Network Presentation

When was Jeff de Bruges founded? We opened our first shop in 1986 and the brand became an immediate success. Today we have 240 shops and are growing continually.

2 What is Jeff de Bruges' position in its home market in France? We are the leading chain of stores in the chocolate market in France. Our performance has been to progressively open over a dozen stores annually and in doing so taking over considerable market share. Our know-how is well established and our shops have excellent profitability. Our success has been recognized and rewarded by the profession with the much coveted "Ruban d'Or" and "Ruban d'Argent" awards.

3 Is Jeff de Bruges expanding overseas? We currently have 23 shops in countries outside of our home market including Spain, Tunisia, Libya, Morocco, Kuwait and the United Arab Emirates. In the last twelve months, we have signed three Master Franchise agreements for China, Romania and Kazakhstan and one Franchise agreement for Italy.

4 What can the Jeff de Bruges franchise do for me? It brings a global concept of retail architecture and merchandising ensuring perfect brand unity and recognition not to mention a very pleasant and dynamic working environment. The Jeff de Bruges franchise means also having a renowned and reputable brand. It brings know-how and innovative marketing and constantly supplies the creative input required inflecting positive evolution to the brand and ranges. Consumers'

needs and behaviours change constantly and one of the essential roles of a brand and its management is to be a catalyst for this positive evolution.. 5 Is the seasonal nature of the chocolate business a problem? The decidedly seasonal nature of chocolate sales requires us to shape our product offer to develop complementary product ranges for the period between April and September. This is why in addition to chocolate, we are purveyors of the MARTIAL brand of Dragees, the only recognized brand of Dragees with a reputation for its know-how and elegance since 1924. Next is our fine line of Ice Cream for which we have developed different variations depending upon the type of shop and its location. And finally, for our stores located in shopping centres we have included a pick-n-mix confectionery merchandising unit which creates everyday customer traffic and adds a colourfully playful side to the shop's environment. Opening a Jeff de Bruges - Martial shop is an opportunity begin a new, excitingly multi-facetted profession.

When one comes from outside of the industry, how long does it take to learn it all? 6 Each new franchisee attends an initial 4 week training session at which all of the different subjects are taught through alternating theory with practice. The subjects include product knowledge, merchandising techniques, selling techniques, management and marketing. Additional training seminars are scheduled throughout the year to improve performance in given areas. Various meetings are also planned including those of the Advisory Council, product workshops, work-in-progress commissions and regional and national seminars. All of these events bring people together encouraging interaction and the sharing of ideas. We consider continuing education as one of the main thrusts of our development. In order for each franchisee to be able to improve skills and gain new ones we have created the Jeff de Bruges Training School. This allows us to offer training courses which are 100% adapted to the needs of our network. In addition, we provide technical and logistical assistance during the set-up and opening of the shop and carry out personalised follow-up including visits on a regular basis, telephone assistance and regional and network-wide meetings.

What are the reasons behind the success of Jeff de Bruges? 7 First of all it must be attributed to a perfect mastery of our line of chocolates thanks to our factory located in Brussels which ensures optimal follow-up and a certain capacity for innovation according to the latest trends. Next of all we would have to cite our high level of brand awareness which has been carefully built over the years and has made us into one of the major players on the market. And finally, one of our great strengths would have to be our marketing know-how which allows us to offer to our network of shops 25 different window promotional themes per year. These rather theatrical themes follow the rhythm of the seasons and the trends of the market to bring dynamic change throughout the year. In January of 2005, we launched a totally renewed store concept which has been a major step for our brand in evolving to respond even better to customer needs.

Ice Cream and Dragees 8

As for Ice Cream, we've dreamt up our own delicious original recipes which can only be found in a Jeff de Bruges shop. To best serve our Dragees customers, we've set-up an integrated structure at our HQ that is capable of making personalised orders for each shop allowing them to sell the Martial quality and "savoir-faire" without the worries of managing a large stock of packaging and supplies.

What is the surface area needed for a shop? 9

One of the strengths of our concept is to be able to adapt to small shops. For a high street shop the surface should be around 30 to 40m2 plus a minimum of 25m2 of storeroom space. In shopping centres, the concept requires a minimum of 40m2 but it can be adapted in the form of an 18m2 central kiosk. Both require a minimum of 25m2 of storeroom space.

How much is the Jeff de Bruges franchise fee? 10 In France, the franchise fee including training fees and engineering fees is 16,000 £á. Outside of our home market, the initial franchise fee will vary according to the type of contract (master or franchise) and according to the country covered.

What is the initial investment necessary to set up a Jeff de Bruges shop? 11 Excluding real estate or lease, the necessary investment for an average high street shop is approximately 70,000 £á. Construction and shop fit-up costs depend greatly upon the state of the shop at purchase. For a shopping centre, construction and fit-up costs can be from 80,000 £á to 140,000 £á excluding real estate, lease costs or entry fees.

