• Questions to ask Yourself to Determine if Franchising is Right for You• Understanding the Canada Small Business Financing Act• Pitfalls to Avoid When Developing a Business Plan• What to Look for in Legal Documents• Real Estate Essentials: Visibility, Accessibility and Negotiations • Checklist for Evaluating a Franchise Opportunity

Brought to you by DRUXY’S Famous Deliand Williams Fresh Cafe

Bruce, Peter and Harold Druxerman

THE GUIDE TO INVESTIGATING YOUR FRANCHISE INVESTMENT

Contents

Letter from the Editors 1

The Strength of the Ontario Restaurant Economy 2

Advice and Insider Tips from Industry Experts 4

DRUXY’S Famous Deli 15

Williams Fresh Cafe 25

What to Do Next 30

Contact Us 31

Letter from the Editors

In 1976 we launched what has become one of Canada’s longest running deli franchises, DRUXY’S Famous Deli. To celebrate our fortieth year we created this magazine in an effort to help other Canadiansenjoy the benefits of being in business for themselves, but not by themselves.

According to the Canadian Franchise Association, the franchising industry in Canada is the second largest in the world with over 76,000 locations representing $100 billion in annual sales. Franchises offernew business owners not only proven systems that make it possible to replicate success in their chosenlocation, they can also offer a recognized and trusted brand name. While no business can guarantee success, of all the franchises opened in Canada within the last 5 years, 86% are under the same ownership and 97% of them are still in business.

We are grateful that after 40 years we can continue to help people achieve their business goals. As a franchisor we offer benefits that are unique in the restaurant industry. The support from head officeis unlike anything you’ll find elsewhere, as we know the day-to-day realities from personal experience,having operated fifty DRUXY’S delis for 15 years before creating our franchise model.

In 2016 we acquired Williams Fresh Cafe, Canada’s leading fast casual cafe franchise, which advancesour market position in terms of buying power and securing prime locations. While the restaurants willcontinue to operate as separate brands, we will continually evaluate how to share each menu’s strengthand design aspects with the other. This union means that we can offer you two different business models; DRUXY’S, which focuses on urban centres, hospitals and office buildings, and Williams, whichconcentrates on the suburbs, universities and colleges.

Regardless of which brand you choose to explore, there are common areas where we find people needguidance. Throughout this magazine we will share insights and tips from experts in franchising, finance,real estate, and law as well as giving you an inside look at our two restaurants. We believe that you’llfind great advice in these pages and hope that you will consider us when you decide it’s time to invest in your future.

With kind regards,Bruce, Harold, and Peter Druxerman

1

104.0102.3101.5100.999.0

103.599.497.395.594.4

106.9100.396.198.890.1

107.4100.395.9101.283.9

110.8102.798.1104.381.1

113.9105.6101.7106.378.9

118.3108.7104.2111.278.0

75.0

80.0

85.0

90.0

95.0

100.0

105.0

110.0

115.0

120.0

125.0

2007 2008 2009 2010 2011 2012 2013 2014-p

Total Commercial

Caterers Drinking Places

Full-Service Restaurants Quick-Service Restaurants

The Strength of the Ontario Restaurant EconomyA Growth Industry

Both DRUXY’s and Williams operate in the Quick Service Restaurant (QSR) industry. According to Statistics Canada, the Ontario QSR industry grew 5.5% in revenue from 2014 to 2015 and generatedover $11 billion in sales. There were over 15,000 QSRs in Ontario in 2015 with an average revenue of$715,000 each. Compared to full service restaurants (where a waiter/waitress brings the food to thetable), QSRs performed relatively better during the recession (see green trend line below) and, further,bounced back stronger as full service restaurants (orange line below) have only recently started to outperform their pre-recession levels.

QSR sales are almost 14% greater than they were in 2007. Some of the growth can be attributed to the increase in units but it also indicates the importance of the benefits QSRs offer, such as price and convenience. Indeed, according to Euromonitor International, almost 60% of all restaurant mealpurchases are done via take-out, drive-through or delivery. Carry-out and drive-through traffic are forecasted to grow by 10% over the next several years according The NPD Group.

Consumers Favour Restaurants

In terms of activities, going out to a restaurant is the preferred activity with family and friends as seenbelow. According to Visa 60% of Canadians eat lunch out once a week or more and Ontarians lead infrequency with 20% buying lunches three or more times a week.

Fast Casuals Outperforming Industry

Another area of growth is the emerging “fast casuals” category, a hybrid of fast food and casual dining,where food is ordered at a counter and brought to the table by a server. Fast casuals usually offer morecustomized and freshly prepared dishes, and are often in a more upscale environment. Fast casuals average a larger cheque size than traditional fast food restaurants and captured 6% of all QSR visits inCanada, according to Canadian Pizza Magazine. Additionally, according to Food Service and HospitalityMagazine and Technomic Research, fast casuals experienced 7% traffic growth in 2014 and sales growthof 13.9%. Williams Fresh Cafe is considered a fast casual restaurant while current DRUXY’S Famous Delisare fast food restaurants.

