BOBA LOCA USA, INC. FRANCHISE INFORMATION PACKET. Property of Boba Loca USA, Inc Neil Road, Suite # 430 Reno, NV 89502

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1 BOBA LOCA USA, INC. FRANCHISE INFORMATION PACKET

2 Dear Prospective Franchisee: Thank you for your interest in becoming a member of the Boba Loca USA, Inc. family. Please take your time in reviewing all the materials included in this information packet, as this is your first step in becoming a Boba Loca USA, Inc. Franchisee. If we have pleased your interest even more, please complete the enclosed questionnaire and return them to us via fax at (775) The questionnaire is necessary for us to initially evaluate your interest in our Franchise System and to help us communicate with you at our first business meeting. This document is to help you understand what is expected of you as a Franchisee and what to expect from us as the Franchisor. I look forward to receiving your application, and if I can answer any questions that you may have, please don t hesitate to call. And again, thank you for your interest in becoming a Boba Loca USA, Inc. Franchisee. Sincerely, Victor Gossler President/CEO Boba Loca USA, Inc. (775)

3 Boba Loca USA, Inc. Philosophy Business When it comes to enjoying a new and exciting beverage, the American consumer appears to have an insatiable appetite. Taking advantage of this phenomenon is a relatively new concept of refreshment called BOBA tea or BUBBLE tea. Originating in Asia, it has already become popular in many areas of the country and particularly in the Western U.S. BOBA is an Asian beverage that combines tea, smoothies, ice blended drinks or milk with the unique element of tapioca balls. Tapioca balls are made from the extract of the Cassava Roots and are all natural and healthy. These tapioca "bubbles" (as they are referred to) are the size of pearls or small marbles with the consistency of a "Gummy Bear". They are sipped through an extra wide straw and then chewed in the mouth. It s a beverage that is fun to drink! Boba is a drink option which means that they are only added to any of our great tasting drinks at the request of our customers. Twenty-three fully operational BOBA LOCA locations have already been successfully operating. BOBA LOCA is now planning a major nationwide expansion in key cities across the United States. The objective is to identify the best locations for the concept and to build up to a total of 100 stores in a 3 year period. Our Product BOBA LOCA has quickly become the leader of the Boba world and the standard by which all others are measured. The cozy, fun atmosphere creates the perfect environment for the generally young consumers who are looking for someplace to relax and get refreshed. It is now perhaps more hip than ever to drink new and different beverages that are desirable simply because they are not the usual soda pop that everyone else is drinking. Additionally, a large percentage of the beverages are purchased for consumption off our premises. Besides boba beverages, BOBA LOCA locations offer snacks, pastries and specialty candies, and have been tremendously successful in the past 3 years. BOBA LOCA locations also operate a full espresso bar for consumers who prefer a more traditional coffee beverage. With our free internet service this also makes us an internet café.

4 Franchise Info You will be carefully screened and qualified to meet our strict business experiences and financial requirements. All applicants must satisfy our interview process, credit check, fund verification, and corporate training to qualify for BOBA LOCA franchise. BOBA LOCA s franchisee(s) must follow and conform to all the strict corporate regulations and mandates. These firm business systems are set in place to ensure the level of quality and professionalism that is expected from a BOBA LOCA store. Our franchise system is easy to understand. Our operating systems are simple, logical, efficient and user friendly.

5 Boba Loca USA, Inc. Franchise Requirements Estimated Financial Requirements TOTAL ESTIMATED INVESTMENT + TURN KEY $88,445 TO $325,955 NON TURN KEY $88,445 TO $320,955 Royalties and Other Fees Royalty 4% of Gross Sales or $495 per month whichever is higher + Franchise Term Available in 2 and 5 years + Marketing Fund Fee 1% of Gross Sales or $175 per month whichever is higher + Multi unit development agreements are available + + Please note that we are going to provide you the full disclosure statement of the estimated investment upon receiving of our Franchise Disclosure Document (FDD).

6 How do I get started? Steps to become a Boba Loca Franchisee Step 2: Boba Loca Chain Store Application Review package, complete and return the Prospective Franchisee Questionnaire. Step 3: Information Review We evaluate your Prospective Franchisee Questionnaire, credit forms and background information. Step 4: Introductory Meeting Our Franchise Regional Developer meets you to introduce you to our operation and provide you with the Franchise Disclosure Document. Step 5: Franchise Agreement If you are approved, you need to sign the Franchise Agreement at least 14 days after you received the Franchise Disclosure Document. Step 6: Orientation In the orientation, we will cover all initial topics such as planning, budgeting, financing, equipment, site selection, store design and construction.

