DAIRY QUEEN - FDD UFOC ITEM 1 Detail

THE TERRITORY OPERATOR, ADQ, AND ANY PARENTS, PREDECESSORS AND

AFFILIATES

To simplify the language in this disclosure document, "we" or "IDQC" means Interstate Dairy Queen Corporation, the territory operator. "ADQ" means American Dairy Queen Corporation, the head franchisor. "You" means the person who buys the sublicense, the sublicensee. If you are a corporation, partnership or other legal entity, "you" may also mean your owners. Certain provisions of the operating agreement will apply to your owners and will be noted in this disclosure document.

We are a Georgia corporation formed on February 3, 1977. Our principal business address is 8555 16th Street, Suite 850, Silver Spring, Maryland 20910-2835. We do business as Interstate Dairy Queen Corporation. We do not do business or intend to do business under any other name.

ADQ is a Delaware corporation incorporated in 1962. ADQ''s principal business address is 7505 Metro Boulevard, Minneapolis, Minnesota 55439, (952) 830-0200. ADQ conducts business under its corporate name and the trade names "Dairy Queen" and "DQ." ADQ is a wholly-owned subsidiary of its parent corporation, International Dairy Queen, Inc. ("IDQ"), which is a wholly-owned subsidiary of its parent corporation, Berkshire Hathaway, Inc. ("Berkshire"). IDQ''s principal business address is the same as ADQ''s, and Berkshire''s principal business address is 1440 Kiewit Plaza, Omaha, Nebraska 68131.

Our and ADQ''s agents for service of process are disclosed in Exhibit A.

MANY ITEMS OF INFORMATION IN THIS DISCLOSURE DOCUMENT ARE STATED TWICE WHERE NECESSARY, FOR US AND FOR ADQ. WE MUST MAKE THIS DUPLICATE DISCLOSURE, BUT WE ARE AN INDEPENDENT BUSINESS FROM ADQ. WE OPERATE UNDER A TERRITORIAL SUBFRANCHI SING CONTRACT WITH ADQ THAT OBLIGATES US TO ADHERE TO ADQ''S REQUIREMENTS. ADQ DOES NOT GUARANTEE THE PERFORMANCE OF OUR OBLIGATIONS TO YOU. YOUR OPERATING AGREEMENT IS A CONTRACT BETWEEN YOU AND US.

Our Business. Our business includes the offer and sale of DQ Grill & Chill, Dairy Queen/Limited Brazier, and Dairy Queen/Fuel Center sublicenses, under territory operator rights that ADQ has granted to us, for sites within ^lA mile of the center-line of certain interstate highways (the "Territory"). We formerly offered sublicenses for Dairy Queen/Brazier restaurants. Our business also includes the ongoing administration of our sublicense system. (See Item 11.)

The Dairy Queen/Fuel Center sublicense grants you the right to operate a DQ Grill & Chill restaurant or Dairy Queen/Limited Brazier store adjacent to a fuel dispensing and travel store business ("fuel center") under the operating agreement and the Fuel Center Addendum to the Operating Agreement ("fuel center addendum") (Exhibit B).]

We have been offering Dairy Queen/Limited Brazier sublicenses since February 1977, Dairy Queen/Fuel Center sublicenses since January 1993 and DQ Grill & Chill sublicenses since

November 2007. We have operated businesses of the type being sublicensed since May 1977. Some of our principal officers participate in other food businesses, which may compete with you.

Our Parents, Predecessors and Affiliates. We have no parents, predecessors or affiliates.

The Sublicense. The DQ Grill & Chill sublicense is for a quick service food restaurant with indoor seating offering a full approved menu of soft-serve, drink and food items. The Dairy Queen/Limited Brazier sublicense is for a store that generally is located in a fuel center or a shopping center, store front, office building or other similar location, and that offers a full approved menu of soft-serve and drink items, and a limited approved menu of Brazier food items. The Operating Agreement included in this disclosure document as Exhibit B (the "operating agreement") is identical for a DQ Grill & Chill or Dairy Queen/Limited Brazier, except for different prescribed menus, sublicensed trademarks and continuing license fees.

