Freshii Inc.

Management’s Discussion & Analysis

For the 13 and 52 week period ended

December 25, 2016

(Expressed in US Dollars)

1

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis (“MD&A”) for Freshii Inc. (“we”, “Freshii” or the

“Company”) provides information concerning the Company’s financial condition and results of operations. The

following MD&A should be read together with the Company’s Consolidated Financial Statements and

accompanying notes for the 52 week period ended December 25, 2016 (“fiscal 2016”). The consolidated results

from operations for the 13 and 52 week periods ended December 25, 2016 are compared to the 13 and 52 week

periods ended December 27, 2015 (“fiscal 2015”). All figures in this MD&A are expressed in US Dollars unless

otherwise noted.

We operate on a 52- or 53 week fiscal year, concluding on the Sunday closest to December 31. The fiscal

years ended December 27, 2015 and December 25, 2016 each consisted of 52 weeks. Our next fiscal year with 53

weeks will be fiscal 2017.

We prepare and report our consolidated financial statements in accordance with IFRS, as issued by the IASB

On January 31, 2017, the Company completed an initial public offering of class A subordinate voting shares

(the “Offering”). The Company’s Class A subordinate voting shares are listed on the Toronto Stock Exchange under

the stock symbol “FRII”. See the “Subsequent Events” section of this MD&A for further details.

This is the MD&A for fiscal 2016 and prior and represents a discussion of operations and financial condition

prior to completion of the Offering. All per share amounts relate to the shares outstanding at December 25, 2016

and do not reflect the new share capital upon completion of the Offering.

This MD&A was prepared on March 21, 2017. Additional information relating to the Company is available on

SEDAR at www.sedar.com

Non-IFRS Financial Measures and Industry Metrics

This MD&A makes reference to certain non-IFRS measures including key performance indicators used by

management and typically used by our competitors in the restaurant industry. These measures are not recognized

measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be

comparable to similar measures presented by other companies. Rather, these measures are provided as additional

information to complement those IFRS measures by providing further understanding of our results of operations

from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a

substitute for analysis of our financial information reported under IFRS. We use non-IFRS measures including

“EBITDA”, “Adjusted EBITDA”, “Pro Forma Adjusted EBITDA”, “free cash flow”, “free cash flow conversion”,

“Adjusted Net Income” and “Pro Forma Adjusted Net Income”. This MD&A also makes reference to “AUV”,

“Canada AUV”, “system-wide AUV”, “system-wide sales”, “same-store sales growth” and “U.S. AUV” which are

commonly used operating metrics in the restaurant industry but may be calculated differently by other companies

in the restaurant industry. These non-IFRS measures and restaurant industry metrics are used to provide investors

with supplemental measures of our operating performance and liquidity and thus highlight trends in our business

that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts,

investors and other interested parties frequently use non-IFRS measures, including restaurant industry metrics, in

the evaluation of companies in the restaurant industry. Our management also uses non-IFRS measures and

restaurant industry metrics, in order to facilitate operating performance comparisons from period to period, to

prepare annual operating budgets and forecasts and to determine components of executive compensation. See

“How We Assess the Performance of our Business” and “Selected Annual and Quarterly Consolidated Information”

below for further details concerning how the Company calculates EBITDA, Adjusted EBITDA, Pro Forma Adjusted

EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income and for reconciliations thereof to the most

comparable IFRS measures.

2

Forward-Looking Statements

Some of the information contained in this MD&A including, in particular, the sections below entitled

“Summary of Factors Affecting our Performance”, “Liquidity and Capital Resources”, “Outlook” and “Risk Factors”,

contain forward-looking statements. The forward-looking statements and other forward-looking information are

provided as of the date of this MD&A and are based on management’s opinions, estimates and assumptions in

light of its experience and perception of historical trends, current trends, current conditions and expected future

developments, as well as other factors that management believes appropriate and reasonable in the

circumstances. Freshii does not undertake to update any such forward-looking statements whether as a result of

new information, future events or otherwise, except as required by applicable securities laws. Actual results may

differ materially from those indicated or underlying forward-looking statements as a result of various factors,

including those described below under the heading “Risk Factors”. Freshii cautions that the list of risk factors and

uncertainties is not exhaustive and other factors could also adversely affect its results. Readers are urged to

consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are

cautioned not to place undue reliance on such information. See “Forward-looking Statements” and “Risk Factors”

in the Company’s Annual Information Form dated March 21, 2017 for a discussion of the uncertainties, risks and

assumptions associated with these statements.

Fourth Quarter and Year End Highlights

• Total revenue for the 13 week period ended December 25, 2016 increased 25% to $4.0 million compared

to $3.2 million in the same quarter in the prior fiscal year. The increase in total revenue was driven by

growth in franchise revenue which was primarily due to an increase in the number of franchised stores

from 172 as of December 27, 2015 to 274 as of December 25, 2016 and, in addition the impact of system-

wide same-store sales growth. The increase in revenue was also impacted by an increase in store

openings of 34 net franchised store openings through the end of the 13 week period ended December 25,

2016, as compared to 25 net store openings through the end of the same fiscal period in 2015. Total

revenue for fiscal 2016 was $16.1 million an increase of 45% compared to $11.1 million in the prior fiscal

year. The increase was a result of the growth in franchise revenue and royalty revenue, largely due to an

increase in the number of franchised stores noted above in addition to the impact of same-store sales

growth. The increase was also driven by the increase in franchised store openings from 102 net franchised

store openings for fiscal 2016, as compared to 76 net franchise store openings for fiscal 2015.

• EBITDA for the 13 week period ended December 25, 2016 decreased to $(0.2) million for the 13 week

period ended December 25, 2016 compared to $0.4 million for the 13 week period ended December 27,

2015, a decrease of $0.6 million or 150%. The decrease in EBITDA is largely a result of transaction and

other related costs incurred in connection with the Offering of $1.4 million, as well as an unrealized

foreign exchange loss on the Credit Facility (as defined herein) which was subsequently repaid after year

end. These costs were partially offset by an increase in revenue for the 13 week period ended December

25, 2016 of $0.8 million, as well as non-recurring legal settlement expenses of $1.0 million incurred in the

prior year. EBITDA for the 52 week period ended December 25, 2016 was $3.3 million compared to $(2.5)

million for the 52 week period ended December 27, 2015, an increase of $5.8 million or 232%. The

increase to EBITDA was largely attributable to an increase in revenue of $5.0 million in addition to the

one-time costs that were incurred in the 52 week period ended December 27, 2015 for a $4.9 million

broker contract buy-out as well as the legal settlement of $1.0 million discussed above. These costs were

offset by costs related to the Offering totalling $2.6 million in fiscal 2016.

• Pro Forma Adjusted EBITDA was $1.8 million and $7.3 million for the 13 and 52 week periods ended

December 25, 2016, respectively, compared to $1.7 million and $4.7 million for the 13 and 52 week

periods ended December 27, 2015, respectively, representing increases of $0.1 million or 6% for the

quarter and $2.6 million or 55% for the year. The increase is largely related to increases in revenue of $0.8

million and $5.0 million respectively, offset by increases in operating costs.

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• Pro Forma Adjusted Net Income was $1.2 million and $4.6 million for the 13 and 52 week periods ended

December 25, 2016, respectively, compared to $2.3 million and $3.1 million for the 13 and 52 week

periods ended December 27, 2015, respectively, representing a decrease of $1.1 million or 48% for the

quarter which related mainly to a deferred tax recovery that was recognized in the 13 week period ended

December 27, 2015 for $1.0 million. The increase for fiscal 2016 of $2.3 million or 33% was mainly

attributed to an increase in franchise revenue.

• Same-store sales growth for the 13 week period ended December 25, 2016 was 7.7% compared to 6.5%

for the same 13 week period ended December 27, 2015, an increase of 120 basis points of 18%. Same

store sales for the 52 week period ended December 25, 2016 was 6.8% compared to 4.8% for the 52 week

period ended December 27, 2015 translating to a 200 basis point increase or 42%.

• System-wide sales grew from $26.4 million and $96.1 million for the 13 and 52 week periods ended

December 25, 2016, respectively, compared to $17.3 million and $61.3 million for the 13 and 52 week

periods ended December 27, 2015, respectively, representing an increase of $9.1 million or 53% for the

quarter and $34.8 million or 57% for the fiscal year. The increase is attributable to an increase of 100 net

new system wide locations, in addition to the same-store sales growth noted above.

Overview

Freshii is a fast-growing restaurant brand serving a healthy and customizable menu built around high-quality

ingredients such as fresh produce, lean proteins, healthy grains and ethnic spices. Founded in 2005 by Matthew

Corrin in Toronto, Canada, Freshii’s core mission is to help people all over the world live healthier and better lives

by making healthy food convenient and affordable. We believe Freshii is at the forefront of the global health and

wellness movement, pioneering the new “healthy fast food” category.

Our goal is to bring healthy food to the masses with convenience and affordability. Our diverse menu is

meticulously developed and continues to be evolved by our culinary experts and certified nutritionists and caters

to a wide range of dietary preferences. Our menu includes salads, bowls, burritos, wraps, soups, juices, smoothies

and frozen yogurt, all of which can be customized with flavourful combinations from a wide variety of high-quality

and colourful ingredients. In addition to healthy meals, our broad menu offers snacks that energize customers

throughout the day. This menu is also supplemented by seasonal and innovative offerings.

Since opening our first store in 2005, Freshii has grown to 278 stores located across 15 countries and in more

than 30 states and provinces in North America as of December 25, 2016. As of December 25, 2016, our store base

was approximately 99% franchised, with 274 franchised locations and four Company-owned stores. Our global

footprint is supported by a strong network of 226 franchise partners with signed franchise agreements, of which

154 were operating Freshii restaurants, as of December 25, 2016, who are passionate about bringing healthier

food to the masses.

Summary of Factors Affecting our Performance

We believe that we have a significant growth opportunity ahead of us, building on our successful track

record. We believe that our performance and ability to achieve this growth depend on a number of factors. These

factors are also subject to a number of inherent risks and challenges, some of which are discussed below and in the

“Risk Factors” section of this MD&A.

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Our Brand

Freshii offers a delicious and diverse menu that energizes people “on-the-go”, appealing to a broad spectrum

of customers across many demographics. We believe the Freshii brand is particularly embraced by the millennial

generation, a demographic focused on maintaining a healthy and customized lifestyle. We are opening stores

across various countries, demonstrating the global portability of our brand and its broad appeal. We believe Freshii

is at the forefront of the global health and wellness movement, pioneering the new “healthy fast food” category.

