UFOC

Sample UFOC

FRANCHISE OFFERING CIRCULAR

The franchisee relates to the operation of a retail establishment ("Shoppe") that produces plain and decorated cookies, fanciful cookie arrangements and related products for retail sale to the general public.

The initial franchise fee for a Shoppe franchise is $27,500 subject to adjustment based on the population in the Primary Marketing Area and other factors, creating a range from $12,500 to $35,000. See Item 5 for details regarding the initial fee and its calculation when greater or less than $27,500. Item 5 describes other payments totaling $9,568. The estimated initial investment for a Shoppe franchise ranges from $90,000 to $180,000. See Item 7.

RISK FACTORS

1. THE FRANCHISE AGREEMENT REQUIRES THAT ALL DISAGREEMENTS BE SETTLED BY ARBITRATION WITH, OR SUIT AGAINST, US IN TEXAS. OUT-OF-STATE ARBITRATION OR SUIT MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO ARBITRATE WITH OR BRING SUIT AGAINST US IN TEXAS THAN IN YOUR HOME STATE.

2. THE FRANCHISE AGREEMENT STATES THAT TEXAS LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS.

3. THE FRANCHISE AGREEMENT STATES THAT FAILURE TO MEET MINIMUM PERFORMANCE STANDARDS IS GROUNDS FOR NONRENEWAL OF THE FRANCHISE FOLLOWING EXPIRATION OF THE INITIAL ONE YEAR TERM.

4. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

Information about comparisons of franchisors is available. Call the state administrators listed in Exhibit N or your public library for sources of information.

Registration of this franchise with the state does not mean that the state recommends it or has verified the information in this offering circular. If you learn that anything in this offering circular is untrue, contact the Federal Trade Commission and the State authority listed in Exhibit

Date of Issuance: See FTC Cover Page and State Registrations Page

COOKIES BY DESIGN, INC. RECEIVED (formerly MGW Group, In PT0FC0RP 0R AT i 0 a Texas corporation SANFRANCtSCO

1865 Summit Avenue, Suite 605

Piano, Texas 75074 '06 APR "3 A 9 34 (972) 398-9536; (800) 945-2665 www.cookiebouquet.com and www.cookiesbydesign.com

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FRANCHISE OFFERING CIRCULAR FOR PROSPECTIVE FRANCHISEES

COOKIES BY DESIGN, INC.

(formerly MGW GROUP, INC.)

a Texas corporation 1865 Summit Avenue, Suite 605

Piano, Texas 75074

(972) 398-9536; (800) 945-2665

www.cookiebouquet.com and www.cookiesbydesign.com

INFORMATION FOR PROSPECTIVE FRANCHISEES REQUIRED BY THE FEDERAL TRADE COMMISSION

To protect you, we've required your Franchisor to give you this information. We haven't checked it and don't know if it's correct. It should help you make up your mind. Study it carefully. While it includes some information about your contract, don't rely on it alone to understand your contract. Read all of your contract carefully. Buying a franchise is a complicated investment. Take your time to decide. If possible, show your contract and this information to an advisor, like a lawyer or an accountant. If you find anything you think may be wrong or anything important that's been left out, you should let us know about it. It may be against the law.

There may also be laws on franchising in your state. Ask your state agencies about them.

FEDERAL TRADE COMMISSION Washington, D. C. 20580

Issuance Date: March 31,2006

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COOKIES BY DESIGN, INC. STATE REGISTRATIONS

This Offering Circular is registered, on file or exempt from registration in the following states with franchise registration and disclosure laws:

State Effective Date

California	Effective Date
Florida	Effective Date
Hawaii	Effective Date
Illinois	Effective Date
Indiana	Effective Date
Maryland	Effective Date
Michigan	Effective Date
Minnesota	Effective Date
Nebraska	Effective Date
New York	Effective Date
North Dakota	Effective Date
Rhode Island	Effective Date
South Dakota	Effective Date
Utah	Effective Date
Virginia	Effective Date
Washington	Effective Date
. Wisconsin	Effective Date

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Item

Table of Contents

Page No.

1. The Franchisor, Its Predecessors and Affiliates........................................................................................1

2. Business Experience..................................................................................................................................3

3. Litigation...................................................................................................................................................5

4. Bankruptcy................................................................................................................................................6

5. Initial Franchise Fee..................................................................................................................................7

6. Other Fees................................................................................................................................................10

7. Initial Investment.....................................................................................................................................14

8. Restrictions on Sources of Products and Services...................................................................................17

9. Franchisee's Obligations.........................................................................................................................20

10. Financing Arrangements.......................................................................................................................23

11. Franchisor's Obligations.......................................................................................................................24

12. Territory.................................................................................................................................................30

13. Trademarks............................................................................................................................................33

14. Patents, Copyrights and Proprietary Information..................................................................................42

15. Obligation to Participate in the Actual Operation of the Franchised Business.....................................44

16. Restrictions on What the Franchisee May Sell......................................................................................45

17. Renewal, Termination, Transfer and Dispute Resolution.....................................................................46

18. Public Figures........................................................................................................................................54

19. Earnings Claims.....................................................................................................................................54

20. List of Outlets........................................................................................................................................54

21. Financial Statements..............................................................................................................................56

22. Contracts................................................................................................................................................57

23. Receipt...................................................................................................................................................57

State Addenda

1. California

2. Illinois

3. Maryland

4. Minnesota

5. New York

6. North Dakota

7. Rhode Island

8. Washington

Franchise Offering Circular - Page i Form 2006

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Exhibits

A. Financial Statements

B. Franchise Licensing Agreement (including State Specific Addenda)

C. Area Development Agreement (including State Specific Addenda)

D. Site Agreement

E. Master Sublicense Agreement (Disney, Garfield, Trading Spaces and Curious George)

F. Receipt for Processing Fee

G. Promissory Note(s) and Guaranty

H. Member Agreement of The MAP Group

I. Automatic Funds Transfer Agreement

J. Table of Contents of Operations Manual

K. Franchisees Currently in Operation

L. Former Franchisees

M. Receipt for Completed Franchise Licensing Agreement/Area Development Agreement and

Related Documents

N. State Administrators

O. Agents for Service of Process

P. Additional Trademark Registrations and Applications

Q. Schedule of Copyright Registrations

R. CBDI Sales and Marketing Point of Sale Software End User License Agreement

S. General Release

T. Receipt for Offering Circular

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1. The Franchisor, Its Predecessors and Affiliates

To simplify the language in this Offering Circular we refer to Cookies by Design, Inc., the franchisor, as "CBDF or by use of the first person plural pronoun ("we," "our" or "us"). We refer to the person, corporation or other entity to whom CBDI grants the franchise by use of the second person pronoun ("you" or "your"). The reference includes the owners of a franchisee that is a business entity. CBDI, formerly known as MGW Group, Inc. and as Cookie Bouquet Franchising Corporation, is a Texas corporation with its principal place of business at 1865 Summit Avenue, Suite 605, Piano, Texas 75074. Mary Gwen Willhite incorporated us in Texas on February 12, 1991. We acquired substantially all of our assets from Cookie Bouquet, Inc., a Texas corporation, ("CBI").

Mary Gwen Willhite organized CBI on June 3, 1986, to operate a store (a "Shoppe") located at 6757 Arapaho Road, Suite 707, Dallas, Texas 75248 and, later, to operate the franchising business we now conduct. We acquired all of the outstanding stock of CBI on May 1, 1991, and CBI became our wholly-owned subsidiary. As of June 1, 1991, CBI transferred the assets of its franchising business to us. We changed our name from MGW Group, Inc. to Cookies by Design, Inc. on January 1, 2005.

CBI acquired the rights to use the name COOKIE BOUQUET® from its founder, Mary Gwen Willhite, who used this name in the operation of a cookie arrangements business in Tulsa, Oklahoma under the name of Cookie Bouquet Inc., an Oklahoma corporation (the "Oklahoma Corporation"), which was incorporated on May 25, 1983. Ms. Willhite sold substantially all of the operating assets of the Oklahoma Corporation to a third party on June 2, 1987, except the trade name COOKIE BOUQUET®, which she licensed to the purchaser. She then liquidated the Oklahoma Corporation. In May 1996, CBI dissolved and transferred all of its assets and liabilities to us. We operated the Shoppe that CBI opened in 1986 until January 2001, when we sold the Shoppe to a franchisee. We no longer operate any Shoppes.

We do business solely under the name Cookies by Design, Inc. We license franchisees to operate under the trade name COOKIES BY DESIGN®. We also grant master sublicenses to qualified franchisees to use certain intellectual property of Disney Enterprises, Inc. ("Disney"), of Paws, Incorporated, creator of the Garfield cartoon characters ("Paws"), of Discovery Licensing, Inc., creator of the Trading Spaces cartoon characters ("Discovery"), and of Universal Studios Licensing LLP, licensee of the Curious George books ("Universal"). Item 13 of this Offering Circular more fully discusses the trade name arrangements and the sublicenses.

We award franchises (the "Franchise") to develop and operate a business that produces plain and decorated cookies, fanciful cookie arrangements and related products for retail sale to the general public (the "Franchisee! Business"). As a condition to grant of a Franchise and to help you decide about becoming a COOKIES BY DESIGN® franchisee, you must first attend a "Discovery Day," at our headquarters in Piano, Texas, a suburb of Dallas. At Discovery Day, you meet our staff, learn about a COOKIES BY DESIGN® Franchise and have the opportunity to ask questions.

We do not franchise or operate any other type of business. As part of the Franchise, you will also have the right to use certain trademarks and copyrights of Disney ("Mickey Mouse®" and related characters and "Winnie the Pooh®" and related characters), of Paws ("Garfield®"), of Discovery ("Trading Spaces®") and of Universal ("Curious George®") in the preparation of your products. You must sign the Master Sublicense Agreement in the form of Exhibit E to this Offering Circular. We refer to the rights to use these marks as a "Sublicense." See Items 6, 7, 13, 14 and 16. You also must become a member of The MAP Group. See Items 6 and 11.

The Franchise, which is characterized by a system that includes methods of operation, control, manuals covering business practices and policies, merchandising, advertising, copyrighted cookie and arrangement designs, sales and promotional techniques and personnel training (the "System"), gives you

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the right to establish a franchised Shoppe that uses the System and the Licensed Marks within a particular market (the "Primary Marketing Area"), which is described in the Franchise Licensing Agreement (the "Franchise Agreement") in the form attached as Exhibit B to this Offering Circular. You may establish in the Primary Marketing Area and operate at a specific location (the "Premises") only one Shoppe. If you have not selected a Primary Marketing Area for your Shoppe by the time you are ready to sign a Franchise Agreement, you may sign a Site Agreement in the form of Exhibit P. See Items 8 and 12. You may relocate the Shoppe, open a satellite location ("Satellite") and/or a kiosk location ("Kiosk") only after opening your Shoppe under the conditions described in the Franchise Agreement. We refer to the Franchisees, Franchised Businesses and the Shoppes operating under the Licensed Marks and using the System collectively as (the "Chain").

