TFC Franchise One Private Equity Fund Company Introduction Portfolio & Fund Managers

The Franchise Co. is a franchise management specialist company that owns and manages a diverse range of established and popular South African franchises on behalf of a vast number of investors – offering all the benefits of owning a franchise without the risks, overheads, admin and long hours. The company’s directors and senior management have more than 150 years combined experience in the industry.

Asset Management Company Finwel Financial Management Services was founded in 1992, holding both Category I and Category II FSP Licenses, under license number 718, with both local, as well as various offshore funds, and has since build a proud track record, producing “value for money “returns. Since inception, the company has grown from strength to strength, and today the company is well established with a formidable management team, with a combined experience of more than 100 years.

Finwel Robbie de Jongh, Thys van Zyl

The Franchise Co. Dr. Danie van Zyl, Taso Pappas, Michael Elias, Conrad Henning

Portfolio Description The portfolio`s goal is to create a long term stable returns in a lucrative well established industry by buying preference shares offered by The Franchise Co. The fund managers’ benchmark is to give a return of inflation plus six percent without taking unnecessary risks. Should markets, interest rates and inflation fluctuate over the medium to long term, investors can rest assure that the sector they are invested in, has proven that it is recession and inflation resistant.

Finance, Real Estate & Business Services

SA GDP Contributors Franchise Industry: 12.5% to SA GDP Government Services

Wholesale, Retail & Motor Trade, Catering & Accommodation

Investment Strategy To achieve a return of inflation plus six percent over the investment term, we stick to our investment strategy and ignore market sentiment, and rely on our thorough industry research and management expertise within the group. We buy and manage top performing national brand name franchises that outperform the turnovers of the normal sector trend. By doing this we innovate our industry expertise over a five year period and secure a stable and lucrative return. The mandate of the fund manager is to invest into a portfolio of speciality retail, restaurants and fast foods.

R302 Billion

2016 2012 2010 2008 R287 Billion

010 492 3793 [email protected] Laudian Franchise Management One (Pty) Ltd

R465 Billion (estimate)

c/o Braam Pretorius & Vinko Streets Sinoville Corner Centre, Office 11, 2nd Floor, Sinoville, 0182 Reg: 2015/385366/07

www.thefranchiseco.co.za Directors: Dr DM van Zyl, T Pappas, CL van Zyl

09/2016

R256 Billion

Estimated Turnover for the Franchise Industry

Inflation Protected Portfolio The franchise Industry is known to be recession resistant and inflation friendly from an investment perspective. The Franchise Co.’s business module is based on a win-win principle which is to increase turnover and investor dividend rewards. This can be achieved irrespective of high market returns, inflation and interest hikes. South African Inflation has hiked at 75% over the past decade, from 3.60% (2006) towards 6.30% (July 2016). Food cost prices hiked 360% over the past six years, from 2.4% (2010) towards 11.2% (2016). The average South African consumer spend is 56% of his monthly income within this sector.

SA Average CONSUMER SPEND SECTOR FRANCHISE INDUSTRY’S CUT OF THE PIE

56% 2,80% 13,80%

12,60% 6,80%

SA Inflation

26,20%

vs FOOD PRICE INFLATION 11,20%

INFLATION

29,60% 8,20%

Transportation Clothing

Inflation

Sport & Leisure Markets

SA INFLATION

Food Inflation

Utilities Rent Per Month

2006

6,30%

6,50%

5,77%

4,10%

Restaurants

FOOD PRICE INFLATION

2,40%

3,60%

75%

2010

2013

365%

2016

SA GDP vs SA FRANCHISE TURNOVER GROWTH GDP 50,50%

SA GDP Franchise Growth

10% Restaurants 2% Health and Wellness

2006

2011

-1,20%

17,50%

3,30%

13% Fast Food Outlets

1%

75% Speciality Retail

2,5%p.a.

Franchise Turnover: 2008 R256 Billion 2012 R302 Billion 2016 R456 Billion

5,40%

The Franchise Co. Fund Sector Allocation

SA AVERAGE GDP

2016

AVERAGE FRANCHISE GROWTH

9,75 p.a.

Chief Financial Officer Forecast The conservative projected figures illustrated below were generated from our past and current financials as well as the financials from the going concerns that forms part of our future buy-in strategy for this portfolio. The figures were then adjusted in line with current and future market trends specifically applicable to the franchise industry, including inflation and interest rates as well as taking into account the current local economic down turn. Our business model is based on growth by increasing turnover while decreasing expenses by means of implementing and maintaining our successful marketing, -operational and -financial structures within the individual businesses forming part of these projections.

