FRANCHISE NI FORMATION - Marcos Pizza Franchising a gourmet pizza shop and still be convenient and affordable. For instance, dough is made fresh daily in every store using our specially

FRANCHISE INFORMATION

REPORT

CONTENTS

WHAT IS MARCO’S? ..................................................................................... 1

HOW IS MARCO’S DIFFERENT FROM ITS COMPETITORS? ..........................3

THE MARCO’S STORY ..........................................................................................5

WHAT ARE THE STARTUP COSTS? ....................................................................7

HOW DO I FINANCE MY MARCO’S? ..................................................................11

HOW MUCH CAN I MAKE? ..................................................................................12

NEXT STEPS ...........................................................................................................17

©2017 Marco’s Pizza. All rights reserved.

The franchise sales information in this document do not constitute an offer to sell a franchise. The offer of a franchise can only be made through the delivery of a

Franchise Disclosure Document. Certain states require that we register the franchise disclosure document in those states. The communications in this document

are not directed by us to the residents of any of those states. Moreover, we will not offer or sell franchises in those states until we have registered the franchise (or

obtained an applicable exemption from registration) and delivered the franchise disclosure document to the prospective franchisee in compliance with applicable

law.

Ah!thentic Italian Pizza® FranchiseFRANCHISE INFORMATION REPORT

marcosfranchising.com i

WHAT IS MARCO’S?

ONE OF THE FASTEST-GROWING PIZZA DELIVERY FRANCHISES IN THE U.S., THANKS TO OUR HIGH-QUALITY INGREDIENTS

Fed up with the lack of good-quality pizza delivery franchises, Italian-born Marco’s founder, Pat Giammarco, sought to create an authentic Italian pizza — an artisan pie created with the fresh dough and the highest quality ingredients delivered swiftly to your home.

Delivery pizza is a highly competitive industry, and he believed if people could get a better-tasting pizza for the same price they usually pay, they would keep coming back. Marco’s has become one of the top pizza delivery franchises and is giving the bigger brands a serious run for their money.

What makes Marco’s unique is the dedication to producing the best delivery pizza money can buy. Customers may order a delivery or takeout pizza because it is inexpensive and convenient, but that doesn’t mean they don’t want great taste. At Marco’s, we believe a delivery pizza can be as good as an artisan pizza from a gourmet pizza shop and still be convenient and affordable.

For instance, dough is made fresh daily in every store using our specially formulated flour. Our sauce is made from tomatoes developed and grown especially for Marco’s. The 100% real cheese that blankets every pizza is always fresh, never frozen. And you’ll find our team members prepping fresh vegetables and using only premium meats (no fillers) for toppings.Marco’s is an affordable luxury. The difference? While other national chains deeply discount and compete


marcosfranchising.com 1

over price point, Marco’s competes on quality and authenticity.

The other pizza chains do business similarly to McDonald’s, Burger King and Wendy’s, appealing to a more price-sensitive customer. Marco’s more closely resembles Five Guys Burgers and Fries – still offering a fast and inexpensive meal but one that is much higher quality. We may charge a little bit more, but like a Five Guys burger, our pizza is worth it.

If you’re passionate about quality and want to join a well established and rapidly growing brand, Marco’s may be right for you.

OUR PHILOSOPHY

Consistency, authenticity and quality. These aren’t just buzzwords in the company’s mission statement but the lifeblood of the brand that pumps through the veins of each franchisee in the system. They are the keys to our success.

Founder Pasquale “Pat” Giammarco was born in Italy and came to America with his family as a young boy. His father ran restaurants, and it’s something Pat gravitated toward as a young man in Toledo, Ohio. He wanted to make the kind of fresh, artisan pizza he remembered from his childhood, and to serve a pizza he could be proud of. That meant creating every pizza with the freshest quality ingredients available. In 1978, Marco’s authentic Italian pizzas quickly became a hit, and he grew a chain of pizza stores serving communities in nearby Indiana, Michigan and Ohio.

In the mid-2000s, it was CEO Jack Butorac who saw the opportunity to take Marco’s to the next level as a high-quality pizza delivery franchise. He felt pizza lovers deserved something better and he knew Marco’s Pizza was what the market was missing. He became a consultant for Marco’s in 2003, and he purchased the franchise rights to Marco’s in 2004.

With three decades overseeing the national expansion of restaurant chains with Chi-Chi’s, Fuddruckers and Tumbleweed, Jack had the vision and the know-how to take Marco’s from a regional favorite to one of the fastest-growing restaurant franchises in the country.

Marco’s wouldn’t dream of selling a second-class product. Some Marco’s franchisees started as managers or executives with other national pizza delivery franchises. But when it came time to invest their own money in a product they believed in, they chose Marco’s. If you were to attend one of our many franchisee conferences, you would hear their passionate commitment to product quality and the total customer experience.

WHAT IS MARCO’S? (continued)



HOW IS MARCO’S DIFFERENT FROM ITS COMPETITORS?