Coffee is the Number One Beverage Choice for Canadians

Coffee is the dominant beverage for adult Canadians, second only to tap water, with two-thirds of the population drinking coffee in the past-day and three-quarters in the past week. Coffee drinkers consume on average 3.2 cups of coffee per day according to the Coffee Association of Canada.

Real Sales Index 2007 = 100

Note: Drinking Places sales declined due to many reclassifying as full service restaurantsSource: GE Capital Franchise Finance, “Canadian Chain Restaurant Industry Review“

Preferred Activity with Family and Friends

0 % 10 % 20 % 40 %

28,3 %

22,9 %

12,0 %

11,9 %

9,2 %

7,0 %

4,5 %

4,3 %

Go out to a restaurant

Outdoor activities

Go out to movies

Go out shopping

Go out to a concert or other event

Go to a bar or pub

Go out to a sporting event

Visit cultural sites

Source: Canadian Restaurant and Foodservices

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Advice and Insider Tips from Industry Experts

In this section we asked a panel of experts for their insights into the franchise industry. These are professionals who speak regularly at franchise shows and work with many different franchise brands.After reading their articles below it will feel like you just attended their seminars. We asked specificquestions to ensure that you were getting information we think is vital in your research.

Ask Yourself These Questions to Determine if Franchising is Right for You

ROLES AND GOALS – THE SEARCH FOR YOUR IDEAL BUSINESS

If you’re seriously considering becoming an entrepreneur, you are likely seeking some answers, such as:

• What business suits me best?• How do I properly research my options so that I don’t “jump in” too quickly? • Can I start part-time and then switch to full-time once the business is up and running?• How much money can I make?

While these are just a few of the questions that you need to address before buying a business, there area couple of far more important questions that you should be answering, prior to looking into the abovequestions. These are:

Critical Question 1: ROLES – What do I “bring to the table” in terms of my most leverageable skillsand strongest passions?

In order to figure this out, here are two questions to consider when figuring out your ideal business:

1. What things (roles and activities) do you really like doing, and that you’re good at, that you want to see elements of in your ideal business?

2. What things (roles and activities) do you dislike doing or that you’re bored with, that you DO NOT want to see day-to-day in your business?

This exercise is critical because the greatest likelihood for success comes when your core skills, abilitiesand passions are closely matched to the critical ROLES that the owner must perform in order to drivesuccess in the business.

Critical Question 2: GOALS – What problems am I trying to solve through franchise ownership that corporate employment can’t solve?

Rarely are there easy-to-find answers here, and the answers are different for each person, but it is important to be completely honest with yourself about your current situation, and about your likely future path if you stick with corporate employment. When you do define the answers effectively, thoseanswers often become the critical criteria to define your ideal business model.

Regardless of what your logical and emotional reasons may be for “moving away from” corporate employment, this type of self-motivation is typically temporary; if you can’t sufficiently define what

Gary Prenevost,FranNet of Southern Ontario

you are “moving towards” then you run a substantial risk of accidentally duplicating a similar negative scenario after investing significant money. The “moving towards” answers that you come up with shouldbecome the goals that you will be striving towards through business ownership. I would suggest thatyou read two blog postings at CanadaFranchiseExpert.ca: “Finding Your Business–The Proper SearchMethodology” from June 11, 2014 and “The Single Most Important Analogy When Buying a Franchise”from August 24, 2014 to help gain a deeper perspective on the majority of the critical answers you needto consider when formulating your ideal business model. Only after your ideal business model is completed, will you be ready to research specific franchise options. You will then want to ask the rightquestions of the right people. On the same website, look for “107 Questions for Franchisors and Franchisees” from June 24, 2014 to provide insight here.

Finally, you will want to completely assess the financial questions like “how much money can I make?”Because of changing negative trends in corporate employment, answering this has become much morecomplex process. Reading “Franchise Ownership versus the Guaranteed(?) Income Corporate Career Path?”from February 5, 2016 will guide you in the right direction.

Gary Prenevost is one of Canada’s leading franchise matchmakers and a respected industry expert; he and his partner have helped over 500 people find the right business for them. They have helped thousands more figure out that self-employment was not the right option. For a greater perspective on entrepreneurship through franchising, please visit his website at www.CanadaFranchiseExpert.ca.

Understanding the Canada Small Business Financing Act

While there are numerous loan products available in the financial marketplace today, one of the mostpopular forms of assistance continues to be through the Canada Small Business Financing Program(CSBF). Established over 40 years ago, its main purpose is to increase the availability of financing for establishing, expanding and/or modernizing small businesses. Over the years this program has providedthe necessary financing that many businesses may not have been able to access otherwise.