1st Year

2nd Year

3rd Year

4th Year

5th Year

REVENUE

R 270 211 503

R 288 450 779,17

R 307 921 206,77

R 328 705 888,22

R 350 893 535,68

COST OF SALES

R 183 017 260

R 195 370 924,62

R 208 558 462,03

R 222 636 158,22

R 237 664 098,90

GROSS PROFIT

R 87 194 243

R 93 079 855

R 99 362 745

R 106 069 730

R 113 229 437

OPERATING EXPENSES (Accounting fees, Advertising, Insurance, Rent, Salaries & Administrative expenditures)

R 43 215 968

R 46 133 045,84

R 49 247 026,43

R 52 571 200,72

R 56 119 756,77

OPERATING PROFIT

R 43 978 275

R 46 946 809

R 50 115 718

R 53 498 529

R 57 109 680

R 28 415 690

R 29 507 047

R 30 675 272

R 31 922 353

R 33 253 612

R 660 000

R 1 479 600

R 2 777 366

R 4 422 493

PROJECTION FOR TRANS TWO

FINANCING COST

(12,2% Preferred Dividends, 6% Management Fee)

INTEREST RECEIVED NETT PROFIT BEFORE TAXATION

R 15 565 585

R 18 099 762

R 20 920 046

R 24 353 542

R 28 278 561

TAXATION @ 28%

R 4 358 364

R 5 067 933

R 5 857 613

R 6 818 992

R 7 917 997

NETT PROFIT AFTER TAX

R 11 207 221

R 13 031 829

R 15 062 433

R 17 534 550

R 20 360 564

AMOUNT AVAILABLE FOR RE-INVESTING

R 11 000 000

R 13 000 000

R 15 000 000

R 17 500 000

R 20 200 000

TOTAL INVESTMENT VALUE AT MATURITY VALUE

R 108 788 055

The Franchise Co. Cash Builder The cash builder gets funded by the total net (excess) profits (after COS, gross expenses, taxes, fees and preference-share dividend payments) generated from the businesses forming part of this portfolio offering from TFC. These profits get paid over to the cash builders’ investment account (call account at competitive market rates) managed by a registered FSP on a monthly basis. The cash builder account will accumulate over time to build security towards the investor to cover expenses which might (where applicable) include to re-purchase the preference shares on early exit. The cash builder’s main purpose is to accumulate funds required on the maturing date of the investment for the re-purchase of the preference-shares from the investors, as well as the 10% bonus payable to preference shareholders held in the investment on the final maturity date. This will ensure that there will be sufficient funds available with no need for external gearing, financing or even the sale of assets (businesses) held by The Franchise Co. in order to finance the funds required for the buy-back of the preference shares at the maturity date. This should leave investors with great peace of mind.

R100 000 000

61% over

BOND FREE DEBT FREE PORTFOLIO

TOTAL RETURN

60

YEAR 5 R108 788 055

months

YEAR 4 R75 000 000

CASH BUILDER YEAR 3 R50 000 000

YEAR 2 R30 000 000

Investing in our profile of franchises is extremely easy. We pride ourselves in being fully transparent.

Executive Management Summary The Franchise Co. corporate culture can be summarised in one word — GROWTH; growing in size, growing their skills, growing the franchises that comprises their investment portfolio, by and growing their offering of diverse, non-traditional investment opportunities. We have created an Investment platform which has the ability to outperform inflation by six percent plus. The platform caters for stable growth over a medium to long term, having the additional advantage of being “tax friendly”. The statistics and market research gathered over a long period of time by both Finwel and The Franchise Co. combined with industry specific experience should bring about the needed peace of mind for potential investors to entrust their hard earned cash with us. Through thorough understanding of market trends and continuously analysing latest business risks, The Franchise Co. has built a reputation for maximising their returns by acquiring ideally located franchises at market related prices. The Franchise Co. will continue to develop their position as a market leader and to challenge the status quo of traditional investments and business opportunities, by offering above average returns in a tangible, stable, and trend setting industry. By delivering efficient, timeous high quality service, the company aims to build solid, long-term relationships with all its stakeholders while delivering above average returns to their investors.

Annualised History Return

Senior Portfolio Managers The Franchise Co. Chief Executive Officer:

Finwel Senior Asset Manager:

Dr Danie Van Zyl

Robbie De Jong

(Ba Hons, B Proc, BD, MA, LLM, DD) As an attorney at law, Dr Danie van Zyl, takes on his position of CEO of The Franchise Co. with all the skill and experience expected from a man of his stature. With numerous degrees behind his name, he brings a wealth of knowledge to the company with clear goals and objectives for the future. He has also served as a commissioner of the Small Claims Court and as a lecturer for the Law Society of the Northern Provinces. His focus lies on the increased effectiveness and efficiency of The Franchise Co.’s management team.

(b Mil BA) Robbie De Jongh started his career in the Financial Industry in 1986 and was a founder member of Finwel when it started in 1992, were he is, still to today, responsible for managing both local, as well as offshore funds for a vast number of Finwel clients. Robbie is accredited with all FAIS’ legislation and has 30 years’ of experience in the Financial Industry.

Annualised Projection Return

*This fund is not open to the General Public, and is exclusively available on a private selection/invitational basis only. **The information contained within this document is subject first to the disclosure document (Oct 2016 V.1.1.) of the fund. ***General Terms & Conditions apply.