Our continued success will be based on our ability to continue to: (i) resonate with our audience of people

who energize “on-the-go”, and (ii) grow in both North America and internationally. Any loss of our appeal with our

customers could affect our business in a negative manner, and in turn result in adverse financial results. To ensure

we mitigate our exposure to any negative impacts to our brand and customer base, we plan to continue to offer

and innovate our healthy, compelling and diverse menu offerings at a compelling price point, which our customers

have come to trust and expect with our brand.

Same-Store Sales Growth

Same-store sales growth is a metric used in the restaurant industry to compare sales derived from the

established stores during a certain period over the same period in a prior year.

Same-store sales growth helps explain what portion of sales growth can be attributed to growth in

established locations and what portion can be attributed to the opening of net new stores. Freshii calculates same-

store sales growth as the percentage change in year-over-year sales for the system-wide same-store base. Freshii

includes a store in the same-store base in the first full quarter following its first 52 full weeks of operations,

excluding non-traditional stores. A store is not included in same-store sales if it is closed for one week or longer,

such as for remodeling, during the stated period. Same-store sales growth is measured on a constant currency

basis to exclude the effect of foreign currency translation.

Same-store sales growth is primarily a result of changes in the number of customer transactions and changes

in the average transaction size. Freshii’s same-store sales growth is primarily impacted by the expansion of its

brand awareness, continued menu innovation and the use of its mobile technology. Freshii’s same-store sales

growth is also impacted by external factors including the macro-economic environment that could affect consumer

spending.

New Store Openings

We have a meaningful opportunity to continue to grow our store network across North America, and

internationally, with a particularly compelling opportunity in the U.S. The opening and success of new stores is

subject to numerous factors, including the application of passionate and qualified potential franchise partners, the

availability of appropriate real estate, the negotiation of suitable lease terms for new locations, and other factors,

some of which are beyond Freshii’s control. Since the start of fiscal 2015, we have opened an aggregate of 177 net

new stores in Canada, the U.S. and internationally.

The following table summarizes the change in our store count from the beginning of fiscal 2015 to the end of

fiscal 2016: 2015

2016

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Total Stores………. 116 128 153 178 191 216 244 278

Openings, Net…… 15 12 25 25 13 25 28 34

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We are targeting to increase our store count by 150 to 160 net new franchised stores by the end of fiscal

2017 and are targeting a system-wide store count of between 810 and 840 stores by the end of fiscal 2019. Our

growth plans reflect our disciplined approach to expanding our network as evidenced by our ability to attract high-

quality franchise partners and employ a rigorous vetting and selection process. During fiscal 2016, we received

over 3,800 applications from new potential franchise partners and awarded franchises to fewer than 1.7% of

applicants.

Competition

Our primary competition for franchise partners are North American and global franchisors with franchises in

the Quick Service Restaurant (“QSR”) and/or Fast Casual Restaurant categories of the Limited Service Restaurant

(“LSR”) segment of the restaurant industry. Many of our direct competitors are well-established national, regional

or local franchisors with franchises in the markets in which we operate or in which we anticipate operating.

Our franchise partners’ stores primarily compete with LSRs, Full Service Restaurants, take-out operations,

delivery operations and grocery stores that offer home meal replacements. Our stores compete for consumers

based on taste, quality and price of food, customer service, ambience, location, convenience and overall

experience. We believe that our stores offer customers a compelling value proposition – flavourful, healthy food

that customers feel good about eating, at an affordable price – which enables us to differentiate ourselves from

our competitors. Our franchise partners’ competitors are typically unable to offer a comparable scope of healthy

eating options in a convenient manner and at an affordable price.

Consumer Trends

The Fast Casual Restaurant and QSR categories are subject to shifts in consumer trends, preferences and

consumer spending which can affect our revenue and operating results adversely. As a result, our proven track

record to adapt in an efficient manner to changes in consumer preferences is key to our success over time. Our

diverse menu offerings, which include salads, bowls, burritos, wraps, soups, juices, smoothies and frozen yogurt,

all of which can be customized, provide us with the ability to optimize our sales mix in a flexible manner. To ensure

we can innovate in a timely manner, we have an operational model that allows us to selectively change our menu

based on consumers’ preferences.

Our revenue is also impacted by discretionary spending by consumers, which is affected by many factors that

are beyond our control, including, but not limited to, general economic conditions, consumer disposable income

levels, consumer confidence levels, consumer debt, the cost of basic necessities and other goods and the effects of

weather and natural disasters.

Foreign Exchange

The majority of our revenue is derived from operations in North America. As our consolidated financial

statements are presented in U.S. dollars, we have foreign currency exposure with respect to our Canadian

operations. The revenue we earn in Canadian dollars is adversely impacted by a decrease in the value of the

Canadian dollar relative to the U.S. dollar. Foreign exchange gains and losses are also impacted by the amount of

cash and debt that we may have on hand in the Canadian company that is translated from US dollars. Conversely,

the majority of our cost of sales and selling, general and administrative expenses are incurred in Canadian dollars

and are positively impacted by a decrease in the value of the Canadian dollar relative to the U.S. dollar. The

average Canadian dollar exchange rate relative to the U.S. dollar for fiscal 2015 and fiscal 2016 was 1.257 and

1.325, respectively. Fluctuations in foreign currency exchange rates may impact the comparability of our results

from period to period. See “Risk Factors” below.

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How We Assess the Performance of our Business

The key performance indicators measures below are used by management in evaluating the performance of

our stores and assessing our business. We refer to certain key performance indicators used by management and

typically used by our competitors in the restaurant industry, certain of which are not recognized under IFRS.

IFRS Measures

Revenue. Our revenue is comprised of franchise revenue and Company-owned store revenue. The following

is a brief description of the components of our revenue.

Franchise revenue includes revenue that we earn in the form of royalty revenue, franchise fee revenue and

other income.

• Royalties consist of fees earned from our franchise partners equal to a percentage of weekly (or, in the

case of international franchise partners, monthly) gross sales. Our franchise agreements require our

traditional franchise partners to pay us royalties of 6.0% of franchised store gross sales. Additionally,

traditional franchise partners are currently required to pay a corporate advertising fee of 1.5% of gross

sales and spend an incremental 1.5% of gross sales on local advertising. Non-traditional franchise

partners are required to pay us royalties of between 4.0% and 6.0% of franchised store gross sales and

the royalty percentage payable to us could decrease over time as additional franchised stores are

opened by the non-traditional franchise partner. Area development franchise partners are required to

pay us royalties of 6.0% of franchised store gross sales. Additionally, area development franchise

partners are currently required to pay a corporate advertising fee of 1.5% of gross sales and spend an

incremental 1.5% of gross sales on local advertising. We are required to evenly split royalties with

master franchise partners, which are typically between 6.0% and 8.0%, of franchised store gross sales

with our master franchise partners. Additionally, master franchise partners are currently required to

pay a corporate advertising fee of 1.5% of gross sales and spend an incremental 1.5% of gross sales on

local advertising.

• Franchise fee revenue consists of initial development and franchise fees related to new stores, fees to

renew or extend franchise agreements and transfer fees in connection with transfers of franchised

stores to third parties. Initial franchise fees, due and payable when the franchise agreement has been

executed, are typically recognized upon the opening of a store and are impacted by the number of

new franchise store openings in a specified period and are payable in the local currency (except for our

international franchise partners, who are required to pay these amounts in U.S. dollars). Area

development and master franchise fees are deferred and recognized as revenue based on initial

services performed on a proportional basis, which generally aligns with the total costs completed to

date compared to the total costs to fulfil the terms of the franchise agreement. Our franchise

agreements provide that traditional franchise partners are required to pay an initial franchise fee of

$30,000 which is due upon signing of the franchise agreement. Our non-traditional franchise partners

are required to pay a franchise fee between $10,000 and $20,000, which is due upon the applicable

store commencing operations. Our area development franchise partners and master franchise

partners are required to pay an initial franchise fee of $30,000 to secure one location, plus an

additional $15,000 to secure each additional location. Our master franchise partners are required to

pay an initial franchise fee of between $30,000 and $35,000 to secure one location, plus an additional

25% to 50% of the initial franchise fee to secure each additional location. The initial franchise fees for

our area development franchise partners and master franchise partners are due upon signing of the

applicable agreement. After the first location under an area development or master franchise

agreement is opened, an additional franchise fee of $15,000 is due upon commencement of

operations of each additional location that is opened. Each of the foregoing amounts is payable in the

local currency, except for amounts payable by international franchise partners, which are calculated in

U.S. dollars.

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• Other income relates to certain food and beverage, other product and services coordination fees

arising from agreements with vendors and are attributable to North American stores’ volume

purchases.

Company-owned store revenue is generated through in-store and delivery sales at our Company-owned

stores. Company-owned store revenue is reported net of sales tax, which is remitted to the appropriate tax

authorities.

Cost of sales. Cost of sales consists of direct food, beverage, paper goods, packaging, labour costs and other

store operating costs such as rent, store repair and maintenance costs and utilities at our Company-owned stores.

The components of Company-owned store operating expenses are partially variable in nature and fluctuate with

changes in sales volume, product mix, commodity costs and labour costs.

Selling, general and administrative expenses. Selling, general and administrative expenses are predominantly

comprised of wages, benefits, franchise development expenses, other compensation, travel, marketing, accounting

fees, legal fees and other expenses related to the corporate infrastructure required to support our franchise

stores. We expect our selling, general and administrative expenses to increase as we incur additional legal,

accounting, insurance, share-based compensation and other expenses associated with being a public company.

Industry Metrics

System-wide stores. System-wide stores reflects the number of total stores, including franchised and

Company-owned stores, open across the system at the end of a particular reporting period. The number of

franchised and Company-owned stores along with the number of operating weeks is used by management to

evaluate new store growth, system-wide sales, royalty and franchise fee revenue and the performance of our

stores.

System-wide sales. System-wide sales represent sales for all of our franchised and Company-owned stores.

This measure allows management to assess changes in our overall system performance, the health of our brand

and the strength of our market position relative to our competitors. Our system-wide sales are driven by the

number of system-wide stores open in any period and same-store sales growth, which is described below. System-

wide sales are measured using the average exchange rate for the period presented to convert the total sales for

our stores located outside the U.S. into U.S. dollars.

Same-store sales growth. Same-store sales growth reflects the percentage change in year-over-year sales for

the system-wide same-store base. We include a store in our same-store base in the first full fiscal quarter following

its first 52 full weeks of operations, excluding non-traditional stores. This measure highlights the performance of

existing stores open during the period, while excluding the impact of new store openings and closures. A store is

not included in same-store sales growth if it is closed for a week or longer, such as for remodeling, during the

stated period. Same-store sales growth is measured on a constant currency basis, which means the results exclude

the effect of foreign currency translation by using the same foreign exchange translation rate year over year. The

foreign exchange rate used is the most recent year end rate of the applicable currency.