For new and/or existing businesses, this program is actually easy to access. Application is made throughthe local bank or credit union of choice, in much the same way one would apply for any business loan.Having an existing business or personal banking arrangement with a financial institution would be tothe applicant’s advantage, assuming there was a favourable history of dealings, but this is definitelynot mandatory.

The CSBF Program is ideal for many franchise systems due to the nature and extent of financing mostoften required. Business owners may sometimes find it challenging to finance capital outlays for itemssuch as signage, leaseholds and premises improvements. These expenditures generally represent lessvalue to the banks for lending purposes than more tangible items such as equipment and vehicles.Nevertheless they are often just as important to the business.

Joseph Pisani,Director National Franchising Services, Bank of Montreal

While it stands to reason that there are some rules and qualification parameters to access this program,the process is not as cumbersome as some would believe. The following is an overview of the primaryrequirements and conditions:

• The business must be a start-up or currently operating in Canada, with estimated annual gross revenues/sales not exceeding $10 million during the fiscal year in which they apply.

• Sole proprietors, partnerships and incorporated companies qualify, however farming and charitable or religious organizations are not eligible.

• Business assets/purchases that qualify for financing include equipment (new or used), signage, furniture and fixtures, new leasehold improvements, real property and vehicles. Items such as inventory, franchise fee and goodwill are not eligible for financing.

• For qualifying purposes, the loan amount can be up to 90% of the cost of eligible purchases.• The maximum loan amount a small business can access under the program is $1,000,000, of which

up to $350,000 can be used to finance the purchase or improvement of equipment, signage, furnitureand fixtures, vehicles and new leasehold improvements. For land and building purposes, the maximumamount available is $1,000,000.

• Financing can be arranged for a period of up to 10 years. The loan interest rate cannot be more than3 percent above the lender’s prime lending rate. Fixed rate loans are also available.

• At time of registration and loan access, all applicants must pay a one-time 2% registration fee. These fees, payable to the federal government, are intended to help cover the costs of administering the CSBF Program.

The CSBF Program provides significant benefits for all concerned. First, small business owners gain access to financing which might not otherwise be available through more traditional financing arrangements. Repayment terms can also be established over a longer period of time to ease annualdebt servicing obligations.

Secondly, lending institutions have the opportunity to use this financing arrangement as a means of expanding their customer base and product offerings. From a national, economic perspective, the CSBFProgram helps stimulate business growth, competition and employment.

This program is often referred to as the “government guaranteed loans program.” Consequently businessowners often have a perspective which conflicts with that of the bank concerning qualification criteria,application requirements, security, business viability, etc. There is a perception by some that the loan is guaranteed so there should be no concern by the bank regarding the prospects of the business. If thebusiness fails, the bank can just claim from the government. This perception is incorrect and an important point of clarification is necessary in this regard.

Firstly, under the Canada Small Business Financing Act, the business owner is expected to provide their personal guarantee in support of business borrowings of up to 100% as proposed by the lendinginstitute.

Secondly, the government guarantee is only for 85% of the outstanding loan. Consequently, if the business fails, the bank may claim on this guarantee but only after all other attempts by the bank to recover the debt from the sale of any business assets and/or from the guarantors (usually the businessowners) have been exhausted.

While all lending institutions (the banks) are encouraged by the federal government to make and administer CSBF loans under the Act, it is also understood that the banks should and will apply thesame care, scrutiny, due diligence and prudent lending practices as they would in granting any otherloan facility. In other words, just because the loan would be supported by a government guarantee doesnot mean that the lender should bend or change the rules associated with good lending practices.

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The initial application will still need to be supported by a business plan and financial forecasts. Periodically thereafter, the bank will also conduct a review of credit facilities provided to the business to ensure financial performance remains in order.

As previously mentioned, the CSBF Program has and continues to represent a very popular source of financing. However, it is not the only loan program or financing facility available. Alternatives includingother bank loan products, private funding or equity partners may be available but will vary in terms ofqualification parameters, repayment terms, interest rates, security, etc. To some business owners, the various conditions and/or loan criteria for some of these alternative financing facilities may represent a better option than the CSBF Program. Others may view their respective criteria as less attractive.Either way, when financing is needed, it is important that business owners take the time to investigateas many financing options as possible and to evaluate each one of them, to determine which is the most appropriate financing structure for their business.

Joseph Pisani has been in Commercial Banking for over fifteen years.Joseph joined the Bank of Montreal’s National Industry Programs Department in 2006 as Manager, National Franchising. He was promoted to Director of National Franchising in 2012. His past work experiences include roles as Commercial Banking Account Manager, and operating a small business as well as, working in the advertising industry. Based out of Toronto, Joseph’s role as Director of National Franchising Services consists of identifying, developing and managing a portfolio of financial service programs aimed at facilitating financing and cash management products for selected franchise and networks as well as other industry verticals such as retail petroleum.

Pitfalls to Avoid When Developing a Business Plan

Before signing any franchise agreement or property lease, a good financial understanding of what youcan expect from your investment should be a part of your research. Developing a business plan will helpyou identify key elements that will affect your revenue and costs, such as where you will source yourcustomers and what makes your franchise different from the local competition.