WE STAND OUT FROM OTHER PIZZA FRANCHISE OPPORTUNITIES BY MAKING QUALITY PIZZA OUR BIGGEST CONCERN

If you asked 100 people what their favorite pizza is, you’d probably get 100 different answers. But if you let 100 people sample Marco’s specialty pizzas alongside its competitors, the majority of them would choose Marco’s. For potential business owners looking at pizza franchise opportunities, that makes Marco’s stand out.

When we hired the Procter & Gamble Test Kitchen, MRSI, to conduct a four-month study with focus groups, 72% of people who tried Marco’s pizza said they’d purchase it again — more than twice the intent to repurchase of the other pizza delivery franchises the kitchen tested.

“If you serve a great-tasting pizza, the business will follow,” says Bryon Stephens, Marco’s President. “In our industry, you are only as good as your last pizza. Our customers keep buying from us because our pizzas taste better.”

The business world is starting to take notice:Marco’s is now the fastest-growing pizza company in the country.

Marco’s was ranked No. 38 on Entrepreneur magazine’s prestigious Franchise 500 list in 2017, a higher ranking than any other pizza franchise opportunities.



HOW IS MARCO’S DIFFERENT FROM ITS COMPETITORS? (continued)

THE TASTE OF ITALY

Founder Pasquale “Pat” Giammarco spent his early childhood in Italy, where people used only the best, freshest ingredients available. Pat wanted his own brand of pizza to be made in the same authentic Italian way. Here are four reasons Marco’s pizza is so much better than the others:

1. The Dough. Our pizza crust isn’t frozen in some factory and shipped to stores. We make the dough fresh in-store every day from premium spring wheat flour, specially filtered water and high-quality yeast. After analyzing the type of flour that works best for our pizza in our ovens, we found Minnesota-grown spring wheat, with its higher protein content, produces the best-tasting crust.

2. The Sauce. From a recipe developed by Pat and his father, our sauce packs a punch of flavor. The sauce originally included three types of tomato — one each for taste, color and texture. From there, growers developed an hybrid that included the best qualities of all three tomatoes, grown in California just for Marco’s. All our sauce is made from these specially grown tomatoes, and proprietary spices are blended into the sauce daily in the store.

3. The Cheese. We use a secret blend of three fresh cheeses from Wisconsin and Iowa to blanket our pizza, giving it a distinct flavor. It’s as good as the best gourmet pizza you can buy in any mom-and-pop.

4. The Toppings. We use only premium, thick-cut meats, including two types of pepperoni and our own meatball-sized sweet Italian sausage. As for how many toppings we use, you need only feel the heft of a Marco’s pizza box to know we serve generous, robust portions.

We pay attention to quality in our other menu items, too, from our CheezyBread and CinnaSquares® to our wings, salads and subs. Marco’s is an affordable luxury; it costs a couple of bucks more than the other guys, but our customers know we’re worth it.

Think about it. For about $4 a person, you get a mass-produced, “fast food” quality pizza. For about $5 a person at Marco’s, you get an authentic Italian pizzeria-quality product. Which would you rather have?



THE MARCO’S® STORY

WHAT DOES IT MEAN FOR MARCO’S PIZZA FRANCHISE TO BE “AUTHENTIC ITALIAN?”

Marco’s Pizza franchise founder Pasquale “Pat” Giammarco understands better than most what makes for an authentic Italian pizza. It’s not about a certain thickness of crust or a particular combination of toppings; it’s about using the best, freshest ingredients available. It’s about making something you’d be proud to serve to your mother. Simply put, it’s about celebrating good food with people you love. That’s the beauty of a delivery pizza – in a busy and hectic world, a family can slow down and spend time enjoying each other’s company.

Pat was just 9 when his family moved from Italy to make a new home in Toledo, Ohio, in 1966, but Pat always remembered the wonderful food he grew up with in his native country.

“In Italy, they take pride in what they serve, whether you go to a restaurant or to someone’s house. In Europe, if they don’t like your food, they’ll throw it back in your face,” says Pat.His father made a career in the restaurant business in the U.S., and Pat followed in his footsteps. In 1978, he opened his first Marco’s. He had expanded to 112 restaurants by 2004 when he first met our current CEO Jack Butorac. Jack, who had decades of experience marketing food franchises and bringing them to market nationally, had a much larger vision. Jack started in 2003 as a consultant and soon bought the Marco’s Pizza franchise rights, with an eye toward national expansion.

He pulled together an impressive team of managers, many with decades of food franchise experience at brands like Domino’s, Little Caesars and Papa John’s. The team understood how to grow a franchise brand that delights customers and how to build a profitable business model for franchisees.

Business has been booming ever since, and today there are hundreds of stores in the United States and three other countries, and we’re still growing by leaps and bounds. One of the keys to our success is the combination of the best ingredients with a passion for making a great pizza, every time.



“Besides the freshness and the quality, there’s a bit of an art to making sure it’s prepared properly, baked properly, packaged properly and serviced properly,” says Pat.