Occasionally, we may offer an Area Development Agreement (the "Development Agreement") in the form attached as Exhibit C to this Offering Circular granting rights to establish multiple Shoppes within a particular area (the "Defined Territory") described in the Development Agreement. You and CBDI must enter into a separate Franchise Agreement for each Shoppe you establish under the terms of the Development Schedule attached to the Development Agreement. The number of Shoppes to be developed under each Development Agreement varies depending on factors like the size, affluence and population density in the Defined Territory. To be considered for a Development Agreement, you must have operated one Shoppe in accordance with all of the terms and conditions of its Franchise Agreement, you must be in compliance with any other agreement with us and with our Confidential Manuals (as defined in the Franchise Agreement) and any other applicable manuals for at least six consecutive months, and during that period, the Shoppe must exceed the applicable Minimum Performance Standard by at least 20%. We grant Development Agreements in our sole discretion. The fact that you may meet the eligibility requirements does not mean that we will enter into a Development Agreement with you. We are under no obligation to offer you or anyone else that opportunity.

We believe that Franchised Businesses attract customers who use the services of florists and/or bakeries. We believe that the market for our products is a developing market. The Franchisees compete with other local and nationally franchised businesses providing similar services. Your ability to compete in this market depends in large part on geographical area, specific site location, general economic conditions and your capabilities. Your affiliation with the Chain does not guarantee you a successful or profitable business operation.

We have offered Franchises to operate Shoppes under the trade name COOKIE BOUQUET® since June 1, 1991. As of December 31, 2005, the Chain consisted of 231 Shoppes. We began to offer Disney Sublicenses to our franchisees on July 16, 1999; Garfield Sublicenses on August 15, 2003, Trading Spaces Sublicenses in July 2004, and Universal Sublicenses in March 2006. See Exhibit E to this Offering Circular for the form of Master Subfranchise Agreement.

CBI offered franchises to operate Shoppes under the trade name COOKIE BOUQUET® between November 1987 and May 31, 1991. Neither Mary Gwen Willhite, nor the Oklahoma Corporation has ever offered franchises under any trade name. Ms. Willhite has never operated a Shoppe, but CBI operated a Shoppe under the trade name COOKIE BOUQUET® from June 3, 1986 until May 31, 1996, when it dissolved and transferred its assets, including the Shoppe to us. We operated the transferred Shoppe under the trade name COOKIE BOUQUET® until January 2001. We have offered franchises to operate Shoppes under the trade name COOKIES BY DESIGN® since November 1990. No other predecessor or affiliate has offered franchises for the operation of Shoppes under the trade name COOKIES BY DESIGN®. Neither we nor any predecessor, nor any affiliate of ours has previously granted franchises in any other line of business.

Exhibit O to this Offering Circular lists our agents for service of process.

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Other than local health department regulations and other laws applicable to businesses generally, there are no industry specific laws affecting the Franchised Business.

2. Business Experience Chairman of the Board, CEO and Sole Director: Mary Gwen Wellhtte

Ms. Willhite is our Chairman of the Board and sole director, positions she has held since February 1991. She became our CEO in December 2004, a position she also held from February 1991 to July 1997. She served from April 1983 through January 1987 as President of the Oklahoma Corporation, located outside of Tulsa, Oklahoma, and from June 1986 to February 1991 as the Chairman of the Board, sole shareholder and President of CBI in Dallas, Texas.

President and Chtef Operating Officer: Mary Kennedy Thompson, CFE

Ms. Thompson joined us as Field Services Coordinator in November 2000, was promoted to Director of Field Operations in January 2002, to Executive Director of Franchise Operations in January 2003 and to President and COO in December 2004. For more than five years before she joined CBDI, Ms. Thompson owned and operated her own Shoppes in Austin and Round Rock, Texas. Ms. Thompson earned a designation as a CFE from the International Franchise Association in February 2003.

Chief Financial Officer: David C. Patterson, CPA, CFE

Mr. Patterson was named our Chief Financial Officer in December 2004. From February 1994 until December 2004 he occupied the position of Vice President in charge of our franchise development, a function he still performs on an interim basis. He also served from January 2003 until December 2004 as our Executive Director of Franchise Development. From June 1991 through September 1993, Mr. Patterson was employed by Arthur Andersen & Co. in Dallas, Texas as a senior accountant. He owned and operated a Shoppe from 1992 to 1997. Mr. Patterson earned a designation as a CFE from the International Franchise Association in February 2001.

Vice President: Katie Patterson, CFE

Our Board of Directors elected Ms. Patterson to the position of Vice President in charge of training and franchise relations in February 1994. Ms. Patterson was also named Director of Special Events in January 2003. She served in various positions with CBI and CBDI in the Dallas, Texas office from May 1990 to February 1994. She owned and operated a Shoppe from 1992 to 1997. Ms. Patterson earned a designation as a CFE from the International Franchise Association in February 2001.

Vice President: AnettaBoney

Our Board of Directors elected Ms. Boney to the position of Vice President of Creative Services in March 1999 and promoted her to Vice President of Design Services in January 2003. Ms. Boney joined CBI at its inception in 1984 and held various positions, including manager of the founder's Shoppe. From January 1992 to March 1999, she held various positions in Our Franchise Services department, consisting of the development of arrangement design, cookie cutter designs, and decorating training for COOKIE COLLEGE, as well as ongoing support services for COOKIE BOUQUET®/COOKIE BY DESIGN® franchises.

Secretary and Director of Corporate Projects: Teresa Kinney

Our Board of Directors elected Ms. Kinney to the position of Director of Corporate Projects in December 2004. She was named Secretary of the company in September 2003. She has previously held

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various positions with us. Before joining us, Ms. Kinney worked for Thompson & Knight, LLP in Dallas, Texas as a legal secretary from August 1989 to October 1999. She received a Bachelor of Arts degree from Texas Tech University in 1984.

Executive Director of Franchise Operations: Tom Campbell

Our Board of Directors elected Mr. Campbell to the position of Executive Director of Franchise Operations in December 2004. Mr. Campbell served as our Director of Supply Chain Management between the time he joined us in November 2001 until December 2004. Before joining us, he worked 25 years in corporate management positions in the hospitality industry, with responsibility for global purchasing, distribution and operation functions at Brinker International, Carlson Hospitality Worldwide and Marriott International.

Director of Financial Operations: Cynthia (Cindy) Vaughn-Pharr, CPA

Ms. Vaughn-Pharr joined CBDI as Director of Financial Operations in June 2000. Her multifaceted position involves service as our Accounting Manager and Controller and as coordinator of our human resources functions. Before joining CBDI, Ms. Vaughn-Pharr managed the U.S. accounting department of LaserComm, Inc. in Piano, Texas from September 1999 until June 2000; served as a general ledger accountant for Pagenet Corporation in Dallas, Texas from August 1998 until September 1999; and served as a Senior Financial Accountant and Credit Manager for Benchmarq Microelectronics, Inc. in Dallas, Texas from April 1996 until August 1998.

Training and Development Coordinator: Candace Ditsch

Ms. Ditsch joined us in July 2004 as the Training and Development Coordinator. Before that she was employed at Brown McCarroll, LLP in Dallas, Texas from 2001 to 2004, and served as a Program Director at Trinity United Methodist Church in Denton, Texas from 1999 to 2001. She obtained her Bachelor of Science degree in Human and Organizational Development from Vanderbilt University and a Masters of Science degree in Management and Administrative Sciences from the University of Texas at Dallas.

Director of National Programs: Barbara Gonzales

Ms. Gonzles joined us in August 2002. She served in various positions for us from 2002 until August 2004 when she was named the National Programs Coordinator. She served as the National Programs Coordinator from August 2004 until January 2006 when she was named Director of National Programs. Prior to her work for us, she was employed as a Customer Relations Manager for 7-11, Inc. in Dallas, Texas from 2001 to 2002. She earned a Business Administration Management degree with an emphasis in leadership from New Mexico State University in 1999.

Director of Marketing: Frank Sobyak

Mr. Sobyak joined us in October 2005 as the Director of Marketing. Prior to that, he was employed as the Vice President of Marketing for Glamour Shots in Frisco, Texas from April 2005 to July 2005, served as the Director of Marketing for Interstate Batteries' All Battery Center stores in Dallas, Texas from September 2004 until March 2005, and was a principal owner/operator of his own start up company called Gather Round Games from April 2000 until August 2004. In addition, Frank has held senior level marketing positions at Sprint, Automatic Data Processing, and the consumer collectibles company, The Franklin Mint. He earned a Bachelors of Science degree in Industrial Engineering from Lehigh University in 1984 and a Masters in Business Administration degree in Marketing from The University of Michigan in 1989.

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3. Litigation

Litigation/Civil: MGW Group, Inc. v. S&A Knudson Corporation, et al., Superior Court of California. Sacramento County ("Case No. 529876). On July 16, 1993, CBI filed suit against a franchisee, S&A Knudson Corporation, a California corporation ("Knudson"), Steven Knudson and Anita Knudson for non-payment of royalty and franchise fee payments due under the Franchise Agreement. The defendants filed a cross-complaint, alleging that CBI had not registered the sale of its franchises in California, as required under California law, and that CBI misrepresented the amount of profits that the defendants could expect to make by operating a Franchise.

In this same matter, on July 20, 1994, California Cookie Bouquet, Inc. ("CCBF), a California corporation entitled by agreement to a share of the royalties paid by Knudson to CBI, filed suit against Knudson, and Does 1 through 20 (meaning unknown defendants, i.e. "John Does") for breach of contract for failure to make periodic royalty payments and a franchise fee payment of $200 per month to CCBI due under the Franchise Agreement, for money received by Knudson for the benefit of CCBI, for account stated, unfair competition, and misappropriation of trade secrets. California Cookie Bouquet, Inc., v. S&A Knudson Corporation, et al., Superior Court of California, Sacramento County (Case No. 541831). CCBI sought preliminary and permanent injunctions, compensatory damages, punitive damages, reasonable attorneys' fees, interest through date of judgment, costs and disbursements, and other relief as the court would deem appropriate.

In settlement of the disputed claims, all the parties to these lawsuits entered into a General Release and Settlement Agreement and Stipulation for Entry of Judgment (Conditional) (the "Settlement Agreement"), effective September 26, 1994. Under the confidential terms of the Settlement Agreement the parties executed mutual releases in which no party admitted to any allegation made in the suits; CBI and CCBI agreed to pay to Knudson the sum of $22,500 over time, representing the settlement amount and $1,990.58 representing fees and expenses of litigation; and Knudson agreed to remove and return certain items and equipment used in the franchised business in which Cookie Bouquet Franchising Corporation claimed a proprietary interest and not to contact any Cookie Bouquet franchisee regarding the litigation or settlement. The parties complied with the terms of the Settlement Agreement and a dismissal with prejudice was entered by the court on February 4, 1998.