ADQ owns and has registered in its name the DQ Grill & Chill, Dairy Queen and Brazier trademarks (see Item 13). However, we (not ADQ) offer and sell DQ Grill & Chill and Dairy Queen/Limited Brazier sublicenses in the Territory. Although we have the right to develop, and to sublicense others to develop, DQ Grill & Chill restaurants and Dairy Queen/Limited Brazier stores in the Territory, we may elect to authorize ADQ to develop, or to license others to develop, DQ Grill & Chill restaurants, Dairy Queen/Limited Brazier and Dairy Queen Treat Center stores at specific locations in the Territory.

Unless used or stated otherwise in this disclosure document, the term "DQ system" applies comprehensively to the DQ Grill & Chill, Dairy Queen and Brazier brands; the term "restaurant" sometimes applies comprehensively to a DQ Grill & Chill restaurant, a DQ restaurant, a Dairy Queen/Brazier restaurant or a Dairy Queen/Limited Brazier store; and the terms "Dairy Queen franchisees or subfranchisees," "Dairy Queen licensees or sublicensees" and "Dairy Queen businesses" apply comprehensively to DQ Grill & Chill, DQ, Dairy Queen/Brazier, Dairy Queen/Limited Brazier and Dairy Queen restaurants, stores, franchisees, subfranchisees, licensees, sublicensees or businesses. Also, in this disclosure document, a sublicensee who is converting an existing Dairy Queen restaurant or store to a DQ Grill & Chill restaurant is sometimes referred to as a "Conversion Sublicensee."

Your operating agreement is a contract between you, ADQ and us. You are a part of the national and international franchise system of DQ Grill & Chill and Dairy Queen franchisees and sublicensees, and you must adhere to various system standards of quality and uniformity that ADQ establishes and modifies periodically, as well as standards and requirements that we establish and modify periodically.

You will use ADQ''s nationally recognized trademarks and service marks that are approved for your concept; have access to the distinctive operational and management attributes of the DQ system; participate in ADQ''s national and regional sales promotion programs; and receive the benefits of association with a nationally recognized franchise system, including various forms of training, opening and operational assistance (see Item 11).

Market. DO Grill & Chill, Dairy Queen and Brazier products appeal to the general public, although some products are targeted for 6-12-year-old children. DQ Grill & Chill, Dairy Queen and Brazier product sales may be seasonal in areas of the United States with cooler climates. You will compete with other quick service and fast casual food restaurants and specialty ice cream treat outlets, including units of other regional and national chains and

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franchise systems. The quick service food and specialty ice cream treat market is well developed and highly competitive.

In addition to laws and regulations that apply to businesses generally, DQ Grill & Chill and Dairy Queen restaurants and stores are subject to various federal, state and local government regulations, including those relating to site location and building construction, storage, food and menu labeling, preparation and sale of food products including certain ingredient restrictions (i.e. those relating to transfats) and regulations relating to dairy and meat products; and health, sanitation and safety regulations relating to food service. We strongly encourage you to investigate these regulations before you purchase a sublicense. It is your sole responsibility to obtain and keep in place all necessary licenses and permits.

Dairy Queen/Fuel Center. To operate a Dairy Queen/Fuel Center, you must sign the operating agreement and the fuel center addendum. A Dairy Queen/Fuel Center involves a DQ Grill & Chill or Dairy Queen/Limited Brazier store, as described above, and an adjacent fuel center with a travel store and motor vehicle fuel pumps. Typically, the fuel pumps annually dispense about J 0,000,000 gallons of diesel fuel and 1,000,000 gallons of gasoline, and their platforms can service about 8 trucks and 8 automobiles simultaneously. Typically, also, a 5,000-square-foot Dairy Queen/Fuel Center is located on a lot of 5 to 10 acres that accommodates parking for 40 to 60 automobiles and 75 to 90 trucks.