“When you put it all together, that’s why we beat our competitors. You can’t just lower your prices. That gets them in the door one or two times, but if they’re not happy with the product, they’re not going to come back.”The idea for Marco’s was to produce a consistently high-quality pizza to keep customers coming back, and it had to be good enough for someone with an authentic Italian heritage to be proud of.

“I eat pizza almost every day,” says our Italian-born founder. “I’m proud to serve my pizza to anyone who comes here from Italy.”

Even so, pizza has become a quintessential American food.

“I think Americans love pizza — and burgers and hot dogs and tacos and chicken. I don’t think people will ever get tired of pizza. Whoever does a better job of making it will outsell the others.”

THE MARCO’S® STORY (continued)



WHAT ARE THE COSTS?

WITH OUR REASONABLE PIZZA FRANCHISE STARTUP COST, FRANCHISEES CAN INVEST WITH CONFIDENCE

The Marco’s Pizza franchise startup cost ranges from $222,830 to $663,830. Your total initial investment depends primarily upon the number of restaurants you build, their size, their configuration, their location, who develops the real estate for and/or constructs them, and the amount and terms of financing. For a more detailed look at the pizza franchise startup costs and fees, please review the tables below:

STORE WITH LIMITED SEATING

Type of Expenditure Amount Method of Payment When Due To Whom Paid

Initial Franchise Fee (Note 1) $25,000 See Note 1 See Note 1 Us

Real Property (Note 2) $6,500 - $16,500 See Note 2 Monthly Landlord

Equipment, Fixtures (Note 3) $60,000 - $107,000 As Incurred Before Opening Vendors

Point of Sale Computers (Note 4) $20,500 - $30,500 As Incurred Before Installation Vendors

Leasehold Improvements (Note 5) $20,500 - $130,000 As Incurred Before Opening Vendors; Contractors

Signage $3,000 - $9,000 As Incurred Before Opening Vendors; Contractors

Opening Inventory (Note 6) $6,000 - $15,000 Lump Sum Before Opening Suppliers

Small Supplies (Note 7) $9,500 $11,500 Lump Sum See Note 6 Suppliers; Us

Delivery Vehicles (Note 8) See Note 8 Lump Sum Before Opening Dealer/Mfr./ Driver

Deposits, Pre-Paid Expenses (Note 9) $1,400 - $7,000 Lump Sum Before Opening Suppliers; Utilities

Business Licenses (Note 10) $100 - $500 Lump Sum Before Opening State & Local Agencies

Insurance (Note 11) $1,500 - $4,000 As Incurred Before Opening Insurance Company

Training Expenses (Note 12) $500 - $5,000 As Incurred Before Opening Employees, Hotel, Etc.

Miscellaneous Expenses (Note 13) $500 - $5,000 As Incurred As Required Suppliers, Employees

Additional Funds (3 months) (Note 14)

$32,500 As Incurred As Required Suppliers, Employees

Architectural and Engineering (Note 15) $4,000 - $6,500 Lump Sum Before Opening Professionals

Technology Fee (Note 16) $330 Lump Sum Before Opening Us

Delivery Area, streets database for POS, and shape files for POS and OLO platform Maps

$1,000 - $1,500 Lump SumBefore Opening

Suppliers, Us

Brand Launch Program (Note 17) $30,000 Installments See Note 17 Us

TOTAL $222,830 to $436,830

OUR MINIMUM CRITERIA FOR NEW FRANCHISEES:

• $100,000 in liquid assets. This includes anything besides home equity that can be converted to cash within 30 days. Retirement accounts such as a 401K or IRA can be considered.

• Net worth of $350,000.

• Strong credit.



WHAT ARE THE COSTS? (continued)

STORE WITH EXPANDED SEATING

Type of Expenditure Amount Method of When Due To Whom Paid

Initial Franchise Fee (Note 1) 25,000 See Note 1 See Note 1 Us



Point of Sale Computers (Note 4) $20,500 - $30,500 As Incurred Before Installation Vendors




Small Supplies (Note 7) $11,500 - $13,500 Lump Sum See Note 6 Suppliers; Us

Delivery Vehicles (Note 8) See Note 8 Lump Sum Before Opening Dealer/Mfr./ Driver


Business Licenses (Note 10) $100 - $500 Lump Sum Before OpeningState & Local Agencies




Additional Funds $32,500 As Incurred As Required Suppliers, Employees

(3 months) (Note 14)


Technology Fee (Note 16) $330 Lump Sum Before opening Us

Delivery Area, streets database for POS, and shape files for POS and OLO platform Maps

$1,000 - $1,500 Lump Sum Before Opening Suppliers, Us

Brand Launch Program (Note 17) $30,000 Installments See Note 17 Us

TOTAL $309,130 to $663,830



WHAT ARE THE COSTS? (continued)

SPECIAL VENUE STORE


Initial Franchise Fee (Note 1) $10,000 - $25,000 See Note 1 See Note 1 Us



Point of Sale Computers (Note 4) $0 - $38,000 As Incurred Before Installation Vendors




