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Morning Briefing for pub, restaurant and food wervice operators

Mon 2nd Nov 2015 - Franco Manca operator signs Bukowski franchise deal
Franco Manca operator signs Bukowski franchise deal: Fulham Shore has entered into a franchise agreement with the owner of Bukowski Grill restaurants. Bukowski is a London-based charcoal-grill restaurant and bar, serving breakfasts, burgers and grills. Bukowski currently has two restaurants in London at Brixton Market and BoxPark, Shoreditch. Under the franchise agreement, the Company intends to open a new Bukowski restaurant on D’Arblay Street in Soho, London. The company already holds a 15 year lease on the site through its wholly owned subsidiary, 10 DAS Limited. Fit-out of the site is expected to commence shortly, with the franchise restaurant expected to open in early 2016. Total fit out costs are expected to be in the region of £500,000. Under the franchise agreement, Fulham Shore will pay to Bukowski an upfront franchise fee of £8,500 and an ongoing franchise royalty calculated at the rate of 5% of the franchise restaurant’s revenue. The franchise agreement is for an initial period of three years, at the expiry of which the Company will be free to renew or cancel the franchise agreement at no additional cost. Under the terms of the franchise agreement, the Company will source and purchase relevant ingredients and prepared products for the Franchise Restaurant at an agreed price from the Bukowski central kitchen. In addition, through Fulham Shore’s existing supply arrangements with an independent third party, Bukowski’s central kitchen will now prepare and supply certain ingredients to the company’s Franco Manca restaurants at an agreed price through the independent third party. The board of Fulham Shore anticipates that the value of these ingredients will initially be circa £200,000 per annum. David Page and Nabil Mankarious, both of whom are directors of Fulham Shore, are both significant shareholders in Bukowski (holding between them 31.6% of Bukowski Ltd’s issued share capital) and Nabil Mankarious is a director of Bukowski. As a result, the entry into the franchise agreement and the supply arrangements by Fulham Shore constitute related party transactions under the AIM Rules for Companies. The independent directors of Fulham Shore (being Nicholas Donaldson, Martin Chapman and Nicholas Wong), having consulted with the company’s nominated adviser, Allenby Capital Limited, consider that the terms of the franchise agreement and the supply Arrangements are fair and reasonable insofar as the company’s shareholders are concerned. In the financial year to date, Fulham Shore has opened: One The Real Greek restaurant at St Martin’s Lane in London’s West End; and five Franco Manca pizzerias in Soho, Ealing, Bermondsey, Earls Court and Covent Garden. This takes Fulham Shore’s restaurant portfolio to 26 restaurants made up of nine The Real Greek and 17 Franco Manca. David Page, executive chairman of Fulham Shore, said: “We are thrilled to be opening a Bukowski in Soho. Bukowski sells great breakfasts, burgers, ribs and steak accompanied by delicious beer and wine. This three year franchise agreement will add to Fulham Shore’s exposure to, and knowledge of, the exciting and thriving London restaurant market.”

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