7 Step 7: Site Selection / Financing The process of selecting the perfect site and obtaining financing begins. Step 8: Franchisee Training Program Most of the training program will take place at a franchise location where detailed discussions of Boba Loca USA Operating Manual and Company Policy Handbook will cover all development issues, operations, management, and hands-on training procedures. Step 9: Construction During construction, hiring and orientation of employees takes place. Upon completion of construction, initial inventory is ordered and the store is set up. Step 10: Grand Opening of your Boba Loca USA Store On site training and field support within the phase of initial store opening will be provided.

8 Franchise Ownership FAQ 1. What makes Boba Loca stand apart from its competitors? Although there are many individually owned boba shops and chain stores, we know that none of them have Boba Loca s competitive advantage. Here are the reasons why Boba Loca is an ultimate partner for all your business needs. BOBA LOCA is devoted to offer the most flavorful, naturally great tasting, refreshing, and satisfying drink experience. BOBA LOCA team is committed to continuously provide worldclass quality products and services by making sure that every BOBA LOCA experience is enjoyable. We refuse to sacrifice quality for convenience by using precooked Boba or Powder Tea. BOBA LOCA is dedicated to spreading and cultivating the BOBA LOCA culture and experience to the world. BOBA LOCA is more than a great drink concept. Providing an excellent, warm, and genuine customer care which is an integral part of who we are and what we do. We are willing to guide you in the process of successfully building and running your own Boba Loca store. 2. Is it necessary to have a previous retail or restaurant experience to be a Boba Loca Franchisee? It is preferable that you have at least 3+ years in the Franchise / Restaurant area. The following qualifications, among others, are essential in order to be considered as a Boba Loca franchisee. A strong desire to succeed by satisfying and delighting our customers. The capability and capacity to create and manage an organization that effectively recruits, trains, retains and motivates people.

9 The psychographic traits which have been proven as a key to success for our proven franchisees. The ability to manage finances. Meet our market-specific financial and operational qualifications. The strong desire to build incremental income through building and operating stores. 3. How much cash or liquid assets will I need? Based on the estimated initial investments, we are going to evaluate cash or liquid assets on a case by case basis. 4. Is there any financing available? Currently, we do not offer any direct or indirect financing or guarantee on any note, lease or obligation. Financing can be obtained directly from your bank. You can also ask U.S. Small Business Administration for financing needs. The phone number is or you could visit their website at 5. What is the availability of sites and territories in my area of interest? The availability of territories in specific areas will be discussed during the personal meeting. However, we cannot predict which locations will be available when the recruitment process is completed. Therefore, flexibility regarding relocation may be required. You may check our web site for the list of the current locations which will give you a general idea where you may want to locate your store. 6. How am I going to pay those initial required fees? The method of payment, due date and to whom the fees should be paid will be discussed during the personal meeting and explained in the Franchise Disclosure Document.

10 7. Are there any ongoing fees paid to Boba Loca? Yes, there is 4% of royalty fee and a 1% advertising fee. The basis of royalty fee and advertising fee will be on monthly gross sales. A full explanation and disclosure will be provided in the Franchise Disclosure Document. 8. What is turn key and a non-turn key on leasehold and construction? The estimate for turn key improvements is if you ask us to help coordinate and remodel your selected location to a Boba Loca restaurant. The estimate for non-turn key improvements is if you elect to retain a third party provider to coordinate and remodel the restaurant to our specifications. In selected areas we can provide you with a fully ready to operate location. 9. I know very little about Commercial lease agreements. Will Boba Loca assist me in reviewing my lease? Boba Loca have years of experience in commercial landlord and tenant leases, which we will put to work for you in finding and evaluating potential locations. However, when it comes to actually reviewing and approving a lease, we recommend speaking with a qualified real estate attorney. 10. I have a perfect location in mind and there are no Boba Loca units nearby. Yet, the state and/or market do not seem to be available for development. Why not? There are number of reasons why an apparent perfect site remains undeveloped or is not available. It is not unusual for a given area to be reserved by an existing franchisee that will be expanding to the area in the near future. Some areas may appear suitable for expansion and/or development, but our strategies or business conditions may limit our desire to expand into the area.