Small Supplies (Note 7) $6,000 - $8,500 Lump Sum See Note 6 Suppliers; Us

Delivery Vehicles $0


Business Licenses (Note 10) $100 - $500 Lump Sum Before Opening State & Local Agencies




Additional Funds $30,000 As Incurred As Required Suppliers, Employees

(3 months) (Note 14)


Web-Based Training (Note 16) $92 Lump Sum Before opening Us

Delivery Area, streets database for POS, and shape files for POS and OLO platform maps

$0

Special Grand Opening Marketing Program (Note 17)

$0 - $10,000 Lump Sum Before Opening Suppliers; Us

TOTAL $149,592 to $403,092


Development Fee$5,000 for each Store to be developed (minimum of two)

Lump sum See Note 1 Us

Total $10,000

DEVELOPMENT AGREEMENT



WHAT ARE THE COSTS? (continued)Notes to Item 7 tables:

1. The Initial Franchise Fee is determined as explained in Item 5 above. If we grant you the right to develop multiple locations (minimum of two), you will pay us the Development Fee at the time you sign the Development Agreement. We will apply a $5,000 credit towards the Initial Franchise Fee due under each related Franchise Agreement.

The amounts that you pay to us are not refundable (except in the limited circumstances described in Item 5 above). Your payment obligations to vendors are not likely to be refundable unless you negotiate those arrangements.

2. The estimate in the chart is for the space that you will need to operate your Store, through the end of the third month of operation, as described below.

Real estate costs vary widely from place to place, and franchisees have a wide range of options to choose from in selecting a location. Your location must be in a general area that will allow you to provide delivery services efficiently and conveniently to customers in the area you serve. You will need about 1,200 – 2,500 square feet of space for your location. Most franchisees find suitable space in a commercial district or strip mall located relatively close to residential areas.

Commercial rental rates vary rather substantially based upon a wide range of factors. The estimate provided in the table is based on the following factors: (1) that in the current real estate market, you will be able to negotiate a total rent abatement for the build-out period (that is, before your store opens); (2) that you will pay a one-month security deposit in addition to the three-month period after you open, for a total of four months’ rent; and (3) that you will lease between 1,200 to 2,500 square feet of space for your store. Stores -Limited Seating typically occupy 1,200 to 1,600 square feet of space at an annual rate of rent of between $15 and $35 per square foot. Stores - Expanded Seating occupy 1,500 to2,500 square feet at an annual rental rate of between $10 and $30 per square foot.

If you lease a location, you are also likely to incur build-out expenses (see note 5 below). You may also incur real estate broker fees, additional prepayments, “additional rent, “common area maintenance (CAM fees), operating fees, or other costs, depending on the terms of your lease and the prevailing real estate market in your area.

Most franchisees lease their space. We cannot estimate your costs for buying or leasing land and constructing a building, as these costs vary substantially from market to market, depending on many factors, such as location and the design and construction of the building, as well as fluctuations in the local real estate market.

3. This cost estimate includes all major pieces of equipment for your Store as required under our manuals, installation costs and freight. It does not include any sales tax on the equipment, which varies from state-to-state. The low estimate assumes the purchase of some refurbished equipment. The upper estimate assumes that you will purchase all new equipment. Stores - Expanded Seating will require tables and chairs, benches or other seating arrangements ranging in cost from $50 to $150 per seat, inclusive of the cost of the table.

4. We require all new Stores to install an approved “point-of-sale” (POS) and “online ordering” system. The technology environment is rapidly changing and it is difficult to anticipate the future cost of developing, acquiring, implementing, and licensing POS and related digital technologies, including mobile apps, that may benefit the System. These advancements may result in additional costs of the POS systems beyond what is currently being charged by the providers. Presently we have two approved POS systems offered by Pyrimont Operating Solutions, a division of Front End Digital, Inc. and FoodTecSolutions, Inc. Pyrimont Operating Solutions and FoodTec Solutions also provides the online ordering system through third party arrangements. The cost estimates indicated in this table include an estimated $500 in start-up expenses to allow a Pyrimont or FoodTecSolutions equipped store to accept on-line (website) pizza and other food order entry. See Franchise Agreement Section 13.15 for additional information on on-line order entry requirements. Stores - Expanded Seating may need to install an additional order taking station at a cost of approximately $2,000. You may fully pay for the POS system at the time of purchase, or a leasing program is available through both POS providers for the hardware cost.

5. You will incur costs for the build-out of your Store. You will lease between 1,200 to 2,500 square feet of space for your Store. A Stores – Limited Seating will occupy between 1,200and 1,600 square feet of space and will require leasehold improvements at a cost ranging from $20,500 to $130,000. Stores - Expanded Seating will occupy between 1,500 and2,500 square feet of space and will require leasehold improvements at a cost ranging from$90,000 to $320,000. The upper end of this scale would include substantial rehabilitation costs not normally incurred and also assumes substantial remodeling of the space, not previously useable by a food business with little or no work performed or funded by the landlord. You may be able to negotiate a construction allowance from the landlord, which may cover a portion of the build-out/leasehold improvement expenses. The lower estimate assumes a substantial amount of the work will be performed or funded by the landlord.

