MARCOS PIZZA - FDD UFOC ITEM 1 Detail

ITEM 1

THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES

The Franchisor

Marco''s Franchising, LLC ("Marco''s", "us", "our" or "we") is the franchisor.

We maintain our principal place of business at 5252 Monroe Street, Toledo, Ohio 43623. We do not maintain sales offices at any location other than our principal place of business. We do business under the names "Marco''s" and "Marco''s Pizza."

We are an Ohio limited liability company and were formed in 2003. On January 12, 2004, we acquired the principal assets of Marco''s, Inc, ("MI"), which had previously owned the right to franchise the "Marco''s Pizza" system of operation. Today, we own the exclusive right to grant those franchises. We have been selling franchises since January 12, 2004. We have never operated an Area Representative business.

We engage in only four lines of business: (1) the offering of Franchised Stores through the Franchise Agreement and the Area Development Agreement (described below); (2) the offering of Area Representative Businesses (described below); (3) the offering of "Hot2Go" franchises which is a very limited menu pizza store offering only 1 or 2 products, with no delivery service, and (4) selling certain store supplies and advertising materials to our franchisees. We acquired the right to franchise Franchised Stores and Hot2Go stores from MI. This Uniform Franchise Offering Circular (this "Offering Circular") applies only to the offering of franchises for Representative Businesses.

A list of our agents for service of process can be found in Exhibit 2 to this Offering Circular. Predecessors, Affiliates and History of Operations

Our former predecessor, MI, owned approximately 15% of us until January 29, 2007, and its President, Pasquale Giammarco, the founder of the "Marco''s Pizza" system of operations, served as a consultant to us. MI shares office space with us at 5252 Monroe Street, Toledo, Ohio 43623. In January 2007, we purchased the 15% interest owned by MI and now we are exclusively owned by Cleveland Marco''s LLC and its manager, JAB Management LLC, which is owned and controlled by John A. Butorac, Jr., our President.

Mr. Giammarco operated several pizza restaurants in the late 1970''s and incorporated MI as an Ohio corporation on December 29, 1978. Marco''s Pizza, Inc. ("MPI"), an affiliate of MI, currently owns and operates 18 Franchised Stores in Ohio and Indiana. MPI also owns the right to develop additional Franchised Stores in: (a) Lucas County, Ohio (and within 7 miles of Lucas County); (b) a portion of Lorain County, Ohio; (c) St. Joseph and Elkhart Counties, Indiana; and (d) Collier County, Florida (and within 10 miles of Collier County).

Marco''s Franchise Services, LLC ("MFS") is our designated broker for the sale of franchises and certain support services to our franchisees. We retain the right to sell franchises but intend that all new franchise applicants will be approved and recommended by MFS. MFS is managed by MP Management #2, LLC which is managed and controlled by John A. Butorac, Jr., our President and CEO. Certain MFS employees (specifically, Bryon Stephens, Cameron Cummins, and Nikki Weis) organize and perform the franchise sales functions of MFS. MFS is paid a share of the Initial Franchise Fee and Royalty Fees for those services.

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MFS Realty, LLC is a wholly owned subsidiary of MFS and provides real estate lease support services to MFS.

MFS Leasing, LLC is a majority owned subsidiary of MFS. MFS Leasing, LLC provides Marco''s Pizza store leasing and financing services to select qualified Area Representatives and Franchisees.

Our affiliate, Cleveland Marco''s, LLC, formed in August 2003, owns 6 "Marco''s Pizza" Stores operating in the greater Cleveland, Ohio area and owns 8J^9_%_of_us (JAB Management J.L� owns the rest).

�MI_affi]J�!ter -Authentic Pizza,_ LLC,_ formed, jn JDecejrjber. 2004,_ owns .13 _"Marco^s_ Pizza" Stores operating in the greater Cleveland, Ohio area. Cleveland Marco''s, LLC owns 10% of Authentic Pizza, LLC.

Our affiliate, 45 Pizza, LLC, formed in June 2004, operates 2 "Marco''s Pizza" Stores in the greater Toledo, Ohio area.