11 11. What should I look for in a store location? We grant your franchise to use our trademarks for a single restaurant at a specific location. You may only operate your restaurant at a location we approve. If you have not selected a particular site for your restaurant when you sign the franchise agreement, we will designate a general geographic area specifying the area within which you may seek a location for your restaurant. 12. Are there still locations available for franchises? Currently, there are 23 total outlets and franchise system wide. We grant franchises to others to operate in an exclusive territory roughly approximating one driving mile more or less from other stores. The Exclusive Territory does not include Shopping Malls whether or not located within the territory granted to you. 13. What will be the fee for multi-units development? If you do have an existing franchise store and plan to purchase an additional Boba Loca franchise, there is a discount in the initial fees and fully detailed information will be given in the Franchise Disclosure Document. 14. How long would it take to set up a store? On the average after the signing of the Lease Agreement, typical set up duration would take approximately 3 months before business operation. 15. May I obtain the funds for a franchise from a relative, friend or associate? A single candidate must personally meet the financial qualifications, however if a partnership or corporation is formed, it is the total financial strength of the business partnership or corporation that must meet the minimum financial requirements. If a corporate entity is involved, all shareholder/members must sign a personal guaranty.

12 16. Do I need to actually work in my store(s)? Yes. You must be willing to work in your store and remain continuously involved in the day-to-day operation of your business. If you are corporation, partnership or entity you must designate an individual we can rely on for the personal and direct onsite management of the franchised business. 17. How much money can I make? Profitability will vary considerably depending upon such factors as sales, location, occupancy and operating costs, the financing terms, your ability to manage and control the business and other factors. We do not predict sales or profits for any new location. We encourage you to discuss this issue with us during the meeting. 18. What is Boba Loca s position on franchising on minorities? Throughout the history of our brand we have actively sought out those individuals who were most qualified to be our franchisees without regarding to gender, national origin or religion. 19. Where can I obtain the following information? Franchisor Financial Statements A copy of the Franchise Agreement Cost Breakdown Once you have completed and submitted the Prospective Franchisee Questionnaire and successfully completed the initial meeting, you will be given a Franchise Disclosure Document (FDD), which provides this information. This disclosure process is mandated by Federal and some State laws and is one of several steps within the approval process.

13 20. Is Boba Loca offering distributorship license agreements? Our business is operating and granting franchises to let people, like you, operate Boba Loca Specialty Drink restaurants, which offer specialized beverages, food and other menu items for on-premises consumption, carryout and delivery. We do not offer distributorship license agreement meaning purchasing Boba Loca products at wholesale prices without making any royalty payments. 21. What kind of support can I expect from Boba Loca? At Boba Loca, we provide the most thorough support to help our franchisee build their business. Our service includes store layout planning recommendation, cooking beverage training, grand opening promotions and limited time on-site support. We created a Confidential Business Operation Manual which contains our policies, specifications, procedures and instructions pertaining to the operation of Boba Loca system. 22. What type of training will I have to attend before I open my store? You will be required to successfully complete the Boba Loca appropriate training program prior to opening your store. You will be required to attend the company s business course approximately 40 hours over five (5) days. Training shall take place at a Boba Loca location designated by us and in your store location during the initial days of operation. 23. What happens after I submit my application? Upon submittal of your confidential application, a confirmation letter will detail the next steps in the application review process.

14 24. What are the next steps? Your application will be forwarded to the Franchising Regional Developer who is responsible for the area for which you have expressed interest. The Developer will review your application and determine how to proceed based on the information you have provided, the area in which you have expressed interest, and the strategy in place for that developing market. It is vitally important that you fill out the application completely so that the Developer will easily facilitate his/her decision-making process. The Developer will then notify you of this determination. 25. Where can I learn more about franchising in general? For more information on franchising visit the following website. International Franchise Association o My question isn t answered here. What should I do? Call Mr. Victor Gossler directly at (775)

15 PROSPECTIVE FRANCHISEE QUESTIONNAIRE Date: Personal Information Name: Address: City: State: Zip: Daytime Phone: Fax: Address: Business Information Geographical Area of Interest: List Business Experience: List Restaurant Experience: Current Net Worth: Cash Available: How did you hear about Boba Loca Franchise System? What is your timeframe to make a decision? IMPORTANT REMINDER: Please fax this document to (775)

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