System-wide AUV. System-wide AUV consists of the average annual sales of system-wide stores that have

been open for a trailing 52 week period or longer. This measure is calculated by dividing total sales during the 52

week period for all stores in the system that were open for operations during the entire 52 week period by the

number of stores that were open for operations during the entire 52 week period. We apply the average exchange

rate over the 52 week period to convert the total sales for our stores located outside the U.S. into U.S. dollars.

System-wide AUV growth is driven primarily by increases in same-store sales growth and is influenced over time by

the opening of new stores as those stores have been in the system for 52 weeks. A store is not included in system-

wide AUV if it is closed for a week or longer, such as for remodeling, during the 52-week period.

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U.S. AUV. U.S. AUV consists of the average annual sales of stores that are located in the U.S., excluding non-

traditional stores, and have been open for a trailing 52 week period or longer. This measure is calculated by

dividing total sales during the 52 week period for all U.S. stores in the system that were open for operations during

the entire 52 week period by the number of U.S. stores that were open for operations during the entire 52 week

period. A store is not included in U.S. AUV if it is closed for a week or longer, such as for remodeling, during the 52

week period.

Canada AUV. Canada AUV consists of the average annual sales, denominated in Canadian dollars, of

Company-owned and franchised stores that are located in Canada, excluding non-traditional stores, and have been

open for a trailing 52 week period or longer. This measure is calculated by dividing total sales during the 52 week

period for all Canadian stores in the system that were open for operations during the entire 52 week period by the

number of Canadian stores that were open for operations during the entire 52 week period. A store is not included

in Canada AUV if it is closed for a week or longer, such as for remodeling, during the 52 week period.

Non-IFRS Measures

EBITDA. EBITDA means net income (loss) before interest costs (net), income tax expense (recovery) and

depreciation and amortization.

Adjusted EBITDA. Adjusted EBITDA means EBITDA further adjusted for share-based compensation, a contract

termination fee, service provider commission costs, a legal settlement, an unrealized foreign exchange loss

associated with the Credit Facility settled after year end, and other expenses and costs in connection with the

Offering and Reorganization (as defined herein).

Pro Forma Adjusted EBITDA. Pro Forma Adjusted EBITDA means Adjusted EBITDA adjusted for commission

costs paid under the Company’s Chicago master franchise agreement for which the Company intends to use a

portion of the net proceeds from the Treasury Offering (as defined herein) to exercise its buyback provision.

free cash flow. Free cash flow means an amount equal to Pro Forma Adjusted EBITDA less capital

expenditures.

free cash flow conversion. Free cash flow conversion means an amount equal to free cash flow divided by Pro

Forma Adjusted EBITDA.

Adjusted Net Income. Adjusted Net Income means net income further adjusted for share-based

compensation, a contract termination fee, service provider commission costs, a legal settlement, an unrealized

foreign exchange loss associated with the Credit Facility settled after year end, and other expenses and costs in

connection with the Offering and Reorganization, net of related tax effects.

Pro Forma Adjusted Net Income. Pro Forma Adjusted Net Income means Adjusted Net Income further

adjusted for commission costs paid under the Company’s Chicago master franchise agreement for which the

Company intends to use a portion of the net proceeds from the Treasury Offering to exercise its buyback provision,

net of related tax effects.

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The following table sets forth our key performance indicators for fiscal 2016, fiscal 2015, fiscal 2014 and

the 13 week periods ended December 25, 2016 and December 27, 2015 (in thousands, except store data or

otherwise noted):

Fiscal Year Ended

13 Week Period Ended

December 25,

2016

December 27,

2015

December 28,

2014

December 25,

2016

December 27,

2015

Total revenue ................................................................$ 16,118 $ 11,102 $ 9,000 $ 3,964 $ 3,176

System-wide stores open at end of period ........................... 278 178 101 278 178

System-wide sales ................................................................$ 96,118 $ 61,275 $ 41,733 $ 26,384 $ 17,319

System-wide AUV ................................................................$ 468 $ 483 $ 530 $ 468 $ 483

U.S. AUV ................................................................$ 612 $ 618 $ 596 $ 612 $ 618

Canada AUV ................................................................C$ 611 C$ 555 C$ 561 C$ 611 C$ 555

Same-store base at end of period ................................ 125 76 52 125 76

Same-store sales growth ................................ 6.8% 4.8% 8.2% 7.7% 6.5%

Pro Forma Adjusted EBITDA ................................$ 7,264 $ 4,733 $ 3,035 $ 1,812 $ 1,684

Pro Forma Adjusted EBITDA (C$)(1)

................................C$ 9,626 C$ 6,039 C$ 3,348 C$ 2,401 C$ 2,149

Net Income (loss)................................................................$ 1,594 $ (1,728) $ 1,016 $ (491) $ 1,341

Adjusted Net Income ............................................................$ 4,277 $ 2,766 $ 1,754 $ 1,085 $ 2,153

Pro Forma Adjusted Net Income ................................$ 4,599 $ 3,111 $ 1,999 $ 1,154 $ 2,283

Net (loss) income per share attributable to the Common Shareholders of the Company (in dollars):

Basic EPS $ 0.06 $ (0.07) $ 0.04 $ (0.02) $ 0.05

Diluted EPS $ 0.06 $ (0.07) $ 0.04 $ (0.02) $ 0.05

Note:

(1) Represents the C$ Pro Forma Adjusted EBITDA converted at the average exchange rates for each respective period.

Selected Annual and Quarterly Consolidated Information

Fiscal Year Ended

13 Week Period Ended

December 25,

2016

December 27,

2015

December 28,

2014

December 25,

2016

December 27,

2015

(in thousands)

Revenue: Franchise revenue ........................ 12,992 7,678 4,998 3,299 2,350

Company-owned store revenue ... 3,126 3,424 4,002 665 826

Total revenue................................... $ 16,118 $ 11,102 $ 9,000 $ 3,964 $ 3,176

Costs and expenses: Cost of sales .................................. 2,664 2,874 3,148 631 687

Selling, general and administrative 9,745 4,843 4,168 3,214 1,033

Depreciation and amortization ..... 284 155 85 162 40

Contract termination fee .............. - 4,875 — - -

Legal settlement ........................... - 1,017 — - 1,017

Total costs and expenses .................. $ 12,693 $ 13,764 $ 7,401 $ 4,007 $ 2,777

Income (loss) before interest costs, foreign

exchange and income taxes ........ $ 3,425 $ (2,662) $ 1,599 $ (43) $ 399

Interest expense, net .......................... 642 88 243 334 59

Foreign exchange loss (gain) .............. 383 41 134 366 44

Income (loss) before income tax expense 2,400 (2,791) 1,222 (743) 295

Income tax expense (recovery) .......... 806 (1,063) 206 (252) (1,045)

Net income (loss) ............................. $ 1,594 $ (1,728) $ 1,016 $ (491) $ 1,341

Currency translation adjustment ........ 330 (59) 232 330 (44)

Comprehensive income (loss) ........... $ 1,924 $ (1,787) $ 1,248 $ (161) $ 1,296

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As at

December 25,

2016

As at

December 27,

2015

As at

December 28,

2014

(in thousands)

Consolidated Statements of Balance Sheet Information: Cash ................................................................................................$ 6,581 $ 2,276 $ 2,363

Total assets ................................................................................................ 12,243 7,560 5,151

Non-current financial liabilities ................................................................ 0 3,559 766

Total debt ................................................................................................ 15,000 4,198 1,081

Equity (deficit) ................................................................................................ (10,492) (1,136) 481

The following table shows our cash flows information for fiscal 2016, fiscal 2015 and fiscal 2014:

Fiscal Year Ended

December 25,

2016

December 27,

2015

December 28,

2014

(in thousands)

Net cash provided by (used in) operations ........................... 4,674 (3,062) 1,956

Net cash provided by (used in) investing ............................. 655 (1,114) (1,240)

Net cash provided by (used in) financing ............................. (1,087) 4,275 (709)

Net increase in cash .............................................................$ 4,242 $ 99 $ 7

The following table reconciles EBITDA, Adjusted EBITDA, Pro Forma Adjusted EBITDA, free cash flow,

Adjusted Net Income and Pro Forma Adjusted Net Income to the most directly comparable IFRS financial

performance measure.

Fiscal Year Ended 13 Week Period Ended

(in thousands)

December 25,

2016

December 27,

2015

December 25,

2016

December 27,

2015

Net income (loss) ................................ $ 1,594 $ (1,728) $ (491) $ 1,341

Interest expense, net ............................ 642 88 334 59

Income tax expense (recovery) ............. 806 (1,063) (252) (1,045)

Depreciation and amortization ............. 284 155 162 40

EBITDA ............................................... $ 3,326 $ (2,548) $ (247) $ 395

Adjustments: Share-based compensation

expense(1)

........................................ 75 171 30 42

Contract termination fee(2)

................... - 4,875 - -

Service provider commission costs(3)

.... - 620 - -

Legal settlement(4)

................................ - 1,017 - 1,017

Unrealized foreign exchange loss(5)

....... 573 - 573 -

Transaction and other costs(6)

............... 2,794 67 1,350 30

Adjusted EBITDA ................................ $ 6,768 $ 4,202 $ 1,706 $ 1,484

Chicago master agreement

commission costs(7)

......................... 496 531 106 200

Pro Forma Adjusted EBITDA ............... $ 7,264 $ 4,733 $ 1,812 $ 1,684

Pro Forma Adjusted EBITDA C$(9)

........ C$ 9,626 C$ 6,039 C$ 2,401 C$ 2,149

Less capital expenditures ...................... $ 319 $ 501 $ 40 $ 86

Free cash flow .................................... $ 6,945 $ 4,232 $ 1,772 $ 1,598

Free cash flow conversion .................. 95.6% 89.4% 97.8% 94.9%

11

Fiscal Year Ended 13 Week Period Ended

(in thousands)

December 25,

2016

December 27,

2015

December 25,

2016

December 27,

2015

Net income (loss) ................................ 1,594 (1,728) (491) 1,341

Adjustments: Share-based compensation

expense(1)

........................................ 75 171 30 42

Contract termination fee(2)

................... - 4,875 - -

Service provider commission costs(3)

.... - 620 - -

Unrealized foreign exchange loss(5)

....... 573 - 573 -

Legal settlement(4)

................................ - 1,017 - 1,017

Transaction and other costs(6)

............... 2,794 67 1,350 30

Related tax effects(8)

............................. (759) (2,255) (377) (277)

Adjusted Net Income ......................... $ 4,277 $ 2,766 $ 1,085 $ 2,153

Adjustments: Chicago master agreement

commission costs(7)

......................... 496 531 106 200

Related tax effects(8)

............................. (174) (186) (37) (70)

Pro Forma Adjusted Net Income

(loss) ............................................ $ 4,599 $ 3,111 $ 1,154 $ 2,283

Notes:

(1) Includes non-cash, share-based compensation. We could incur similar non-cash expenses in future periods if we grant additional share-based awards.

