SHOW ME THE MONEY

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.

The table below contains information on the average and median Net Sales for our company-owned and franchised Chop Stop restaurants that were open and continuously operating for the entire fiscal year for the following Fiscal Years: Fiscal 2019 (December 31, 2018 to December 29, 2019), Fiscal 2020 (December 30, 2019 to December 27, 2020), and Fiscal 2021 (December 28, 2020 to December 26, 2021). During 2020, all Chop Stop restaurants were required to temporarily close or limit operations to take-out and/or delivery only due to federal, state, and local laws or regulations that were imposed in response to both COVID-19 and civil unrest. During 2021, some of these government restrictions continued. All 15 Chop Stop restaurants that were open at the end of our 2019 Fiscal Year were located in California; and 20 of the 23 Chop Stop restaurants that were open at the end of our 2020 Fiscal Year were located in California. California enacted some of the strictest COVID-19 closures in the nation, and those closures remained in effect longer than almost anywhere else in the country. No Chop Stop restaurant permanently closed during the 2019 Fiscal Year, 2020 Fiscal Year, or 2021 Fiscal Year after opening and commencing operations.

At the start of our 2019 Fiscal Year we had 5 company-owned restaurants and 3 franchised restaurants (all located in California). At the start of our 2020 Fiscal Year we had 5 company-owned restaurants and 10 franchised restaurants (all located in California). At the start of our 2021 Fiscal Year we had 5 company-owned restaurants and 18 franchised restaurants (all located in California with the exception of 2 franchised restaurants in Nevada and 1 franchised restaurant in Texas).

The Chop Stop restaurants presented in the tables below have a footprint ranging from 1,100 to 1,700 square feet, and have been open from 1 to 11 years.

Notes to Tables 1 and 2:

• “Net Sales” means the aggregate amount of all sales of goods and services (including service charges in lieu of gratuity and delivery fees), whether for cash, on credit (not adjusted for credit card fees) or otherwise, made or provided in connection with each Chop Stop restaurant, including off premises sales and monies derived at or away from the restaurant, and including all sales made via third-party delivery and ordering applications, regardless of whether payment is made directly to the Chop Stop restaurant or a third party on behalf of the Chop Stop restaurant, and not adjusted for any fees paid to any third-party delivery and ordering application. Net Sales does not include taxes paid or accrued. Net Sales does not include adjustments for returns or discounts to customers on items sold, and Net Sales is not adjusted for any uncollected accounts.
• These 8 Chop Stop restaurants (3 franchised and 5 company-owned) were open and operating for at least 12 months as of the end of our 2019 Fiscal Year, at least 24 months at the end of our 2020 Fiscal Year, and at least 36 months at the end of our 2021 Fiscal Year (excluding any temporary closures that occurred during 2020 due to COVID-19 or situations where only take-out orders were accepted).
• These 15 Chop Stop restaurants (10 franchised and 5 company-owned) were open and operating for at least 12 months at of the end of our 2020 Fiscal Year, and at least 24 months at the end of our 2021 Fiscal Year (excluding any temporary closures that occurred during 2020 due to COVID-19 or situations where only take-out orders were accepted).
• These 23 Chop Stop restaurants (18 franchised and 5 company-owned) were open and operating for at least 12 months at of the end of our 2021 Fiscal Year (excluding any temporary closures that occurred during 2021 due to COVID-19 or situations where only take-out orders were accepted).

ADDITIONAL NOTES TO THE FINANCIAL PERFORMANCE REPRESENTATION:

• Written substantiation for the financial performance representation will be made available to the prospective franchisee upon reasonable request.
• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.
• The information presented above relates to the actual historical performance of the Chop Stop restaurants presented above. The financial information we utilized in preparing this Item 19 was based entirely upon information reported to us by our POS system. None of this information was audited.
• You are responsible for developing your own business plan for your Restaurant, including capital budgets, financial statements, projections and other elements appropriate to your particular circumstances. We encourage you to consult with your own accounting, business, and legal advisors in doing so.
• The financial performance representation does not reflect any costs or expenses that must be deducted from Net Sales to obtain your net profit. You should conduct an independent investigation of the costs and expenses you will incur in operating your Restaurant. Franchisees or former franchisees, listed in this disclosure document, may be one source of this information.

Other than the above information, we do not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or franchised outlets, nor do we authorize our employees or representatives to make any such representations either orally or in writing. If you receive any other financial performance information or projections of your future income, you should report it to Mark Kulkis at 2626 Foothill Blvd, Suite 230, La Crescenta, California 91214, telephone (818) 369-7350, contact the Federal Trade Commission, and the appropriate state regulatory agencies.