6. You will need an initial supply of inventory, including items including foodstuffs and paper goods. The estimated cost should cover approximately 1 to 2 weeks of operation. All supplies and inventory must meet our standards and specifications (see Item 8).

7. You will need various “small supplies,” including various hand tools for pizza making. You will also need miscellaneous stationery and office supplies, including forms we designate (see Item 8).

8. You will need a sufficient number of delivery vehicles, each of which must be outfitted with sign or painted to our specifications (see Item 8). Our estimate assumes that you will hire delivery drivers who will have their own vehicles, and that you will simply lend a “cartop” sign for each vehicle. Most Stores need 6 to 12 delivery vehicles available. Our estimate does not include the cost of directly leasing or buying vehicles.

9. The estimate includes deposits that may be refundable to you at a later time. In most cases, your lease will require you to pay electric, gas, water and other utilities directly; however, some landlords cover some utility charges through CAM fees or operating fees (see Note 2 above).

10. You should consult your lawyer or your local county and state authorities about the specific legal requirements for business licenses and related types of expenses in your local area.

11. Insurance costs may vary in different localities. The estimate is for initial amounts paid in the first 90 days, which may include a full year of liability insurance coverage, including hired/non-owned automobile coverage. If you have employees, you must maintain adequate workers’ compensation and liability insurance. We are unable to estimate amounts for workers’ compensation insurance. The requirements and rates vary widely from place to place. We reserve the right to require additional types of insurance and coverage as provided under the Franchise Agreement. See Item 8 for our insurance requirements.

During training, you must obtain workers’ compensation insurance on yourself and on all personnel undergoing training at our facilities. You must also have the insurance coverage outlined above in effect at the beginning of the training period, and maintain it throughout your training. You will not be allowed to begin training until you have given us proof of insurance coverage.

12. This estimate does not include additional training fees, which would apply if you decide to send more than 1 person to the initial training course (see Item 6). For training requirements in general, see Item 11. These costs would be paid to other suppliers such as hotels and airline companies if you were traveling.

13. “Miscellaneous expenses” includes a variety of other costs. Legal expenses would be a miscellaneous expense included in this cost estimate. In some cases, you may need assistance from others in helping to obtain financing for your Store. The amount of that assistance may depend on the amount of your loan and may run as high as 3% of your financed amount (or more in some circumstances). In addition, if your financing must be guaranteed by the SBA (Small Business Administration), the SBA may require you to pay a 2% guarantee fee.

14. We require you to have a minimum of $30,000 in working capital available when your store opens for business and all expenses are paid. This is an estimate only of the amount of funds you may need for start-up and additional payroll expenses you may incur and your start-up expenses may be higher or lower. The actual amount of additional funds you will need depends on a variety of factors, including the type of community in which you open Store, the size of your advertising area and delivery territory, the time of year when you open your Store, your own management skill, economic conditions, competition in your area, and other factors.

15. You will be required to obtain professional blue prints and engineering drawings for your Store and in most cases to obtain construction permits, food service permits, and other required permits. Most equipment purveyors will provide basic line drawings at little or no cost to you that you can provide your chosen architect or engineer in order to save substantial time and money. We may provide recommendations for a possible architect or engineer, however you are not obligated to choose our recommendation. We will review the basis line drawings and the final blue prints in order to ensure compliance with the System. You will be responsible for all architectural, engineering and similar fees.

16. You will be required to pay to us $110.54 per Period for the Technology Fee.

17. The total cost of the Brand Launch Program is $30,000 and covers all the expected costs of local store marketing for the first 4-6 months the Store is open plus the Grand Opening event expenses. Included in the total cost is $5,000 for Launch Kit items (banners, yard signs etc.) You will pay this amount to the Marco’s Advertising Fund in installments, as follows: (1) $5,000 when you sign your Franchise Agreement; (2) $10,000 when you receive building permits for construction of your Store; and (3) the remaining $15,000balance will be paid through a weekly automated debit from your checking account (ACH deduction) of $937.50 per week for the 16 weeks following the Store opening date. All marketing for Special Venue Stores must be approved by us. Special Venue Stores are not required to participate in the Brand Launch Program, but we may require special marketing programs for the grand opening.



HOW DO I FINANCE MY MARCO’S?

THE NUMBER OF FINANCING OPTIONS AVAILABLE CAN MAKE THE COST OF STARTING A PIZZA BUSINESS MORE AFFORDABLE THAN YOU MIGHT EXPECT

With the financing options available, the cost of starting a pizza business isn’t nearly as intimidating as you might think, even if this is your first business. Marco’s is an approved franchise on the Small Business Administration National Registry, which is accessible to all SBA commercial lenders.

Among the financing options:

• SBA. This is the primary way our franchisees secure their funding.