While most banks have business plan templates that can be found on their websites, just filling out thesections they provide won’t give you everything you need. The real insight comes from understandingthe implications of each of the topics and how it affects your financial assumptions. For example, whenresearching the size of the market, is there enough room for another brand given the population andexisting competition? Will the area grow in the future? What market share do you think you can captureand why? Given the average cheque size and frequency of visits, what yearly revenue do you think youcan achieve?

The quality of the answers that come out of a business plan depends on asking the right questions.Here are some common pitfalls resulting from not asking the appropriate questions and how to get themost out of your research.

Matthew Stern, President, New Ink Consulting

Topic Pitfall Correct Approach

Monthly Costs When determining the start-up Develop a month-by-month cash flow statementof Running the costs, funds only cover the build-out. to assess the necessary amount of money Business What happens in the first year required to cover both business and personal

if cash flow from operations do not expenses before breaking even. This workingcover the business’s needs or your capital should be budgeted from the beginningliving expenses? so you know how much investment is needed not

just to open the doors, but keep them open through the first year.

HST Not budgeting for HST in start-up Allocate HST against each relevant start-up expenses. Cost guidance found in line item (not all expenses have HST charges).disclosure documents usually While HST is usually refunded back, it still needs does not include HST. to be financed. If refunds are timely, it can often

be used for working capital requirements.

Break Even Calculating break even for only one For any year that adds more fixed costsPoint year. As you expand and add more (e.g. more space or equipment), the break even

fixed costs, the break even point point should be recalculated. will change.

Revenue Estimating revenue growth as Figure out the maximum monthly revenueGrowth a percentage of the previous year you can manage and ensure that the estimated

(e.g. 10% more) without taking into growth does not exceed this (without account capacity. Most businesses expansion). Determine the utilization ratio cannot grow beyond the physical (projected sales divided by maximum revenuelimitations of the establishment potential – if the number is greater than 100% (restaurants that have catering, then your revenue estimations are too high) take-out and drive-through windows and ask other franchise owners in the system do not have these limitations). if it’s a reasonable target.

Cost Drivers Allocating too small a percentage Cost of goods and labour change as sales gofor costs of goods and/or labour in up or down and therefore are expressed as the beginning and too much labour a percentage of sales. At the beginning, you with growth. will be “learning the ropes.” It’s often a good

idea to budget for a higher percentage on cost of goods and/or labour in the first year to account for this learning curve. Also ask existingfranchise owners what their ratios were over the years as the labour percentage tends to decrease as sales grow.

Matthew Stern is the President of New Ink Consulting which provides bank-readybusiness plans for franchisees and introductions to financial institutions to sourcefinancing. Matthew collects and analyzes the necessary information from marketstudies, the franchisor, existing franchisees, the real-estate broker, and the bank, to ascertain the feasibility of the investment. As a result of his due diligence andability to translate research implications to actionable business plans, he has a 100% success rate in securing funding for clients. Matthew can be reached atmatthew@newinkconsulting.com or (647) 926-3019.

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Joanne Gilbert-Wiens is an Associate in KMB’s Branding & Franchising and Corporate/Commercial practice groups. She is also a registered Canadian Trademark Agent. Joanne’s corporate/commercial practice covers a wide range of corporate and commercial matters including mergers and acquisitions; shareholders agreements; corporate reorganizations; trademark matters including the protection of trademarks and trade secrets; and assisting small and medium-sized businesses with incorporation and start-up. As a member of the Branding & Franchising Group, Joanne assists franchisors with variousareas of their business including the preparation of disclosure documents andfranchise agreements, and trade-mark and brand protection. Joanne assists franchisees with disclosure and franchise agreement review and negotiation; and negotiating and documenting the purchase and sale of franchised businesses.Please contact Joanne Gilbert-Wiens at jgilbert@kmblaw.com or (905) 276-0406for additional information on these and other related franchise issues.

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What to Look for in Legal Documents

When deciding whether to purchase a franchise there is certain material information that must be considered in order to make an informed decision. Such material information is possessed solely by the franchisor so various provinces have enacted legislation that among other things, helps balance theinequality of information between the franchisor and franchisee. In Ontario, the relationship betweenfranchisee and franchisor is governed by the Arthur Wishart Act (Franchise Disclosure), (the “Act”).

Disclosure Documents are a summary of information on the franchisor, its executive team and its franchise agreements. The document is provided to potential franchisees and must contain material information prescribed by the Act that will assist a franchisee in making an informed decision regardingthe franchise. This includes but is not limited to background information on the franchisor and its directors, financial statements, and copies of all agreements relating to the franchise. In Canada, franchise systems are required by law to provide a Disclosure Document to prospective franchisees inprovinces where franchise legislation is enacted. A franchisee has a right of action for damages wherehe or she suffers a loss due to a misrepresentation in the Disclosure Document or statement of materialchange. A misrepresentation includes an untrue statement or omission regarding a material fact.