Litigation/Civil: The Cookie Bouquet of Houston. Inc. v. Cookie Bouquet of Clear Lake, Inc. and Cookie Bouquet, Inc.: 61st Judicial District Court of Harris County, Texas; Cause No. 95-003041. On January 23, 1995, The Cookie Bouquet of Houston, Inc. ("CBH"), a franchisee of CBDI, filed suit against Cookie Bouquet of Clear Lake, Inc. ("CBCL"), another franchisee of CBDI, and against Cookie Bouquet, Inc., Our predecessor in interest. CBH asserted a breach of contract action against CBCL, for failure to pay its share of advertising cost and sought (i) a declaratory judgment against CBCL, and Cookie Bouquet, Inc., (based on CBH's, assertion that it was a third party beneficiary to the franchise agreement entered into by CBCL, and Cookie Bouquet, Inc.) declaring the franchise agreement terminated, (ii) prejudgment and post judgment interest, attorneys' fees and costs of court, and (iii) other relief to which it may be entitled. CBH, asserted that Cookie Bouquet, Inc., is a necessary party to this action, pursuant to applicable law, inasmuch as it is a person who has or claims an interest affected by the declaratory judgment sought. In January 1996, CBH amended its petition to include claims for past due commissions and fees allegedly earned for its assistance with the sale of franchises in the Houston area pursuant to an agreement with CBDI, which claims would offset past due royalties owed by CBH to CBDI.

The parties participated in binding mediation on February 21, 1996, which resulted in a settlement of all of the claims. The parties executed a Mutual Release and a Memorandum of Agreement. Pursuant to the Memorandum of Agreement, (a) the parties amended the CBH franchise agreement to (i) modify CBH's protected territory by deleting some counties and adding others, (ii) delete certain addenda

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to the franchise agreement declaring void three agreements between CBH and CBDI, and (iii) delete any third party beneficiary rights CBH might have under any other Houston area franchise agreement; (b) CBDI agreed not to oppose the entering into by CBH and any prospective purchaser of CBH's development rights of local advertising agreements collateral to, but not a part of, any franchise agreement signed by the prospective purchaser and CBDI; (c) any purchaser of CBH's development rights must sign the then current form of CBDI franchise agreement; (d) CBDI eliminated all marketing assistance responsibilities of CBH; and (e) CBDI agreed to pay CBH (i) $83,000 over the next six months in settlement of disputes over commissions earned and royalty fees owed by CBH and (ii) on an ongoing basis, a commission for third party franchises developed as a result of sale of a portion of CBH's development rights. The court entered an Order of Dismissal with Prejudice on June 10, 1996.

Litigation/Civil: MGW Group, Inc. v. Sherrie Ann Rodda and Michael John Rodda: In the 362nd Judicial District Court of Denton County. Texas: Cause No. 97-40561-362. On June 25, 1997, MGW Group, Inc. filed a Petition In Intervention in a pending divorce action between Sherrie Ann Rodda ("Ms. Rodda") and Michael John Rodda ("Mr. Rodda," together with Ms. Rodda, collectively referred to herein as the "Defendants"). Ms. Rodda was a franchisee of Cookies by Design, Inc. and Mr. Rodda actively worked as an employee in Ms. Rodda's franchise Shoppe. MGW asserted claims against the Defendants for misappropriation of trade secrets and fraud. MGW was seeking termination of the franchise agreement and a permanent injunction enjoining the Defendants from disclosing, using, and/or selling MGW's confidential trade secrets and proprietary business information. MGW's claims were severed from the divorce action. On August 19, 1997, Ms. Rodda filed an Answer and Counterclaim, requesting (i) declaratory judgment that the franchise agreement was void from the beginning, alleging, in part, MGW failed to comply with applicable franchise law; and further alleging (ii) fraud; (iii) violation of the Texas Business Opportunity Act; (iv) breach of contract; and (iv) antitrust violations. Ms. Rodda was seeking relief in the nature of judgment declaring the franchise agreement void, recovery of all fees and royalties paid under the franchise agreement, and attorneys' fees, actual and/or compensatory damages, punitive damages, additional damages, treble damages, attorneys' fees, prejudgment and postjudgment interest and other relief afforded by the court. On March 2, 1998, a settlement of this litigation between MGW and Ms. Rodda was reached in which Ms. Rodda agreed to (a) transfer her franchise license within a specified time period; (b) pay MGW $3,000; and (c) not be involved in any business or department or division of a business that makes or sells decorated cookies, cookies-on-a-stick, or cookie arrangements, or a bakery, in the United States or within a 20 mile radius of any other Unit within the System in existence on the date of the Franchise Agreement. The parties agreed to a dismissal of the litigation with respect to claims and counterclaims between MGW and Ms. Rodda. An order dismissing the claims and counterclaims between MGW and Ms. Rodda was entered by the Court on March 17, 1998, and Ms. Rodda has since transferred her franchise license to an independent third party.

On February 2, 1999, a settlement of this litigation between MGW and Mr. Rodda, in which Mr. Rodda agreed to (a) pay MGW $300; and (b) for a period of 10 years, not be involved in any business or department or division of a business that makes or sells decorated cookies, cookies-on-a-stick, or cookie arrangements, or a bakery in the United States, or within a 20-mile radius of any other unit within the System in existence on the date of the Franchise Agreement. An order dismissing the claims by MGW was entered by the Court on July 15, 1999.

To the best of our knowledge, no litigation other than the four matters listed above must be disclosed in this Offering Circular.

4. Bankruptcy

No person identified in Items 1 or 2 of this Offering Circular has been involved as a debtor in proceedings under the U.S. Bankruptcy Code that must be disclosed in this Item.

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5. Initial Franchise Fee

PROCESSING FEE. No sooner than 10 days after receipt of this Offering Circular and before the execution of either a Development Agreement or a Franchise Agreement, you must pay us a fee of $250 (the "Processing Fee"). This amount covers our initial expenses including time, effort and money spent to evaluate, among other things, your background and credit history and your financial, management and merchandising ability and skill. The Processing Fee does not bind or commit us or you to the final execution of a Development Agreement or a Franchise Agreement. We do not refund Processing Fees.

SITE AGREEMENT DEPOSIT. At the time you execute a Site Agreement in the form attached to this Offering Circular as Exhibit D (the "Site Agreement"), and before the execution of either a Development Agreement or a Franchise Agreement, you must deposit $1,000 (the "Site Agreement Deposit") with us. You will have 90 days to find an acceptable site for the Franchise. The term of the Site Agreement expires in 120 days. This amount will cover our expenses including time, effort and money we spend in exchanging information, preparation of documentation, reserving a Primary Marketing Area, etc. If either of us terminates the Site Agreement within the first 30 days, we refund the entire Site Agreement Deposit. If we terminate the Site Agreement for breach or anticipated breach of the confidentiality provisions, or misrepresent information on your application for a Franchise, we will not refund any part of the Site Agreement Deposit. If you withdraw or terminate after the first 30 days, we will refund the Site Agreement Deposit after deducting a maximum of $500. If you later execute either a Development Agreement or a Franchise Agreement, we will credit the Site Agreement Deposit against any initial fees due at that time.

Payments for Other Services and Goods. You must purchase from us the customized software and support programs that comprise your POS Computer Program. You must purchase from us or one of our designated suppliers your stencils and cookie cutters, an appliance we require for use in the operation of a Shoppe and plastic bossed containers. (See the CBDI Sales and Marketing Point of Sale Software End User License Agreement attached as Exhibit R. which requires you to pay us a $2,500 License Fee and an Annual Maintenance Fee of $300) The initial supply of these items costs a total of $9,568. The cost is uniform to all franchisees and, once your Shoppe opens, is not refundable.

FRANCHISE AGREEMENT. By the date on which all parties execute the Franchise Agreement, you must pay us the initial franchise fee in full. The initial franchise fee is generally $27,500, but it may increase or decrease depending on the density and affluence of the residential and non-residential population of the Primary Marketing Area of a particular franchise and other demographic factors reported by the most recent United States Census. Also, we are a member of the International Franchise Association and participate in the LFA's VetFran Program. Participants in VetFran offer a 25% discount on initial franchise fees to veterans of U.S. Armed Forces who otherwise meet the requirements of the Program.

We charge the typical $27,500 initial franchise fee for a franchise with a Primary Marketing Area that includes a resident population of approximately 250,000 people, up to approximately half of whose household incomes exceed $40,500, and a significant mix of retail, commercial, office and/or institutional uses. The initial franchise fee may rise above $27,500 if the resident population in the Primary Marketing Area is larger and more than half the population resides in households that have incomes in excess of $40,500 or if the Primary Marketing Area includes a disproportionately large number of retail, commercial, medical or institutional uses on a combined basis. The initial franchise fee may fall below $27,500 if the population in the Primary Marketing Area is less than 250,000 people. The minimum initial franchise fee is $12,500. In some cases in which the resident population in a Primary Marketing Area is less affluent, we may expand the Primary Marketing Area geographically to increase the population beyond 250,000. The formula follows:

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Base Franchise Fee

Location Multiplier______Initial Franchise Fee

$10,000.00 X ____________________ = ____________________

a. We base the location multiplier on various demographic factors and statistics obtained from the Site Targeter zip code mapping software distributed by Tactician® Corporation.

CBD1 determines the total estimated population for the Primary Marketing Area for the year in question from the statistics mentioned above.

CBD1 determines the weighted average median household income for the Primary Marketing Area for the year in question from the statistics mentioned above.

b. From the demographic information CBD1 calculates the location multiplier based on one of the following:

If the population within the Primary Marketing Area is approximately 250,000 and the median household income is greater than or equal to $40,500, then CBDI sets the multiplier at 2.75.

If the population within the Primary Marketing Area is approximately 250,000 and the median household income is less than $40,500, then:

(A) CBDI may increase the Primary Marketing Area so that the population is larger than 250,000 and CBDI sets the multiplier at 2.75, or

(B) CBDI lowers the multiplier to between 1.25 and 2.75 depending on how low the population and/or the median income numbers are.

CBDI rarely uses alternative B because it becomes very subjective.

If the population within the Primary Marketing Area is larger than 250,000 and the median household income is greater than or equal to $40,500, then CBDI sets the multiplier at a number approximately equal to the result achieved by dividing the total population of the Primary Marketing Area by 90,000.

If the population within the Primary Marketing Area is less than 250,000 and the median household income is greater than or equal to $40,500, then CBDI sets the multiplier at a number approximately equal to the result achieved by dividing the total population of the Primary Marketing Area by 90,000.

If the population within the Primary Marketing Area is less than 150,000 and the median household income is less than $40,500, then CBDI sets the multiplier at 1.25.

The initial franchise fee paid by franchisees during the fiscal year ended December 31, 2005 ranged from $28,100 to $37,700 (though in prior years the range has been as high as $52,000) using a similar formula, but with a median household income basis of $40,000. If the parties sign a Development Agreement calling for the development of a number of Shoppes in a geographic area, it is common for us to increase beyond 250,000 the population size included in the Primary Marketing Area of each Franchise developed under the Development Agreement.

The initial franchise fee for the Shoppe is non-refundable with one exception. You may receive a partial refund of the initial franchise fee under the conditions described in Section 6(s) of the Franchise Agreement if we terminate the Franchise because you or your Manager (as defined in Item 15 of this Offering Circular) fail to complete initial training to our reasonable satisfaction. The refund will equal the greater of (1) $1,500 or (2) the amount you paid us, less costs and expenses we incurred with respect to your Shoppe. We do not charge an initial fee for the Sublicense.

We add the proceeds from franchise fees to our general working capital and use them, to the extent necessary, to pay expenses we incur, including training and initial services to Franchisees.

