Item 19 Financial Performance Representations

The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and the information is included in the Disclosure Document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.



The following tables provide historical sales information for Tropical Smoothie Café® franchised stores (“Stores”) that were open at least one full year as of: (a) the calendar year 2010 for 262 Stores; and (b) the calendar year 2009 for 233 Stores. The tables do not include any financial performance information for any other types of franchises, such as non-traditional locations (i.e. college campus or other captive locations) or seasonal locations, and do not include any franchises of any type that had not been open for at least one year on December 31, 2010 and December 31, 2009, respectively. The information presented is not a forecast of future potential performance. The gross revenue figures are based on the same computation for computing royalties as required under the Franchise Agreement.

The tables provide the average gross revenues for the following categories of Stores in 2010 and 2009 on a category and cumulative basis: (a) our top 10% revenue producing Stores (meaning the average gross revenue for the number of Stores that were in the top 10% of gross revenues for that year); (b) our top 25% revenue producing Stores (which includes the Stores that are in the top 10%); (c) our top 50% revenue producing Stores (which includes the Stores that are in the top 10% and the top 25%); and (d) our top 75% revenue producing Stores. We present the average gross sales for the year in that category as well as the number and percentage achieving or surpassing the average gross sales in that category alone and cumulative for all Stores. For example, 24 of the 62 Stores in the top 25% for 2010 (or 39%), and 113 of the 250 Stores or 45% of the total Stores, achieved or surpassed that average.





As of December 31, 2010, there were 289 franchised Stores and 2 company-owned Stores. Of the 289 franchised Stores, 262 were franchised Stores that had been open for at least 12 months as of December 31, 2010. Of the 262 Stores, 12 Stores were excluded since they were non-traditional locations. Of the 250 Stores referenced in the above table, all reported sufficient financial performance information to be included in this financial performance representation.





As of December 31, 2009, there were 275 franchised Stores and 3 company-owned Stores. Of the 275 franchised Stores, 233 were franchised Stores that had been open for at least 12 months as of December 31, 2009. Of these 233 Stores, all reported sufficient financial performance information to be included in this financial performance representation.

As stated, the sales for each of the Stores presented are limited to the sales results for Stores that had been open for a full 12 months of operations as of December 31, 2010 and December 31, 2009, respectively. Sales during the first year of operations are likely to be significantly less than for those that have been open for a year or more.

All Tropical Smoothie Café® Stores offer substantially the same products and services to the public. None of the franchised Tropical Smoothie Café® Stores received any services not generally available to other franchisees and substantially the same services will be offered to new franchisees.

We obtained these historical financial results from the information submitted by our franchisees. Neither we nor an independent certified public accountant has independently audited or verified the information. Some Stores have sold the amounts shown in the tables. Your individual results may differ. There is no assurance you will sell as much.

YOUR INDIVIDUAL FINANCIAL RESULTS MAY DIFFER SUBSTANTIALLY FROM THE RESULTS DISCLOSED IN THIS ITEM 19.

The foregoing data relates to revenues only; we are not presenting any information on the costs and expenses of operating a Store. Operating a Store incurs a wide variety of expenses that will reduce the Store’s income from the revenue levels shown. Examples of the types of these expenses include, without limitation, rent and occupancy expenses; food and beverage product and supply costs; salaries, wages and other personnel-related expenses; federal, state and local taxes and fees; utilities; financing costs (including on loans and leases); royalties and other amounts due us. See also Items 5, 6 and 7.

CHARACTERISTICS OF THE INCLUDED FRANCHISED STORES MAY DIFFER SUBSTANTIALLY FROM YOUR STORE DEPENDING ON YOUR PREVIOUS BUSINESS AND MANAGEMENT EXPERIENCE, COMPETITION IN YOUR AREA, LENGTH OF TIME THAT THE INCLUDED STORES HAVE OPERATED COMPARED TO YOUR STORE, AND THE SERVICES OR GOODS SOLD AT YOUR STORE COMPARED TO THE INCLUDED STORES. THE SALES, PROFITS AND EARNINGS OF AN INDIVIDUAL FRANCHISEE MAY VARY GREATLY DEPENDING ON THESE AND A WIDE VARIETY OF OTHER FACTORS, INCLUDING THE LOCATION OF THE STORE, POPULATION AND DEMOGRAPHICS IN YOUR MARKET AREA, ECONOMIC AND MARKET CONDITIONS, LABOR AND PRODUCT COSTS, ETC.

WE HAVE WRITTEN SUBSTANTIATION IN OUR POSSESSION TO SUPPORT THE INFORMATION APPEARING IN THIS FINANCIAL PERFORMANCE REPRESENTATION. WRITTEN SUBSTANTIATION WILL BE MADE AVAILABLE TO YOU ON REASONABLE REQUEST.

We recommend that you make your own independent investigation to determine whether or not the franchise may be profitable, and consult with an attorney and other advisors prior to executing the franchise agreement.

Other than the preceding financial performance representation, we do not make any financial performance representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to our management by contacting Eric Jenrich, our President and CEO at 12598 U.S. Highway 98 West, Suite 200, Destin, Florida 32550 and (888) 292-2522, the Federal Trade Commission, and the appropriate state regulatory agencies.