In Ontario, pursuant to the Act, a franchisor must prepare and deliver to a prospective franchisee, in person or by registered mail, a Disclosure Document or statement of any material change in the franchiseat least 14 days before the signing of the franchise agreement or the making of any payment related tothe franchise, whichever is earlier. Only in specific, limited circumstances is a franchisor exempt from thisrequirement. Keep in mind that the Disclosure Document is only a summary of important information.Potential franchisees should also study the franchise agreement in detail as this is ultimately the document they will be signing. The franchise agreement sets out the duties and obligations of the franchisor to the franchisee and vice versa, so it is important to make sure to read and understand these documents. It is also important to have the Disclosure Document and the franchise agreement reviewed by professionals who are familiar with the obligations and rights set out by the Act.

In addition to legal advice, potential franchisees should seek advice from an accountant, a financial advisor and their bank to ensure that they can financially afford the investment. The bank may also request a copy of the Disclosure Document so that they can make an informed lending decision.

Joanne Gilbert-Wiens,Corporate/Commercial and Branding & Franchising Lawyer, Keyser Mason Ball, LLP

Their insights are key, for example, to understanding the underlying drivers of rent prices. When you take into account rent free periods, tenant inducements and landlord’s work, the net rent back to thelandlord could be from $15 to $80 per square foot. An important insight to remember is that the landlord is not going to concede anything without getting something in return. If the landlord is puttingup monies in the form of a Tenant Allowance and wants 15% interest on that money, then taking thatout of the negotiations could make a big difference in your actual rent number. The same applies to rentfree periods; for landlords these periods affect their cash flow but do not require them to write a cheque.As such, negotiating rent free periods may be a better way to maximize a landlord's contribution.

Having a strong negotiator and franchisor supporting you through the process can be helpful as theybring ideas and past experience that can work in your favour. The landlord will also weigh the value ofthe franchisor brand and its impact on the overall value of the property when considering your tenancy.The franchisor and the broker/sales representative will work to help position you for the long term success of your DRUXY’S or Williams location.

Shawn Saraga has helped sign hundreds of franchise agreements and leasesover the course of his career. Shawn started his own company, working withmore than 120 brands across Canada to recruit franchisees and provide tenant representation and marketing consulting services. In April 2014 hemerged his company with Cushman & Wakefield and at the end of 2015 joinedSRS. Shawn has worked with hundreds of national and international retailerssuch as Burger King, Red Roof Hotels, Trade Secrets, and Playdium Entertainment Centres.

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Real Estate Essentials: Visibility, Accessibility and Negotiations

The Canadian restaurant industry has always been a competitive space with franchise-based systemswinning disproportionately large shares. Innovation and revenue diversification drives much of their growth, starting at the counter, followed by the drive-through, then catering and now by enabling ordering through mobile and online.

All that being said, location is still the most important consideration when opening a food service business. While there are hundreds of factors to consider when evaluating locations for food serviceoperators, let’s cover off three of them: Visibility, Accessibility and Negotiations.

VISIBILITY

Visibility is more than just a sign on a building, it is the position of your business on the property so that the greatest number of customers will be able to see it. There are four layouts to consider:

1. Inline units that offer one sign placement. It will be important to ensure that your signage is at the end of a busy corridor, where customers are constantly walking towards it, maximizing its impact.

2. Corner units with two sides of signage. Determine the best signage placement based on where the entrance will be located. People are naturally attracted to busy places. Position the entrance with clear site lines so that your current customers can be used to attract people passing by.

3. End-cap units with three sides of signage (e.g. end of a plaza). Determining where to position the entrance and the signage is critical, and it is important to know that your city may have restrictions on how your business can utilize signage.

4. The ideal: A free-standing building with four walls not only increases visibility, it offers the greatest flexibility when it comes to positioning your entrance, signage and patio.

ACCESSIBILITY

Accessibility has to do with the ability to get in and out of the business easily and quickly. In foodservice,convenience is everything so a “right in, right out” turn is normally the easiest way to get people to stop.Having a “left in, left out” is also important and if it can be done through a lit intersection, it will increasedrivers’ inclination to get into your property due to safer access. Medians, however, can kill a business byforbidding “left in, left out“ and redirecting the natural flow of traffic that a plaza may have enjoyed. Accessibility is especially critical for drive-through locations, as is making sure you are on the right sideof the street based on traffic flow and patterns.

NEGOTIATION

Market rents are determined by the price the market will bear. At the time of printing, spaces for DRUXY’Sand Williams locations range in price from $25 – $100 per square foot with food court opportunities ashigh as $350 per square foot. That being said, if others in the market can afford it and are making moneyat those rents then landlords hypothesize that you will be able to as well. This theory is not entirely offbase as the landlord is looking to maximize the value of their property. Negotiating the rates comesdown to an understanding of past and comparative deals. This is where your broker/sales representativeplays an important role as they have the knowledge and experience in the marketplace.