When you execute a Franchise Agreement in accordance with a Development Agreement, the mechanics of the payment of the initial franchise fee are different. The paragraph below captioned "Area Development Agreement" provides a description of fees paid at the time of the execution of an Area Development Agreement. In the case of the execution of a Franchise Agreement in accordance with the Development Schedule, the initial franchise fee for that Shoppe (Column II of the Development Schedule) is payable on the date of execution. When you execute the first Franchise Agreement under a Development Agreement, you receive a 100% credit for that initial franchise fee for the development of that Shoppe against the development fee that you paid when you executed the Development Agreement. For the second and each Shoppe developed at a later date under a Development Agreement, we credit an

Franchise Offering Circular -Page 8 1417734 2.DOC

Form 2006

amount equal to 25% of the amount of the initial franchise fee for that Shoppe against the development fee, reducing the amount of the initial franchise fee payable at that time by a like amount.

AREA DEVELOPMENT AGREEMENT. Upon execution of a Development Agreement, you must pay us a development fee. We do not refund development fees. The development fee equals the full amount of the initial franchise fee for the first Shoppe scheduled for development under the Development Agreement, plus 25% of the total initial franchise fees required for all other Shoppes scheduled for development under the Development Schedule. The preceding section describes the formula for determining initial franchise fees. We earn the non-refundable development fee upon execution of the Development Agreement in consideration for our previous development of the System and for other development opportunities we lost as a result of the development rights granted to you. We credit that portion of the development fee calculated by reference to a specific initial franchise fee for a Shoppe scheduled for opening in the future against the initial franchise fee for that particular Shoppe at the time of execution of the Franchise Agreement.

The method of calculating the development fee remains about the same for all Development Agreements we offer, although the amount of the development fee varies depending upon the number of Shoppes which you agree to develop and the population demographics for the first Shoppe Franchise granted.

SATELLITE AND KIOSK FEES. If you elect to open a Satellite in your Primary Marketing Area, you pay an annual licensing fee of $500 for each Satellite at the time you give us notice of the opening date of the Satellite. If you elect to open a Kiosk in your Primary Marketing Area, you pay a fee of $100 per month up to $500 annually based upon the time period for which you have the right to operate the Kiosk in a third-party location. If the period of time is longer than 12 months, but less than a full additional year, you pay the additional licensing fee before the 1^st day of the month following the expiration of the first year. For example, if the term of the lease for your Kiosk is 15 months, you would be required to pay $500 for the first 12 months in advance upon date of delivery of the notice of the actual opening date of the Kiosk and $300 at least 10 business days before the 1st day of the 13th month of the term to cover the remaining three months of the 15 month term. If your Kiosk agreement/lease provided for a five month extension, you would be required to pay $500 for the additional five months upon exercise of your extension option. We do not prorate or refund Satellite or Kiosk licensing fees.

WEBSITE AGREEMENTS. The End User License Agreement for CBDI/CB Website (the "Intranet Agreement") (see Items 6, 8 and 12) and the Orders Administration Website Participation and License Agreement for the CBDI/CB Website (the "Admin Site Agreement") (see Items 8 and 12) each permit us to charge fees for optional goods or services and administrative fees. Beginning in 2006, we plan to begin assessing an administrative fee on those Shoppes that participate in our online ordering program. The Specific fee has yet to be determined. We anticipate that the administrative fee will be approximately $2.00 per order received by a Shoppe and paid monthly to us. The Intranet Agreement requires you to pay a $100 administrative fee for each Authorized User (as defined in the Intranet Agreement) in excess of two. We currently do not impose or plan to impose any other fees in connection with our Websites.

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Page 9

6. Other Fees

Name of Fee	Amount h':	DueDati	Remarks¹
Licenses	The greater of:
a) Shoppe Fee	1) 6% of Gross Volume of Business³ or	Payable monthly by the 10th day of the next month
	2) Minimum annual fee⁴	No later than January 31 following the end of each year after the first full calendar year of operations
b) Satellite Fee	$500 per year	Payable annually	Opening a Satellite is optional. You must have our prior written consent.
c) Kiosk Fee	$ 100 per month up to a	Payable annually	Opening a Kiosk is optional. You
	maximum of $500 per		must have our prior written
	year		consent.
d) Marketing POS²	$300 per year

1 All fees are imposed by and payable to us, except for the cost of audited financial statements, advertising, cooperative advertising, insurance costs, maintenance expenses and remodeling/construction costs, which are recurring costs to you and imposed by the terms of the Franchise Agreement but not paid to us or collected by us for a third party. All fees are nonrefundable.

2 The license fee for the Marketing Point of Sale Software End User License Agreement is $2,500, and the annual maintenance fee is $300. (See Item 5).

3 "Gross Volume of Business" means "the aggregate gross amount of all revenues from whatever source derived (whether in the form of cash, credit, agreements to pay or other consideration, and whether or not payment is received at the time of sale and regardless of whether any of the amounts prove uncollectible) and through whatever communication or sales medium used which arise from or are derived by you or by any other person from business conducted or which originated in, on, from or through the Premises (including any Satellite or Kiosk), whether the business is conducted in compliance with or in violation of the terms of the Franchise Agreement, excluding sales tax or other tax receipts (the collection of which is required by law), delivery revenues and any refunds paid by you".

4 The minimum annual fee in year one is $4,200 and increases by 10% to 20% each following calendar year. The amount of the minimum annual fee is not an earnings or revenue projection and should not be relied upon as such.

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1417734 2.DOC

Form 2006

**■M'M^:! \ :Name of Fee ^::>{};^**	_:;:^j^:;":v:;^:;amoiint;s3;?:\|7;'^:;^;v	)i?>":' Due Date	Remarks¹
Master Sublicense			We must pay each of the Licensors
Agreement			a continuing fee based on your Gross Volume of Business from the sale of Licensed Articles. We retain the percentages shown in reimbursement of our costs to develop the various sublicense arrangements.
Disney	11 54% of your Net Sales	Each payable by the 10th	54% (Also see Disney Sublicense
	of Disney Licensed	day of the next month	Advertising below)
	Articles⁵
Garfield	8%ofyourNetSalesof Garfield Licensed Articles⁶		3% 4%
Trading Spaces	9%ofyourNetSalesof Trading Spaces Licensed Articles⁷		4%
Curious George (Universal)	9%ofyournetsalesof . Universal Licensed Articles⁸
Retail Assistance Program	$100	Payable upon execution
("RAP") Fee		of a RAP Listing Agreement

5 See the definition of "Net Exhibit E and Paragraph B,

6 See the definition of "Net Exhibit E and Paragraph B,

7 See the definition of "Net Exhibit E and Paragraph B.

8 See the definition of "Net Exhibit E and Paragraph B.

Sales of Licensed Articles" in Article II of the Master Sublicense Agreement,

4 of the Disney Sublicense Agreement.

Sales of Licensed Articles" in Article II of the Master Sublicense Agreement,

4 of the Garfield Sublicense Agreement.

Sales of Licensed Articles" in Article II of the Master Sublicense Agreement,

5 of the Trading Spaces Sublicense Agreement.

Sales of Licensed Articles" in Article II of the Master Sublicense Agreement, 4 of the Universal Sublicense Agreement.

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Form 2006

Name of Fee	Amouot:^;;;.^"^:'5;:';:"'	■^-f:; Due Date	Remarks¹
Advertising Marketing & Advertising Program Other Advertising Special Use Fund	Total Advertising fees payable to CBDI, an Association or a Special Use Fund may not exceed an aggregate of 2% of Gross Volume of Business. 1% of Gross Volume of Business. Varies based on local costs and charges by telephone companies and special promotions adopted by CBDI or The MAP Group. Not Formed. May not exceed 1% of Gross Volume of Business annually.	Payable monthly by the 10th day of the next month. As incurred. As directed by the governing documents when adopted by CBDI.	Although we cannot set a rate higher than 2% of Gross Volume of Business in the aggregate, Franchisees can approve contribution rates higher than 2%. The only Association now in existence is The MAP Group. You pay fees to The MAP Group. See Items 8 and 11. The MAP Group may set a rate higher than 1%. Used for listing(s) in local white and most predominantly used yellow pages of all local telephone directories in the Primary Marketing Area; to obtain and maintain any special promotional materials; for expenses for changes in the listing and promotional materials mentioned above; for a national toll free telephone number. Funds pay for creation of television and electronic communication advertising, and supporting print materials. See Item 11.
Disney Sublicense Advertising	1 % of the ir/2% Disney Sublicense continuing fees.	Payable monthly by the 10th day of the next month.	We pay the Disney National Advertising Fund what it collects from you.
Cooperative Advertising	As determined by a local cooperative.	As determined by the local cooperative.	None in existence at this time.
Additional Training/Assistance	CBDI imposes no training or tuition fees at this time, but has the right to do in the future.	As incurred	You are responsible for your travel and living expenses and those of your Manager for training for any additional training and assistance. Training to use the Licensed Articles is via audio/visual materials sent to you at your Shoppe.
Transfer⁹ a) Franchise Agreement b) Development Agreement	Greater of $5,000 or our actual cost to evaluate and process the transfer and train the transferee.¹⁰ $2,500	Before or simultaneously with execution of transfer documents. Before or simultaneously with execution of transfer documents.	You must satisfy all other terms of the Franchise Agreement governing transfers. You must satisfy all other terms of the Development Agreement governing transfers.

9 Neither the Master Sublicense Agreement nor any Sublicense are transferable independently from a Shoppe franchise. See Item 9(t).

10 You will not owe a transfer fee for transfers to family members.

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1417734 2.DOC

Form 2006

*.'■';, ^:- Name of Fee*	Amount	Due Date	Remarks¹
Audited Statement of Income and Retained Earnings and Audited Balance Sheet	Cost of the audited records¹¹	Upon the request of CBDI within 90 days after the close of each of your fiscal years.
Audit or Inspection	Cost of the audit¹² plus interest (see "Interest" below) on underpayment. The various Licensors also have a right to audit under the Sublicenses under these same terms. Also profits on infringing sales.	At completion of audit or inspection	You pay if the audit discloses a deficiency of 5% or more in the reported Gross Volume of Business or a deficiency in reporting sales of Licensed Articles, or if the inspection discloses unauthorized sales in another Franchisee's Primary Marketing Area.
Renewal Fee a) Initial Term Extension b) First Renewal Term c) Following Renewal Terms d) Master Sublicense	No fee. 25% of your initial franchise fee. 25% of the then-current initial franchise fee for similar new franchises.¹³ Unknown at this time.	Before the beginning of the Renewal Term. Before the beginning of the Renewal Term. Unknown at this time.	Must satisfy extension criteria. Must satisfy renewal criteria. Must satisfy renewal criteria. The Master Sublicense Agreement does not provide for a renewal term. If we and a Licensor renew a Sublicense, and a Licensor imposes a renewal fee on us, we may elect to impose a renewal fee for a renewal of your Master Sublicense Agreement.
Insurance	$4,000 to $6,000¹⁴
Indemnification	As incurred	CBDI	See Item 9 Chart.
Interest/Service Charge	Lesser of the daily equivalent of 18% of the overdue amount per year or the highest rate then permitted by law for each day the amount is past due beginning on the 6th day after the due date.	As incurred.¹⁵	See paragraph VIII.B.3 of the Master Sublicense Agreement.