Our affiliate, Marco''s Indiana, LLC, formed in April 2005, operates 3 "Marco''s Pizza" Stores in the greater Indianapolis, Indiana, area.

Our affiliate, Cleveland Stores, #1, LLC, formed in December 2004, owns 3 Marco''s Pizza" Stores operating in the greater Cleveland, Ohio area. Cleveland Marco''s, LLC owns 10% of Cleveland Stores #1, LLC.

Our affiliate MP Management #1, LLC, formed in September 2004, provides management services to Cleveland Stores #1, LLC and owns 15% of Cleveland Stores #1, LLC

Our affiliate MP Management #2, LLC, formed in October 2005, provides management services to Marco''s Franchise Services, LLC and owns 12.5% of Marco''s Franchise Services, LLC.

Our affiliate MP Management #3, LLC, formed in October 2005, provides management services to Authentic Pizza, LLC and owns 10% of Authentic Pizza, LLC.

Our affiliate MP Management #4, LLC, formed in April. 2006, provides payroll management services to Cleveland Marco''s, Authentic Pizza, LLC. and is 100% owned by Cleveland Marco''s, LLC

Our affiliate MP Management #5, LLC, formed in May, 2006, provides payroll management services to Cleveland Marco''s, LLC, Authentic Pizza, LLC, 45 Pizza, LLC and is 100% owned by Cleveland Marco''s, LLC

All of our affiliates are organized in Ohio, and are based at 5252 Monroe Street, Toledo, Ohio 43623. None of our affiliates (except MI, as explained below) has ever offered franchises for sale.

Wq do not own any "Marco''s Pizza" stores, but our affiliate, Cleveland Marco''s, LLC owns 6 "Marco''s Pizza" stores.

40 non-affiliated investors own a total of 18% of us. None of the investors own 2% or more. None of the investors have control over our operations or finances.

Marco''s Area Rep UFOC (April 13, 2007) 579163.91

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Our predecessor, MI, operated company-owned "Marco''s Pizza" Stores from its beginning in 1978, until it transferred them to its affiliate, MPI (also our affiliate), as of January 1, 2001. The first non-company-owned, non-affiliate-owned franchised "Marco''s Pizza" Store began operation in April 1979, and is currently in operation. MI granted "Marco''s Pizza" franchises from January 1979 until January 2004.

During the past 5 years, our predecessor, MI, and our mutual affiliate, MPI, have operated between 36 and 41 "Marco''s Pizza" Stores that are similar to the Franchised Stores we offer. MPI now owns 18 "Marco''s Pizza" Stores. Most of these "Marco''s Pizza" Stores are located in urban areas, although 3 are in towns having a population of less than 50,000, which are not immediately contiguous to a larger municipality. All of these "Marco''s Pizza" Stores have approximately 1,200 to 3,000 square feet of floor space, and are located on busy streets. Information on "Marco''s Pizza" Stores openings and closing is in Item 20 below.

Our predecessor, MI, offered the "Hot2Go" franchise described above from July 2, 2001 through January 11, 2004. It sold a total of 5 "Hot2Go" franchises. We acquired the exclusive right to offer those franchises on January 12, 2004; at the same time, we acquired the exclusive right to franchise "Marco''s Pizza" Stores.

We have offered franchises for Area Representative Businesses since June 8, 2006. We have offered franchises for Franchised Stores since 1979. We do not own any "Marco''s Pizza" Stores, but our affiliate, Cleveland Marco''s, LLC, owns 6 "Marco''s Pizza" Stores.

You must register before the offer or sale of any franchises in California in accordance with the California State law.

Except as described above, neither we, nor our predecessor, nor any affiliate of either of us, has ever engaged in, or offered franchises in, any other lines of business.

The Franchise Offered

We offer to enter into area representative agreements (an "Area Representative Agreement") with qualified persons and legal entities ("you") that wish to establish and operate Representative Businesses.