• 401k rollovers. This option is sometimes paired with another form of financing to meet the down payment requirements.

• Cash. Several people are coming into our system from other concepts, and may already be large franchisees. This may be the best option for certain candidates. Marco’s will help candidates decide how much cash to leverage.

• Buyouts. If someone buys an existing Marco’s, different financing options are in place.

• Refinancing existing debt. This option can come into play if someone is buying an existing franchise.

• Other sources of financing to facilitate other needs, such as expanding or upgrading POS systems.

Business opportunity is often a function of good timing, and Marco’s time is now. We are looking for experienced and talented franchisees who want to capitalize on Marco’s tremendous forward momentum.



HOW MUCH CAN I MAKE?

A LOOK AT THE MARCO’S PIZZA FRANCHISE REVENUE OPPORTUNITY

If you want a chance to run your own franchise with one of the fastest-growing pizza chains in the country, we have the experience to help our franchisees thrive. Consider this breakdown of the pizza franchise revenue from the most recent Item 19 of our Franchise Disclosure Document:

OPERATING RESULTS

Charts 1 and 2 below provide the average Net Royalty Sales of the 638 Franchised Stores and 40 Company-Managed Stores which were open for business for 52 weeks in our 2016 fiscal year. The Net Royalty Sales figures after coupons and discounts for the Franchised Stores are based upon unaudited royalty reports supplied by franchise owners. Included in Chart 1 are the specific results for MPI, our founder’s 16 Franchised Stores. There are no guarantees that you will make this amount.

130

243

265

85

57

54

69

< $500,000 $500,000 - $698,213 >$698,213

$1,000,001 - $1,496,285

$900,001 - $1,000,000

$800,001 - $900,000

$698-213 - $800,000

CHART #1 – NET ROYALTY SALES OF SYSTEM-WIDE STORES – 2016By Ranges



HOW MUCH CAN I MAKE? (continued)

CHART #2 – NET ROYALTY SALES OF SYSTEM-WIDE STORES

CHART #3 – NET ROYALTY SALES OF 40 COMPANY MANAGED STORES - 2016

Average Net Royalty Sales of 40 Company-Managed Stores $836,884 No. of System-wide Stores Above the Company-Managed (Store Average) 155 (24%)No. of System-wide Stores Below the Company-Managed (Store Average) 483 (76%)No. of Company-Managed Stores Above the System-wide (Store Average) 28 (70%)No. of Company-Managed Stores Below the System-wide (Store Average) 12 (30%)

Average Net Royalty Sales of 40 System-wide Stores $836,884 No. of System-wide Stores Above the Company-Managed (Store Average) 155 (24%)No. of System-wide Stores Below the Company-Managed (Store Average) 483 (76%)No. of Company-Managed Stores Above the System-wide (Store Average) 28 (70%)No. of Company-Managed Stores Below the System-wide (Store Average) 12 (30%)

Average Net Royalty Sales of 16 Franchised Stores owned and operated by the Founder of Marco’s in mature markets $1,044,496 No. of Founder Stores Above the Founder Store Average 8 (50%)No. of Founder Stores Below the Founder Store Average 8 (50%)No. of Founder Stores Above the System-wide Store Average Average 15 (94%)No. of Founder Stores Below the System-wide Store Average Average 1 (6%)

Highest Volume Store $1,468,751 Lowest Volume Store $348,880 Average Net Royalty Sales of 40 Company Managed Stores $836,884*No. of Company Managed Stores with Net Royalty Sales Above this Average 19 (48%)

No. of Company Managed Stores with Net Royalty Sales Below this Average 21 (52%)No. of Company Managed Stores with Net Royalty Sales above the System-wide Store Average 28No. of Company Managed Stores with Net Royalty Sales Below the System-wide Store Average 12



$556,876

$604,074

$645,374* $647,363

$671,630$683,486

$698,213

2010 2011 2012 2013 2014 2015 2016

$550,00

$500,00

$600,00

$650,00

$700,00

$750,000

* Fiscal year 2012 included a 53rd week. The chart above excludes the 53rd week for comparison purposes.

CHART 4 – AVERAGE NET ROYALTY SALES- SYSTEM-WIDE STORES 2010-2016The chart list the Average Net Royalty Sales of Stores in operation for at least one full year

as of the end of each fiscal year listed in the chart.

CHART 5 – CHANGE IN AVERAGE NET ROYALTY SALESSYSTEM-WIDE STORES FOR LAST 6 YEARS

Fiscal Year

Average Net Royalty Sales $ Change from Prior Year

% Change from Prior Year

$ Change over 2010 % Change

over 20102011 $604,074 $47,198 8.5% $47,198 8.5%

2012 $645,374 $41,300 6.8% $88,498 15.9%2013 $647,363 $1,989 0.3% $90,487 16.2%2014 $671,630 $24,267 3.7% $114,754 20.6%2015 $683,486 $11,856 1.8% $126,610 22.7%2016 $698,213 $14,727 2.2% $141,337 25.4%


CHART 6 – NUMBER OF SYSTEM-WIDE STORES WITHNET ROYALTY SALES OVER $1,000,000 BY YEAR

2011 2012 2013 2014 2015 2016Total Stores Reported 210 266 316 413 546 638Stores over $1M 9 19 25 45 61 69% of Stores Reported 4.3% 7.1% 7.9% 10.9% 11.2% 10.8%

* Fiscal year 2012 included a 53rd week. The chart above excludes the 53rd week for comparison purposes.