(2) Represents a non-recurring fee related to the termination of a service provider contract. For more details, see note 8 to our audited consolidated financial

statements.

(3) Represents non-recurring payments to a former service provider throughout each fiscal year, which ceased upon the termination of the contract referred to

in note (2) above.

(4) Represents non-recurring costs and expenses related to a legal settlement. For more details, see note 26 to our audited consolidated financial statements.

(5) Represents non-recurring unrealized foreign exchange loss on the Credit Facility . The Credit Facility was repaid subsequent to year end. For more details on

the Credit Facility and subsequent payment see notes 14 and 28 respectively to our audited consolidated financial statements.

(6) Represents expenses relating to the Offering completed subsequent year end (that relate to the selling shareholders) and other expenses such as

reorganization and restructuring costs, including in respect of the Recapitalization (as defined herein).

(7) Represents commission costs paid under the Chicago master franchise agreement for which the Company intends to exercise its buyback provision.

(8) Related tax effects are calculated at statutory rates in Canada or U.S. depending on adjustment.

(9) Represents the C$ Pro Forma Adjusted EBITDA converted at the average exchange rates for each respective period.

12

Factors Affecting the Comparability of our Results

Store Activity

New store openings and store closures impact our revenue and the comparability of our results from period

to period. New stores, system-wide, typically experience a six to 12 month ramp-up period of sales volatility before

sales stabilize. The following table shows the growth in our network of franchised and Company-owned stores for

fiscal 2016, fiscal 2015 and fiscal 2014 and the 13 week periods ended December 25, 2016 and December 27, 2015

respectively:

For the Year Ended

For the 13 Week Period Ended

December 25,

2016

December 27,

2015

December 28,

2014

December 25,

2016

December 27,

2015

Franchised Store Activity: ................................................. Beginning of period .............................................................. 172 96 65 240 147

Openings ................................................................ 110 83 38 36 26

Franchise acquisition(1)

......................................................... 2 (1) 0 0 0

Closures and relocations ...................................................... (10) (6) (7) (2) (1)

Franchised stores at end of period................................ 274 172 96 274 172

Company-owned Store Activity: Beginning of period .............................................................. 6 5 5 4 6

Openings ................................................................ 0 0 1 0 0

Refranchised locations(1)

...................................................... (2) 1 0 0 0

Closures and relocations ...................................................... 0 0 (1) 0 0

Company-owned stores at end of period ............................. 4 6 5 4 6

Total stores ................................................................ 278 178 101 278 178

Note: (1)

Represents a store previously run as a Company-owned store and now owned and operated by a franchise partner or a store previously run by a franchise

partner now owned by the Company.

Store Composition

Our franchised store base includes traditional, master franchise and non-traditional stores. As of the end of

fiscal 2015 and fiscal 2016 the total number of traditional stores was 140 and 221, respectively. As of the end of

fiscal 2015 and fiscal 2016 our master franchise partners operated 44 and 57 stores, respectively. As of the end of

fiscal 2015 and fiscal 2016 the total number of non-traditional stores was 32 and 53, respectively. Our non-

traditional stores are located on university campuses, in airports, in hospitals, in fitness centres and within select

retailers. Some of our non-traditional locations, including stores on university campuses, do not operate for a full

fiscal year as they follow a school-year schedule. In fiscal 2015 and fiscal 2016, 14 and 20 stores, respectively, were

located on university campuses and therefore closed in certain periods of the year. Due to the different store

operating periods and menu offerings, the results of many of our non-traditional stores do not follow the results of

our traditional stores. Consequently, our store composition will impact the comparability of our results from

period to period.

Segments

We identify our reporting segments based on the organizational units used by management to monitor

performance and make operating decisions. We have identified two operating segments: franchise store

operations and Company-owned store operations.

The franchise segment consists of our North American and international franchise stores, which represent

the majority of our system-wide stores. At December 25, 2016, the franchise operations segment consisted of 274

stores operated by franchise partners in 15 countries. Revenues in this segment consist primarily of franchise

royalty revenue, sales of franchises, area development fees and food coordination fees received.

13

The Company-owned segment consists of our Company-owned stores, located only in Canada. As of

December 25, 2016, the Company-owned segment consisted of four stores. We anticipate that the number of

Company-owned stores will decrease as a percentage of system-wide stores over time and, accordingly, Company-

owned store revenue is expected to decrease as a percentage of total revenue as will our cost of sales. Our

Company-owned stores are used as test kitchens, as training centers and for menu innovation. Accordingly,

contribution to net income as a percentage of revenue from our Company-owned stores is typically less than in

respect of franchised stores.

Public Company Expenses

As a public company, we will implement additional procedures and processes for the purpose of addressing

the standards and requirements applicable to public companies. We expect to incur additional annual expenses

related to these steps and, among other things, additional directors’ and officers’ liability insurance, director fees,

public company reporting costs, transfer agent fees, hiring additional accounting, legal and administrative

personnel, increased auditing and legal fees and similar expenses. We also expect to recognize certain non-

recurring costs as part of our transition to a publicly traded company, consisting of professional fees and other

expenses.

Results of Operations

13 Week Period Ended December 25, 2016 Compared to the 13 Week Period Ended December 27, 2015

The following tables summarize our results of operations for the 13 week period ended December 27, 2015

and the 13 week period ended December 25, 2016 (in thousands).

For the 13 Week Period Ended

December 25, 2016

December 27, 2015

Amount

Percent of

Total

Revenue

Amount

Percent of

Total

Revenue

Revenue Franchise revenue ................................................................................................$ 3,299 83% $ 2,350 74%

Company-owned store revenue ................................................................ 665 17 826 26

Total revenue................................................................................................ 3,964 100 3,176 100

Costs and expenses Cost of sales ................................................................................................ 631 16 687 22

Selling, general and administrative................................................................ 3,214 81 1,033 33

Depreciation and amortization ................................................................ 162 4 40 1

Contract termination fee ................................................................................................ — —

Legal settlement ................................................................................................ — — 1,017 32

Total costs and expenses ................................................................................................ 4,007 101 2,777 88

Income (loss) before interest costs, foreign exchange and income

taxes ................................................................................................................................ (43) (1) 399 12

Interest expense, net ................................................................................................ 334 8 59 2

Foreign exchange loss (gain) ................................................................ 366 9 44 1

Income (loss) before income tax expense ................................................................ (743) (18) 295 9

Income tax expense (recovery) ................................................................ (252) (6) (1,045) (33)

Net income (loss) ................................................................................................$ (491) (12%) $ 1,341 42%

Total Revenue. Total revenue was $4.0 million for the 13 week period ended December 25, 2016,

representing an increase of $0.8 million or 25% over the same period in prior year. Total revenue for the 13 week

period ended December 27, 2015 was $3.2 million. The increase in total revenue was driven by growth in franchise

revenue offset by a decrease in Company-owned store revenue, as described in more detail below.

14

Franchise revenue. Franchise revenue was $3.3 million for the 13 week period ended December 25, 2016,

compared to $2.4 million in the same fiscal period in the prior year, increase of $0.9 million or 38%. Royalty

revenue was $1.7 million for the 13 week period ended December 25, 2016, an increase of $0.5 million or 42%, as

compared to $1.2 million in the same fiscal period in the prior year. The increase in franchise revenue and royalty

revenue were primarily due to an increase in the number of franchised stores from 172 as of December 27, 2015

to 274 as of December 25, 2016 and, in addition the impact of system-wide same-store sales growth. Same-store

sales growth was 7.7% in the 13 week period ended December 25, 2016 compared to same-store sales growth of

6.5% in the 13 week period ended December 27, 2015. Franchise sales were $0.9 million for the 13 week period

ended December 25, 2016, an increase of $0.2 million or 29%, as compared to $0.7 million in the 13 week period

ended December 27, 2015. This increase was driven by 34 net franchised store openings through the end of the 13

week period ended December 25, 2016, as compared to 25 net store openings through the end of the same fiscal

period in 2015. Coordination fees received from third parties were $0.7 million for the 13 week period ended

December 25, 2016, an increase of $0.2 million as compared to $0.5 million for the 13 week period ended

December 27, 2015. The increase was primarily due to the increased number of system-wide stores in operation in

the 13 week period ended December 25, 2016 together with the additional 34 net store openings in the 13 week

period ended December 25, 2016.

Company-owned store revenue. Company-owned store revenue was $0.7 million for the 13 week period

ended December 25, 2016, a decrease of $0.1 million or 13%, as compared to $0.8 million for the 13 week period

ended December 27, 2015. The decrease was driven by the decrease in Company-owned stores from six as at

December 27, 2015 to four as at December 25, 2016. The Company converted these stores to franchised stores in

2016 through a sale of the existing assets to the respective franchise partners.

Total costs and expenses. Total costs and expenses were $4.0 million for the 13 week period ended

December 25, 2016, an increase of $1.2 million or 43%, as compared to $2.8 million during the same fiscal period

in the prior year. The increase in total costs was due to $1.4 million in non-recurring expenses relating to the

Offering incurred during the 13 week period ended December 25, 2016. Total costs and expenses as a percentage

of total revenue were 101% for the 13 week period ended December 25, 2016, compared to 87% for the same

fiscal period in the prior year.

Cost of sales. Cost of sales were $0.6 million for the 13 period ended December 25, 2016, a decrease of $0.1

million as compared to $0.7 million in the same fiscal period of the prior year. The decrease was primarily driven

by the reduction of Company owned stores from six to four, as discussed above. Cost of sales as a percentage of

Company-owned stores sales was 86% for the 13 week period ended December 25, 2016 compared to 88% for the

13 week period ended December 27, 2015.

Selling, general and administrative. Selling, general and administrative expenses were $3.2 million for the 13

week period ended December 25, 2016, an increase of $2.2 million as compared to $1.0 million in the same fiscal

period in the prior year. The increase was due to $1.4 million in non-recurring expenses relating to the Offering, in

addition to an increase in headcount at our corporate headquarters related to franchise support. Selling, general

and administrative expenses as a percentage of total revenue was 80% for the 13 week period ended

December 25, 2016, compared to 31% in the corresponding periods in the prior fiscal year.