11 This cost could range widely depending on the state of disarray or orderliness of your record keeping and books. Although we may require audited financials under the Franchise Agreement, we generally conduct audits at our own expense with CBDI personnel.

12 Costs include out of pocket expenses for travel, food, lodging, costs to reproduce information, and the hourly rate charged by the auditors. Employees of Disney who audit receive $60/hour. Interest begins from the date the underpayment was due.?

13 We limit these fees to not more than 50% of the sum of the initial franchise fee and the renewal fee paid by you for the previous Renewal Terms.

14 Insurance costs may vary depending on, among other things, your ability to qualify from a health and insurable risk standpoint for keyman insurance, state requirements, number of employees and other factors specific to your Franchised Business.

15 Interest begins to accrue on the 6th day after the payment due date. It is a late charge and not an alternative to timely payment.

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Form 2006

NameofFee

Amount

Due Date'- -^:':^:-'.y-

Remarks¹

Maintenance Cost $750 to $1,000¹⁶

Remodeling/Construction $10,000 to $20,000"

Replacements, Upgrades $3,000 to $6,000¹⁸ As required Replacement and upgrading of

and Modifications equipment and software, if

required by the Confidential Manuals and policies for the Intranet Agreement and the Admin _________________________________________________________________________Site Agreement________________

7. Initial Investment Your Estimated Initial Investment for A Development Agreement

Description	Amount	Method of Payment	When Due	To Whom Payment is to be Made
Initial Development Fee¹	$12,500+ 25% of the franchise fee for the second and each additional Shoppe you commit to develop; to $35,000+ 25% of the franchise fee for the second and each additional Shoppe you commit to develop.	Lump Sum	At execution of Development Agreement	CBDI²
Late Opening Fee³	Balance of initial franchise fee for. unopened Shoppe plus $500 per month until Shoppe opens.	Lump Sum and monthly	Month following the Default, and monthly thereafter	CBDI
Additional Funds (3 months)	$90,000 to $180,000	See Disclosures below for Initial Investment for a Shoppe.	See Disclosures below for Initial Investment for a Shoppe.	See Disclosures below for Initial Investment for a Shoppe.
TOTAL⁴	$90,000+ 25% of each additional franchise fee to $180,000+ 25% of each additional franchise fee.

16 Maintenance costs will depend largely upon your usage, care and upkeep of the Shoppe and equipment and whether you purchase the equipment and improvements new or used.

17 We may require remodeling (but not more often than every five years) to bring a Shoppe, Satellite or Kiosk into compliance with applicable specifications as they may change. We estimate any cost to remodel would not exceed the current range for construction of a new Shoppe, Satellite or Kiosk subject to general increases in construction costs.

18 The cost of these upgrades, replacements or modifications is difficult to estimate, because they depend on unpredictable developments in electronics technology.

¹ Franchise fees are estimated based on the lowest and highest amounts charged during 2005. See ranges for initial franchise fees described in Item 5.

² Termination of the franchise for failure to complete training to our satisfaction may entitle you to receive a partial refund of the initial franchise fee (see Item 5). However, in that event, we do not refund the balance of the development fee.

³ Available for one Shoppe only under the Development Agreement.

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Form 2006

Your Estimated Initial Investment for a Shoppe

Description	Amount	Method of > Payment :	'.:■. When Due : "	To Whom Payment is to be Made
Initial Franchise Fee¹	$12,750²to $35,O0O³	Lump sum	At execution of Franchise Agreement	CBDI⁴
Travel and Living (Expenses to attend Discovery Day and training)	$1,500 to $2,500 (per person)	As incurred	During training	Airlines, hotels and restaurants
Leasehold Improvements⁵	$20,000 to $50,000	Lump sum or as required by contractor	Before opening	Contractors
Equipment and Computer (Hardware and Software)	$19,750 to $32,000	Lump sum or as required by vendor	Before opening	CBDI and Vendors
Furniture, Fixtures & Cabinetry (including freight and installation)	$10,000 to $12,500	Lump sum	Before opening	Vendors
Signs	$3,500 to $5,000	Lump sum	Before opening	Sign company
First Month's Rent⁶	$1,500 to $3,000	Lump sum	Before opening	Landlord
Miscellaneous Opening Costs (Security Deposits and Initial Insurance Premiums)	$3,000 to $5,000	Lump sum	Before opening	Landlord and utility & service companies
Opening Inventory⁷	$5,000 to $8,000	Lump sum	Before opening	Vendors
Advertising Related Fees and Expenses⁸ (3 months)	$500 to $1,000	As incurred	As incurred	Vendors
Licenses and Permits	$500 to $1,000	Lump sum	Before opening	Government officials
Additional Funds (3 months)⁹	$12,000 to $25,000	As incurred	As incurred	Landlord, utilities, Vendors and Employees
TOTAL	$90,000 to $180,000

If you enter into a Development Agreement at the same time you sign a Franchise Agreement, you incur additional fees. See discussion of Development Agreement under Item 5 for specifics.

Includes $250 processing fee, if this is your first franchise. If you enter into a Site Agreement (see Exhibit D). we will apply the Site Agreement Deposit of $1,000 against the Initial Franchise Fee when you sign a Franchise Agreement.

See Item 5 for a description of the formula to calculate the initial fee. In highly populated Primary Marketing Areas, the initial fee may be more than $27,500, but that is an exception to the norm. The initial franchise fee includes a non-refundable $250 Processing Fee that is due no sooner than 10 business days after receipt of the Offering Circular, but before execution of the Franchise Agreement.

Failing to complete training to our satisfaction may entitle you to receive a partial refund of the initial franchise fee in accordance with Section 6(c)(ii)(l) of the Franchise Agreement.

In our experience virtually all franchisees locate their Shoppes in leased retail space. This estimate reflects construction of improvements within leased space.

This figure is for one month's rent only.

This amount includes approximately $600 for stencils and cookie cutters using the Disney Licensed Articles.

We base this estimate on the cost of listing your business in the local white and most predominantly used yellow pages of telephone directories in your Primary Marketing Area. The Additional Funds category includes other advertising costs, such as contributions to The MAP Group and the cost of a national toll-free telephone number. See Items 6 and 11.

This estimate includes an allowance for general operating expenses for approximately three months, including initial payroll and rents, which could range from $4,500 to $11,000 during that period and advertising and promotional expenses. We relied on our years in business and informal surveys of start-up costs conducted by us from among some of our franchisees to compile these estimates. This estimate does not take into account any revenue you might receive during the initial period. You should review these figures carefully with a business advisor before making any decision to purchase the franchise. See Items 6, 8 and 11.

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Form 2006

Your Initial Investment for a Satellite

Description	Amount	Method of; Payment	':_;v- When Due' ■;''	To Whom Payment is to be Made
Satellite Fee	$500	Lump sum	Upon notice to us of the actual opening date of your Satellite	CBDI
Leasehold Improvements	$15,000 to $30,000	Lump sum or as required by contractor	Before opening	Contractors
Equipment and Computer (Hardware and Software)	$8,000 to $13,000	Lump sum or as required by vendor	Before opening	Vendors
Furniture, Fixtures & Cabinetry (including freight and installation)	$10,000 to $12,500	Lump sum	Before opening	Vendors
Sign	$3,500 to $5,000	Lump sum	Before opening	Sign company
First Month's Rent	$1,200 to $2,500	Lump sum	Before opening	Landlord
Miscellaneous	$2,500 to $3,750	Lump sum	Before opening	Land and utility service companies
Opening Inventory	$2,500 to $4,000	Lump sum	Before opening	Vendors
Advertising Fee (3 months)	$375 to 750	As incurred	As incurred	Vendors
Additional Funds (3 months)	$6,000 to 12,500	As incurred	As incurred	Vendors
Licenses & Permits	$500 to $1,000	Lump sum	Before opening	Government officials
TOTAL	$50,075 to $85,500

Your Estimated Initial Investment for a Kiosk

	Amount	Method of Payment	When Due	To Whom Payment is to be Made
Kiosk Fee	$100'to $500	Lump sum	Upon notice to us of the actual opening date of vour Kiosk	CBDI
Leasehold Improvements	___5
Equipment and Computer (Hardware and Software)	$5,000 to $6,500	Lump sum or as required by vendor	Before opening	Vendors
Furniture, Fixtures & Freight	$1,000 to $2,000	Lump sum	Before opening	Vendors
Sign	$500 to $2,500	Lump sum	Before opening	Sign company
First Month's Rent	$500 to $1,500	Lump sum	Before opening	Landlord
Miscellaneous	$500 to $1,000	Lump sum	Before opening	Land and utility service companies

You may open a Satellite or Kiosk in connection with and after the opening of a Shoppe. You may not elect to open a Satellite or Kiosk instead of a Shoppe.

This fee is $100 per month for the term of your lease or agreement up to a maximum of $500 per year. The fee could be as little as $100 if you have only a one month lease on a Kiosk, and the Franchise Agreement does not require payment for more than one year's licensing fee in advance. The fee is based on the number of months in the term of your lease but limited by the $500 maximum per year.

The Kiosk generally takes the form of a cart or some kind of movable display (the cost of which would be included in Furniture, Fixtures and Freight), as opposed to a building or other permanent structure that would require build out expense.

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Form 2006

	Amount	Method or,; Payment	**-i-:-\-- When Due '■■'■**	To Whom Payment is to be Made
Opening Inventory	$1,250 to $2,000	Lump sum	Before opening	Vendors
Licenses & Permits	$500 to $1,000	Lump sum	Before opening	Government officials
Additional Funds (3 months)	$6,000 to $12,500	As incurred	As incurred	Vendors
TOTAL	$15,350 to $29300

8. Restrictions on Sources of Products and Services

At present we require that you purchase from us a customized computer software program and support programs used to prepare sales, marketing and accounting reports (the "POS Computer Program"), a small appliance required for use in the operation of a Franchised Business, and CBDI stencils and cookie cutters. We also require that you purchase specific computer hardware used to run the POS Computer Program from a designated supplier as well as plastic bossed containers from a designated supplier. See Item 5. Except for these items, we do not require that you purchase or lease from us or our designated suppliers any services, supplies, fixtures, equipment, inventory or real estate used in the establishment or operation of the Franchised Business.

We have contracted with two central suppliers to provide certain of products and supplies we require that you use. We do not require that you buy from these central suppliers, but the suppliers provide a "one stop shopping" service, and you can take advantage of any cost savings resulting from these arrangements.

We derive income from the purchases you are required to make from us. During 2005, we received revenues of $102,827 on account of franchisee purchases from us. These revenues accounted for approximately 3% of our total revenues for the year of $3,449,045.

You must join and remain a member in good standing of The MAP Group, an independent corporation whose members are substantially all of the franchisees in the Chain. See Item 11, ADVERTISING, for more information on The MAP Group. To remain a member in good standing, you must pay the advertising and promotion fee of 1% of your total revenues (See Item 6). You must participate in the advertising and marketing programs adopted by The MAP Group and approved by us. Participation means The MAP Group may require you to buy marketing materials created by The MAP Group for use by the Chain and to bear any expenses required for any marketing promotion adopted by The MAP Group. As an example, The MAP Group is currently coordinating with us adoption of a program to offer products through electronic commerce. We approve the use of the Licensed Marks and our Copyrighted Materials in any program created and implemented by The MAP Group. The MAP Group is the only group authorized to create advertising and promotional programs for use by the Chain. You may use your own advertising agency for local advertising, and create your own advertising programs for your Shoppe, but that does not relieve you from your obligation to participate in The MAP Group programs.