Under a separate Uniform Franchise Offering Circular (the "Store Circular"), we offer franchise agreements ("Franchise Agreements") and area development agreements ("Development Agreements") for Franchised Stores. Our current form of Franchise Agreement is attached to this offering Circular as Exhibit 5. Under a Development Agreement, the developer is offered the chance (and accepts the obligation) to establish multiple Franchised Stores within a specific area. The developer will sign a Franchise Agreement for each Franchised Store, which will set out the area under which that the Franchised Store will be operated.

The Representative Business

You will develop and service multiple Franchised Stores located within a designated area, referred to as your "Territory." The Area Representative Agreement will govern the manner in which you may solicit, screen, and evaluate prospective franchisees, and train and service franchisees who have entered into a Franchise Agreement ("Franchisees") to operate Franchised Stores under the System in the Territory.

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Compensation. Under the Area Representative Agreement, we will compensate you with a

franchise fees and 36.36,% of the_ Royalty_Fees less Advertising Set-asides, _that we_cql_e_ct from Franchisees operating within your Territory that you solicit and service.

Regulatory Compliance. In order to comply with disclosure requirements imposed under the Federal Trade Commission Franchise Rule and applicable state law, as well as our standards, we must make certain disclosures about you (as well as your "salespeople") in our Uniform Franchise Offering Circular ("UFOC") given to prospective Franchisees. This information, and these disclosures, must be provided before you will be able to begin any activities under the Area Representative Agreement. Additionally, you must complete our required Franchise Sales Training (see Item 11 for additional details) before you begin to solicit prospective Franchisees.

You will not receive any compensation with respect to a prospective Franchisee that is solicited before you: (i) have successfully completed Franchise Sales Training; (ii) are listed in our UFOC; (Hi) are registered (if necessary) as a franchise broker and/or as may otherwise be required under the laws of one or more states that regulate the offer and sale of franchises; and/or (iv) comply with any other requirements imposed under the laws of one or more states that regulate the offer and sale of franchises (which will be at your expense).

You must follow our standards and requirements concerning compliance with state and federal franchise laws, and you also must fully cooperate with us in those matters.

Before you receive any compensation with respect to royalty fees generated by Franchisees in your Area Representative Agreement''s Territory, you must also successfully complete all Franchise Operations Training and Franchise Support Training (see Item 11 for additional details). You may satisfy the requirements to complete such training with various employees or principals of your business, but at least one person must complete the Training for the function that they will perform for you. If you do not complete your training within 180 days of the date you enter into the ^Area.,Representative Agreement, we will have the right to terminate the Area Representative Agreement-Advertising Set-asides. We have established a program to use a portion of the royalty fees we collect to pay for additional advertising to assist Franchised Stores whose sales are lower than our goal level for sales. The portion of the royalty fees we collect that Is used to pay for additional advertising is called "Advertising Set-asides." Because Advertising Set-asides are not income to us, they will also not be income against which commissions will be paid to you.� We will use Advertising Set-aside receipts to obtain advertising for that franchisee.

Marco''s Area Rep UFOC (April 13, 2007) 579163.91

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We will have the right to determine the appropriate advertising purchases, but you will be responsible for suggesting to us the best manner of utilizing advertising purchases to increase sales for that franchisee. We will have the right to decide whether or not to establish an Advertising Set-aside for any particular Franchisee of any particular Store. We will have the right to establish an Advertising Set-aside for a period of up to two years (measured from the date of the first Advertising Set-aside for that Store) unless you agree to extend that period of time. We will only establish an Advertising Set-aside for Stores owned by Franchisees that are in "Good Standing." Advertising Set-asides are for the benefit of the System and are not "owed" to any area representative or franchisee under any circumstance. No Advertising Set-asides will be established for any stores owned by Area Representatives or their closely-owned affiliates.

We have the right to establish Advertising Set-asides, and our current policy is that we will establish Advertising Set-asides based on our judgment that doing so is to the long-term benefit of a particular Franchisee, the System, to you, and to us. Our current policy is to limit the amount of Advertising Set-asides as follows:

While the purpose of Advertising Set-asides Is to help certain Stores operating at lower sales volumes by providing funds for additional advertising, we are not required to establish an Advertising Set-aside for any particular Store or Franchisee. And, since there are no guarantees that advertising will actually result in higher sales volume for any particular Store, it is possible that Advertising Set-asides could simply result in lower income to you in both the short term and the long term.