Depreciation and amortization. Depreciation and amortization was $0.2 million for the 13 week period

ended December 25, 2016, an increase of $0.1 million compared to $0.1 million in the same fiscal period in the

prior fiscal year. Depreciation and amortization increased due to an impairment loss being recorded against certain

company-owned store assets of $0.1 million in the 13 week period ended December 25, 2016.

15

Interest expense, net. Interest expense, net was $0.3 million for the 13 week period ended December 25,

2016, an increase of $0.2 million as compared to $0.1 million in the same fiscal period in the prior year. The

increase in interest expense was driven by increased borrowings made in June and July 2016 under the Credit

Facility. At year end the Company accelerated $0.2 million of capitalized transaction costs through interest

expense to reflect the settlement of the Credit Facility in conjunction with the Offering. The borrowings under the

Credit Facility were repaid subsequent to year end upon successful completion of the Offering.

Income tax expense (recovery). Income tax recovery was $(0.3) million for the 13 week period ended

December 25, 2016, as compared to an income tax recovery of $(1.0) in the same fiscal period in the prior fiscal

year. The decrease in tax recovery was primarily due to the recognition of a deferred tax asset in 2015 which is

primarily comprised of the recognition of loss carry forwards, which we utilized in part in the current year and plan

to continue to utilize in future tax years, as well as settlement payments to be deducted upon payment.

Fiscal 2016 Compared to Fiscal 2015

The following table summarizes our results of operations for fiscal 2016 and fiscal 2015 (in thousands).

Fiscal Year Ended

December 25, 2016

December 27, 2015

Amount

Percent of

Total

Revenue

Amount

Percent of

Total

Revenue

Revenue Franchise revenue ................................................................................................$ 12,992 81% $ 7,678 69%

Company-owned store revenue ................................................................ 3,126 19 3,424 31

Total revenue ................................................................................................ 16,118 100 11,102 100

Costs and expenses Cost of sales ................................................................................................ 2,664 17 2,874 26

Selling, general and administrative ................................................................ 9,745 60 4,843 44

Depreciation and amortization ................................................................ 284 2 155 1

Contract termination fee ................................................................................................ — — 4,875 44

Legal settlement ................................................................................................ — — 1,017 9

Total costs and expenses ................................................................................................ 12,693 79 13,764 124

Income (loss) before interest costs, foreign exchange and income

taxes ................................................................................................................................ 3,425 21 (2,662) (24)

Interest expense, net ................................................................................................ 642 4 88 1

Foreign exchange loss (gain) ................................................................ 383 2 41 0

Income (loss) before income tax expense ................................................................ 2,400 15 (2,791) (25)

Income tax expense (recovery) ................................................................ 806 5 (1,063) (10)

Net income (loss) ................................................................................................$ 1,594 10% ($ 1,728) (16%)

Total Revenue. Total revenue was $16.1 million in fiscal 2016, an increase of $5.0 million, or 45%, as

compared to $11.1 million in fiscal 2015. The increase in total revenue was driven by growth in franchise revenue,

offset by a decrease in Company-owned store revenue as described in more detail below.

16

Franchise revenue. Franchise revenue was $13.0 million in fiscal 2016, an increase of $5.3 million, or 69%,

compared to $7.7 million in the prior fiscal year. Royalty revenue was $6.3 million in fiscal 2016, an increase of

$2.2 million, or 54%, as compared to $4.1 million in the prior fiscal year. The increase in franchise revenue and

royalty revenue was primarily due to an increase in the number of franchised stores from 172 as of the end of

fiscal 2015 to 274 as of the end of fiscal 2016 in addition to the impact of same-store sales growth. Same-store

sales growth was 6.8% in fiscal 2016 compared to same-store sales growth of 4.8% in fiscal 2015. Franchise fee

revenue was $4.3 million in fiscal 2016, an increase of $1.9 million, or 79%, as compared to $2.4 million in the prior

fiscal year. This increase was driven by 102 net franchised store openings for fiscal 2016, as compared to 76 net

franchise store openings for fiscal 2015. Coordination fees were $2.3 million during fiscal 2016, an increase of $1.1

million as compared to $1.2 million during fiscal 2015. The increase was primarily due to the increased number of

franchised stores in operation for the entire fiscal year as well as the additional 100 net total store openings. In

fiscal 2016, the Company also recorded a gain on sale of corporate store assets of $0.2 million, compared to nil in

the comparable period in 2015.

Company-owned store revenue. Company-owned store revenue was $3.1 million in fiscal 2016, a decrease of

$0.3 million, or 9%, as compared to $3.4 million in the prior fiscal year. The decrease was driven by the decrease in

Company-owned stores from six as at December 27, 2015 to four as at December 25, 2016. The Company

converted these stores to franchised stores during fiscal 2016 through a sale of the existing assets to the respective

franchise partners.

Total costs and expenses. Total costs and expenses were $12.7 million in fiscal 2016, a decrease of $1.1

million or 8% as compared to $13.8 million in the prior fiscal year. The decrease in total costs and expenses is

largely due to certain non-recurring items occurring in the prior fiscal year including a contract termination fee of

$4.9 million and a legal settlement of $1.0 million. This was offset by a $4.8 million increase in selling, general and

administrative, largely made up of a $2.8 million increase in professional fees relating to non-recurring offering

expenses, a $1.8 million increase in salaries and wages, and a $0.3 million increase in advertising and promotion,

each described in more detail below. Total costs and expenses as a percentage of total revenue was 79% in fiscal

2016, compared to 124% in the prior fiscal year.

Cost of sales. Cost of sales. Cost of sales was $2.7 million in fiscal 2016, a decrease of $0.2 million, or 7% as

compared to $2.9 million in the prior fiscal year. The decrease was primarily driven by the reduction of Company-

owned stores from six to four, as discussed above. Cost of sales as a percentage of Company-owned stores sales

was 87% for fiscal 2016 and 85% for fiscal 2015.

Selling, general and administrative. Selling, general and administrative expenses were $9.7 million in fiscal

2016, an increase of $4.9 million as compared to $4.8 million in the prior fiscal year. The increase is primarily due

to a $2.8 million increase in non-recurring professional fees relating to the Offering process the Company initiated

in the year, and completed subsequent to year end. Making up a large portion of the remainder of the difference

was a $1.8 million increase in salaries and wages, and a $0.3 million increase in advertising and promotion. The

increase in salaries and wages is a result of an increase in headcount at our corporate headquarters related to

franchise support, including a number of key hires including Vice President of People Culture, Vice President of

Marketing, and Head of Technology. In addition, the field consultant role was added in the year to support the

operation of franchise support. The increase in advertising and promotion is a result of a few key large marketing

initiatives undertaken with third party marketing consultants in the year to increase brand awareness, and

promote sales. Selling, general and administrative expenses as a percentage of total revenue was 60% in fiscal

2016, compared to 43% in the prior fiscal year.

Depreciation and amortization. Depreciation and amortization was $0.3 million in fiscal 2016, an increase of

$0.1 million, as compared to $0.2 million in fiscal 2015. The increase is primarily due to the impairment charge of

$0.1 million recorded on leasehold improvements with a carrying value greater than value in use, and recoverable

amount at year end.

17

Interest expense, net. Interest expense, net was $0.6 million in fiscal 2016, an increase of $0.5 million as

compared to $0.1 million in the prior fiscal year. The increase in interest expense was driven by increased

borrowings made in June and July 2016 under the Credit Facility. At year end the Company accelerated $0.2 million

of capitalized transaction costs through interest expense to reflect the settlement of the Credit Facility in

conjunction with the Offering. The borrowings under the Credit Facility have been repaid in full as a result of the

successful completion of the Offering.

Income tax expense (recovery). Income tax expense was $0.8 million in fiscal 2016, as compared to an

income tax recovery of $1.1 million in the same period in the prior fiscal year. The increase in tax expense was

primarily due to $2.4 million in taxable income the 52 week periods ended December 25, 2016 compared to a net

loss of $2.8 million in the comparative prior fiscal period largely resulting from a contract termination fee and legal

settlement incurred.

Performance Measures – Quarterly Results

The following table sets forth certain unaudited operating data for each fiscal quarter during fiscal 2015 and

fiscal 2016. Our quarterly results are not necessarily indicative of future operating results. See “Non-IFRS Financial

Measures”, “Industry Metrics” and “Risk Factors”.

Fiscal 2015

Fiscal 2016

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

(in thousands, except store numbers and sales percentages)

Number of system-

wide stores open

at end of period .............. 116 128 153 178 191 216 244 278

Number of franchised

stores open at

end of period .................. 111 122 147 172 185 211 240 274

Number of company-

owned stores

open at end of

period ............................. 5 6 6 6 6 5 4 4

System-wide sales ................$ 12,195 $ 15,336 $ 16,425 $ 17,319 $ 18,879 $ 24,545 $ 26,310 $ 26,384

Same-store sales

growth ............................ 7.6% 2.5% 3.3% 6.5% 7.3% 7.0% 5.3% 7.7%

Revenue ................................$ 2,372 $ 2,829 $ 2,725 $ 3,176 $ 3,231 $ 4,723 $ 4,200 $ 3,964

Seasonal factors, in addition to the timing of holidays, can cause the Company’s revenue to fluctuate from

quarter to quarter. The timing of openings, which are typically slower historically in the first quarter as compared

to the remainder of the quarters throughout the year, can lead to revenue fluctuations from one quarter to

another. Additionally, the first quarter has historically been a slower period for sales by our restaurants given

consumer spending trends following the holiday season as well as adverse weather in our legacy markets.

System-wide sales grew from $26.4 million and $96.1 million for the 13 and 52 week periods ended

December 25, 2016, respectively, compared to $17.3 million and $61.3 million for the 13 and 52 week periods

ended December 27, 2015, respectively, representing an increase of $9.1 million or 53% for the quarter and $34.8

million or 57% for the full year. The increase relates to an increase of 100 net new franchised locations, in addition

to same store sales growth of 7.7% for the 13 week period ended and 6.5% for the 52 week period ended

December 25, 2016.

Same store sales growth for the 13 week period ended December 25, 2016 was 7.7% compared to the 13

week period ended December 27, 2015 of 6.5%. Same store sales growth for the 52 week period ended December

25, 2016 was 6.8% for the 52 week period ended December 25, 2016 compared the same period in 2015 of 4.8%.

