Marketing and Advertising Dixie Lee Concepts Start up Costs of each Dixie Lee Concept

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3 TABLE OF CONTENTS History of Dixie Lee The Dixie Lee System Dixie Lee Menu Systems a. P.O.S. System b. Menu Costing c. Operations Manual Marketing and Advertising Dixie Lee Concepts Start up Costs of each Dixie Lee Concept The Dixie Lee System Frequently Asked Questions Credit Application

4 HISTORY OF DIXIE LEE Dixie Lee has been part of the food services industry in Canada for more than forty years and was founded in Belleville, Ontario, Canada in The concept was initially marketed as supplementary food items to existing restaurants. As society s requirements changed, Dixie Lee underwent the necessary modifications. As a result of the faster pace of life brought about by technological innovations which encouraged standardization, specialization and efficiency, consumers demanded an increase in speed and efficiency in customer service at fast food outlets. The food services industry responded to these demands by refining its product presentation and offerings. The development of fast food, which targeted specific market niches and utilized standard products and systems, contributed to the explosive growth and success of the format of franchising in the fast food sector. The efficient chicken and seafood takeout concepts found in Dixie Lee today evolved from a combination of society s changing demands, an innovative food service industry and a visionary Franchisor. Mr. David Silvester purchased the business from Dixie Lee's founder, Mr. Ramon Walmsley in 1979 and has been active in the business for the past 30 years. In January, 2006 Mr. Silvester sold the company and has remained with the company as a Franchise Consultant. Mr. Joe Murano, current President and C.E.O. brings strong leadership skills to Dixie Lee. Mr. Murano's background in franchising and real estate development has proven to be a strong asset for Dixie Lee. With the combination of strong leadership and the vast experience of a system that has been developed over the last 40 years, the future looks bright. Today, Dixie Lee has developed Area Franchise Agreements in China, South America, United Arab Emirates, India, Malaysia, Sri Lanka and Jamaica.

5 THE DIXIE LEE SYSTEM "If you plant the seed it will grow" In order to maintain the high standards of the Dixie Lee system, certain conditions and rules apply to each franchisee. These conditions are part of a development process that has evolved over the past 40 years. All franchisees will be obligated to follow the Dixie Lee system, including the Franchise Agreement and the Dixie Lee Operations Manual. Both of these documents form the complete Dixie Lee system, all franchisees must operate their restaurant within these guidelines. Dixie Lee prides itself with its strong commitment with working closely with franchisees and its area developers. Dixie recognizes the importance of developing its concept to fit the wide range of ethnic challenges worldwide. We take great care in tailoring our food line up and concept with each area being developed, this may include changing our spice taste profile or concept design, which ever works in that region. We are in search for franchise candidates to develop multiple unit restaurants. An advantage with this method allows you to maintain scale and leverage within your operation. All store openings in any area being developed requires: A learning curve with developing food preparation and efficiencies in production Developing processes and system communication procedures. Opening multiple restaurants utilizes this same knowledge which makes any future openings less complicated. Why Dixie Lee Dixie Lee can provide an opportunity to penetrate the chicken QSR segment held by our major competitor. We believe that the taste profile of our chicken over our competitors will prevail. As a franchisee Dixie Lee will provide the following: Access to nationally recognized foodservice providers Food buying programs with major suppliers lowering our food costs More than 40 years of franchise experience in the chicken QSR segment A willingness to work and support our franchisees in developing all aspects of their business

