will be $1,000 if the satellite will be in operation for a term of 1 year or less (“short term”). The term of the Franchise Agreement for a short term satellite location is 1 year or less from the date of the Short Term Satellite Rider or until the termination or expiration of the Base Restaurant Franchise Agreement, whichever occurs sooner. If your Base Restaurant Franchise Agreement has not expired, you may renew the short term satellite location for an additional 1 year term for a renewal fee of $1,000. If, with our approval, you choose to convert your satellite to a full restaurant and terminate your Franchise Agreement for the satellite, we may credit the initial franchise fee you paid. We will not allow credit for expired or terminated Franchise Agreements for the satellite. To qualify for the credit, you must be in substantial compliance (as defined in the Operations Manual) and you must comply with any necessary upgrades or additional requirements to establish a full restaurant at the satellite location. We will waive the initial franchise fee through March 31, 2020, under our school lunch program, where we will franchise (1) a school system directly, (2) an institutional food service provider, or (3) an existing individual Subway® franchisee, to operate a Subway® restaurant located in a school. We may charge an initial franchise fee after March 31, 2020 at our then-current rate or at a reduced rate, or may continue to waive the fee. You must open your school location within 6 months after you sign your school lunch Franchise Agreement. If you are not the school board, school district, or municipality controlling the school location, within 6 months after you sign your Franchise Agreement you must sign a contract, license, or lease, giving you the right to operate the restaurant, or your Franchise Agreement will automatically terminate. You will not have to enter into a Sublease or Sublicense with us or our affiliate or assign your contract or license to us. You must identify a location for the school lunch restaurant and your proposed operation plan before you sign the Franchise Agreement. The term of the Franchise Agreement for a school lunch location is a period of 5 years, with the right for additional 5 year renewals, with no renewal fee. If you are an individual franchisee, you must establish the restaurant in the school as a satellite location. We will waive the initial franchise fee through March 31, 2020, under our Community Development Program. We may charge an initial franchise fee after March 31, 2020 at our then current rate or at a reduced rate, or may continue to waive the fee. Under the program, franchisees may establish franchises within facilities operated by organizations or individuals that offer support services within the community in which they are located. Examples of these facilities include places of worship, shelters, half way homes, rehabilitation centers, community centers, and disaster relief centers. Your restaurant must be operated with the intent of providing job training to individuals with barriers to employment. You will not have to enter into a Sublease or Sublicense with us or our affiliate or assign your contract or license to us. You must identify a location for your restaurant and your proposed operation plan before you sign the Franchise Agreement. We offer a location selection program whereby you can purchase a franchise to establish a full service restaurant (not a satellite restaurant) for a specific location at the time you sign the Franchise Agreement, including the Specific Location Rider. We give preliminary approval to the location when we sign the Franchise Agreement. If you pay the initial franchise fee and sign a Specific Location Rider, you cannot attend training until a lease is signed for the specific location. If we or our designated affiliate cannot offer you a Sublease or Sublicense for the premises or if we do not give final approval to the location within 6 months after the date of the Franchise Agreement, the Specific Location Rider will automatically terminate and your franchise will be deemed a standard franchise. You will have no further rights to the location. We will refund the initial franchise fee if you send us a written request no later than 60 days after the Specific Location Rider is terminated and the standard franchise becomes effective. If we or our designee offers you a Sublease or Sublicense, you must sign it within 30 days from the date it was offered to you or your Franchise Agreement will automatically expire at the end of the 30 day period. We will not refund the initial franchise fee if we or our designee enters into a lease or license containing basic economic terms (e.g. rent, square footage, and length of term) which you previously consented to and you do not then sign the offered Sublease or Sublicense within the 30 day period. We do not refund any of the initial franchise fees except as stated above or under the following circumstances: 1) you purchase a franchise for a location where we will allow you to enter into a lease or license directly with the landlord and we do not grant final approval of the location within 90 days after you sign the Franchise Agreement; or 2) you purchase a franchise for a dual location test site and you do not obtain a Sublease or Sublicense in accordance with our requirements; or 3) you purchase an existing restaurant and apply the franchise fee of your current, unused franchise toward the transfer fee. If you apply the franchise fee of your unused franchise to pay a transfer fee, you will sign a release terminating the unused franchise. If you fail our standardized test which may be conducted during the training program, we may dismiss you from the training program, cancel your franchise agreement and refund one-half of your franchise fee. If more than one individual signs the Franchise Agreement, any one of the individuals who fails this standardized test may be dismissed from the training program, removed from the Franchise Agreement