18

Total revenue was $4.0 million for the 13 week period ended December 25, 2016, representing an increase

of $0.8 million or 25% for the fourth quarter over the same period in prior year. Total revenue for the 13 week

period ended December 27, 2015 was $3.2 million. The increase in total revenue was driven by growth in franchise

revenue offset by a decrease in Company-owned store revenue. The Company’s franchise revenue was $3.3

million for the 13 week period ended December 25, 2016, compared to $2.4 million in the same fiscal period in the

prior year, representing an increase of $0.9 million or 38%. Royalty revenue was $1.7 million for the 13 week

period ended December 25, 2016, an increase of $0.5 million or 42%, as compared to $1.2 million in the same

fiscal period in the prior year. The increase in franchise revenue and royalty revenue were primarily due to an

increase in the number of franchised stores from 172 as of December 27, 2015 to 274 as of December 25, 2016

and, in addition the impact of system-wide same-store sales growth. Same-store sales growth was 7.7% in the 13

week period ended December 25, 2016 compared to 6.5% in the 13 week period ended December 25, 2015.

Franchise sales were $0.9 million for the 13 week period ended December 25, 2016, an increase of $0.2 million or

29%, as compared to $0.7 million in the prior year for the same fiscal period. This increase was driven by 34 net

franchised store openings through the end of the 13 week period ended December 25, 2016, as compared to 25

net store openings through the end of the same fiscal period in 2015. Coordination fees received from third parties

were $0.7 million for the 13 week period ended December 25, 2016, an increase of $0.2 million as compared to

$0.5 million for the 13 week period ended December 27, 2015. The increase was primarily due to the increased

number of system-wide stores in operation in the 13 week period ended December 25, 2016 together with the

additional 34 net store openings in the 13 week period ended December 25, 2016.

Recent Developments

On June 28, 2016, the Company entered into a new credit facility with a Canadian chartered bank (the

“Credit Facility”) consisting of (i) a $2.0 million demand operating credit facility (the “Operating Credit Facility”),

(ii) a $15.0 million demand term loan (the “Demand Term Loan”), and (iii) a $0.2 million demand Visa credit facility

(the “Visa Credit Facility”). Subsequent to year end, the Company used a portion of the proceeds therefrom to

repay all outstanding borrowings under our retired credit facility.

On September 2, 2016 the Company completed both a distribution of cash of $0.44 per share (being the

aggregate amount of $11,321,438) as well as a reorganization of the Company’s share capital in order to facilitate

the return of capital to the shareholders of the Company (the “Recapitalization”). Immediately prior to the return

of capital, the share capital of the Company was reorganized such that each received a special class of common

shares in respect of their shareholdings in the Company. The reorganization was implemented to facilitate an

efficient return of capital to each shareholder based upon their original subscription of shares in the Company.

Immediately after the return of capital, each shareholder exchanged their special class of common shares for

shares of the existing class of common shares, described above. The aggregate cash distribution was comprised of

two amounts, a return of capital of $4,016,825 and a dividend of $7,304,613.

On January 31, 2017 the Company completed the Offering. The Company’s Class A subordinate voting

shares were listed on the Toronto Stock Exchange under the stock symbol “FRII” on January 31, 21017. In

conjunction with the Offering, the Company filed articles of amendment to, among other things, (a) amend the

authorized share capital to provide for Class A subordinate voting shares and Class B multiple voting shares, (b)

amend and redesignate its common shares on a one-for-one basis as Class A subordinate voting shares, and

(c) amend its authorized capital to remove the existing classes of preferred shares and replace same with a single

class of “blank cheque” preferred shares, issuable in series. Immediately prior to the closing of the Offering, the

Company issued Class B multiple voting shares to Jaxii Holdings LLC (“Jaxii”), a company controlled by Matthew

Corrin, the Chairman and Chief Executive Officer of the Company, on a one-for-one basis, in exchange for Class A

subordinate voting shares held by Jaxii (other than 1,086,984 Class A subordinate voting shares sold by Jaxii in

connection with the Offering). The foregoing transactions are collectively referred to as the “Reorganization”.

19

The offering of 10,900,000 Class A subordinate voting shares consisted of a treasury issuance by the

Company of 4,360,000 Class A subordinate voting shares (the “Treasury Offering”), and a secondary offering of

6,540,000 Class A subordinate voting shares by the selling shareholders. The offering price of $11.50 resulted in

net proceeds to the Company of $47,131,600 and $70,697,400 to selling shareholders after underwriting

commissions of $7,521,000. In addition, the Company and selling shareholders, other than Jaxii, on a pro-rata basis

granted the underwriters an over-allotment option to purchase up to an additional 1,635,000 Class A subordinate

voting shares. The over-allotment option was fully exercised after the Offering and raised additional net proceeds

of $7,069,740 to the company and $10,604,610 to the selling shareholders after underwriting commissions of

$1,128,150.

In conjunction with the Offering, the Company intends to exercise its option to buy back its Chicago master

franchise agreement. This buy back option includes the development rights and could include the repurchase of

three stores owned and operated by the development agent and its affiliates, which stores would then be

refranchised. As at March 21, 2017 the company is currently engaged in final diligence in order to complete the

master franchise agreement buy-back.

Outlook

We believe that we have a significant growth opportunity ahead of us, building on our successful track

record. We are committed to rapidly increasing the number of franchise partner locations in our store network and

leveraging the scalability of our operating platform to increase the profitability of our business.

Our growth strategy targets:

• increasing our store count by 150 to 160 net new franchised stores in fiscal 2017 to reach 430 to 440

system-wide stores by the end of fiscal 2017;

• system-wide store count of between 810 and 840 stores by the end of fiscal 2019;

• annual same-store sales growth for all system-wide stores of between 3.0% and 4.0% for the period

fiscal 2017 through fiscal 2019;

• system-wide sales growing to between $355 million and $365 million by the end of fiscal 2019;

• average royalty rate of 6.0% to 7.0% for the period fiscal 2017 through fiscal 2019;

• average franchise fees of approximately $30,000 per store in local currency (except for our

international franchise partners, who are required to pay this amount in U.S. dollars);

• other income growing to approximately 2.5% of system-wide sales for the period fiscal 2017 through

fiscal 2019;

• selling, general and administrative expenses as a percentage of system-wide sales of 4.0% and 5.0% for

the period fiscal 2017 through fiscal 2019; and

• Pro Forma Adjusted EBITDA growing to between $20 million and $22 million by the end of fiscal 2019.

We believe we can achieve this growth through the following:

• Rapidly Grow Our Franchise Partner Store Base – Based on our current pipeline, our franchise partners

are targeting approximately 150 to 160 net new franchised store openings in fiscal 2017 to reach a

total store count of between 430 and 440 system-wide stores by the end of fiscal 2017. We anticipate

that these openings will generate an average franchise fee of approximately $30,000 (subject to

foreign exchange rates for our Canadian openings) and an average royalty rate of 6.0% to 7.0%. We

also expect the new store opening process to be accelerated by our dedicated real estate team, who

will work with new franchisees to identify and select real estate from a preferred list of pre-identified

locations in target markets. We do not expect the acquisition of suitable real estate to constrain our

ability to grow our system-wide store count. By the end of fiscal 2019, we are targeting a system-wide

store count of between 810 and 840 stores.

20

• Drive Same-Store Sales Growth – We are targeting same-store sales growth for all system-wide stores

of between 3.0% and 4.0% for the period fiscal 2017 through fiscal 2019, which we believe we will

achieve through the following strategies: (i) increase frequency of customer visits and traffic through

continued menu innovation, (ii) attract new customers by expanding brand awareness, (iii) leverage

mobile technology to increase order frequency and speed of service, and (iv) expand and optimize

menu mix and dayparts.

• Enhance Profitability and Free Cash Flow – We will continue to focus on increasing our profitability

while also investing in personnel and infrastructure to support our future growth. As we execute our

growth strategy, we believe we will grow revenue and leverage our fixed cost infrastructure, creating

greater operating leverage and generating increased earnings growth and free cash flow.

The foregoing financial outlook is based on the following assumptions, amongst others:

• the existing pipeline of franchise partners that have signed agreements to open their first store will do

so;

• franchise partners that have contractual obligations to open additional stores will do so;

• there will be conservative growth each year over the current rate at which the Company signs new

agreements with new franchise partners;

• master franchise agreements that have contractual development schedules will be entered into and

the development schedules satisfied;

• growth of historical store base’s sales at a rate of approximately 3.0% to 4.0% annually;

• continuing to grow our store base with franchise partner stores and maintaining our current Company-

owned stores over the forecast period;

• continuing to accelerate store openings from new and existing franchise partners each year;

• achieving annual same-store sales growth over the outlook period;

• consistent U.S. dollar to Canadian dollar exchange rate of US$1.00 = C$1.31;

• expanding our brand in North America and accelerating growth in the U.S.;

• taxation rates remaining consistent with historical levels;

• continuing to generate free cash flow through minimal investment in capital expenditures and capital

maintenance costs;

• continuing to leverage vendor relationships in a scalable manner to ensure continued acceleration of

operating margins through economies of scale generated by our system-wide store growth;

• continuing to innovate our menu offerings to attract new customers and increase loyalty of our

current customer base;

• continuing a rigorous real estate site selection process to ensure target sales levels and store

economics are achieved for our franchise partners;

• continuing to attract quality franchise partners to represent our brand and provide support and tools

to continually improve the guest experience; and

• continuing to improve our mobile application, web ordering and in-store technology to drive customer

loyalty.

21

Management currently believes that the achievement of the financial outlook is possible, can be reasonably

estimated and is based on underlying assumptions that management believes are reasonable in the circumstances,

given the time period for such targets. However, there can be no assurance that we will be able to accelerate and

achieve our new store growth, expand our brand into the U.S. and internationally in an accelerated manner,

achieve similar same-store sales growth in the North American and international markets we enter, continue to

sell franchises at an accelerated pace or achieve continued positive same-store sales growth. Furthermore, there

can be no assurance that foreign currency exchange rates, taxation rates will be consistent with our assumptions

as actual rates and levels may vary in the future.

The foregoing description of our potential growth opportunities is based on management’s current

strategies, our assumptions and expectations concerning our growth opportunities, and our assessment of the

opportunities for the business and the QSR industry as a whole, and has been calculated using accounting policies

that are generally consistent with our current accounting policies. The purpose of disclosing our fiscal 2019

financial targets is to provide investors with more information concerning the financial impact that management

currently believes is achievable based on our growth strategies described above. The forward-looking information

included in this MD&A has been prepared by the Company’s management as of the date hereof. Such information

is the sole responsibility of Company’s management.

