Area Developers pay a development fee of $.05 per capita in their development area, and receive 30% of the initial franchise fee and 2/7ths of the royalty from the locations developed pursuant to their agreements. Noble Roman's, Inc. retains all training and supervision responsibilities, and must approve all franchisees and all locations. In order to maintain the right to develop the territories, each Area Developer has to meet the minimum development schedule as stipulated in their Area Development Agreement. The territory covered by this development schedule has a population of approximately 3.2 million people.
With the signing of this most recent Area Development Agreement, the company has now entered in to 24 Area Development Agreements for various regions of the country, which together call for the development of 868 franchised locations over the next three to eight years. Additionally, the company has entered in to 98 dual branded franchise agreements for traditional locations, 45 of which were sold through Area Developers. There can be no assurance that all the Area Developers will meet their required schedules. If an Area Developer does not meet the required schedule, the Developer loses their rights to the development area and their share of the franchise fee income on any of the units that were developed.
The 24 Area Development Agreements call for the development of franchise locations as follows:
Year: 2007 2008 2009 2010 2011 2012 2013 2014 2015
Units: 46 117 147 161 155 109 87 36 10
The company has franchises in 45 states from coast-to-coast within the United States. In addition, it has sold franchise agreements for military bases in Puerto Rico, Guam and Italy, and for entertainment facilities and convenience stores in Canada. In past years the company's growth strategy was to expand primarily through franchising in non-traditional locations. The company is continuing its growth by franchising non-traditional locations and, in addition, it is also part of the company's strategy to sell dual-branded Franchise Agreements for traditional locations. The company is selling development territories to Area Developers to spur its growth in stand-alone traditional locations.
The statements contained in this press release concerning the company's future revenues, profitability, financial resources, market demand and product development are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) relating to the company that are based on the beliefs of the management of the company, as well as assumptions and estimates made by and information currently available to the company's management. The company's actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the company's operations and business environment including, but not limited to: competitive factors and pricing pressures, shifts in market demand, general economic conditions and other factors, including (but not limited to) changes in demand for the company's products or franchises, the success or failure of individual franchisees and the impact of competitors' actions. Should one or more of these risks or uncertainties adversely affect the company or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended.