Shawn Saraga, SVP and Market Leader, SRS Real Estate Partners

DRUXY’S FAMOUS DELI

DRUXY’S Famous DeliHonouring Traditions and Creating New Ones Since 1976

The Druxerman brothers grew up in a household steeped in traditions, including a classic deli dinner everySunday night with family and friends. The table featured fresh corned beef, kosher salami, natural-casedhot dogs, coleslaw and potato salad. Once in the deli business, it was natural for the brothers to look totheir celebrated Sunday dinners as an example of what a great deli restaurant could offer.

Recalling the delicious aromas that flowed from the Sunday table, the brothers made sure those scentswere a hallmark of their delis. Showcasing hot briskets and premium smoked meats on the countertop allows the tempting aroma to draw in guests and instantly converts them to loyal customers. And just like those Sunday dinners, fresh quality ingredients, fun social times and custom-made meals are at theheart of each DRUXY’S deli. This approach is replicated in every DRUXY’S as it is a proven loyalty driver;over half of the business comes from regular guests who frequent DRUXY’S an average of four times per day.

To compliment the deli menu and expand the customer base, new innovative approaches are constantly analyzed and acted upon, creating long-term impacts. Recognizing the importance of mealcustomization, for example, DRUXY’S launched a “Fresh Deli Revolution”, making them the only deli thatoffers unlimited toppings on salads and sandwiches at no extra charge. With the acquisition of WilliamsFresh Cafe, a new set of opportunities will be considered, from pouring the highly acclaimed Williamscoffee at DRUXY’S to learning from the Williams’ layout which offers more workspace for casual meetings and technology-friendly features such as power stations and high-speed internet.

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INVESTMENT AND BUILD-OUT

With footprints ranging from 500 to 1,800 square feet and fewer equipment requirements (no grill, fryer exhaust or special fire equipment), the capital costs are relatively lower than other quick servicerestaurants. A DRUXY’S deli can be opened with a total investment as small as $175,000.

We support the build-out by providing you with trusted and established contractors and services and will help oversee the deli’s construction.

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Hear What DRUXY’S Owners Have to Say

“I’ve been a DRUXY’S deli owner for over 15 years. One thing that has always impressed me is the partnership not only with the Druxerman brothers but also with other DRUXY’S owners.”

Ezio Melaragno, Princess Margaret Cancer Centre, Toronto

“We take pride in delivering a special deli sandwich that you can’t find in average sandwich shops.Our difference is in how we prepare the meats – pickled and spiced, sliced steaming hot in front of the customer for each sandwich. I always enjoy watching them take their first bites and seeing the reactions.”

Arash Bahrami, 29 Queen Street East, Toronto

“I looked at a few different food franchise options before choosing DRUXY’S. The combination of investment requirements, training and support, and time commitment convinced me that DRUXY’S was the right choice. Many years later, I’m still convinced.”

Bashir Dhalwani, Trillium Health Centre, Mississauga

Why DRUXY’S is a Better Quick Service Restaurant Choice

LOCATION AND LIFESTYLE

DRUXY’S targets high traffic areas such as urban centres, mall food courts, hospitals and office buildingswhere the wonderful deli aroma can entice people that walk by. These locations are ideal for deli ownerslooking for a more balanced lifestyle as working hours match regular mealtimes, covering the three partsof the day, and often are closed on evenings and weekends.

MENU

For those looking to escape standard fast food, the DRUXY’S menu offers customized meal classics your customers will feel good about because of the premium ingredients and unlimited healthy toppings for sandwiches and salads. DRUXY’S health credentials are supported by the fact that thecompany was chosen to provide food services in 12 hospitals/health facilities (where healthy food is paramount) and was the first QSR to participate in the Heart and Stroke Foundation’s former Health Check Program.

Beyond health, another key menu benefit is the “Design Your Own” feature. With sandwiches, guests can choose from a variety of breads, fillings and toppings. They can have it plain, toasted or grilled. No two sandwiches are the same since they are made-to-order according to your customer’s wishes.With salads, guests can choose from a wide selection of fresh ingredients and dressings. All meals are delivered in convenient grab-and-go packaging allowing guests to choose between eating in the deli or taking it with them.

The menu is refreshed according to seasonal flavours as well as when consumer trends point to a needto revisit ingredients and food preparation. Often, however, we find that we are ahead of the curve assome “new” trends are just the way we’ve been doing things for a while, like:

“CLEAN EATING” Tired of feeling unwell after eating heavy and processed foods consumers are

seeking healthier, natural options, leaner meats, and fruits and vegetables. The recent Ontario

legislation regarding menu labeling, where brands with more than 20 locations will have to post

nutrient content and calories on menus, will help consumers make informed decisions. DRUXY’S fresh ingredients fits well with “clean eating” and will be advantageous when comparing the nutritional benefits to other QSR menus.