Your rights and obligations to solicit, screen, and evaluate prospective franchisees in the Territory are referred to in this Offering Circular as "Promotion Rights and Obligations." In exercising your Promotion Rights and Obligations, you will identify prospective franchisees for us and we will have the right to consider and sign Franchise Agreements with those that we deem qualified to become our Franchisees. You will not be asked (nor will you be permitted) to enter into any agreement with a prospective franchisee or a Franchisee. Once a prospective franchisee is approved, we will enter into a Franchise Agreement with that prospect. In states where registration of a franchise offering is required, you will not be able to speak with prospective franchisees until we have notified you that our registration in that state has taken effect, been renewed, or amended, as may be the case. Upon our request, you must provide us with information about yourself and your operations so that we can prepare and update our franchise disclosure documents and registrations (and, in some cases, broker registration filings as well).

You must use certain selected or proprietary software, as well as equipment, products, decor, artwork, materials and supplies that we have modified, designed or approved. We will provide you with information concerning our system for operating a Franchised Store (the "System").

We strongly recommend, but do not require, that you have a "Marco''s Pizza" store at which you can demonstrate the concept, and train potential franchisees.� The store at which a

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franchisee is demonstrated the Marco''s concept is called a "Demonstration Store". The store at which the majority of a Franchisee''s initial training (that you are obligated under the Area Representative Agreement to provide ("Training Obligations")) is conducted is called a "Certified Training Store". You may own and operate the Certified Training Store or you may enter into an agreement with a Franchisee in the Territory (subject to our approval) to use their store for the purpose of conducting the training required in order to meet your Training Obligations. Only stores which meet our requirements may be used as a Certified Training Store. If you do not arrange for the use of a Certified Training Store in the Territory, we will have the right to charge you a fee as described in Section 6 below for us to provide training services to Franchisees in the Territory. The cost of opening a Certified Training Store is the same as the cost of any other Marco''s Pizza store and is as set forth in Item 7 of the Store Circular.

You will be required to exercise the Promotion Rights and Obligations and meet the development schedule established for Franchise Agreements to be signed for Franchised Stores to be located in the Territory as specified in Exhibit C to the Area Representative Agreement (the "Development Schedule"). As described below in Item 12, your failure to meet the Development Schedule (after the end of the Probationary Period) will be a default under the Area Representative Agreement.

Competition

Franchised Stores compete with locally-owned businesses, as well as with national and regional chains that offer pizza carryout and delivery services and related products, and which may compete with the products offered at a Franchised Store. The market for these items is well-established and very highly competitive. Pizza restaurants compete based on many factors, such as price, service, store location, product quality, and store promotions and marketing programs. These businesses are often affected by other factors as well, such as changes in consumer taste, economic conditions, seasonal population fluctuation, and travel patterns.

Industry-Specific Regulations

An Area Representative who sells franchises may be required to comply with various state franchise laws and regulations, many of which will require a pre-sale registration before franchise sales can take place, as well as compliance with the Federal Trade Commission Rule governing the sale of franchises.

Area representatives must comply with all local, state, and federal laws that apply to your Franchised Store operations, including for example health, sanitation, no-smoking, EEOC, OSHA, discrimination, employment, and sexual harassment laws. The Americans with Disability Act of 1990 requires readily accessible accommodation for disabled persons and therefore may affect your building construction, site elements, entrance ramps, doors, seating, bathrooms, drinking facilities, etc. For example, you must obtain real estate permits (such as zoning), real estate licenses, and operational licenses. There are also regulations that pertain to sanitation, labeling, food preparation, food handling, and food service. You will be required to comply with all applicable federal, state, and local laws and regulations during the operation of your Franchised Store if you own such a store. You should consult with your attorney concerning those and other local laws and ordinances that may affect your Franchised Store''s operation.

Marco''s Area Rep UFOC (April 13, 2007) 579163.91

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