FRANCHISE DISCLOSURE DOCUMENT CONTENTS 1. INTRODUCTION 3 2. CORPORATE INFORMATION 3 3. COMPANY DIRECTORATE 3 4. A BRIEF HISTORY OF THE COMPANY 3 5. THE MANAGEMENT OF THE COMPANY 4 6. CURRENT FRANCHISEE NETWORK 4 6.1. List of current Franchisees 4 7. THE OCEAN BASKET PACKAGE 5 7.1. Restaurant location & setup 5 7.2. Training 5 7.3. Advertising & Marketing 5 7.4. Group benefits 5 8. THE APPLICATION PROCESS / FRANCHISE ASSESSMENT 6 9. THE OCEAN BASKET FRANCHISE AGREEMENT 6 9.1. Restaurant location & setup 6 9.2. Costs 6 9.2.1. Franchisees initial license fee / joining fee 6 9.2.2. Cost of development 6 9.2.3. Guarantee 7 9.2.4. Ocean Basket professional fee 7 9.2.5. Royalty fees 7 9.2.6. Marketing fees 7 9.2.7. Insurance costs 8 9.2.8. Training costs 8 9.3. Summary of restrictions of the Franchisee 8 9.3.1. Territorial 8 9.3.2. Sale 8 9.3.3. Assignment 9 9.3.4. Involvement in related business 9 9.4. Summary of Terms & Conditions relating to termination & renewal 9 9.4.1. Termination 9 9.4.2. Renewal of franchise agreement 10 9.4.3. Revamp of restaurant 10 9.5. Main obligations of Ocean Basket 10 9.5.1. Setup 10 9.5.2. Knowledge & experience 10 9.5.3. Training 10 9.5.4. Trading 10 9.5.5. Evaluations 10 9.5.6. Restaurant Support Manager & support system 10 10. THE FRANCHISEE’S INVESTMENT 11 10.1. Initial investment 11 10.2. Purchasing a restaurant 11 10.3. Financing 12 10.4. Other costs 12 10.5. Potential return 12 10.6. Main expenses 12 11. PURCHASING STOCK FROM HEAD OFFICE 12 12. CONCLUSION – THE FUTURE 13 ANNEXURE A: LIST OF EXISTING FRANCHSEES 14 1. INTRODUCTION We have provided this disclosure document to help you decide about buying an Ocean Basket Franchise. While it includes some information about our franchise agreement, don’t rely on it alone to understand the agreement. It is recommended that you also seek financial and legal advice on the franchise proposition. Please note that this disclosure document is provided for your convenience and information. The Franchisor will not be held liable for any representations or warranties that it makes in this document. Ocean Basket is a member in good standing of the Franchise Association of South Africa and, if required, further information on this membership can be obtained from: THE EXECUTIVE DIRECTOR FRANCHISE ASSOCIATION OF SOUTH AFRICA PRIVATE BAG X4 BEDFORDVIEW 2008 011 615 3679 2. CORPORATE INFORMATION Ocean Basket Franchise Company (Pty) Limited is duly registered in South Africa. Business office of the Franchisor: Ascot Park Corner Richards Drive and Le Roux Avenue Midrand Postal address: Private Bag X184 Halfway House 1685 Telephone: +27 11 655 1300 Email: [email protected] 3. COMPANY DIRECTORATE Director Peter Lazarides +27 11 655 1300 Director George Lazarides +27 11 655 1300 Director Pedro de Sambento +27 21 514 3780 Director Grace Ann Harding +27 11 655 1300 4. A BRIEF HISTORY OF THE COMPANY The Ocean Basket formula is simple: delicious Mediterranean style seafood at exceptional prices. The first Ocean Basket opened its doors in Pretoria in 1995. Brothers Fats (Peter) and George (Laz) Lazarides had a simple dream: to open a restaurant where people could enjoy great seafood without spending a fortune. Only the best was good enough for its customers, and the brand was founded on an obsession to serve, create happiness and to see people uplift themselves. When queues started forming outside their doors, the founders knew they had a winning recipe. Page 3 Soon they had 5 restaurants in Gauteng and Pedro De Sambento came on board to take Ocean Basket to Cape Town. Their excellent offering and incredible knowledge of the customer, combined with a clever location strategy, saw the brand quickly growing to become one of the most loved and respected restaurant brands in South Africa. Currently there are over 200 Ocean Basket restaurants in 18 countries around the world. Every day, 50,000 customers enjoy a meal at an Ocean Basket. From piping hot seafood served in our unique pans to the freshest and most innovative sushi, we pride ourselves on being the home of Mediterranean style seafood. 5. THE MANAGEMENT OF THE COMPANY Ocean Basket is managed by the following leaders: Chief Executive Officer Grace Harding +27 11 655 1300 Strategic Sourcing & Wholesale Pedro de Sambento +27 21 514 3780 IT Manager Karl Schoeman +27 11 655 1300 Finance Managers Nasreen Naidoo / Lauren Smith +27 11 655 1300 Head of Global Franchising John Camacho +27 11 655 1300 New Business South Africa Gabrielle Issa +27 11 655 1300 Restaurant Support Jessica Pallister +27 11 655 1300 Marketing Manager Morgan Mynhardt +27 11 655 1300 Store Development Sandra Caetano +27 11 655 1300 South Africa Franchise Jaime de Abreu + 27 11 655 1300 6. CURRENT FRANCHISEE NETWORK Information as at 1 January 2017: Number of outlets 205 Franchised outlets 195 Company-owned outlets 10 BEE outlets 28 International outlets 33 6.1. LIST OF CURRENT FRANCHISEES Please refer to the attached list of current Ocean Basket Franchisees who can be contacted or visited to assess the information disclosed herein. Attached Annexure A: List of existing Franchisees – 1 November 2018 Page 4 7. THE OCEAN BASKET PACKAGE 7.1. RESTAURANT LOCATION & SET UP As a prospective Franchisee you have at your disposal an experienced team that will partner with you, from initiation to completion. Their functions are: ▪ Evaluation and selection of suitable premises ▪ Assistance and advice regarding lease negotiations with the prospective landlord ▪ Planning layout and interior design ▪ Site development and supervision. 