Dollars % of Net Royalty Sales

Revenue:Net Royalty Sales $805,038 100.0%

Direct Costs:Total Food $202,826 25.2%Paper $35,958 4.5%

Total Cost of Food, Paper Misc. Shipping $238,784 29.7%Direct Labor Note 1 141,498 17.6%Management Salary $35,543 4.2%

Gross Profit (Operations) $389,213 48.5%Indirect Labor Expense:

Taxes on Labor - Notes 1, 3 $21,246 2.6%Worker’s Compensation - Notes 1, 3 $4,036 0.5%Bonuses – Note 1 $4,848 0.6%Insurance & Employee Benefits - Note 1 $8,617 1.1%

Total Indirect Labor Expense - Note 2 $38,747 4.8%Adjusted Gross Profit - Note 2 $350,466 43.7%

Operating Expenses:Delivery Expense $41,870 5.2%Bad Debts & Fees $264 0.0%Bank Fees $1,126 0.1%Cash (Over) & Short – Note 1 $798 0.1%Credit Card Fees $10,527 1.3%Administrative Services $1,058 0.1%Crew Meetings & Special Training $3,188 0.4%Laundry & Uniforms $1,683 0.2%Repairs & Maintenance Note 1 $7,951 1.0%Online Ordering Fees $5,112 0.6%Theft & Security $401 0.0%Supplies – General/Janitorial $8,884 1.1%Utilities/Telephone/Trash Removal Notes 1 & 4 $22,249 2.8%

Total Operating Expenses - Note 2 $105,112 12.9%Gross Controllable Profit - Note 2 $245,355 30.8%

Fixed & Non-Controllable Expenses:Rent - Note 4 $32,243 4.0%Licenses & Taxes $621 0.1%Royalties - Note 5 $20,205 2.5%Auto Insurance $4,001 0.5%Insurance – Business - Note 1 $3,660 0.5%

CHART 7 – STATEMENT OF TYPICAL EXPENSES FORCOMPANY MANAGED STORES AT AVERAGE VOLUME SALES




Total Fixed Expenses - Note 2 $60,730 7.5%AdvertisingAdvertising – Brand Development $8,046 1.0%Advertising – Regional - Note 4 $21,663 2.7%Advertising – Other $33,631 4.2%

Total Advertising Expense – Note 2 $63,340 7.9%Total Fixed & Non-Controllable Expenses - Note 2 $124,070 15.4%

Store Level Income Before Owners Compensation, Taxes, Depreciation, Interest & Administration - Note 2

$121,285 15.4%

NOTES:The following notes are intended to help you better understand the data that we have included as well as the data that we have omitted from our averages. While certainly every cost is dependent upon your actions as a franchisee, certain costs are much more dependent on you or other factors beyond our ability to control.

1. This cost category is largely dependent upon your decisions and how you choose to operate the business. New employers are likely to be charged with a higher experience rate than us.

2. These are sub-totals and totals of the column.

3. These cost categories may be dependent upon local, state, and federal government.

4. These cost categories are dependent upon local market conditions.

5. The Company Managed Stores are charged a different Royalty Rate than you. Please see the applicable Disclosure Document section and Franchise Agreement for your applicable costs for these categories.

6. Cost figures provide only a part of the information that you will need to evaluate the franchise opportunity. We urge you to carefully consider not just these figures but also the information that you independently verify and develop about the costs that you are likely to incur. Franchisees will incur business expenses that are likely to be significant, and those expenses will vary considerably from one franchisee to the next. As a franchisee you will be required to pay royalty fees and make local advertising expenditures, as well as to make contributions to advertising funds and marketing expenditures. These costs are based upon a number of well-established stores operated by affiliates of ours in primarily two cities in Ohio and Indiana. Your costs will depend upon a number of factors which include, but are not limited to, your expertise in operating a Marco’s Pizza Store, the general level of wages in your area, the costs of food transported to your area, the overall costs of utilities and other support costs in your area, governmental issues, and a number of other factors. Among the additional categories of expenses that you may incur are rent and occupant costs; franchisee compensation over and above that earned from the operations of the Store business (such as the salary that you may draw); employee benefits, such as health, vacation and pension plan contributions (none of which are included in the payroll numbers in the chart); debt service; insurance; Store facilities and property maintenance (and reserves for future maintenance); business and regulatory fees and licenses; ongoing and supplemental training expenses; recruitment expenses; legal and accounting fees; and bookkeeping and other professional services.