The MAP Group has contracted with us to provide administrative services to it. The MAP Group reimburses us for our out-of-pocket expenses related to these services. Although we can charge a fee for these services, we do not currently do so, nor do we otherwise derive any revenues from your membership in The MAP Group. The estimated proportion of the fees payable to The MAP Group is less than 1% of all required purchases and leases to open your Franchised Business. The proportion of the fees payable to The MAP Group as compared to all of your other costs to operate the Franchised Business will vary depending upon the amount of your total revenues and the programs adopted by The MAP Group.

We maintain a website on the Internet and an Intranet. You may have a home page on the Internet website, without cost. If you desire to maintain your own website in connection with your Franchised

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Form 2006

Business, you must first secure our approval by submitting hard copies of the material you propose to use on your website, and you must comply with the policies and procedures regarding the use of the Licensed Marks, the Licensed Articles (as defined in the Master Sublicense Agreement) and the Copyrighted Materials in connection with your website. In addition, if you do not operate your Shoppe in accordance with our standards of operation, we have the right to refuse or withdraw permission for you to maintain a website. You also must agree to assign the website Uniform Resource Locator to us upon a termination, expiration or transfer of your Franchise, unless we approve an assignment to a transferee, and you must sign the Limited Power of Attorney that permits us to effect such an assignment if you fail to do so. See Items 13 and 14 for other restrictions regarding the Licensed Articles. Except for a $100 charge for Authorized Users in excess of two, we have the right to charge an administrative fee for your participation in our online ordering program for the website. See Item 5 for a description of the anticipated $2.00 per order fee to be imposed during 2006.

We established and maintain an Intranet facility to facilitate communications among our franchisees, us and our employees, The MAP Group (see Item 11), the President's Advisory Counsel (see Item 11) and any other Associations, and suppliers. You must sign the Intranet Agreement in the form of Attachment I to the Franchise Agreement, and abide by our policies Intranet use. See Item 5 regarding administrative fees for additional Authorized Users.

You must sign any license agreements required by third party providers of software used on the Intranet.

We have established a program that permits customers to place orders online (the "Online Order Program"). You must sign an Admin Site Agreement in the form of Attachment J to the Franchise Agreement if you elect to be part of the Online Order Program. If you participate in the Online Order Program, you must comply with our policies for the Online Order Program. You have no obligation to participate in the Online Order Program. See Item 12 for effects of non-participation.

You must purchase all ingredients, equipment, fixtures and other supplies required to establish and operate the Franchised Business from suppliers we approve in writing and do not later disapprove. If you desire to purchase any items from a supplier not yet approved, you must submit a written request to us for approval in accordance with our required procedures in effect at that time. We notifies you of our approval or disapproval within 30 days of receipt of your written approval request. We do not have a formal set of written policies and procedures governing the approval or revoking of approval for its approved suppliers. We evaluate suppliers upon request and on a case by case basis. If the supplier has a good reputation, is financially sound, provides prompt, reliable service and provides goods meeting our quality standards, we generally approve the supplier. If not, the supplier will not receive approval. A supplier who becomes unreliable, fails to provide goods of required quality or otherwise demonstrates undesirable practices will have its approval revoked by deleting it from our list of approved suppliers and notifying Franchisees by one or more of the following means: in writing in either or both of the COOKIE CRUMBS® or COOKIE DOUGH® publications, on our Intranet or an announcement at COOKIE CONVENTION. We provide you a list of approved suppliers (which may include us or an affiliate), but do not intend to limit your choice from among approved suppliers in any way, except with respect to the Licensed Articles covered by the Master Sublicense Agreement.

Based on the current total pre-opening cost of goods, services, supplies, fixtures, equipment, inventory and real property, we estimate the percentage of the cost of these items that you must purchase from us or our designated supplier at between 5% and 11% of the total cost for a Shoppe, between 8% and 13% for a Satellite, and between 20% and 39% for a Kiosk.

Based on the current total cost of goods, services, supplies, fixtures, equipment, inventory and real property purchased or leased on an ongoing basis after opening the Franchised Business, we estimate

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the percentage of the cost of these items that you must purchase from us or our designated supplier at between 3% to 6% of the total operating costs for a Shoppe (depending on the Shoppe's size), between 2% and 3% for a Satellite and between 1% to 2% for a Kiosk.

We formulate and modify specifications and standards for our products through traditional research and development methods including kitchen testing and consultation with nutritionists and other consultants in the food industry. We formulate and modify non-food specifications and standards based on factors including market research and response, our and franchisees' experience and applicable law. Historically, we have notified franchisees of new specifications or modifications to specifications by mail, in our monthly newsletter COOKIE CRUMBS®, through our Intranet, at the annual convention or through modifications of the Confidential Manuals sent through the mail.

You must purchase and install, at your expense, all signs and equipment we require, and all other items we may require now and in the future. You must not install or permit the installation on the Shoppe premises or in relation to the Franchised Business of, any item that does not meet our standards and specifications.

We require that you maintain in sufficient supply, and use at all times, only operating materials, supplies and expendables that conform to our standards and specifications in effect at that time, and prohibits you from using non-conforming items without our prior consent.

You must sell and offer for sale all products we may require both now and in the future and only those that we may approve both now and in the future, and not later disapprove, as meeting our quality standards and specifications. If you sign a Master Sublicense Agreement, you must offer the Licensed Articles of those Sublicenses as a choice to your customers.

You must use only business stationery, business cards, marketing materials, advertising materials, printed materials or forms we approve in advance. All supplies or materials purchased, leased or licensed by you must always meet our standards specified in the Confidential Manuals. You must purchase any advertising and promotional materials created by The MAP Group in support of any promotion we and The MAP Group adopt. See Item 11. You must use the various marks covered by the Master Sublicense Agreement only in compliance with that agreement. In each case you must also comply with the instructions contained in the Confidential Manuals.

Other than the central supplier, no formal purchasing or distribution cooperatives exist, although some franchisees may informally join together in the acquisition of some supplies.

You must obtain from the insurance company of your choice the following insurance:

Employer's liability and workers' compensation insurance as required by law;

Comprehensive general liability insurance covering the operation of the Franchised Business, including Blanket Contractual Liability insurance which insures contractual liability under the indemnification provisions found in the Franchise Agreement but the amount of coverage obtained in no way limits your indemnification;

Business interruption insurance; and

Keyman life insurance insuring your life (if you are an individual) or insuring the lives of the initial equity and voting owners identified in Paragraph 4 of Attachment A of the Franchise Agreement (if you are a corporation, partnership or limited liability company).

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We require that you designate us as an additional insured on all policies.

You must have our consent to the location of your Premises. We condition our consent upon two conditions. First, any lease of the Premises must contain a provision which provides us the right to enter the Premises to make any modifications necessary to protect the Licensed Marks. Secondly, you and the lessor must execute a Leasehold Deed of Trust or an Assignment of Lease in substantially the forms attached to the Franchise Agreement as Attachments F and G, respectively, providing us notice of your default under the lease, the right but not the obligation to cure any default and the right to act as prime lessee under the lease and to sublease the location to you. We will subordinate these rights to a third party lender of purchase money. If you relocate your Shoppe, your lease for the new location must have a term equal to the remaining term of your franchise, and you must execute the same collateral documents described in this paragraph with respect to the new location.

9. Franchisee's Obligations

THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE FRANCHISE LICENSING AGREEMENT AND OTHER AGREEMENTS. IT WILL HELP YOU FIND MORE DETAILED INFORMATION ABOUT YOUR OBLIGATIONS IN THESE AGREEMENTS AND IN OTHER ITEMS OF THIS OFFERING CIRCULAR.

Franchise Agreement, Master Sublicense Agreement and Development Agreement

	Obligation	Section in Franchise Agreement (MSA)	Section in Development ^;; Agreement .V	^: Item in Offering Circular
a.	Site selection and acquisition/lease	Section 1 and 6 (FLA) Site Agreement	N/A	N/A Items 1 and 5
b.	Pre-opening purchases/leases	Section 6 (FLA); Paragraph V.A (MSL);	N/A	Items 6, 8&11
c.	Site development and other pre-opening requirements	Sections 1(b) & 6 (FLA)	Sections 2, 4 & 5	Items 6 &7
d.	Initial and ongoing training	Sections 3 & 6 (FLA); Paragraph V.B. (MSL);	N/A	Items 6, 11&15
e.	Opening	Section 6 (FLA); Paragraphs V.A & B (MSL);	Sections 2 & 4	Items7&ll
f.	Fees	Sections 1,2, 4 &11 (FLA); Paragraphs II.E, F, & H, VIII.A, & X.C (MSL); Site Agreement, Section 5	Sections 2, 3 & 10 N/A	Items 5, 6 & 7
g-	Compliance with standards and policies/Operations Manual	Sections 6, 7 & 15 (FLA); Paragraphs III.B, IV.C-F & V.C-E (MSL);	Sections 6 & 8	Items 8, 16 & 17
h-	Trademarks and proprietary information	Sections 5 & 7 (FLA); Paragraphs Il.A & B, IV.A & D, VI, VII, & IX (MSL); Site Agreement, Section 9	Sections 7 & 8 N/A	Items 13, 14, 15 & 17
i.	Restrictions on products/services offered	Section 6 (FLA); Paragraphs IV.A & B, & VII (MSL);	N/A	Items 8 and 16
J-	Warranty and customer service requirements	Section 6 (FLA)	N/A	N/A

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	Obligation	Section in Franchise Agreement (MSA)	Section in Development Agreement	Item in Offering Circular
k.	Market development and sales quotas	Sections 1(b). 2(c). 2(d), 2(e). 4(c) (FLA); Paragraph II.H. (Minimum Continuing Fees) (MSL, Sch 1)	Sections I, 2,4 & 6	Item 6
1.	Ongoing product/service requirements	Section 6 (FLA)	N/A	Item 8
m.	Maintenance, appearance and remodeling requirements	Section 6 (FLA)	N/A	Item 6
n.	Insurance	Section 14 (FLA)	N/A	Item 7
0.	Advertising	Section 8 (FLA); Paragraph IV.F (MSL Schedule 1);	N/A	Items 6, 7, 8, 11 &16
P-	Indemnification	Section 16 & No. 4 Addendum (FLA); Paragraph XI (MSL);	Section 11	Item 13 & Addendum
q-	Franchisee's participation/management/staffing	Section 6 (FLA); Paragraph V.B (MSL)	Section 6	Items 11 &15
r.	Records and reports	Section 9 (FLA); Paragraph VIII (MSL);	N/A	N/A
s.	Inspections and audits	Sections 3, 6, 9 & 18 (FLA); Paragraph X (MSL);	N/A	Item 6
t.	Transfer	Section 11 (FLA); Paragraph XV (MSL);	Section 10	Items 6 &17
u.	Renewal	Section 2 (FLA); Paragraph II.D (MSL);	N/A	Item 171tem6 (Renewal)
V.	Post-termination obligations	Section 13 (FLA); Paragraph XIII (MSL);	Section 11	Items 8 (Internet) and 17
w.	Non-competition covenants	Section 10 (FLA)	Section 11	Items 16 & 17
X.	Dispute resolution	Section 20 (FLA); Paragraph XVI.A (MSL);	Section 13	Item 17
y-	Guaranty Requirement	Section 1 (FLA) Guaranty Agreement	Section 1	Item 15