6 DIXIE LEE MENU International Add-on Products At Dixie Lee we understand the wide range of ethnic choices of food and strive to include and adapt to every cultural food requirement. Chicken Dinners One, two, three or four pieces of chicken Includes choice of fries, wedges or onion rings Includes choice of macaroni, potato or coleslaw salad Chicken Buckets Five, ten, fifteen or twenty pieces of chicken Other Chicken Products Chicken Burger with or without fries Dixie Big Crunch with or without fries Hot Chicken Sandwich with or without fries Grilled Chicken Breast with or without fries Chicken Nuggets six, nine or twenty pieces includes Four Piece Chicken Fingers with or without fries Buffalo Wings ten, twenty or forty pieces onion rings Popcorn Chicken Wraps Classic Caesar Chicken Wrap with or without fries California Garden Chicken Wrap with or without fries Pizza Basic and a variety of speciality pizzas 9, 13, 15 and 17 Chicken Meal Deals Five, ten, fifteen or twenty pieces of chicken Includes choice of fries, wedges or onion rings Includes gravy and choice of macaroni, potato or coleslaw salad Rotisserie Chicken ¼ Breast Dinner, ¼ Leg Dinner, ½ Dinner, Double Leg Dinner and Whole Chicken. Includes choice of fries or vegetable side dish and dipping sauce Seafood Shrimp n Dip includes choice of fries, wedges or onion rings Shrimp Basket Butterfly Shrimp includes choice of fries, wedges or onion rings Scallop Dinner includes choice of fries and salads Seafood Combo includes scallops, butterfly shrimp, and one piece of fish choice of fries and salads Fish Dinners one or two piece dinners with choice of fries, wedges or Salads Garden Salad with or without chicken Caesar Salad with or without chicken Sides Gravy, French Fries, Wedge, Fries, Onion Rings, Poutine, Mozzarella Sticks, Breaded Mushroom Caps, Coleslaw, Macaroni and Potato salad

7 SYSTEMS Point of Sale System With all new franchises that open worldwide, Dixie Lee is using the Maitre D Quick Service and Maitre D Table Service software with touch screen terminals for all its POS requirements. To help better meet specific operational needs, decrease training costs and increase efficiency, Maitre D offers flexible configuration of screens and screen flow, per employee and/or operational divisions. Since Maitre D offers a multitude of peripheral interfaces, you can add virtually any peripheral device or solution to the system for additional control and efficiency, such as scales, coin dispensers, a kitchen video system, drive-thru order confirmation board and even a camera surveillance system. With hundreds of reports and the option to customize or create your own reports, there is no limit to the availability of knowledge each unit could provide to each franchisee and Head Office. Maitre D also includes the following modules as add on features: Frequent Diner Time & Attendance Inventory & PO Management EFT with IP credit & debit card processing Accounting & Payroll Interfaces Gift card Interface PMS Interface Floor Management An important feature that Dixie Lee requires each franchisee to enrol in is the LogMeIn software feature which allows Head Office to remotely sign into any location via the internet to: 1. help troubleshoot errors that occur for each franchisee, if required 2. monitor and download all sales figures 3. control and edit the pricing of all menu items, specials and promotions

8 SYSTEMS Menu Costing System Dixie Lee has developed an in-house Menu Costing and Recipe Costing system to better manage the food and paper costs within our Canadian and International franchise system. The system is capable of the following: instantly re-calculates recipes and menus calculates shrinkage by menu item controls and reports on recipe and menu costing full reporting by category, item or entire menu catering function tracking exact cost from raw materials to end products all unit conversions are performed automatically when ingredients are added inventory tracking can easily be added analyse profit margins and food costing by menu item

9 SYSTEMS Operations Manual Dixie Lee has developed an operations manual which covers the complete system of Dixie Lee including the recipes and procedures for all menu items sold. The manual itself is all encompassing including the WHMIS program and the rules as set forth by the various levels of government. The manual is complete in all respects and together forms the complete system of the Dixie Lee operations. The franchise agreement sets out the rules of the franchisor and the manual details the operation. The franchise agreement by itself is not sufficient as it is a requirement to have an Operations Manual to back up the franchise agreement; Dixie Lee offers both hard copy and a CD/DVD version of the manual as well.