What is the minimum personal equity needed for the project ? 12

In order to avoid cash flow problems that might be created by having too high of a loan payment we require a minimum of 40% personal equity of the total project (incl. real estate, entry fees, construction costs, shop fitting costs, etc...).

What is the average turnover of a shop? 13 Here again, the turnover depends upon the shop's location on a high street or in a shopping centre. For example, a high street shop in France can generate revenues from 180,000 £á to 380,000 £á excl. VAT with a product mix of chocolate, dragees, and ice cream during the summertime. A store in a shopping centre with the full range of chocolate, dragees, ice cream and pick-n-mix sweets can have sales ranging from 220,000 £á to more than 800,000 £á excl. VAT.

14 And how about the profitability?

Several factors are to be taken into account. First of all, gross margins for chocolate and dragees can tally up to 55%. For ice cream, gross margins range between 56 and 80% depending on the system used. Secondly, the low level of stock required prevents cash from being tied up in unproductive dormant stock. The turnover of stocks is thus quick, there are no mark-downs or sale periods necessary and there is almost non-existent loss from spoilage or breakage. A well prepared and managed project should see a return on investment within five years.

Do franchisees have to pay royalties? 15 Several factors are to be taken into account. First of all, gross margins for chocolate and dragees can tally up to 55%. For ice cream, gross margins range between 56 and 80% depending on the system used. Secondly, the low level of stock required prevents cash from being tied up in unproductive dormant stock. The turnover of stocks is thus quick, there are no mark-downs or sale periods necessary and there is almost non-existent loss from spoilage or breakage. A well prepared and managed project should see a return on investment within five years.

No, there are no royalties whatsoever with Jeff de Bruges. There is a however an advertising participation fee which helps to pay advertising expenses. It is set at 2% of sales excl. VAT with a minimum of 3,300£á per shop annually.

16 Does Jeff de Bruges do national advertising?

In France, we organise two campaigns, one at Christmas and one at Easter. These are of course essential periods for our sales and our presence must be high on television, radio and in the press. We organise in shop operations as well and furnish shops free of charge with promotional kits including catalogues, posters and POS advertising.

17 What is the level of awareness of the Jeff de Bruges brand? In a survey done by SOFRES in December of 2002, using a representative cross-section of the French population, the Jeff de Bruges showed constant progression and achieved a level of brand awareness of 60% which is a very good score.

Do you provide assistance to the franchisee in the search for the future shop location? 18 Naturally, since the choice location is of fundamental importance. To ensure success, the choice of location must be in perfect harmony with our products and our target market. We look for locations in the mid to upscale high street locations with high pedestrian traffic in towns with a population of over 30,000 as well as locations in shopping centres. As a member of PROCOS, which is a federation of speciality retailers for urban development and planning, we have studies of most of the high street sites and shopping centres in major cities. In the same manner, for existing shops which are sold as a going concern, we assist the candidates in the different steps of their project.

19 Is Jeff de Bruges a member the French Franchise Federation?

Yes. We have been members since 1988, and this membership is an important one for us since the role of the F.F.F. is to inform and to guide future franchisees as well as to enforce the code of ethics of the profession. In addition, our franchise contract has been reviewed and given approval by the Federation. The contract is a 5 year renewable contract that states the obligations of both partners who enter into the agreement namely what Jeff de Bruges is required to provide to the franchisee. It defines, among other things, the boundaries of the exclusive territory awarded to the franchisee.

20 Do you work with an architectural design firm?

Yes. Our architectural design firm ensures the integrity and cohesion of the concept for the entire network of shops. They draw up plans for each project individually. The approved layout is then made available to each franchisee's shop fitter allowing him or her to apply for the necessary permits and to proceed under his or her own responsibility. Our architectural design firm validates the final specifications. The franchisee is of course free in the end to choose the shop fitter.

21 What are the perspectives for the evolution of the market? French chocolate consumption has been progressing annually at a steady rate and the future development looks bright. Chocolate has a magical quality, one that can make the eyes of children of all ages light up. Besides being just plain good, it's good for you since it has many therapeutic virtues. It is considered an antidepressant, an anti-stress and a source of vitality since it is chocked full of vitamins and minerals. Another asset of our business model is the fact that it is based on two major holidays, Christmas and Easter where chocolate is by traditional a must. Everyone loves chocolate. So nearly everyone buys chocolate as a gift or as a treat for themselves. That is why we at Jeff de Bruges make chocolate in all shapes and sizes: chocolate pralines, tablets, chunks, chocolate spread, truffles, gift hampers and other compositions made for any occasion.