7. Your sales may be higher or lower than the average sales levels reflected in the charts and will depend upon a large number of factors (such as the quality of your Store location, the number of competitors in the area, the quality of the competition, your ability to understand and implement the Marco’s Pizza System as explained in the Manual, and a number of individual factors beyond simple explanation). In addition to the points noted above, your results will be affected by factors such as prevailing economic or market area condition, demographics, geographic location, interest rates, your capitalization level, the amount and terms of any financing that you may secure, the property values and lease rates, your business and management skills, staff strengths and weaknesses, and the cost and effectiveness of your marketing activities. A new franchisee at a newly-opened Store should not expect to obtain these results.

8. We strongly advise you to conduct an independent investigation of this information and the opportunity to buy a franchise so that you can decide whether or not you think the franchise will meet your financial needs. Among other things, we recommend that you contact the current and former franchisees listed in this Disclosure Document and that you also consult with a qualified attorney, accountant, and other professional advisors before entering into any agreement with us. We suggest that you develop and review with your own professional advisors a pro forma cash flow statement, balance sheet and statement of operations, and that you make your own financial projections regarding sales, costs, customer base, and business development for your own Marco’s Pizza Store before you sign any agreement with us.

9. Written substantiation of the data used in preparing the information in this Item 19 will be made available to you upon reasonable request

10. Some outlets have earned these amounts. Your individual results may differ. There is no assurance that you will earn as much.

11. The information in this Item 19 is an historic representation about the performance of our outlets. Other than the preceding financial performance representation in this Item 19, we do not make any written or oral representations of statement of sales, profits or earnings to prospective franchisees. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to our management by contacting Debbie Allen, our Director of Corporate Compliance, at 5252 Monroe St., Toledo, Ohio 43623 (800.262.7267), the Federal Trade Commission, and the appropriate state regulatory agencies.

12. Some outlets have earned these amounts. Your individual results may differ. There is no assurance you’ll earn as much.



NEXT STEPSJOINING THE MARCO’S FAMILY

By now, you know Marco’s is the quality leader in the industry. With our current growth trajectory, Marco’s is poised to become an even bigger pizza brand over the next two years. Hopefully, you’ve also learned that we will not sacrifice quality for any reason, because that’s what has made our stores so successful.

The next step is two-fold. Tell us more about yourself, and we will tell you more about us.

First, fill out an application and review our executive summary. This will prepare you for your first phone conversation with a Marco’s franchise representative. One of our franchise representatives or Area Representatives will reach out to you to set up a phone conversation to explore the possibility of a match.

STEP NOTE TIMING TIME TO COMPLETE ITEMS TO BE COMPLETED

STEP 1

Introduction callDetermines whether or not there is potential for a candidate to become a franchisee. General background and qualification understanding.

15 minute call I day

STEP 2

First date (interview)

Interview determining how candidate’s goals and objectives can be met as a franchisee by helping candidate see how his background, experience and financial ability translates into success as a franchisee. Application should be turned in during this step.

15 minute call I dayApplication (owner 20% or greater) Finance Pre-Qualification

STEP 3

Winning FormulaOnline presentation showcasing the highlights of Marco’s Pizza

45-60 minute call I day

STEP 4

FDD Review

Review of the Franchise Disclosure Document, which communicates the roles of a Marco’s franchisee and the franchisor; identifies and eliminates any potential contractual barriers to moving forward.

45 minute call

2-3 days (scheduled 2-3 days in advance and allows time for review & questions)

Sign FDD Receipt

STEP 5

The Peek Behind the Curtain

Introduction to a Marco’s location, the operations, the product and much more. We recommend completing this on a Thursday, Friday or Saturday. Leave with Pizza for dinner.

I hour lunch outside of store and 3 hour store visit

I day

STEP 6

Pro Forma

An opportunity for you to complete a customized Marco’s proforma to really understand the economics of the business. Information provided from the Item 19 and other franchisees will be needed.

30 minute call 2 days

STEP 7

Franchisee ValidationTWO PHASES: 1) Franchisee validation teleconference 2) Franchise profile survey

Multiple calls and a 30 minute survey

3-7 daysFranchise Profile (person operating the store) Credit & Background Check

STEP 8

Operational Assessment

Assessment of the skills and abilities needed to be a successful Marco’s franchisee. This will be completed at the store closest for you by Franchise Business Leader, Area Rep or Certified Training Manager.

4 hours 1 day NDA Operational Assessment Survey

STEP 9

Discovery DayComing to Toledo to meet Corporate Officers, ask questions, and make final determination whether or not candidate and Marco’s will do business.

6 hours 1 day in Toledo, OH Marco’s Pizza Official Approval Letter

STEP 10

Yes/No Decision Candidate signs franchise agreementTotal approximately 60 days



JOIN THE MARCO’s FAMILY!call

(800) 836-2074

Documents

FRANCHISE NI FORMATION - Marcos Pizza Franchising a gourmet pizza shop and still be convenient and affordable. For instance, dough is made fresh daily in every store using our specially