ITEM 1
THE FRANCHISOR AND ANY PARENTS,
PREDECESSORS AND AFFILIATES
The Franchisor, Its
Predecessors and Affiliates
The Franchisor is Maui Wowi
Franchising, Inc. To simplify the language in this Disclosure Document, "we," or "us," means Maui Wowi Franchising,
Inc. "You"
and "your" means the person who buys the
franchise and includes the operators of a franchisee entity.
We were incorporated on March
13, 2002 in Colorado and before that, existed as a Utah corporation formed on
March 6, 1997 under the name Maui Wowi Marketing, Inc. On March 19, 2002, Maui
Wowi Marketing, Inc. was merged into us. Our principal place of business is 5445 DTC Parkway, Suite 200, Greenwood Village, Colorado 80111. We do not do business under
any names other than Maui Wowi and Maui Wowi Franchising, Inc.
We have one affiliated company,
Maui Wowi International, Inc. ("Affiliate"). Our Affiliate was incorporated
on March 13, 2002 in Colorado and before that, existed as a Utah corporation
formed on March 6, 1997 under the name Maui Wowi USA, Inc. On March 19, 2002,
Maui Wowi USA, Inc. was merged into our Affiliate. In 1997, Maui Wowi USA, Inc.
was the surviving company in a merger with Maui Wowi, Inc., a Utah corporation
formed in 1982, which had, before the merger, continuously operated the MAUI
WOWI� fresh fruit smoothies business. We and our Affiliate are owned by a
holding company called Maui Wowi, Inc. ("Parent" or "MW"). MW was formed on March 13,
2002, and acquired all of our stock and the stock of our Affiliates on March
14, 2002. The principal business address for our Parent and our Affiliate is
the same as ours.
Our
agents for service of process are disclosed in Exhibit A.
The Franchise
We offer franchises for the
operation of businesses ("MAUI WOWI Businesses" or individually, a "MAUI WOWI Business")
selling
fresh fruit smoothies made from our proprietary fruit smoothie blends ("MAUI WOWI Blends") with or without nutritional
supplements, brewed Hawaiian coffee, espresso drinks, gourmet bottled waters
and other approved products (collectively, "MAUI WOWI
Products"), from one of our two types of proprietary mobile, self-contained units ("Ka''anapali Carts" or "Event Concession
Trailers"), or from our proprietary non-traditional fixed-location kiosks ("Fixed Kiosks") or at retail stores ("Retail Stores"). Retail Stores fall under three
classifications: "In-Line" stores, which are traditional store front
locations, "Drive-Thru" stores, which may be stand alone or in
connection with an In-Line store, or "Stand-Alone" stores, which are
locations adapted to meet unique needs. Ka''anapali Carts, Event Concession
Trailers, Fixed Kiosks and Retail Stores are collectively referred to in this
Disclosure Document as the "Operating Units," or individually as an "Operating Unit." The Ka''anapali Cart and Event
Concession Trailer are usually operated at activities including fairs, sporting
events, conventions, rodeos, festivals, trade shows, grand openings and
seminars ("Events").
However,
the Ka''anapali Cart and Event Concession Trailer may be operated from
permanent, fixed sites located in malls, strip centers, schools, office
buildings, hospitals, airports, colleges, health clubs, drive-thrus,
auditoriums, arenas, and concert and sports venues ("Permanent Sites"). The Fixed Kiosk and Retail
Store are operated from Permanent Sites. You are required to obtain our written
consent for each Permanent Site at which you desire to locate an Operating
Unit, and for the Letter of Intent (defined in ITEM 11) and lease of any Permanent
Site. (See ITEM 11.) An Operating Unit operating from a Permanent Site may
not be relocated without our prior written consent.
All Operating Units are
operated under our MAUI WOWI� trademark, trade names, service marks and logos ("Marks") using our unique and
proprietary system for operating the MAUI WOWI Business and related licensed
methods of doing business ("System"). Our System includes our Marks,
our MAUI WOWI Blends, the MAUI WOWI Products, including products that may be
added to the System in the future, and our proprietary specifications, methods and
procedures for the preparation, marketing and sale of our fruit smoothies,
Hawaiian coffee, gourmet waters, nutritional supplements, espresso drinks, and
other products (collectively, "MAUI WOWI Services"), as well as our proprietary
Ka''anapali Carts, Event Concession Trailers, Fixed Kiosks, and Retail Stores.
You will operate the MAUI WOWI Business in accordance with the System and our
proprietary Library of Operating Manuals (as defined in ITEM 8).
You will acquire the MAUI WOWI
Blends, MAUI WOWI Products and certain equipment used in your MAUI WOWI
Business, including, trademarked cups, shirts, and hats, custom gift cards,
espresso machines, blenders, signage, decor and other equipment, as well as the
Ka''anapali Cart, Event Concession Trailer, and Fixed Kiosk (collectively, "MAUI WOWI Supplies and
Equipment"), through us, our Affiliate or other approved suppliers of ours.
We offer three types of MAUI
WOWI unit franchises, a "Single Unit Franchise," a "Standard Franchise" and an "Empire Builder Franchise."