“UNIQUE FLAVOUR COMBINATIONS” Consumers are now seeking different and innovative flavour

pairing, such as sweet and spicy (e.g. sweet chilli wraps) or adding a sour taste experience (e.g. the

addition of Greek yogurts). As DRUXY’S guests can pick and choose their own toppings and sauces, they can experiment with different combinations.

“SHRINKING MENUS AND CUSTOMIZATION” Menus are focusing on fewer items to streamline

operations while still answering the need for variety by concentrating on a core product that can be

customized through a variety of sides and toppings. The layout of a DRUXY’S menu and service counter is presented in a fashion that allows customers to easily custom-make their own meals.Furthermore, a wide variety of options are available such as gluten-free bread and meats, lactose-free milk and soya beverages, egg whites, and vegan choices for customers with special dietary needs.

To extend your reach beyond the physical walls of the deli, a catering program is a part of your toolkit,

creating an additional revenue stream. Our delis have generated up to 60% of their sales from catering.

It also acts as a vital promotional tactic; one order can introduce the brand to an entire nearby office.

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SUPPORT AND TRAINING

Support from head office comes from genuine experience as we owned and operated fifty DRUXY’S delisfor 15 years prior to moving to our current franchise model. We offer in-store training when you first openand then online programs for continuing your education. These programs include:

• Training via DRUXY’S University. All owners and their staff have online access to a progressive trainingprogram. Using dynamic gaming technology to keep everyone engaged, learners advance once they pass the goals of the current level. Topics include business management, health and safety, and employee orientation.

• Support tools from a database library. Resources include manuals, a catering management system and sales contests.

• Health and safety audits. A team of trained inspectors reviews each store, ensuring the highest standards of health and safety.

Prior to an owner opening a deli, the head office team will assist with the following:

• Site selection• Build-out specifications and construction supervision if required• Equipment purchase• Thorough and complete initial hands-on and online training• Supplier and product specifications• Product marketing strategies• Setting up performance tracking and report generation

We are rewarded for this kind of support and deep understanding by our deli owners who repeatedlyrank us as a “Franchisee Choice” in the annual Canadian Franchise Association survey.

INVESTMENT AT A GLANCE

DRUXY’S FAMOUS DELI

Founded: 1976

Began franchising: 1991

Number of locations: 44

Minimum investment (food court): $175,000

Minimum investment (sit down): $225,000

Franchise fee: $30,000

Royalty fee: 6.5%

Brand development fund: 1%

For further information on franchise opportunities please email us at franchising@druxys.comor visit our website at druxys.com/franchise.

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WILLIAMS FRESH CAFE

Williams Fresh CafeA Coffee House Market Leader

Williams Fresh Cafe, Canada's leading fast casual cafe franchise since 1993, was recently ranked as the number one regional coffee house brand. Serving fresh-to-order artisan sandwiches and riceboxes, signature coffees, cakes and pastries, and all-day breakfasts in a vibrant and inviting atmosphere,Williams has become a neighbourhood establishment in 25 locations across Ontario.

To maintain our leadership position, aggressive expansion plans are in place where we can fill a gap in the marketplace between quick service restaurants and other fast casuals. Williams satisfiescustomer needs where and when other competitors don’t. From early risers needing their espressoshots and freshly baked pastries to the business lunch crowd seeking fresh meals without sacrificingspeed of service, to late-night dinner groups, Williams covers all parts of the day. With a welcomingand comfortable environment, guests have come to recognize Williams as a great meeting placewith non-intrusive counter-to-table service.

Hear What Williams Fresh Cafe Owners Have to Say

“It’s easy to feel good about owning a Williams. You really are a part of the neighbourhood, gettingto know the regulars and becoming their go-to place for great meals in a relaxed setting.”

Cassian Joseph, 2454 Queen Street East, Brampton

“Williams has a strong coffee house heritage and that comes through in its staying power. Whileothers have added coffee programs to their menus, our customers keep on coming back to enjoy the bold taste of our premium coffee and fresh and wholesome meals.”

Mark Edmeades, 4500 King Street East, Kitchener

“When we heard that DRUXY’S bought Williams we weren’t sure what that was going to mean.Now we know that means dedicated support, better supply management and an experienced team of professionals on the lookout for how to constantly improve.”

Shawn Collee, 4025 Dorchester Road, Niagara Falls

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Why Williams Fresh Cafe is a Better Fast Casual Restaurant Choice

LONGEVITY AND EXPERIENCE

While the fast casual concept is relatively new in Canada and one of the fastest growing areas in the restaurant industry, there are few Canadian brands that can claim to understand the sector fromtheir own experiences. Williams Fresh Cafe is one of them, entering the fast casual segment in 1993. The original founders envisioned a concept that provided fast service and offered tasty, affordable, highquality products enjoyed in a relaxed atmosphere – a combination that made it unique in the industryand is still a part of our success today.