Selected Consolidated Statements of Balance Sheet Information

As at

December 25, 2016

As at

December 27, 2015

Total assets ........................................................................................................ 12,243 7,560

Non-current financial liabilities .......................................................................... 0 3,559

Equity (deficit) .................................................................................................... $ (10,492) $ (1,136)

Total assets were $12.2 million as at December 25, 2016, an increase of $4.6 million as compared to $7.6

million as at December 27, 2015. The increase is largely attributable to an increase in cash of $4.3 million. See

“Comparative Cash Flow” below for a discussion of the changes in cash. The remainder of the change is primarily

due to an increase in prepaid assets of $1.5 million and accounts receivable of $0.5 million offset by decreases in

restricted cash and deferred charges of $0.8 million and $0.7 million. The increase in prepaid assets is a result of

cash expenditures related to the Treasury Offering. Subsequent to year end and upon successful completion the

Offering, these amounts have been reclassified from prepaid expenses and other assets to equity. The decrease in

restricted cash is a result of the settlement of the Company’s retired credit facility, which removed the

requirement for restriction. The decrease in deferred charges is a result of the opening of stores previously signed

through a service provider which supported franchise sales in the 13 week period ended December 27, 2015 and

prior, resulting in the recognition of the related commission expense.

Non-current financial liabilities were nil as at December 25, 2016, a decrease of $3.6 million as compared to

$3.6 million as at December 27, 2015. During fiscal 2016, the Company entered into an agreement to renegotiate

its term facility to facilitate a distribution to shareholders pursuant to the Recapitalization. The renegotiated debt

extinguished the $2.9 million long term payable under the old credit facilities, and the Company received a

$15.0 million term loan, due on demand. This debt transaction was the largest driver of the change period over

period. The remaining change is due to $0.6 million of the prior year’s legal settlement payable becoming current.

The Company had a deficit of $10.5 million as at December 25, 2016, a decrease of $9.4 million from the

$1.1 million deficit as at December 27, 2015. The increase in deficit is largely attributable to the $11.3 million

distribution to shareholders pursuant to the Recapitalization during fiscal 2016. This increase was offset by the

$1.6 million of net income earned during the same period.

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Liquidity and Capital Resources

General

Our primary sources of liquidity and capital resources are cash generated from operating activities and

availability under our Credit Facility. Our primary requirements for liquidity and capital are working capital and

general corporate needs, such as our franchise sales and support activities. Additional future liquidity needs will

include expenses we expect to incur as a public company. Our operations have historically not required significant

working capital and we have been able to operate, and expect to continue to be able to operate, with negative

working capital. As at December 27, 2015 and December 25, 2016, the Company had a working capital deficit of

$0.2 million and $11.8 million, respectively. The negative working capital position of $0.2 million as at December

27, 2015 is primarily a result of the indebtedness incurred as a result of the one-time contract termination fee, as

well as the current portion of legal settlement payable, offset by an increase in accounts receivable. The negative

working capital position of $11.8 million as at December 25, 2016 was principally as a result of the indebtedness

incurred under our Credit Facility to fund the Recapitalization. Notwithstanding the working capital deficiency as at

December 25, 2016, our cash on hand and undrawn availability under our Operating Credit Facility were sufficient

to satisfy our obligations as they became due. Furthermore, subsequent to year end, in conjunction with the

Offering, the Company received C$54.2 million. We believe that our current sources of liquidity and capital will be

sufficient to finance our continued operations, growth strategy and additional expenses we expect to incur as a

public company for at least the next 12 months. A portion of the proceeds were used to repay the Credit Facility.

Our capital expenditures consist primarily of remodeling activities associated with our corporate

headquarters and Company-owned stores, equipment replacements, investments in information technology, and

other property and equipment which we have funded out of cash from operating activities. In fiscal 2016, total

capital and intangible expenditures were $0.3 million, resulting in a slight decrease from fiscal 2015. We expect to

continue to fund capital expenditures out of cash from operating activities.

Our cash flows and available borrowings under our Credit Facility have allowed us to pursue our growth

strategies while also returning capital to shareholders, when appropriate. Our priorities in the use of available cash

have been historically been:

• reinvestment in core business activities that promote our strategic initiatives;

• reducing long term debt; and

• general corporate purposes.

The following table shows our cash flows information for fiscal 2016 and fiscal 2015:

Fiscal Year Ended

December 25,

2016

December 27,

2015

Net cash provided by (used in) operations ........................... 4,674 (3,062)

Net cash provided by (used in) investing.............................. 655 (1,114)

Net cash provided by (used in) financing ............................. (1,087) 4,275

Net increase in cash ............................................................. $ 4,242 $ 99

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Comparative Cash Flow

Net cash provided by (used in) operations. Our net cash provided by (used in) operations is driven by sales at

both franchised stores and Company-owned stores, as well as franchise and development fees. We collect

franchise royalties from our traditional franchise partners located in North America on a weekly basis and from our

international and certain non-traditional franchise partners on a monthly basis. Cash receipts from our traditional

franchise partners located in North America are directly debited from the franchise partners’ operating cash

accounts, eliminating collection or bad debt exposure. Store-level operating costs at our Company-owned stores,

unearned franchise and development fees and corporate overhead costs also impact our net cash provided by

(used in) operations.

Net cash provided by operations was $4.7 million in fiscal 2016 compared to net cash used in operations of

$3.0 million in fiscal 2015. In fiscal 2016, the increase in net cash provided by operations was primarily attributable

to increased net income, which accounted for $3.3 million of the change, and an increase in accounts payable and

accrued liabilities responsible for $3.5 million of the change. This increase in accrued liabilities is a result of a

number of expenses incurred in the fourth quarter of 2016 related to the Offering which were not paid until fiscal

2017. The increase in cash is partially offset by an increase in prepaid expenses of $1.4 million related to costs

incurred in conjunction with the Offering.

Net cash provided by (used in) investing. Our net cash provided by (used in) investing include remodeling

activities associated with our corporate headquarters and our Company-owned stores and providing operational

support to our franchise system. Substantially all of our capital expenditures have historically been financed using

cash provided by operations and borrowings.

Net cash provided by investing activities was $0.7 million in fiscal 2016 compared to net cash used by

investing activities of $1.1 million in fiscal 2015. Net cash provided by investing activities in fiscal 2016 primarily

consisted of a reduction in our restricted cash balance of $0.9 million tied to the extinguishment of the retired

credit facility and proceeds generated from the sale of corporate stores of $0.1 million partially offset by capital

expenditures and intangible assets of $0.3 million. Net cash used in investing activities in fiscal 2015 primarily

consisted of an increase in our restricted cash balance of $0.6 million and capital expenditures and intangible

assets of $0.5 million.

Net cash provided by (used in) financing. Our net cash used in financing activities was $1.1 million for fiscal

2016 compared to net cash provided by financing activities of $4.3 million for fiscal 2015. The net cash provided by

financing activities for fiscal 2016 primarily consisted of a $15.0 million drawing on our Credit Facility partially

offset by repayments of $3.9 million on our retired credit facility, the payment of a dividend and return of capital

to our shareholders totaling $11.3 million pursuant to the Recapitalization, and repayment of bank loans totaling

$0.6 million. The net cash provided by financing activities in fiscal 2015 primarily consisted of drawings of

$4.0 million from our retired credit facility.

On June 28, 2016, Freshii entered into the Credit Facility with the Lender consisting of (i) the Operating

Credit Facility, (ii) the Term Loan, and (iii) the Visa Credit Facility. Freshii entered into a general security agreement

with the Lender under the Credit Facility, which grants the Lender a first-priority security interest in all present and

future undertakings and personal property of Freshii and a pledge of shares of certain of Freshii’s subsidiaries and

certain assignments of agreements and insurance claims. The Credit Facility is also guaranteed and secured by a

first-priority security interest in all present and future personal property of each of Freshii’s material subsidiaries.

As of December 25, 2016, the Operating Credit Facility and the Visa Credit Facility remained undrawn and

there was $15.0 million of total principal amount outstanding under the Term Loan. As of December 25, 2016, we

were in compliance with all covenants under the Credit Facility. The Credit Facility was subsequently repaid in

conjunction with the Offering.

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Contractual Obligations

The following table sets forth the maturity profile of our contractual obligations and commercial

commitments as of December 25, 2016 on an undiscounted basis (in thousands):

Contractual Obligations

Less than

1 year

1 -3 years

3 - 5 years

More than

5 years

Total

Long-term debt obligations $ 2,188 $ 11,250 $ 1,562 $ — $ 15,000

Operating lease obligations 663 1,169 — — 1,832

Settlement payable 640 — — 640

Total 3,491 12,419 — — 17,472

Off-Balance Sheet Arrangements

We have guaranteed certain lease obligations, primarily related to franchise partners. In the event of default

by the relevant franchise partner, we retain the ultimate responsibility towards the landlord for payments under

the lease agreements. We have a number of options available to mitigate this potential liability and historically

have not incurred any significant liabilities pertaining to these guarantees. For more information about our off-

balance sheet arrangements, see note 26 to our audited consolidated financial statements.

Share Information

As at December 25, 2016, the Company’s authorized share capital consisted of an unlimited number of

common shares, an unlimited number of Class A - Class V common shares, 525,000 Series A preferred shares and

an unlimited number of series B preferred shares, of which 25,467,169 common shares were issued and

outstanding. In conjunction with the Offering, the Company filed articles of amendment to implement the

Reorganization. As a result of the Reorganization, the Company’s authorized share capital consists of an unlimited

number of Class A subordinate voting shares, an unlimited number of Class B multiple voting shares and an

unlimited number of preferred shares to be designated and issued at such time as the board of directors of the

Company (the “Board”) may determine, of which 25,233,152 Class A subordinate voting shares, 5,248,017 Class B

multiple voting shares and no preferred shares are issued and outstanding as at the date hereof.

As of March 21, 2017, the Company had 1,021,245 options to purchase Class A subordinate voting shares

issued and outstanding.

Related Party Transactions

The Company’s policy is to conduct all transactions with related parties at arm’s length to align with market

terms and conditions. The Company has entered, or proposes to enter, into employment agreements with related

parties and related parties may also participate in the Company’s share-based compensation plans and the

Company’s defined contribution savings plan. See note 27 to our audited consolidated financial statements.

Subsequent Events

On January 25, 2017, the Company granted an aggregate of 969,975 restricted share units to its executive

officers, management and employees, and 49,500 restricted share units to the Company’s non-management

directors.

On January 31, 2017 the Company completed the Offering. The Company’s Class A subordinate voting shares

were listed on the Toronto Stock Exchange under the stock symbol “FRII” on January 31, 2017. In conjunction with

the Offering, the Company completed the Reorganization.

25

The offering of 10,900,000 Class A subordinate voting shares consisted of the Treasury Offering and a

secondary offering of 6,540,000 Class A subordinate voting shares by the selling shareholders. The offering price of

$11.50 resulted in net proceeds to the Company of $47,131,600 and $70,697,400 to selling shareholders after

underwriting commissions of $7,521,000. In addition, the Company and selling shareholders, other than Jaxii, on a

pro-rata basis granted the underwriters an over-allotment option to purchase up to an additional 1,635,000 Class

A subordinate voting shares. The over-allotment option was fully exercised after the Offering and raised additional

net proceeds of $7,069,740 to the Company and $10,604,610 to the selling shareholders after underwriting

commissions of $1,128,150.

