c




    1958

     1959

Texas

 U.S.

   The franchisee will operate a dine-in, delivery, or delivery and carry-out
restaurant, offering primarily pizza, pasta and other Italian-style food items, under the name
Pizza Hut.

  

 Pizza Hut offers franchises to operate three types of Pizza Hut-branded
units at specific locations:

± Pizza and other products are sold for dine-in and carryout
consumption, and may be delivered for off-premises consumption
 ± Approved products are delivered for off-premises consumption
 ! " # $ ± Approved products are sold for carryout
and are delivered all for off-premises consumption

  %  The franchisor does not offer, directly or indirectly, any arrangements
for financing the initial investment or the continuing operation of the franchise. The
franchisor does not guarantee the franchisee¶s note, lease or obligation.

&  %  All unit managers of the franchised restaurant must complete
mandatory training. All training is done at the restaurant on the job. The manager must
commence such training within 90 days after the manager is hired or placed in the position.
The franchise¶s current mandatory training for restaurant managers includes approximately
82 hours of µon the job¶ training. The franchisor will provide the franchisee with one set of all
training materials for each of the franchised restaurants.

&  The franchisor grants the right to an exclusive territory. No other Pizza Hut
franchisees will develop or operate a restaurant within 500 yards of any of the franchisee¶s
restaurants. Furthermore, the franchisor will not allow any other Pizza Hunt franchisees to
offer delivery service to any point in the franchisee¶s designated delivery area. The franchisee
will not otherwise receive any exclusive territory or have the right to exclude development of
concepts owned by or licensed by the franchisor. Pizza Hut affiliate restaurants may be
located within 500 yards of the franchisee¶s restaurant or within their delivery area.

&'
%'(The term of the franchise is 20 years, with no option to
renew.

)     It is recommended, but not required, for the franchisee to
participate in the day-to-day operation of the franchise restaurant. Each restaurant must be
directly supervised by a manager on-site who has successfully completed the mandatory
training program. Neither the franchisee nor the on-site manager can have any interest in or
business relationship with any competitors. The on-site manager must sign a written
agreement to maintain the confidentiality of the franchise trade secrets and proprietary
information.

& *')
+  Approximately 34,000 units.

 '&)

Initial Investment:

*'
 , (  
Initial Franchise Fee $25,000 $25,000
Development Services Fee Varies
Development Fees Varies
Equipment $60,000 $450,000
Opening Inventory $4,000 $8,000
Smallwares $20,000 $45,000
Land, Building, and Improvements $330,000 $2,325,000
Computers $21,000 $70,000
Additional Funds (3 months) $5,000 $20,000
Miscellaneous $10,000 $22,000
Start-up "Other´ $3,000 $4,000
Total $478,000 $2,969,000

Ongoing Fees:

*'
 %' 
Monthly service fee 6.5% of gross sales
Taxes As levied by tax authorities
National advertising 2.5% - 3% of gross sales
IPHFHA Dues 2% - 3% of gross sales
The difference between 4.5% of monthly gross sales and the
Local advertising
required National Advertising contribution rate
The difference between 4.5% of monthly gross sales and the
Cooperative Advertising
required National Advertising contribution rate
Software training fee $1,500 plus travel and living expenses
Software maintenance/
$1,600 per year per unit for all services
support fee
Training Reasonable publication, preparation and administration fees
Additional materials Reasonable publication, preparation and administration fees
Audit Costs of Audit
Compliance Costs As needed
 Double the annual compensation of employee involved, plus costs
Employee Piracy
and attorney fees
As set by franchisor (currently 1.5% per month) but not in excess
Late charges
of maximum lawful rate
Unauthorized Closure Double the past year¶s monthly service fee
Relocation Maximum $25,000
Transfer fee $2,500 plus an additional $250 per unit transferred