Intranet Agreement and Admin Site Agreement

■	Obligation :p ;'	Section in Intranet Agreement	Section in Admin Site ■ ■.■■'.'■ Agreement	Item in Offering Circular
a.	Site selection and acquisition/lease	N/A	N/A
b.	Pre-opening purchases/leases	N/A	N/A
c.	Site development and other pre-opening requirements	N/A	N/A
d.	Initial and ongoing training	N/A	N/A
e.	Opening	N/A	N/A
f.	Fees	Section 4	Section 4	Item 5
g-	Compliance with standards and policies/Operations Manual	Section 2(b)	Section 2.a. and Exhibit A	Items 8, 16 & 17
h.	Trademarks and proprietary information	Section 8	Section 8	Items 13 and 14
i.	Restrictions on products/services offered	Section 2(c)(iv) and (vi)	Sections 2.c.v) and vii)	Items 8 and 16
J-	Warranty and customer service requirements	N/A	N/A	N/A
k.	Market development and sales quotas	N/A	N/A	N/A
I.	Ongoing product/service requirements	Section 5	N/A	Item 8

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	Obligation	Section in Intranet Agreement	Section in Admin Site . " "■. Agreement V	Item in Offering Circular
m.	Maintenance, appearance and remodeling requirements	Section 2(b)	Section 2.a and Exhibit A	Items 6
n.	Insurance	N/A	N/A	N/A
0.	Advertising	N/A	Section 8 of Policies	N/A
P-	Indemnification	Section 6	Section 6	N/A
q-	Franchisee's participation/man agement/staffing	N/A	N/A	Item 8
r.	Records and reports	N/A	N/A	N/A
s.	Inspections and audits	N/A	N/A	N/A
t.	Transfer	N/A	Section 3	Item 17
u.	Renewal	N/A	N/A	N/A
v.	Post-termination obligations	N/A	N/A	N/A
w.	Non-competition covenants	N/A	N/A	N/A
X.	Dispute resolution	N/A	N/A	N/A
y-	Guaranty Requirement	N/A	N/A	N/A

Sales and Marketing Point of Sale End User License Agreement

	- Obligation	Section in Sales.and Marketing Point of . Sale End User License Agreement	Item in Offering Circular
a.	Site selection and acquisition/lease	N/A	N/A
b.	Pre-opening purchases/leases	N/A	N/A
c.	Site development and other pre-opening requirements	N/A	N/A
d.	Initial and ongoing training	N/A	N/A
e.	Opening	N/A	N/A
f.	Fees	Section 1, 3 and 4	Item 5
g-	Compliance with standards and policies/Operations Manual	N/A	Items 8, 16 & 17
h.	Trademarks and proprietary information	Section 5	Items 13 and 14
i-	Restrictions on products/services offered	Sections 5, 6 and 7	Items 8 and 16
J-	Warranty and customer service requirements	Sections 2 and 8	N/A
k.	Market development and sales quotas	N/A	N/A
1.	Ongoing product/service requirements	Section 6	Item 8
m.	Maintenance, appearance and remodeling requirements	Section 6	Item 5
n.	Insurance	N/A	N/A
0.	Advertising	N/A	N/A
P-	Indemnification	Section 11	N/A
q-	Franchisee's participation/management/staffing	N/A	Item 8
r.	Records and reports	N/A	N/A
s.	Inspections and audits	Section 7	N/A
t.	Transfer	Section 1	Item 17
u.	Renewal	Sections 3 and 10	Item 17

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	Obligation	Section in Sales and Marketing Point of Sale End User License Agreement '>■> ■	i Item in Offering Circular
V.	Post-termination obligations	Section 10	Item 17
w.	Non-competition covenants	N/A	N/A
X.	Dispute resolution	Section 15	Item 17
y-	Guaranty Requirement	N/A	N/A

10. Financing Arrangements

Provided you meet all other conditions to renewal, we may provide financing for the payment of renewal fees in situations where, as a result of extraordinary circumstances, you are unable to make the lump sum renewal payment required at the time of renewal. We do not guarantee the availability of renewal financing. We deal with the financing of renewal fees on a case by case basis, and financing depends on the facts and circumstances of the particular franchisee requesting consideration for financing. We require execution of a promissory note with renewal fee financing and a guaranty executed by (1) all principals, officers, directors, partners, limited partners, managers, and holders of a beneficial or legal interest of 20% or more in the corporation, partnership, limited partnership, limited liability company or other form of legal entity comprising you, and their spouses; (2) all officers, directors, partners, limited partners, managers, and holders of a beneficial or legal interest of 20% or more in any corporation, partnership, limited partnership, limited liability company or trust directly or indirectly owning an interest in you, along with their spouses; (3) the officers, directors, partners, limited partners, managers, and holders of a beneficial or legal interest of 20% or more of the equity interests in any corporation, partnership, limited partnership, limited liability company or trust which controls, directly or indirectly, any corporation, partnership, limited partnership, limited liability company or trust owning an interest in you, and their spouses; and (4) the beneficiaries of the trust and their spouses, if you are a trust. You must also sign a form of AFT Agreement (see Exhibit I to this Offering Circular), which permits us to draft against your bank account for the note payment on a weekly basis. If we exercise this right, you must also pay any fees imposed by the banking institutions. See the following for an example of the financing we provide.

* * TfflS CHART IS AN EXAMPLE * «

Summary of Financing Offered
Item Financed (Source)'	Renewal Fee
Amount Financed	$6,875²
Down Payment	None
Term	6 Months
APR%	12%³
Payment	Monthly: $1,186 Weekly: $273
Prepayment Penalty	None

We may, but are not obligated to, provide financing of all or part of the renewal fee described in Item 6. The amount financed depends on the amount of your initial franchise fee. The terms vary depending on the facts and circumstances surrounding the renewal, but you cannot finance a renewal fee for more than one year. You may make payments either monthly or weekly and payment amounts vary depending on the amount financed. See forms of note (weekly or monthly payments) attached as Exhibit H. we have not sold and, at this time, does not plan to sell or assign the notes.

The renewal fee for a First Renewal Term is currently $6,875 based on an average initial Franchise Fee of $27,500.

We set the annual percentage rate at the time of financing. As of the date of this Offering Circular, we have financed a few renewal fees. The interest rate for each renewal note executed to date ranges from 9% to 12%.

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iy: :s ^Summary of Financing Offered ;
Security Required	Guaranty
Liability Upon Default	Delinquent payments; total unpaid principal of and accrued unpaid interest on the note; court costs and attorneys' fees; default under the Franchise Agreement
Loss of Legal Right	Waiver of notice of demand, presentment, intention to accelerate, acceleration, protest and notice of protest

Except as disclosed above, neither we nor any person affiliated with us offers, directly or indirectly, any financing arrangements to you. We are unable to determine whether you can obtain financing for all or any part of your investment, and if so, the terms of any financing. We do not guarantee your obligations to third parties.

Except for renewal fee financing (which, depending on your circumstances, may or may not be available to you), we do not require or advise you to execute any note, contract or other instrument containing any waiver of defenses or similar provisions.

We do not assign or discount to third parties notes, contracts or other instruments executed by you or other Franchisees but reserve the right to take, pledge and assign or discount to third parties in the future notes, contracts or other instruments executed by you or other Franchisees should we determine, in our sole discretion, that this action is advisable or in our best interest.

Except for renewal fees financing, we do not recommend or place financing with any lender and receive no direct or indirect payment from any person or lender (i) offering financing or (ii) arranging for the placement of financing for you. Our only return on the renewal fee financing is the interest charge.

11. Franchisor's Obligations

Except as listed below, we need not provide any assistance to you.

Before you open your Shoppe, we will:

1) designate your Primary Marketing Area before signing the Franchise Agreement. You must select the site for the Franchised Business. (Franchise Agreement - Section 1) We evaluate your selection, and will visit upon request if you reimburse our expenses, but do not comment on the potential for success of the selected site;

2) provide you confidential information regarding preliminary plans and layouts for your Shoppe, and standards and specifications for all fixtures, signs, improvements, equipment and other related facilities for use in typical or similar Shoppes; (Franchise Agreement - Section 3(a)(i))

3) provide confidential information available to us concerning possible sources of signs, equipment, fixtures, furnishings, improvements and other available services related to the operation of Shoppes; (Franchise Agreement - Section 3(a)(ii))

4) provide approximately two business weeks of training (and any additional time we may deem necessary) in the operation of the Franchised Business and, at our discretion, up to three or more days of training at the Premises before, during and after the opening of the Franchised Business for either you or your Manager. We do not charge a tuition fee for this training or service, but you must pay the salary, travel and living expenses you and your Manager incur. We or our designee exclusively conduct this training at our home office or a location we designate.

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(Franchise Agreement - Section 3(a)(iii); Master Sublicense Agreement - Paragraph V.B;)

See Item 11 below for a summary of the training schedule at the end for your review;

5) loan you the Confidential Manuals, subject to amendment by us now and in the future in our sole discretion; (Franchise Agreement - Section 3(a)(v))

6) provide you an initial supply of accounting forms for reporting transactions to us in accordance with Sections 4 and 9 of the Franchise Agreement. (Franchise Agreement - Section 3(a)(vi)); provide you with an initial supply of the accounting forms that Disney requires for reporting sales of Disney Licensed Articles to us; (Master Sublicense Agreement- Schedule 1)

7) provide you a confidential list of designated or approved suppliers for computer software, support programs, equipment, fixtures, ingredients and commodities. (See Item 8)

After you open your Shoppe for business and so long as you are not in default, we will provide:

1) periodic individual or group counseling in the operation of the Franchised Business; (Franchise Agreement - Section 3(b)(i))

2) advice concerning operating problems, new techniques or operating methods we develop or disclosed by reports submitted to or inspections made by us; (Franchise Agreement - Section 3(b)(ii))

3) advice and guidance concerning new and improved methods of operation or business procedures we develop, use of the Confidential Information, management materials, promotional materials, advertising formats and the Licensed Marks; (Franchise Agreement - Section 3(b)(iii))

4) the opportunity to participate, on the same basis as other similar franchisees, in group purchasing programs for supplies, insurance and equipment that we elect to make available to our franchisees; (Franchise Agreement - Section 3(b)(iv))

5) periodic inspections of the Premises and other Shoppes and of the services they offer; (Franchise Agreement - Section 3(b)(v))

6) if you give us 14 days prior written notice, and we have qualified CBDI representatives available, and we elect to provide this service, onsite training; (Franchise Agreement - Section 3(b)(vi))

7) if you meet our standards of operation and have signed the required agreements, you have the opportunity to participate, on the same basis as other similar franchisees, on the CBDI Websites, and to link to and incorporate frames from the CBDI Website, subject to your compliance with our policies as set forth in the Manuals and in the Intranet Agreement and the Admin Site Agreement; (Franchise Agreement - Section 3(c))

8) additional training through videos, seminars and refresher training to learn how to use the Licensed Articles in production and changes thereto (Master Sublicense Agreement -Paragraph V.B; and remedial training (Master Sublicense Agreement - Schedules)

9) an opportunity to purchase advertising and promotional materials through our designated agent, The MAP Group, at prices set by The MAP Group; (Franchise Agreement - Section 8(d)) and

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10) an opportunity to participate in the existing Sublicense programs with Disney, Garfield, Trading Spaces and Universal and any future Sublicense programs we adopt in the future, if available in your Primary Marketing Area (Franchise Agreement - Section 1(a)).