LOCATION

Williams Fresh Cafes are typically found in suburban locations where destination anchor tenants, suchas supermarkets, draw significant traffic. We are also successful in winning contracts at universities and colleges and will be investigating other institutional opportunities such as hospitals and tourist attractions.

INVESTMENT AND BUILD-OUT

Williams offers two formats to consider; a full size cafe or an express cafe.

Full size cafe features:

• Minimum investment: $500,000 - $675,000• Square footage: 2,500 to 3,500• Other options: Drive-through, patio

Express cafe features:

• Minimum investment: $180,000 - $400,000• Square footage: 300 to 1,500• Menu: At minimum; hot and cold beverages with baked goods, to full menu

Similar to DRUXY’S, Williams does not require a grill, fryer exhaust or special fire equipment, so the capital costs are relatively lower than other fast casual restaurants. And just as with DRUXY’S, we support the build-out by providing you with trusted and established contractors and services and willhelp oversee the cafe’s construction.

MENU

Part of the reason the Williams acquisition by DRUXY’S makes a lot of sense is that both menus use the same food ingredients for the soups, salads and sandwiches, therefore we can negotiate lowercosts on your behalf. Similarly Williams is also ahead of the curve on “new” trends (see DRUXY’S sectionabove) like “clean eating”, “unique flavour combinations” and “shrinking menus and customization”. WhileDRUXY’S offers “Design Your Own” features, Williams has a “Take-Your-Pick” program, allowing guests to bundle various combinations of soups, salads, sandwiches and desserts.

Further differentiation with DRUXY’S comes from how the food is presented and the menu. For in-cafédining, Williams serves food on plates with cutlery compared to DRUXY’S grab-and-go format.

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Beyond sandwiches, soups and salads, Williams has a more international approach to cuisine, servinghot rice boxes, quesadillas, regionally inspired pizzas, and hot pressed Paninis.

Williams also offers catering. Through a convenient online order form the website passes detailed customer orders directly to your cafe location, with a request for 48 hours’ notice. Customers are alsoprovided with the contact information to call in their order when a quicker turnaround is needed.

SUPPORT AND TRAINING

Support and training from head office are similar to the programs listed above in the DRUXY’S section,with modules dedicated to operating a fast casual cafe and operational manuals that are specific toWilliams.

An extra sales support feature that Williams has, which will be examined for DRUXY’S in the future, is a payment, loyalty and gifting phone app called myWilliams. The app is not only a way for guests to earn rewards on their purchases, but is also a marketing tool that enables you to send offers and exclusive invitations to loyal customers. And to further enrich the sales cycle, the app allows users to pay from their device. For those without a smartphone, a physical card is available that guests can link to an online account.

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INVESTMENT AT A GLANCE

WILLIAMS FRESH CAFE

Founded: 1993

Began franchising: 1994

Number of locations: 25

Minimum investment (express unit): $180,000

Minimum investment (sit down): $400,000

Franchise fee: $30,000

Royalty fee: 6.5%

Brand development fund: 1%

For further information on franchise opportunities please email us at franchising@druxys.com or visit our website at druxys.com/franchise.

INVESTMENT AT A GLANCE

DRUXY’S or Williams?

Deciding between a DRUXY’S or Williams franchise is not an easy choice. Each have their clear advantages over the competition as illustrated above. The best way to decide is by talking to us to review your business goals and working style. If you want to be a part of a neighbourhood coffee culture, Williams may be a better fit. If you see yourself in a more urban environment, serving officeneeds, DRUXY’S may be the way to go. Either way, you’ll get the same unparalleled support from head office and join a culture of other like-minded entrepreneurs who are dedicated to achieving their goals.

Drop us a note at franchising@druxys.com to start the conversation about how you can be a part of our next 40 years.

Contact Us

What to Do NextChecklist for Evaluating a Franchise Opportunity

As you go through your research, use this checklist to compare the key aspects of the different franchises. And don’t just talk to the franchisor. Speak to as many franchise owners as possible to get a good sense of what it’s like to work within that system.

Franchise A Franchise B Franchise C

How long have they been franchising?

Is the franchisor financially stable?

How long have the head office managers been in their positions?

How long did the head office managers work at the store level?

How many new locations openedin the past year?

Have any locations failed and why?

How many of their units are in the area you are interested in?

How long does it typically take for a new franchise to open?

What are the territory terms?

What innovations has the franchisor implemented in the past few years?

What kind of on-going training does the franchisor provide?

Does the franchisor respond promptly and helpfully to questions or with advice when franchise owners ask?

Does the franchisor ask franchise owners for their inputs into marketing strategies and product development?

What is the brand’s reputation? (Researchcustomer reviews online, look at the BBB ratings, investigate if there are any current or past lawsuits)

Franchise fee

Royalty rate

Advertising fund rates (national plus local)

Can you sell your franchise? How is the sale price determined?

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