The closing of the Offering constituted a liquidity event as described in Note 17 and, as a result, options to

purchase 340,415 common shares vested immediately, resulting in an acceleration of expense of $21,000.

In conjunction with the Offering, the Company announced its intention to exercise its option to buy back its

Chicago master partner agreement. This buy back option includes the development rights and three stores owned

and operated by the development agent and its affiliates.

On February 7, 2017, the Company repaid the $15 million Term Loan with proceeds from the Offering.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in conformity with IFRS. The preparation of these financial

statements requires us to make estimates and assumptions that affect the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the

reported amounts of revenue and expenses during the reporting period. Actual results could differ from those

estimates. Critical accounting policies are those that management believes are both most important to the

portrayal of our financial condition and operating results, and require management’s most difficult, subjective or

complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently

uncertain. We base our estimates on historical experience, outside advice from parties believed to be experts in

such matters, and on various other assumptions that are believed to be reasonable under the circumstances, the

results of which form the basis for making judgments about the carrying value of assets and liabilities that are not

readily apparent from other sources. Judgments and uncertainties affecting the application of those policies may

result in materially different amounts being reported under different conditions or using different assumptions.

Our significant accounting policies can be found in Note 2 and Note 3 to our audited consolidated financial

statements. We consider the following policies to be the most critical in understanding the judgments that are

involved in preparing our consolidated financial statements.

The following are the accounting policies that are subject to judgments and estimates.

Revenue recognition

Management reviews the Company’s recognition of initial franchise fees and revenue relating to the grant of

franchise partners with area franchise rights. The Company evaluates the substantial obligations to the franchisee

of each agreement in order to determine the amount of revenue to be recorded from the initial franchise fee at

the end of each reporting period.

Accounts receivable

Management reviews accounts receivable at each balance sheet date to determine whether the amounts

due to the Company are recoverable. Management determines the recoverability of its accounts receivable

balances by reviewing the aging of outstanding balances, payment history and the creditworthiness of its franchise

partners. The process of determining recoverability requires management to make estimates regarding expected

future recovery of cash balances based on these inputs.

26

Income and other taxes

The calculation of current and deferred income taxes requires management to make certain judgements

regarding the tax rules in jurisdictions where the Company performs activities. Application of judgments is

required regarding classification of transactions and in assessing probable outcomes of claimed deductions,

including expectations of future operating results, the timing and reversal of temporary differences, likelihood of

utilizing deferred tax assets and possible audits of income tax and other tax filings to the tax authorities.

Provisions

Management reviews provisions at each balance sheet date using judgments to determine the probability

that an outflow of economic benefit will result from the legal or constructive obligation and an estimate of the

associated obligation. Due to the judgmental nature of these items, future settlements may differ from amounts

recognized.

Share-based compensation

Our Board is authorized to grant awards to executive officers in the form of stock options. The options

granted by the Board expire within a 5-year period from the date of grant. As of December 25, 2016, we had

1,021,245 shares authorized for issuance pursuant to option award agreements. The options are subject to

performance-based vesting. Performance-based options contain performance-based vesting provisions primarily

based on us meeting certain unit count milestones during the vesting period.

Options require the holder to be continually employed by the Company at the time of vesting and vest based

on performance conditional upon market success of the Company measured by a count of the number of stores

open and operating, except for one-third of such options which immediately vest upon grant. All outstanding

unvested options will vest, in the discretion of the Board, in the event the Company completes an initial public

offering or automatically vest in the event the Company completes a transaction which results in a change of

control.

The accounting for equity-settled share-based compensation requires management to make an estimate of

the fair value of the stock options based on the enterprise value of the Company at the time of the grant as well as

estimates around volatility, risk free rates and forfeitures of vested options.

Significant Accounting Standards Not Yet Adopted

Certain pronouncements were issued by the IASB or the IFRS Interpretations Committee that are mandatory

for accounting periods beginning on or after January 1, 2016. Those pronouncements that are not applicable to or

do not have a significant impact on the Company have been excluded from the table below. The following have not

yet been adopted and are being evaluated to determine the resulting impact on the Company:

• IFRS 9, Financial Instruments (“IFRS 9”) – IFRS 9 replaces the guidance in IAS 39 Financial Instruments:

Recognition and Measurement and IFRIC 9 Reassessment of Embedded Derivatives. This includes amended

guidance for the classification and measurement of financial assets by introducing a fair value through other

comprehensive income category for certain debt instruments. It also contains a new impairment model which

will result in earlier recognition of losses. No changes were introduced for the classification and measurement

of financial liabilities, except for the recognition of changes in own credit risk in other comprehensive income

for liabilities designated at fair value through profit or loss. It also includes the new hedging guidance that was

issued in November 2013. These changes are likely to have a significant impact on entities that have significant

financial assets and in particular financial institutions. IFRS 9 will be effective for annual periods beginning on

or after 1 January 2018, subject to endorsement in certain territories. This standard does not have a material

impact on the Company.

27

• IFRS 15, Revenue from Contracts with Customers (“IFRS 15”) – In May 2014, the IASB issued IFRS 15. The core

principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services

to customers in amounts that reflect the consideration to which the company expects to be entitled in

exchange for those goods or services. IFRS 15 will also result in enhanced disclosures about revenue, provide

guidance for transactions that were not previously addressed comprehensively and improve guidance for

multiple-element arrangements. The standard will also address accounting for loyalty programs and breakage.

Application of IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018 and is to

be applied using the retrospective or the modified transition approach. Early adoption is permitted.

Management is currently assessing the impact of this standard.

• IFRS 16, Leases (“IFRS 16”) – IFRS 16 sets out the principles for the recognition, measurement, presentation

and disclosure of leases for both parties to a contract, the customer (“lessee”) and the supplier (“lessor”). This

will replace IAS 17, Leases (“IAS 17”) and related interpretations. IFRS 16 provides revised guidance on

identifying a lease and for separating lease and non-lease components of a contract. IFRS 16 introduces a

single accounting model for all lessees and requires a lessee to recognize right-of-use assets and lease

liabilities for leases with terms of more than 12 months, unless the underlying asset is of low value, and

depreciation of lease assets separately from interest on lease liabilities in the income statement. Under

IFRS 16, lessor accounting for operating and finance leases will remain substantially unchanged. IFRS 16 is

effective for annual periods beginning on or after January 1, 2019, with earlier application permitted for

entities that apply IFRS 15. As the Company has contractual obligations in the form of operating leases under

IAS 17, there may be an increase to both assets and liabilities upon adoption of IFRS 16, and material changes

to the timing of recognition of expenses associated with the lease arrangements. The Company is analyzing

the new standard to determine its impact on the Company’s consolidated balance sheet and consolidated

statement of comprehensive income (loss).

Risk Factors

The main risks our financial instruments are exposed to are credit risk, market rate risk, foreign currency risk,

interest rate risk, liquidity risk, and commodity price risk, each of which is discussed below. All of these risks arise

in the normal course of business, as we do not engage in speculative trading activities. The following analysis

provides quantitative information regarding these risks.

Credit risk

The Company’s credit risk is primarily attributable to its trade receivables. Trade and other receivables

primarily comprise amounts due from franchisees. Credit risk associated with these receivables is mitigated for a

number of reasons including the following:

• Other than receivables from international locations, the Company’s broad franchise base is spread mostly

across Canada and USA, which limits the concentration of credit risk.

• Prior to accepting a franchisee, the Company undertakes a detailed screening process which includes the

requirement that a franchisee has sufficient financing

• Franchisee balances beyond a particular age are reviewed and evaluated and in cases where management

considers that the expected recovery is less than the actual account receivable, the Company accounts for this

with a specific bad debt provision.

The amounts disclosed in the consolidated balance sheet are net of allowances for bad debts, estimated by

the Company’s management based on past experience and specific circumstances of the counterparty.

28

Other financial instruments that potentially subject the Company to credit risk consist principally of cash. The

Company had no significant credit risk exposure arising in relation to its financial instruments as at December 25,

2016. The Company limits its counterparty risk associated with cash by utilizing a number of different financial

institutions and limiting the total amount of cash held at any individual financial institution. The majority of the

cash as at December 25, 2016 was held at large US and Canadian financial institutions.

Market risk

Market risk is the risk that changes in market prices and interest rates will affect the Company’s net earnings

or the value of financial instruments. These risks are generally outside the control of the Company. The objective

of the Company is to mitigate market risk exposures within acceptable limits, while maximizing returns. The

Company’s market risk consists of risks from changes in foreign exchange rates, interest rates and market prices

that affect its financial liabilities, financial assets and future transactions.

Foreign currency risk

The Company is exposed to foreign currency risk as a portion of the sales and purchases are made in foreign

currencies. Foreign exchange risk arises due to fluctuations in foreign exchange rates, which could affect the

Company's results. The total Canadian dollar ("CAD") balances for the 52 week period ended December 25, 2016 in

the amount of $668,000 were translated into United States dollars (“USD”) at the yearend rate of 0.7388 USD for

one CAD. Based on the above net exposures as at December 25, 2016, and assuming that all other variables remain

constant, a +/- 5% change in the value of the CAD against the USD would result in an increase/decrease of $23,000

in the consolidated statement of comprehensive income. The Company has not entered into any derivative

instruments to reduce its exposure to currency risk.

Interest rate risk

The Company is exposed to interest rate risk on its variable interest rate financial instruments. The variable

rate instruments (bank indebtedness, bank loans) subject the Company to a risk of changes in cash flow. If interest

rates had been 50 basis points higher/lower and all other variables were held constant, the Company's profit for

the 52-week period ended December 25, 2016 would decrease/increase by $37,000 (December 27, 2015:

decrease/increase by $21,000).

Liquidity risk

Liquidity risk relates to the risk the Company will encounter difficulty in meeting its obligations associated

with financial liabilities. The financial liabilities on its balance sheet consist of bank indebtedness, bank loans,

accounts payable and accrued liabilities, and settlements payable. Management closely monitors cash flow

requirements and future cash flow forecasts to ensure that it has access to funds through its committed borrowing

facility and from operations to meet operational and financial obligations. The company believes it has sufficient

liquidity to meet its cash requirements for the next twelve months.

Commodity price risk

The Company is exposed to increases in the prices of commodities in operating its corporate restaurants. To

manage this exposure, the Company uses purchase arrangements for a portion of its needs for certain consumer

products that may be commodities based.