10 MARKETING AND ADVERTISING Building recognition of your store and the Dixie Lee name is an essential objective that benefits everyone. For this reason each franchisee is required to spend a total of 2% of gross sales on local advertising. Dixie Lee has a strong background on the best method of marketing the name of Dixie Lee in any given area. With our in-house Advertising Department, a plan is devised to gain the maximum sales potential for every Dixie Lee unit. In some cases, electronic media such as radio and television are used when there are groupings of 3 to 5 Dixie stores that can benefit from the same coverage. The use of newspapers and mail-out flyers is the most cost effective way to advertise to your target market. On a bi-monthly basis flyers are produced and delivered to each store where the franchisee will distribute the flyers using mail or in with newspaper distribution. In addition to the forms of advertising mentioned above, Dixie Lee also provides window posters along with point of sale material for the inside area of the Dixie Lee unit. Dixie Lee can also provide material to create a catering program that meets the social needs of family gatherings, sporting events, company luncheons and special event occasions.

11 DIXIE LEE CONCEPTS The success of Dixie Lee has been partly due to the flexibility of adapting the system to many applications. The three concepts below have been designed to meet the consumers demand for fast economical meals. The Dixie Lee strategy is simple, target the ever increasing take out business by locating units in convenient and accessible locations and develop units to minimize the franchisee s occupancy and staffing costs. With the diversity of the three concepts Dixie Lee can meet the needs of any development demands, the concepts are as follows: TAKE OUT/FOOD COURT UNIT This concept is approximately 1,000 to 2,000 sq/ft and is designed for smaller applications, such as areas with a small population base or within a food court in shopping malls. The cost to set up a take out unit is considerably less money for capital costs, due to the size.

12 DIXIE LEE CONCEPTS TAKE OUT WITH CONVENIENCE SEATING This concept is approximately 2,000 to 2,500 sq/ft with a seating capacity of 40 to 80 patrons and has the greatest flexibility in design layout. The concept is ideally situated for walk by traffic and is readily available for a sit down restaurant offering. FULL DINNING RESTAURANTS This concept is approximately 2,500 sq/ft plus with a seating capacity for over 100 patrons. Dixie Lee offers a themed restaurant with an outstanding array of menu items to meet the needs of a full restaurant concept with full table service.

13 DIXIE LEE START UP COSTS Start Up Costs 1) all costs are approximate and varies with each location selected 2) Costs do not include Leasehold Improvements, Building Permits & Fees, Franchise Fees etc Take Out 1,000-2,000 sq/ft Convenience Seating 2,000-2,500 sq/ft Dine In 2,500 plus sq/ft Essential Restaurant Equipment $ 90,000 $ 125,000 $ 150,000 Small Wares $ 15,000 $ 20,000 $ 25,000 Signage $ 9,500 $ 15,000 $ 25,000 POS & Communication Systems $ 5,000 $ 10,000 $ 15,000 Seating $ 0.0 $ 11,000 $ 30,000 Office Equipment & Supplies $ 3,500 $ 6,000 $ 10,000 Miscellaneous Equipment $ 2,000 $ 3,000 $ 4,000 Opening Inventory $ 10,000 $ 25,000 $ 30,000 Working Capital $ 25,000 $ 35,000 $ 45,000 Total Costs before the following $ 160,000 $ 250,000 $ 334,000 Rotisserie Equipment (optional) $ 5,000 $ 5,000 $ 10,000 Pizza Equipment (optional) $ 19,000 $ 19,000 $ 25,000 Total Costs including all optional equip $ 184,000 $ 274,000 $ 369,000 Before final estimation of opening costs can be given the Franchisor must view the location and building plans.