and no portion of the franchise fee will be refunded. If you sign the standard Franchise Agreement, you will have 2 years to sign a Sublease or Sublicense or your Franchise Agreement will expire. If you sign a Non-Traditional Location Rider, Food Service Provider Rider or Direct Lease Rider, you will have 2 years to open your restaurant or your Franchise Agreement will expire. You may request in writing and we may grant you in writing an extension to sign a Sublease or Sublicense or open your restaurant if you have signed one of the above riders. You will pay to us an extension fee of $1,000 and will sign our then-current form of Franchise Agreement. The extension fee is due when you sign our then-current form of Franchise Agreement and is nonrefundable. If you are granted an extension, you will have an additional 2 years to sign a Sublease or Sublicense or open your restaurant if you signed one the above riders with no right to any further extensions. The term of your franchise will then be for the full number of years granted in the replacement Franchise Agreement and you will have no right to any additional extensions. This description of the extension fees also applies if you sign a Non-Traditional Location Rider in conjunction with a Satellite Rider to open a satellite restaurant in a non-traditional location. We may change or eliminate the extension procedures in the future. The extension fee does not apply to school lunch locations, satellite locations operating in locations other than non- traditional locations, short term satellite locations, or locations which fall under our location selection program. These locations must be opened within the timeframes set forth in their respective Riders and will have no right to any extension. When you sign the Sublease, you will pay our affiliate $50 as a nonrefundable fee for administrative costs to record the lease. In addition, you will be responsible for all other costs we incur to record the lease, including but not limited to, recording fees, recording taxes, conveyance fees and conveyance taxes. We estimate that these costs may range from $50 to $2,500, depending upon your state and local laws. These fees are nonrefundable. You must pay a deposit of 2 months' rent when you sign the Intent to Sublease, representing one month's rent and one month's security deposit. We estimate that the security deposit will cost approximately $2,000 to $12,000. If you are required to sign a Sublicense for the location, you may be required to pay an advancement fee when you sign the Intent to Sublicense. If the landlord does not require the security deposit, we or our designee will return the money to you. If your restaurant is in a non-traditional, satellite, or school lunch location, and you are providing the premises for the restaurant, you will not have to sign a Sublease. For certain non-traditional locations, we may require you to sign a concession or subconcession agreement. If your restaurant is a satellite location, we may allow you to enter into the lease or license directly with the owner of the premises, but you may have to sign a collateral assignment of your rights under the lease or license which would take effect if your Franchise Agreement terminates or expires. If your restaurant is a school lunch location, you may enter into the contract, license, or lease directly with the entity controlling the school. In some cases, we may allow you to sign a lease directly with the landlord provided you have our prior written approval, but you must request in writing, and we must approve in writing the form of lease, including any modifications, amendments, renewals or extensions of the lease. We may require that the lease you enter into contains either a conditional assignment of the lease or any other security interest for the lease we designate that will allow us or our designee to take possession of the premises and assume the lease if you breach the lease or your Franchise Agreement. The assignable interest will be enforceable against you, any corporation you establish to lease the premises for the restaurant, and any person or entity to which the lease or restaurant is transferred. We may require the conditional assignment to read substantially like the following: The person(s) or corporation that has executed this lease shall hereinafter be referred to as the “occupying tenant”. Landlord acknowledges that the occupying tenant of the demised premises has executed the lease with the intention of operating a Subway® restaurant pursuant to a franchise agreement with Doctor’s Associates LLC (“DAL”), a Florida limited liability company. Landlord further acknowledges that this occupying tenant has executed this lease personally or on behalf of its own duly formed corporation. This lease shall not be binding on DAL unless it is assumed by DAL. Should the occupying tenant default on its obligations to landlord, DAL, at its sole option, can assume or elect to designate an authorized subsequent occupying tenant to assume this lease and its obligations for continuing the operation of a Subway® restaurant. In this event, landlord agrees to assign to DAL or its designee all of the occupying tenant’s rights under this lease. Landlord agrees that this assumption/assignment shall not transfer liability for a previous default to a subsequent occupying tenant of DAL. This provision shall not be construed as a remedy for any uncured default. You must purchase or lease from us substantially all major items of equipment for your restaurant. You may be required to pay us a fee on the equipment we order for purchase or lease by you in an amount up to 4% of the cost of the equipment. We estimate that this fee will cost between $2,200 and $3,200. You will pay this fee by preauthorized check or electronic funds transfer. If you participate in the Equipment Lease Program, you must pay us a security deposit by certified or cashier’s check. The security deposit is 10% of the equipment cost, with a minimum of $1,000. We estimate that the equipment