Although the fuel center''s travel store and the DQ Grill & Chill restaurant and Dairy Queen/Limited Brazier store share a common wall, the fuel center''s travel store has separate service counters, cash registers, identification and signage to distinguish it from the DQ Grill & Chill restaurant or Dairy Queen/Limited Brazier store.

Located adjacent to a major highway, a Dairy Queen/Fuel Center caters to traveling consumers, professional truck drivers and limited local trade. The DQ Grill & Chill, Brazier and Dairy Queen products sold at the DQ Grill & Chill or Dairy Queen/Limited Brazier restaurant are targeted at the same ages and are subject to the same seasonality as described above. The products and services sold at the fuel center''s travel store are targeted to travelers and generally are not as seasonal. You will compete with other motor vehicle fuel centers, travel stores and fast food restaurants, including units of other chains and franchise systems, which ordinarily are located adjacent to highways or turnpikes. The motor vehicle fuel center, travel stores and fast food restaurant markets are well developed and highly competitive.

In addition to laws and regulations that apply to businesses generally, Dairy Queen/Fuel Centers must comply with various federal, state and local government regulations, including those relating to site location; building construction; food product storage, preparation and sale; health; sanitation; safety; and fuel storage and sale. We urge you to inquire about these laws and regulations.

Our Conversion Program. We offer a program (the "Conversion program") to qualifying Dairy Queen sublicensees within the Territory to allow them to "convert" their existing Dairy Queen restaurants or stores to DQ Grill & Chill restaurants, through replacement, relocation, conversion or modernization of their facilities. Unless otherwise noted, the term "convert" means not only facility conversion, but also modernization, replacement and relocation. Whether an existing Dairy Queen restaurant or store qualifies for the Conversion program depends on a number of factors, including: the location, type, age and condition of the facility, the type of

operating agreement governing the facility, the sublicensee''s economics, and the sublicensee''s operation and compliance history.

If you operate an existing Dairy Queen restaurant or store within the Territory and meet all of our qualifying criteria, we may allow you to convert your restaurant or store to a DQ Grill & Chill restaurant through the granting of trademark rights, a modified service style and a modified menu, without requiring you to sign a new operating agreement or pay any additional continuing license fees or sales promotion program fees to us or ADQ, so long as certain minimum facility standards are met.

ADO, Its Parents, Predecessors and Affiliates. ADQ''s affiliates include its parent corporation, IDQ, of which ADQ is a wholly-owned subsidiary. ADQ''s affiliates also include the following: Dairy Queen Corporate Stores, Inc. ("DQCS"); DQ Joint Ventures Stores, Inc. ("DQJV"); DQ Wholly-Owned Stores, Inc. ("DQWO"); DQ Managed Stores, Inc. ("DQMS"); DQ Training Restaurants, LLC ("DQTR"); Unified Supply Chain, Inc. ("USCI"); Orange Julius of America ("OJA"); Karmelkorn Shoppes, Inc. ("KSI"); DQF, Inc. ("DQF"); and federal Canadian corporations Dairy Queen Canada Inc. ("DQC") and Orange Julius Canada Limited ("OJC"). The principal business address for DQTR, USCI, OJA, KSI and DQF is the same as ADQ. The principal business address for DQCS, DQJV, DQWO and DQMS is 9656 Bluegrass Parkway, Suite 200, Louisville, Kentucky 40299. The principal business address for DQC and OJC is 5045 South Service Road, Suite 3000, Burlington, Ontario, Canada L7L 5Y7.

Business of ADO. ADQ''s business includes administering its direct-licensed franchise system, establishing and conducting sales promotion programs for Dairy Queen, DQ, DQ Grill & Chill and Brazier products, and providing various services to its franchisees (see Items 8 and 11). In addition, since ADQ''s incorporation, ADQ has operated Dairy Queen restaurants and stores on an interim basis. As of the date of this disclosure document, ADQ does not operate any company-owned DQ Grill & Chill or Dairy Queen/Brazier restaurants (although as explained further below, ADQ''s affiliates, DQJV, DQWO and DQTR, have ownership interests in and operate DQ Grill & Chill and/or Dairy Queen/Brazier restaurants).