7.2. TRAINING New Franchisees and their crew undergo an intensive training programme, which encompasses both theoretical and practical on-the-job training. The course content is designed to fully prepare the participants for the operation of their new business. The training includes: 1. Training on all key areas of running an Ocean Basket restaurant 2. Welcome packs for the new crew members 3. Competency certification 4. Support for 10 days after the restaurant opening 5. Operates Brand standards manual and training manual 6. Assistance with the advertising for and interviewing of new applicants. Training courses run for a period of six to eight weeks. It is the Franchisee’s obligation to ensure that all staff are fully trained prior to working in any restaurant. Upon completion, the Franchisee will receive a comprehensive operator’s manual for reference purposes. The training programme is on-going and refresher courses are always available. 7.3. ADVERTISING & MARKETING The marketing fees are allocated to a dedicated Franchise marketing budget which is used for dynamic awareness campaigns. A variety of brand awareness and retail promotional campaigns are run across a variety of mass media, including: ▪ Print (national and regional publications) ▪ Radio ▪ TV ▪ Outdoor (street poles, billboards) ▪ Social media. 7.4. GROUP BENEFITS Franchisees enjoy access to a wide range of benefits, including: ▪ The backing of a dedicated and respected management team with years of experience in the franchise industry ▪ The benefit of belonging to a globally loved and respected seafood restaurant brand ▪ Bulk buying discounts and value as well as full distribution infrastructure ▪ Franchise support infrastructure which covers operational support, training support and financial feedback on your business. All these support systems are designed to make your business as successful as possible ▪ Access to the best seafood sourced globally. Page 5 8. THE APPLICATION PROCESS / FRANCHISE ASSESSMENT Ocean Basket takes great care to ensure that any prospective Franchisee will be a suitable restaurant operator and brand ambassador. As such, all potential Franchisees are required to: Complete the franchise application document in full Provide all the supporting documentation requested Pay the non-refundable application fee to complete the Shadow match Undergo an online Shadow Match test Complete the 2-3 day in-store assessment program Be interviewed by the franchisee approval committee Once the prospective Franchisee has gone through this process, all the information is taken into consideration to determine whether a candidate is suitable 9. THE OCEAN BASKET FRANCHISE AGREEMENT 9.1. RESTAURANT LOCATION & SET UP The Franchisor offers an agreement (the franchise agreement) which grants individuals, partnerships or corporations (the Franchisee) the right and license to establish, develop and operate an Ocean Basket outlet under the trade name Ocean Basket and under such other trade names, service marks and trademarks as may be designated by the Franchisor from time to time. The restaurant business is highly competitive, and the Franchisee will have to compete with numerous other outlets offering a wide variety of foods. 9.2. COSTS All monies payable by the Franchisee is to be deposited into the trust account of our appointed attorneys, Christelis Artemides Attorneys. These funds will be dealt with as provided for in the franchise agreement. Christelis Artemides Trust Account Nedbank, Business Central Branch Account Number: 1906 395 578 Branch: 128405 9.2.1. FRANCHISEES INITIAL LICENSE FEE / JOINING FEE The initial (joining) fee charged by the Franchisor is R150 000 (one hundred and fifty thousand Rand) exclusive of VAT. The joining fee is payable in a lump sum upon acceptance as a Franchisee and signing of the franchise agreement. The fee is refundable should the Franchisee fail to procure the necessary development funding of same; or fails to secure a lease. This fee covers the following aspects of establishing an Ocean Basket franchise restaurant: ▪ The right to use the brand name and associated intellectual property within the brand guidelines set out by Ocean Basket 1.