lease security deposit will cost between $7,500 and $15,000, depending upon the location. We will refund the security deposit at the end of the lease if you satisfy our requirements. If you purchase equipment through us, you must pay us the cost of the equipment charged by the manufacturer or distributor before the allowance of any trade discounts, plus a buffer of 10% of the cost to cover freight charges and other amounts. We will refund any amounts we do not need from the buffer. We estimate that the cost for equipment will range from $75,000 to $150,000 (including the 10% buffer), depending upon the location. You may experience delays and have higher costs if you seek approval to purchase directly from vendors or from vendors not currently approved. You must purchase your initial supply of menu board translites from us or SFAFT, unless we designate otherwise. The estimated cost for menu board translites is $125. You must also buy decals and replacement menu board translites from SFAFT, and certain operational items from our affiliate, FSCC. The estimated cost is less than $600 and is nonrefundable. You have the option to purchase digital menu boards typically consisting of four television screens, media players, HDMI cables, and menu content management services from us, an affiliate or a designated supplier. The estimated cost to purchase and install the digital menu boards are $8,000 to $14,000. Ongoing licensing fees and support fees may apply. In the future, we may require you to purchase digital menu boards. If you register for and fail to attend the training program, or if you cancel a registration for the training program with less than 10 business days' notice, you must pay a nonrefundable cancellation fee of $100. If you do not pass our standardized test to qualify for the purchase of a franchise, we charge a nonrefundable retest fee of $20 if we allow you to take the test again. We do not charge a retest fee for our standardized test conducted during the training program. If you do not pass, we may grant you an exemption under one of the three following circumstances and you meet all the conditions: (1) you qualify to sign a Non-Traditional Location Entity Rider (Exhibit A-3); (2) your spouse or relative named on the Franchise Agreement passes, you successfully complete our training program, you are actively involved in the daily operation of the restaurant for one year (as verified by the area field representative or Business Development Agent) and the restaurant is in substantial compliance (as defined in the Operations Manual) then you may be added to the Franchise Agreement for that restaurant provided that you otherwise comply with the transfer process in Subparagraph 9.a. of the Franchise Agreement; or (3) you have been the manager of a Subway® restaurant for at least three years, the restaurant has been in substantial compliance (as defined in the Operations Manual) and you receive the approval of the area Business Development Agent. If you are purchasing a company- or affiliate-owned restaurant, you must sign a Franchise Agreement and pay the initial franchise fee that applies to you. You must pay the purchase price in cash or by certified check. Financing is available for some of the purchase price. The purchase price for these restaurants vary greatly in price. In 2018, we sold 86 restaurants ranging in price from $1 to $163,500 and our affiliates sold 39 restaurants ranging in price from $1 to $74,500. The purchase price does not represent your total initial investment for these restaurants and may only the costs of existing physical assets, such as leasehold improvements, equipment, signs, any security systems, inventory and supplies. You may have to purchase, finance, or lease required equipment that is not included in the purchase price. You may have to spend additional money to bring the restaurant into compliance with the Operations Manual. We may offer incentives to franchisees purchasing company- or affiliate-owned restaurants that we believe have below average sales. These incentives may include but are not limited to: 1) financing by us or an affiliate for all or a portion of the purchase price at variable terms; or 2) under certain conditions, an obligation in the purchase agreement for us or our affiliate to repurchase the restaurant from the franchisee if the franchisee chooses to terminate the transaction. Under these circumstances, we or our affiliate will not repurchase the restaurant unless it is in substantial compliance as defined in the Operations Manual and the franchisee has maintained or exceeded the Average Unit Volume (AUV) of sales reported for the 12 months prior to our or our affiliate's acquisition of the restaurant from the previous owner. You are required to use a computer based point-of-sale system (the “POS System”) which must be purchased from one of our approved POS hardware vendors. The IPC may act as collection agent for Hewlett Packard (“HP”) and Partech (“Par”), and collect fees you owe to them for the POS System hardware through your pre-authorized account. Alternatively, we have approved HP and Par to offer POS hardware-as-a-service to franchisees. If you choose to participate, you will enter into an agreement directly with HP or Par to obtain the approved hardware, and we will collect fees you owe to HP or Par monthly on HP’s or Par’s behalf. We estimate the costs to participate in this arrangement to be $44 to $62 per month. We may approve other hardware vendors to lease the POS System hardware to you, or offer a similar type of arrangement in the future, and we may collect any fees under the lease or similar arrangement on behalf of the vendor. You are also required to use point of sale software and web applications that we designate in all of your new and existing restaurants. SubwayPOS® is the required software, except co-branded locations. Certain non-traditional locations may also be exempt from this requirement. Currently, only co-branded locations will be offered licenses for the Sub