We are a Delaware limited liability company that was formed in October 2016. We do business under our company name and maintain our principal business address at 1210 Northbrook Drive, Suite 310, Trevose, Pennsylvania 19053. Our agents for service of process are disclosed in Exhibit J to this Disclosure Document. We were originally formed under the name RWIFC Acquisition, LLC and, in January 2017, we changed our name to our current name. We have offered franchises for Rita’s shops since January 2017. We have never operated a business of the type being franchised in this Disclosure Document, and we have never engaged in any other business activity nor offered franchises in any other lines of business.
On December 30, 2016, under the terms of an asset purchase agreement, we purchased from Rita’s Holdings, LLC and its subsidiaries (each, a “Predecessor Entity” and collectively, the “Predecessor Entities”) substantially all of their assets, including all franchise agreements, development agreements, area developer agreements, trademarks, service marks and other intellectual property, that comprise the Rita’s franchise system (the "System") and the Rita’s brand (the “Asset Transaction”). As a result of the Asset Transaction, we became the franchisor of the System and we now offer and sell franchises in the United States and internationally
Shops We offer franchises to individuals and entities to operate Rita’s shops under the System. The term “Shop” will refer to both standard Rita’s shops (“Standard Shops”) and express Rita’s shops (“Express Shops”). You will operate the Shop under the terms of a franchise agreement, the current form of which is attached as Exhibit A to this Disclosure Document (the “Franchise Agreement”). The Franchise Agreement will grant you a territory (the “Territory”). Standard Shops must offer the full assortment of Menu Items we designate for Standard Shops, and Express Shops must offer the full assortment of Menu Items we designate for Express Shops. Express Shops operate at unique locations (such as highway rest stops, parks, universities, sports arenas, convention centers, airports, transportation terminals, theme parks, military bases and other similar types of locations) and we require less Menu Items for Express Shops than we require for Standard Shops. However, each Express Shop must be self-contained and have a production area. Shops are either (i) year around shops that operate all year (“Year Around”) or (ii) seasonal shops that operate during a period designated by us in the Manuals (“Seasonal”). We may change the required operating period for Seasonal shops. The Franchise Agreement will designate whether the Shop is Year Around or Seasonal based on what you and we agree upon prior to signing the Franchise Agreement. Satellites If you own a Shop and meet certain criteria, we may offer you the opportunity to establish and operate a satellite shop (“Satellite”) supported by the Shop. The Satellite is supported by the Shop’s production capability and will sell approved Menu Items for Satellites (“Satellite Menu Items”). If we grant you the right to operate a Satellite, you must sign the Satellite Addendum (the “Satellite Addendum”) to the Franchise Agreement and pay us a fee. The current form of the Satellite Addendum is attached as Exhibit B to this Disclosure Document. We do not offer the opportunity to operate a Satellite to any party that does not operate a Shop and is not in full compliance with their Franchise Agreement. Mobile Units If you own a Shop and meet certain criteria, we may offer you the opportunity to operate a mobile unit(s) (“Mobile Unit(s)”) supported by the Shop. A Mobile Unit(s) is an approved special, freestanding mobile unit (including mobile carts, stationary carts, kiosks, trailers and vans), which is decorated to meet our specifications. The Mobile Unit(s) is supported by the Shop’s production capability and will sell approved Menu Items for mobile units (“Mobile Menu Items”). If we grant you the right to operate a Mobile Unit(s), you must sign the Mobile Addendum (the “Mobile Addendum”) to the Franchise Agreement and pay us a fee. The current form of the Mobile Addendum is attached as Exhibit C to this Disclosure Document. The Mobile Addendum will grant you the right to operate up to three Mobile Units. We do not offer the opportunity to operate a Mobile Unit(s) to any party that does not operate a Shop or is not in full compliance with their Franchise Agreement. Under the Mobile Addendum, your Mobile Unit(s) may engage in approved off-premises special events, activities or sales, including specialty parties, festivals and business events (“Mobile Events”) in the Territory for the Shop. A Mobile Event is any event where there are multiple customers that pay individually for Mobile Menu Items sold at the event site. You may not use a Mobile Unit at any event site (including Mobile Events and Catering Activities) unless you have submitted to us a request for approval (“Mobile Event Request”) and we have approved the Mobile Event Request.