If you
acquire a Single Unit Franchise, you may operate one Retail Store. If you
acquire a Standard Franchise, you may operate up to three Operating Units at
Events or Permanent Sites, or any combination of both. If you acquire an Empire
Builder Franchise, you may operate up to 10 Operating Units at Events or
Permanent Sites, or any combination of both. Regardless of the type of
franchise you acquire, you are required to pay us the initial fees discussed in
ITEM 5 of this Disclosure Document, sign our franchise agreement ("Franchise
Agreement") and complete the Mainland Training Program (defined in ITEM 11) prior to
operating your MAUI WOWI Business. A copy of our Franchise Agreement is
attached to this Disclosure Document as Exhibit B. You will also execute the appropriate Operating Unit
Rider to the Franchise Agreement ("Operating Unit Rider") for each Operating Unit you
open under your Franchise Agreement. The Operating Unit Riders are attached to
the Franchise Agreement. If you acquire either a Standard Franchise or an
Empire Builder Franchise, you will execute a separate Operating Unit Rider for
each Operating Unit you operate under the same Franchise Agreement prior to you
operating additional Operating Units. Also, if you acquire either a Standard
Franchise or an Empire Builder Franchise and operate a Ka''anapali Cart or Event
Concession Trailer, you may apply for a "right of first refusal" for
additional, later Events held by the same sponsor in the same locale and for additional
space in the same venue of an Event (for example, if you are operating at an
Arena with one Ka''anapali Cart and the Arena has requested two additional
Ka''anapali Carts for events). (See ITEM 12).
We also offer to select persons
the opportunity to purchase a Director of Regional Support ("DRS") franchise, also known as an
area developer franchise. Each DRS is selected by us based on his or her
performance as a franchise operator or other qualifications to serve as a DRS.
The selection of a DRS and the establishment of the territory in which the DRS
shall operate ("DRS Territory") are made by us in our sole discretion. A DRS is
responsible for identifying potential franchise operators in the DRS Territory
and providing training, site selection assistance and ongoing support to
franchise operators located in the DRS Territory. When a MAUI WOWI franchise is
awarded or transferred in a DRS Territory, we will pay the DRS a portion of the
Initial Franchise Fee (defined in ITEM 5) or transfer fee. The DRS may also be entitled
to an additional commission from us based on the later purchase of certain
products by franchisees within the DRS Territory. Offers to acquire a DRS
franchise are made by a separate Disclosure Document. If you acquire a MAUI
WOWI Business to be located in a DRS Territory, you may receive some or all of
your training and ongoing support from the DRS in that DRS Territory.
Market and Competition
The market for fruit smoothies,
frozen smoothies, specialty coffee and coffee confections, nutritional supplements,
and similar products is continuing to develop in consumer product recognition
and popularity and has become highly competitive in attracting customer dollars
and high profile locations. You will typically compete with other sellers of
beverages and related products located in or near the MAUI WOWI Business
location you select. There are many such competing companies. The sales of the
services are not seasonal.
Regulations
In most states and local
jurisdictions, there are industry specific health and other regulations that
apply to businesses offering food and beverages to the general public. A
summary of these regulations and laws are set forth on Exhibit K to this Disclosure Document.
These regulations and laws are subject to change. You are solely responsible
to determine what local city, county or state regulations, permits, and
licenses you will need to comply with in order to operate the MAUI WOWI
Business in a particular state. You may be required to modify your MAUI WOWI
Operating Unit to comply with any applicable state, county or local laws or
regulations, or even zoning laws. Any modifications will be at your expense.
You should also familiarize yourself with federal, state or local laws of a
more general nature affecting your MAUI WOWI Business. You must comply with
employment, worker''s compensation, insurance, corporate, taxing, licensing and
similar laws and regulations.
Franchisor''s Prior Experience
The founders of the MAUI WOWI
fresh fruit smoothies concept, Jeff N. and Jill E. Summerhays, have been using concepts
similar to the System and conducting a business of the type to be operated by
you continuously in Utah since 1982. The MAUI WOWI smoothie formula grew out of
a perceived need for an alternative, healthy beverage. The Summerhays sell MAUI
WOWI smoothies at a variety of locations in the State of Utah, such as fairs,
art festivals, sports events and Permanent Sites located in convention centers,
ski areas, universities and auditoriums offering indoor and outdoor activities.
Mr. and Mrs. Summerhays have also sold MAUI WOWI fresh fruit smoothies in Australia. The Summerhays may be deemed predecessors of ours, and are currently franchisees
of ours.
Maui Wowi Marketing, Inc.
acquired the System and concepts from the Summerhays in 1997 and offered MAUI
WOWI franchises from that time until it was merged into us in 2002. We have
offered MAUI WOWI franchises since that time. As of the date of this Disclosure
Document, we have not offered for sale or sold franchises in any other line of
business. However, as noted above, we also offer DRS franchises to qualified
persons and businesses by way of a separate Disclosure Document. Neither our
Parent nor our Affiliate have operated MAUI WOWI Businesses, sold franchises
for MAUI WOWI Businesses or sold franchises in any other line of business. We
do not operate any MAUI WOWI Businesses, but.our Parent owned a company named
Maui Wowi #101, LLC, which operates a MAUI WOWI Business. Our Parent sold Maui
Wowi #101, LLC in 2006. Our Affiliate as well as other approved suppliers and
distributors distribute the Ka''anapali Carts, Event Concession Trailers, Fixed
Kiosks, all MAUI WOWI Products and all MAUI WOWI Supplies and Equipment, other
trademarked products and select equipment that you must purchase in connection
with your MAUI WOWI Business.