ADQ knows that a certain level of consumer confusion is created as a result of the DQ system having many different restaurant and store types and many different menus. To reduce this consumer confusion and to improve the competitive positioning of the Dairy Queen concepts, ADQ continues the process of concept evolution to bring greater unification to its food centric concepts under the DQ Grill & Chill design, trademarks, menu and business system. In the past ADQ issued Dairy Queen/Brazier franchises, which are quick service food restaurants that feature the full line of approved Dairy Queen and Dairy Queen/Brazier menus of soft-serve, food and drink items. In the fall of 2000, ADQ began conducting an extensive test program that ended January 2005, at which time the DQ Grill & Chill building design, trademarks and menu became the approved building design, trademarks, menu and standard for new restaurants outside of Texas, and the approved building design for new restaurants in Texas. Therefore, ADQ ceased offering new Dairy Queen/Brazier direct-licensed franchises. Texas restaurants and stores operate under the DQ and Texas Country Food trademarks.

Since 2006, ADQ has conducted tests to allow certain qualifying Dairy Queen/Brazier restaurants to use various aspects of the DQ Grill & Chill concept in their restaurants, which may include the DQ Grill & Chill name and trademarks, signage, menu items, and media, without completely remodeling their restaurants to the current DQ Grill & Chill building design (previously called the "Signage and Media Test").

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In 2005, ADQ began offering certain qualifying DQ territory operators the right to develop, and sublicense others to develop, DQ Grill & Chill restaurants, pursuant to an agreement with ADQ. Beginning in 2007 and continuing in 2008 in limited markets, ADQ, through an arrangement with OJA, began testing the offer and sale of various Orange Julius products in one or more other DQ concepts, including certain new and existing direct-licensed DQ Grill & Chill franchises and certain existing direct-licensed Dairy Queen/Brazier franchises, under the "OJ Test" program. Under the OJ Test, a franchisee is permitted to incorporate the Orange Julius trademarks, beverage menu and business system in the franchisee''s DQ Grill & Chill or Dairy Queen/Brazier restaurant. You are not being offered the opportunity to participate in the OJ Test under this disclosure document.

ADQ offers franchises for the operation of Dairy Queen/Limited Brazier stores, which are considerably smaller than DQ Grill & Chill restaurants and sell the full line of approved Dairy Queen soft-serve treat products and a limited number of approved food items. ADQ also offers franchises for the operation of Dairy Queen Treat Center stores, which sell Dairy Queen soft-serve treat products and Orange Julius products, pursuant to an arrangement with OJA. ADQ offers these franchises through separate franchise disclosure documents. ADQ also offers the "Project Cornerstone" test for the future treat centric concept within the DQ system. The test stores generally operate under the name "DQ/Orange Julius" or some other name ADQ designates and carry the current Dairy Queen treat menu, current Orange Julius beverage menu, and certain additional treat and snack products. ADQ began conducting the Project Cornerstone test in 2005 and will continue to do so in 2008 in certain limited markets for existing and new DQ stores. You are not being offered the opportunity to participate in the Project Cornerstone Test under this disclosure document.

Although ADQ no longer offers new Dairy Queen/Brazier franchises, there are existing Dairy Queen/Brazier franchisees that were granted licenses under these franchise programs, as detailed in Item 20. In certain unique circumstances, however, ADQ may enter into a franchise agreement with an existing Dairy Queen/Brazier restaurant franchisee to allow that franchisee to continue to operate its location as a Dairy Queen/Brazier restaurant.