Initial Franchise Fees Shops When you sign a Franchise Agreement for a Shop, you must pay us the non-refundable initial franchise fee which is $30,000 for a Standard Shop and $15,000 for an Express Shop. Mobile Unit(s) If you enter into a Mobile Addendum with us, you must pay us a $10,000 non-refundable mobile unit initial franchise fee for the right to operate up to three Mobile Units. Satellites If you enter into a Satellite Addendum with us, you must also pay us a $15,000 non-refundable satellite shop initial franchise fee for the right to operate a Satellite. * * * Except for discounts we offered through certain International Franchise Association (IFA) programs last year, the initial franchise fees described above are uniform as to all franchisees purchasing a Shop, Mobile Unit(s) or Satellite. However, we reserve the right to reduce the initial franchise fees and to negotiate alternative fee arrangements with institutional franchisees, franchisees in unique locations or franchisees purchasing multiple locations. We may reduce, defer or waive the initial franchise fee for Shops or Satellites that require an entry fee to obtain a site or when a unique or compelling situation warrants. During 2018, we did not reduce our initial franchise fees collected from new franchisees, but for a limited period in 2018 we offered certain existing franchisees committing to develop in certain areas an initial fee reduction. We are a member of the IFA and participate in the IFA’s VetFran program. We offer franchise candidates qualifying under this program and our requirements a 20% reduction in the initial franchise fee for their first Shop. The qualifying franchise candidate(s) must own 51% or more of (i) the assets of the Shop, (ii) the rights under the Franchise Agreement and (iii) any entity that will be the franchisee. We reserve the right to cancel or modify this program at any time. Development Fees and Franchise Fees for Shops under a Development Agreement If you sign a Development Agreement for Standard Shops, the amount of the initial franchise fee for the Shops that you develop under the Development Agreement will be $30,000 for the first Shop, $20,000 for the second Shop, $15,000 for the third and each additional Shop. If you sign a Development Agreement for Express Shops, the amount of the initial franchise fee for the Shops that you develop under the Development Agreement will be $15,000 for the first Shop, $10,000 for the second Shop, $7,500 for the third and each additional Shop. Upon signing the Development Agreement, you must pay us a development fee (“Development Fee”) equal to the initial franchisee fee for the first Shop and 50% of the initial franchise fee for each additional Shop to be developed under the Development Agreement. The Development Fee is earned and non-refundable regardless of whether you enter into Franchise Agreements for those Shops. For 2018, we did not reduce the development fees we collected. You will pay the initial franchise fee for the first Shop as part of the Development Fee and, for each of the other Shops developed and operated under the Development Agreement, you must pay us the initial franchise fee (the amount of which will be determined according to the schedule of fees described above, as it applies to you) at the time you sign the Franchise Agreement for that Shop. The Development Fee and all initial franchise fees paid under a Development Agreement are earned and non-refundable when paid, in consideration of administrative and other expenses we incur in entering into the Development Agreement. If you meet your obligations under the Development Agreement and are not otherwise in default under any other agreement with us, as you sign Franchise Agreements for the development and operation of each Shop to be developed under the Development Agreement, we will credit the portion of the Development Fee that you paid for such Shop, as payment of the initial franchise fee due for that Shop. Before entering into the Development Agreement, we will review and consult with you concerning the proposed geographic areas that will comprise the Development Search Area. We will then determine and specify the required number of Shops and (if applicable) any Satellites that you must develop under the Development Agreement. Also, the Development Schedule will contain the required number of Shops and the time frames in which the Shops must be developed. We will specify the Development Schedule before you sign the Development Agreement. The factors that influence the minimum number of required Shops include projected market demand, the size of the Development Search Area, economic and demographic factors in that area, your financial and other capabilities and the duration of the Development Agreement. Pre-Opening Purchases Before the Shop opens, you must purchase from us and/or our distributors the Products and other items. We estimate that your total costs of pre-opening purchases from us and/or our distributors will range from $8,000 to $15,000 for a Standard Shop and $8,000 to $8,500 for an Express Shop. Factors which impact the costs of your pre-opening costs for Products and other items include the size of the Shop and the amount of Menu Items offered at the Shop. Your pre-opening purchases for a Satellite and/or Mobile Unit(s) will depend on how much you intend to increase the inventory at the Shop that will support the Satellite or Mobile Unit(s) and Menu Items offered by the Satellite or Mobile Unit(s). We estimate the total costs of pre-opening purchases from us and/or our distributors will range from $4,000 to $9,000 for a Satellite and $0 to $300 for a Mobile Unit(s). Minimum New Shop Marketing Program Expenditure The Franchise Agreement requires you to spend on a new shop marketing program (the “New Shop Marketing Program”) a minimum of (i) $12,000 for a Standard Shop and (ii) $10,000 for an Express Shop or Satellite (the “Minimum New Shop Marketing Program Expenditure”). You must deposit the Minimum New Shop Marketing Program Expenditure with us at least 60 days prior to the anticipated opening date and we will distribute such funds as necessary to conduct the New Shop Marketing Program. * * * Except as otherwise described above, all fees paid to us or our affiliates are payable in lump sum and nonrefundable.
We do not offer direct or indirect financing. We do not guarantee your note, lease or obligation. We do not know if you will be able to obtain financing for all or part of your investment and, if so, what the terms of such financing will be. We do not receive direct or indirect payments for placing financing. We participate in the SBA’s Franchise Registry Program described at www.franchiseregistry.com. Under the SBA’s Franchise Registry Program, we may modify the Franchise Agreement and Development Agreement, if necessary, to comply with SBA requirements for you to participate in certain SBA loan programs.
The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be given only if (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances. Other than the preceding financial performance representation, 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 Rita’s Franchise Company, LLC, Attn: Gerald Wells at 1210 Northbrook Drive, Suite 310, Trevose, PA 19053 and (800) 677-7482, the Federal Trade Commission and the appropriate state regulatory agencies. *** We acquired the rights to the Proprietary Marks and became the franchisor of the System on December 30, 2016. References to fiscal year 2016 in the above charts relate to the time period when the Immediate Predecessor was the franchisor of the System. (See Item 1). Attached as Exhibit G to this Disclosure Document is a list of the names, addresses and telephone numbers of all franchisees, and the names, city and state and last known business telephone number of every franchisee who had an outlet transferred, terminated, canceled, not renewed or who otherwise voluntarily or involuntarily ceased to do business under the Franchise Agreements and Development Agreements during the previous fiscal year, or who has not communicated with us within 10 weeks of the issuance date of this disclosure document. If you buy this franchise, your contact information may be disclosed to other buyers when you leave the System. In some instances, current and former franchisees/developers sign provisions restricting their ability to speak openly about their experience with us. You may wish to speak with current and former franchisees, but be aware that not all such franchisees will be able to communicate with you. We created Rita’s Franchise Advisory Council, Inc. (“RFAC”), a Pennsylvania not for profit corporation, to act as an advisory board to our management team. The address for the RFAC is 1210 Northbrook Drive, Suite 310, Trevose, Pennsylvania, 19053. The telephone number is 215-876-9300. Except as noted above, there are no trademark-specific franchisee organizations that need to be disclosed in this Disclosure Document.