Shop/2000™ software (including any additional necessary software or modules) in lieu of the SubwayPOS® software. The license fee for the SubShop/2000™ software is $583, which includes the initial fees for the following additional software: Teamviewer or other remote management software, the Subway® Payment Manager software, and Progress DBMS software). In the future, co-branded locations will be required to discontinue their use of the Sub Shop/2000™ software in favor of the SubwayPOS® software. For use of the SubwayPOS® software and all other software and web based applications we currently require you to use, you will pay to us a one-time Technology Enhancement Fee of $1,500 per restaurant (“Technology Enhancement Fee”). Restaurants with more than one POS terminal will pay to us an additional multi-terminal fee of $500. You may not be required to pay the Technology Enhancement Fee or multi-terminal fee if you are purchasing a restaurant through a transfer and the seller previously paid the Technology Enhancement Fee and multi-terminal fee (if applicable) for that restaurant. There may also be additional fees for software support calls made after the initial installation. When SubwayPOS® software becomes required for co-brand locations, you may have the option to enroll in a financing program for the Technology Enhancement Fee for any of your existing co-brand locations at an interest rate of 6%, if permitted by local law. Each month, we will deduct $29 plus interest over a 5 year period from your pre-authorized account. If enrolled, you may dis-enroll from the financing program and pay the full balance of the Technology Enhancement Fee at any time. These funds are non-refundable. In the future, we may approve additional software vendors and may charge additional fees for any such future software that we require. The software and web application components that are covered under the Technology Enhancement Fee may also be updated or changed and/or the Technology Enhancement Fee itself may be adjusted. You will be required to comply with such changes, including covering any future increases to the Technology Enhancement Fee. You must use the card reader and barcode reader we require for use with your POS System to participate in the required Subway® Card Program, Remote Ordering Program and integrated credit/debit, contactless and mobile device payment options. You will purchase the card reader from us for $300, or $360 for certain non-traditional locations. You may be required to purchase additional card readers from us, if you have more than one POS terminal at your restaurant. You will purchase the barcode reader from us for $170 or $180 if your restaurant has a drive-thru.

Financing

We may change or eliminate these loan programs and equipment leasing program without any prior notice to franchisees. We and our affiliates did not discount or assign to anyone (other than an affiliate) any franchisee notes, commercial paper, or Equipment Leases prior to January 1, 1998. When we and our affiliates do discount and assign the notes, commercial paper, and Equipment Leases to the third party, the third party may be immune under the law to claims or defenses you may have against us or our affiliate, or the equipment manufacturer. We have approved HP and Par to offer POS hardware-as-a-service to franchisees. If you choose to participate, you will enter into an agreement directly with HP or Par to obtain the approved hardware, and we will collect fees you owe to HP or Par monthly on HP or Par’s behalf. We may approve other hardware vendors to lease the POS System hardware to you, or offer a similar type of arrangement in the future, and we may collect any fees under the lease or similar arrangement on behalf of the vendor. Whether, and on what terms, you can obtain financing from third parties will depend on a variety of factors, including your own creditworthiness, the type of security you can offer, the policies of lending institutions, and the availability and cost of commercial credit generally. You may not be able to obtain a loan. Except for payments made to us or our affiliates under (i) Subleases or leases for constructed restaurants, (ii) loans in connection with a Subway® restaurant, (iii) any Equipment Leases, and (iv) the financing of the Technology Enhancement Fee for existing restaurants, we and our affiliates do not receive payments for the placement of financing or providing financing. We may receive payments under the Sublease or Sublicense if you use a portion of the premises for any use other than a Subway® restaurant, or under the lease or license if the lease or license is terminated early by the landlord or the government. Except for the lease or license for your restaurant premises, we and our affiliates do not guarantee your obligations to third parties. Also, you may lose your defenses against us and others in a collection action on an Equipment Lease or a loan that is assigned, as disclosed above. We do require you to sign a general release of claims as a condition of making a loan to you. You must arbitrate any disputes or claims under the Equipment Lease. The primary lease or license for your restaurant may contain a waiver of notice, confession of judgment, or a waiver of defenses. Except as disclosed in this Item, we do not arrange financing from other sources. Franchisees of the Subway® system are eligible for expedited and streamlined SBA loan processing through the SBA’s Franchise Registry Program, www.franchiseregistry.com.

Franchisee Revenue and Profit

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. However, if you are purchasing an existing outlet, 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 any of the following individuals: Donald Fertman at [email protected], 1-800-888-4848 extension 1320; Janet Gschliesser at [email protected], 1-800-888-4848 extension 1480; Tracey Devine at [email protected] 1-800-888-4848 extension 1404. You may also contact the Federal Trade Commission and the appropriate state regulatory agencies.