14 THE DIXIE LEE SYSTEM The Keys to Success The keys to successfully developing multi or single unit restaurants are: 1. financial stability 2. proven track record 3. the vision to see the potential of developing an Area territory 4. complete support from Dixie Lee Corporate 5. full compliance to using Dixie Lee systems What Dixie Lee will Provide Dixie Lee will provide our expertise in providing service and support to our franchisees in the following areas: 1. equipment sources 2. site selection 3. design layout 4. lease negotiations 5. establishing buying programs 6. assistance with store openings 7. establishing advertising programs 8. full training programs 9. store opening assistance Come join a winning team! Your first step is to complete and send us your Credit Application form. This will be followed by a phone call and arrangements for a visit. Buying a business is a large undertaking so the necessary time needs to be spent before you buy to ensure that your expectations will be met.

15 FREQUENTLY ASKED QUESTIONS Who is Dixie Lee? In 1964, the doors of the original home of Dixie Lee Fried Chicken were opened in Belleville, Ontario, Canada. A secret combination of the finest ingredients available to produce the top quality taste of Dixie Lee Fried Chicken resulted in immediate success. Public response was so positive it necessitated the original founders to open stores to meet the demand. Later fish was added to the menu which created a positive customer response. An All-Canadian franchise company, with the Head Office located in Kingston, Ontario, Dixie Lee now boasts over 60 stores across Canada ready to provide our customers with high quality food products at economical prices along with fast, friendly service. Where would you like your business? The choice is yours! With being a proven and growing company there are many locations and opportunities available. Consideration will be given to establishing in an Area that you have chosen. After demographic studies are completed, Dixie Lee will recommend the best sites in your area. The area must exceed the minimum site requirements of our site selection criteria. In addition to space, exposure and rent, the location must present sufficient demand for our product. Your success is our success! How can I get started? In a way you have already started by inquiring for information. Not everyone is suited to own and operate their own business. You owe it to yourself to arrange for an interview so that you are able to determine whether you would be successful and enjoy the challenge and benefits of self employment. Please complete our Credit Application and return it to us. We will then set up a convenient time that we can meet and discuss in greater detail your future with Dixie Lee. What is franchising? Franchising may be defined as a system of distribution in which one enterprise, the franchisor, grants to another, the franchisee, the right to operate a business in accordance with prescribed methods and procedures controlled by the Franchisor. The Franchisor offers his technical expertise, an approved system, and trade marks or other distinguishing marks or names, as well as the initial and ongoing operational support, in return for a continuing right to compensation from the franchisee. The aim of franchising is to achieve financial goals for both parties by combining the strength and expertise of centralized buying and merchandising with the energy and ingenuity of local private ownership and management.

16 Who are the Franchisor and Franchisee? The franchisor is Dixie Lee and the franchisee is anyone granted the right to operate a Dixie Lee franchise in accordance with the Dixie Lee system. How much cash do I need? Most Dixie Lee franchisees start a franchise business with a working capital of $25,000 to $40,000. The funds can be obtained from various sources such as savings, family, friends, investors or home equity. What can I expect to earn? Earning estimates will also be provided for each specific location. Your success as a franchisee depends upon many variables, including location, competition, and how effectively your business is operated. Is food or management experience necessary? No, this experience is unnecessary. It is estimated that only 30% of Dixie Lee franchisees have food or management experience. Management or business experience is helpful but not essential, as training is provided. Do I own my business? Yes, you will own your business, but you will have operational assistance from the franchisor whenever you require it. How much do I spend on advertising? Building recognition of your store and the Dixie Lee name is an essential objective that benefits everyone. For this reason each franchisee is required to spend 2% of gross sales on local advertising, a further 2% is required to be spent on regional advertising (if a regional advertising program has been established in your area) and a further 1% Ad Council Fee is levied for the creation of advertising and P.O.S. material that is required for each outlet. How much is your franchise fee? For a Franchise Fee of $25,000, you will receive a proven business concept, an established name and an exclusive territory. The franchisor also provides start up assistance, as well as ongoing assistance on a regular basis, extensive initial training, site location analysis and lease negotiation assistance. How much do I pay for royalties? All franchisees pay 6% in royalties.

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