In the past, ADQ issued Standard and Urban Territory franchises in the United States, which are both territory franchises which allow a franchisee (sometimes referred to as a "territory operator") to develop the Dairy Queen/Brazier and Dairy Queen/Limited Brazier businesses within a defined geographical area ("territory") through subfranchising to third parties. Some territory operators have been granted the right to sublicense the DQ Grill & Chill business through an amendment to their existing agreement with ADQ. Territory operators offer the sublicense through separate disclosure documents. From time to time ADQ acquires a territory operator''s interest in various restaurant and store franchise agreements pursuant to negotiated acquisitions of territorial subfranchising rights, in which case, ADQ becomes the franchisor of the operating agreement. Also in the past, ADQ issued Dairy Queen soft-serve-only franchises (a store featuring approved Dairy Queen soft-serve treat products which may or may not sell non-system food) and Dairy Queen/Fuel Center franchises (a franchise specifically offered for locations operated in conjunction with or adjacent to a fuel dispensing and/or travel business). While ADQ no longer offers the various franchises referenced above, there are existing franchisees that were granted licenses under these franchise programs (including territory operators who continue to sublicense).

Business of ADO''s Affiliates. KSI is the franchisor of Karmelkorn� retail outlets, although it no longer offers new franchises. Except for certain existing Dairy Queen Treat

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Center� franchises that have a Karmelkorn component, the Karmelkorn program operates independently from the DQ system.

OJA sells Orange Julius� franchises in the United States and other countries except Canada. OJC sells Orange Julius franchises in Canada. Orange Julius stores feature Orange Julius drinks and other specialty fruit beverages and food and snack products. Except for the Dairy Queen Treat Center program, and the Project Cornerstone and OJ Test programs, the Orange Julius franchise program operates independently from the DQ system.

IDQ''s business includes the limited sale of products to the various franchise systems that its subsidiaries operate (see Item 8). DQF provides various services to direct-licensed franchisees, including the financing services described in Item 10. USCI acts as the "supply chain entity" and sells or sources certain products and equipment to the various franchise systems that IDQ''s subsidiaries operate (see Item 8). IDQ, DQF and USCI do not and have not issued franchises or conducted a company-operated DQ Grill & Chill restaurant.

ADQ''s affiliates, DQJV and DQWO, which are wholly-owned by DQCS, have ownership interests (either as a joint venturer, partner, shareholder or sole owner) in DQ Grill & Chill and Dairy Queen/Brazier restaurants. DQJV, DQWO and DQCS have conducted the Dairy Queen business since February 1996. In June 2003, DQTR opened and began operating a new DQ Grill & Chill restaurant in Edina, Minnesota, which serves as a training facility for ADQ personnel and franchisees. DQJV, DQWO, and DQTR have entered into agreements with ADQ substantially similar to the form franchise agreement in place at the time for other franchised locations. These company-operated restaurants are disclosed in Item 20. DQJV, DQWO, DQCS and DQTR do not and have not issued franchises in any line of business.

ADQ and OJA have offered a number of international franchise programs over the years under the Dairy Queen and Orange Julius trademarks, including an international territory program, an international multiple unit development program and an international store program. In addition, ADQ plans to offer the Project Cornerstone test program and may offer the OJ Test program in certain international markets in 2008.

DQC conducted, and granted franchises to others to conduct, the Dairy Queen business in Canada since 1953. DQC holds exclusive area franchising rights in Canada through licensing agreements with ADQ, under which DQC exercises exclusive rights to license the registered trade name and trademark Dairy Queen and certain other trademarks owned by ADQ. DQC issues franchises for DQ Grill & Chill restaurants, Dairy Queen/Limited Brazier stores and Dairy Queen Treat Center stores. While DQC no longer offers Dairy Queen/Brazier and Dairy Queen soft-serve-only franchises, there are still existing franchised locations.

The following table summarizes the franchises offered by ADQ and its affiliates that were operating as of December 31, 2007. Taking into account all the various franchise programs, the DQ system includes nearly 5,700 DQ Grill & Chill and Dairy Queen restaurants and stores on an international basis.

(2)                
In addition to territory operators who were granted Standard Territory or Urban Territory franchises, other territory operators conduct the Dairy Queen or Dairy Queen/Brazier business under older forms of franchise agreements, many of which were issued more than 30 years ago.

(3)                 Included in each of these totals are 12 Orange Julius/Karmelkorn combination units. These franchisees entered into separate franchise agreements for the Orange Julius and Karmelkorn concepts, but they share the same store premises.