Start the journey to success

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1 Start the journey to success

2 THE BRAND THE FRANCHISOR'S PERSPECTIVE Caramello's was established in 2002 with the name being derived from the Greek word Caramella which means sweet treat. Caramello s is an established brand in Central South Africa and aims to cater for the sophisticated markets confectionery, bakery & coffee shop needs. Stores locations are best suited in high traffic shopping complexes. Our store model requires between 150m² and 200m² combined retail space. What has been paramount to Caramello's success? The fact that the business is well established with12 years of operational success. The Founders & Franchisors still involved today and being very handson with the day-to-day operations makes it a very powerful brand with strong capacity as a Franchise, creating great opportunities for potential Franchisees. Furthermore the success of Caramello's can be attributed to the current & continued strong foundation of well established and profitable stores. We have gained great interest for our brand nationally and even internationally through our strong foundation in the well established and profitable stores. CARAMELLO S CORE CULTURES We have an exclusive Frozen Retail Offering with a FTO (Frozen to Oven) in-store baking process ensuring 100% availability of baked goods with a quality guarantee a 100% of the time, currently a unparalleled product offering in the market. Our unique stores strive to give an unparallel customer experience by ensuring that our PEOPLE, PRODUCT & EQUIPMENT are of a superior nature whilst keeping QAULITY, SERVICE and CLEANLINESS at the highest levels. We believe in open communication between ourselves and our patrons and understand without them we have no business. We pride ourselves in the fact that our initial investment required by a potential owner operator for a new store is approximately 50% less than that of our peers without compromising our store setup or quality of product. This, in itself, reduces the period required to retrieve ones initial capital outlay and increases return on investment. The on-going franchise fees are extremely well positioned at 6% royalty and a 3% marketing fee contribution. Despite the current growth within the group, service & customer satisfaction will always remain at the core of everything we do. Our central kitchen and distribution centre allows us to supply all confectionery, specialized bakery products, coffee supply and recipe items to our exclusive store

3 network, ensuring we remain exclusive, very responsive to quality, price, changing markets and keeping product innovation as part of our DNA. What challenges do you face at present? The Greatest Challenge most Franchisors face including ourselves is identifying and securing good locations, with good terms & conditions and rates, thereafter it is identifying a good owner operator and brand custodian to champion a new outlet. How has your franchise model worked in favour of Caramello's? Our unique menu offers great variety, ranging from breakfasts to gourmet burgers; from espresso's to coffee cocktails. We continuously strive to remain price and product conscious without neglecting quality and profits. One of our unique selling propositions is our Deli section, where we provide quality confectionery, bakery and catering platters for events. What are some of the attributes required from franchisees? Passionate Driven Hands-on operator Desire for growth Desire for profits Commitment towards excellence & service How would you describe the overall relationship between Caramello'sand its franchisees? We are very hands-on in our relationship with our franchisees and believe that to be a successful Franchise each stakeholder within the brand should be treated as a partner in the business. We believe a healthy relationship between Franchisor & Franchisee is built on a foundation of strong communication and as a result we greatly encourage and place high value upon Franchisee feedback, suggestions & overall communication. What kind of training and support can franchisees expect? We are very hands on with support to our franchisees and require all our owner operators to undergo a two month in-store training program prior opening their business. There is also a hand holding period once the business opens, thereafter we are just a phone call away besides our regular store visits and follow ups. Which factors are paramount for sustained future growth within Caramello'swith specific reference to its present and future franchisees? It is critical that every store that opens has a passionate, well trained, driven, hands-on operator that will champion their business daily.

4 Where to from here and into the future? What made you decide to buy a franchise? We have gained great interest for our brand nationally and even internationally and our aim to grow into a National Brand. Our short term objective is to award a minimum of 3 franchise outlets during We believe this is possible due to our current & continued strong foundation of well established & profitable stores, strong systems & procedures and hands-on Franchising approach. I wanted to buy a proven business model with established systems & procedures, for which I was willing to pay a monthly premium. After carefully conducting my various due diligence processes and finding the right franchise that matched my skill set and capital capacity, the return on investment & overall probability of success were automatically elevated & realized. We are also very excited for the launch of our new niche market offering whereby frozen deli & confectionery items will be retailed directly to walk-in customers whilst providing (FTO) Freezer to Oven deli & confectionery items to our coffee shop clientele. Details and a virtual store tour are available on our website. THE FRANCHISEE'S PERSPECTIVE How important is it to investigate a franchise and what criteria did you use? As mentioned previously LESS IS NOT MORE in this process and it is important to investigate every aspect and question everything upfront. Once you have concluded the necessary agreements there is no more room for negotiation or unrealistic expectations. What questions should prospective franchisees ask themselves before buying a franchise? It is very important for a potential franchisee to do their due diligence regarding the Franchisor company from every aspect. Ensuring that they visit & interview other successful franchisees is a paramount part of this due diligence process and may not be neglected, to mention but one of the many important procedures that require attention prior making any kind of investment decision. What made you buy a Caramello's franchise? They are a relatively young franchise but a well established business, who were very transparent from the beginning. This in itself presented a great opportunity. There systems & procedures, current brand loyalty & track record attracted me even more. To date I can say I have not been disappointed & my expectations have been surpassed.

5 What early challenges did you face? Initially Human Resources (HR) was a challenge for me with a larger staff turnover than I had anticipated, but once I found my feet it was mere run of the mill challenges that were overcome relatively easily with the training and ongoing support received from the Franchisor. What advice would you give to prospective franchisees? Do your homework thoroughly before entering into agreements. Understand your strengths & weaknesses and match them to a Franchise Opportunity. What training and support does the Franchisor provide you with? The Franchisor required me a two month in-store training program prior opening my franchise. Thereafter they have been very hands on and supportive. How important is the Franchisee's relationship with the Franchisor? If it looks too good to be true, it usually is. Any Franchisor promising you a fast or easy return on your money not accompanied with hard work is pulling wool over your eyes. Be very clear & understand WHY you want to purchase a specific Franchise opportunity. Extremely, there can be no success if there is a breakdown or lack of relationship between Franchisee & Franchisor. I must admit that Caramello's has welcomed and pursued relationship with me from the onset, something I am very thankful for and did not easily find when investigating other Franchise opportunities.

6 Fleurdal Mall (July 2013 store opening)

7 Brandwag Centre (June 2014 store opening)

8 QUICK FACTS ABOUT Founders The Ioannides brothers Year founded 2002 Area of origin Bloemfontein, Free State, South Africa CEO Rodos Ioannides NETWORK DETAILS First franchise opened 2013 Number of South African outlets 4 FINANCIAL STATISTICS Average monthly store turnover R Achievable gross margins 63% Average setup cost (incl. joining fee and working capital) R Initial franchise fee R Minimum owner's contribution percentage (excl. loans) 50% FRANCHISE AGREEMENT TERMS Management services fee 6% Marketing fee 3% Initial agreement term 5 years Renewal term 5 years FOR MORE INFORMATION Contact person: Shaun Coetzer Tel: / Website:

9 Telephone: Website:

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