Typically individual franchisees place most of their advertising on a local basis. The Franchise Agreement does not require that you spend a minimum amount on local advertising. You may use your own advertising materials, although we must approve any local advertising materials you prepare. Under the Franchise Agreement, you must obtain at your own expense listings of the Franchised Business in the local white and the most predominantly used yellow pages of telephone directories of the kind and size we specify for all comparable Shoppes and obtain and maintain any special promotional materials of the kind and size we require for comparable Shoppes. (Franchise Agreement - Section 8(b))

As a licensee of Disney, we must contribute to the Disney national marketing and advertising program. We collect the contribution from you as part of your continuing fees derived from the sale of Disney Licensed Articles, and we pay that amount to Disney. See Item 6 for a description of that contribution. (Master Sublicense Agreement - Schedule 1, V.B.) You must also participate in any advertising and marketing program that a future sublicense agreement may require.

We currently maintain a Website under the two domain names of cookiesbydesign.com and cookiebouquet.com, which are linked to each other. The Website offers information about CBDI and the Chain. A customer may find information about the closest Shoppe from which to place an order on the Website. If you have signed an Admin Site Agreement and therefore participate in the Online Order Program, you will have the ability to accept orders via the CBDI Website. We must approve any Websites that franchisees establish. We review any materials you want to include on a website you establish. (Franchise Agreement - Section 8(e)) The Master Sublicense Agreement also requires you to first have our approval to place photos or representations of Licensed Articles on your website (Master Sublicense Agreement - Paragraph rV.D.);

We may require the formation of national and regional advertising cooperatives (an "Association"). We have no power to form local advertising cooperatives, and none exist. The Franchise Agreement is silent as to our right to change, dissolve or merge an Association. So long as we collect or administer an Association, we anticipates that we will include in the governing documents a right by us to change, dissolve or merge an Association. If Franchisees control the collection and administration of an Association, only the members of the Association can change, dissolve or merge that Association in accordance with that Association's governing documents. The only Association now formed is The MAP Group, described in the next paragraph.

We now require you to participate in two marketing or advertising programs. The first is the program required in the Master Sublicense Agreement related only to Disney (discussed above); and the second is a regional/national advertising program recently approved by The MAP Group (formerly known as the CBDI/CB Advertising Association), a Texas corporation comprised of almost all franchisees in the Chain. Independently of us, Chain Franchisees formed the CBDI/CB Advertising Association in December 1995 to increase market penetration and name recognition. On July 15, 2000, at the Franchisee Convention, the members of the CBDI/CB Advertising Association voted overwhelmingly to convert that group to a national and regional advertising and marketing group and changed the name to The MAP Group. Effective that same date, we made contributions to a national and regional advertising and marketing fund mandatory and designated The MAP Group as our agent for collection and administration of the Advertising and Promotion Fee, as provided in Section 8(d)(i) of the Franchise Agreement. The MAP Group formerly collected and now collects 1% of Gross Volume of Business from its members. Most existing franchisees now contribute to The MAP Group. You must become a member and keep your membership in good standing with The MAP Group. Membership in The MAP Group satisfies your obligation under Section 8(c)(i) of the Franchise Agreement to become and remain a member in good

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standing of a regional or national marketing and advertising association. Also, see the Member Agreement, Exhibit H. All members (including us if we own a Shoppe) must contribute the same percent of Gross Volume of Business.

The MAP Group decides how to use the funds it collects, subject to our approval of the use of our trademarks and copyrights. It will use the funds to support and coordinate marketing, advertising and public relations on a local, regional and national basis through various forms of media (print, broadcast, electronic) and sales by the Chain in electronic commerce, as well as its own administrative expenses. An Executive Board comprised of members manages The MAP Group. The MAP Group does not refund any fees collected from franchisees. If funds remain unspent in any fiscal year, The MAP Group uses those funds in the following year. The MAP Group may refund contributions prorata only upon a dissolution or becoming inactive, after paying all liabilities. The MAP Group will reimburse us for providing certain administrative services pursuant to an Administrative Services Agreement between us and The MAP Group. Either party may terminate the Administrative Services Agreement with or without cause upon notice.

Each Member may, at the requesting Member's expense and during normal business hours, conduct an examination or audit of the books and records of The MAP Group, at The MAP Group's place of business upon two business days prior notice. The bylaws of The MAP Group do not require audited books and records.

The Franchise Agreement now requires you to participate in an additional fund when and if formed. The purpose of this fund (called the "Special Use Fund") is to create advertising for national and regional broadcast campaigns for placement in television and electronic communications media, with print support. We have no current plans to institute the Special Use Fund. We will not create the Special Use Fund until such time as we believe that the Chain is large enough to benefit from such advertising. We anticipate that when formed the Special Use Fund would most likely coordinate its production with The MAP Group or its successor and any local advertising cooperatives. We can set the fee for the Special Use Fund up to 1% of Gross Volume of Business. We can require that you contribute to the Special Use Fund and retain your contributions until such time as it has sufficient funds to pay for any proposed program. Some existing franchisees do not have an obligation to contribute to a Special Use Fund.

We collect no advertising funds from franchisees except those we collect on behalf of The Disney Company. The Franchise Agreement does not permit us to use any advertising funds we collect for the marketing of franchises, and we have not done so.

In 1998, we created a President's Advisory Council (the "PAC") that consists of seven franchisees. The purpose of the PAC is to foster open communications and to permit franchisees to participate in planning for the future of the Chain. The seven franchisees represent six demographic groups based on the size of the population where Shoppes are located and one group for multi-unit franchisees. Each group elects one representative to the PAC. Elections occur by mail or at the annual CBDI franchisee convention. An elected representative serves for a term of two years. The Franchise Agreement contains no provision regarding the formation of the PAC. We have sole discretion to revise the manner in which the PAC is comprised, to change the way in which the PAC functions and to discontinue the PAC.

We require you, at your expense, to install, update or replace any computer equipment or software we specify now or in the future. Because of the rapid change in computer technology, our specifications change frequently. Be certain to check with us before you purchase any computer hardware or software. There are no contractual limitations on the frequency or cost of these obligations.

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(Franchise Agreement - Section 6(v)) you must sign any third party provider agreements for software used on the Intranet. (Intranet Agreement - Section 5) We currently specify the following system:

1. POS Computer Program Equipment - electronic cash drawer, computer monitor, keyboard, mouse, modem, swipe reader and receipt printer.

2. Computer Software - We require the following software:

Cookies by Design, Inc. Custom Designed SAM Point of Sale (POS) software

Microsoft Windows XP Prof. Edition operating system

Anti-Virus - Solution

IC Verify Credit Card Processing Software

Lone Wolf Time Keeping software

Symantec PC Anywhere Host

3. COMPUTER HARDWARE - We require one IBM compatible computer. We recommend that you operate a second system in the back of the Shoppe, but, it is not required and you may choose to operate only one system. At this time, CBDI does not require any specific brand of computer hardware but highly encourages you to purchase your computer from a specified approved vendor. The computer must have the following minimum hardware configuration¹:

Intel Pentium 4 3 GHZ Prescott with 1 MB Cache

80 GB Hard Drive

1.44 Diskette Drive

512MBRAM

52x24x52 CD-RW Drive

Monitor with resolution (1024x768)

Report Printer

UPS (Uninterrupted Power Supply)

Integrated Intel 10/100 Ethernet

U.S. Robotics Internal 56K v.90 Modem

These requirements are based on our standards in effect on the date of this Offering Circular. They may change before you are ready to order your computer hardware, and we strongly encourage you to verify our current standards before you place your order.

4. General Ledger Software Package - We require that you use an accounting software program that generates financial reports using our prescribed format and standard chart of accounts. You may use any computerized general ledger software that can generate our prescribed reports and standard chart of accounts.

The Point of Sale ("POS") computer program is proprietary to us. It is a customized program that we developed for the exclusive use of the Chain. We currently provide maintenance and support, upgrades, and updates for an annual fee of $300 but have no obligation to do so in the future. We may earn a profit from providing these services.

Due to the proprietary nature of the POS computer program, we require that you purchase the POS computer program from us and sign the CBDI Sales and Marketing Point of Sale Software End User License Agreement attached as Exhibit R. We incurred the entire cost of developing the POS computer program and accordingly charges for the initial purchase of the POS computer program and for future

If you own a computer and/or any of the peripheral equipment with the required configuration, you need not purchase these items.

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upgrades and updates. Once the development cost of the POS computer program has been recovered, including the development cost of future upgrades and updates, we may earn a profit from the sale of the POS computer program.

The POS computer program functions as a cash register and provides you with sales, marketing, labor and bookkeeping functions and enables you to capture and generate the following kinds of information for use in the Franchised Business: sales information, customer information including names and addresses, accounts receivable and invoices for corporate credit accounts. It also functions as a time clock for employees and prepares payroll reports. The system integrates with certain general ledger accounting packages, which prepare Shoppe financial records, balance sheets, income statements and financial statements. We have direct access to gather sales information from your POS computer program. You must provide us access to your computer data base and send us original or duplicate copies of all diskettes you use in the operation of the Franchised Business. (Franchise Agreement - Section 6(v)) No contractual limitations exist to limit our right to access information and data from your POS computer program system. Upon expiration or termination of your franchise, you must return all data generated by the POS computer program software that is proprietary or confidential information, and all copies of them to us, delete them from your computer hardware drive, and at our request and permit us to delete the any related data from your computer hardware drive if you fail to do so. (Franchise Agreement - Sections 7(g) and 13(a)(iii))

Exhibit J to this Offering Circular contains the table of contents of the Operations Manual. The Operations Manual currently contains 265 pages, covering the following subject areas:

The Franchise Business 13 pages

Establishing the Franchise 35 pages

Personnel 30 pages

Mixing and Baking 24 pages

Decorating and Assembly 36 pages

Delivery 5 pages

Accounting and Financial Control 27 pages

Emergency Procedures 6 pages

Standard of Operations 22 pages

Marketing 24 pages

Standard Forms 46 pages

Franchisees typically open their stores 60 to 120 days after they sign their Franchise Agreements. Factors affecting this length of time usually include obtaining a satisfactory site, finalizing financing arrangements and construction of leasehold improvements.

We conduct all training at our home office in Piano, Texas or at another location we designate. We offer the training over a two business week period and requires that you or your Manager attend and satisfactorily complete the training before opening the Franchised Business. We may require additional training time for individual franchisees if we determines that the need exists. We do not charge a separate tuition for this training or service, but you must pay the salary, travel and living expenses incurred by you and/or your Manager. (Franchise Agreement - Section 3(a)(iii) and Master Sublicense Agreement -Paragraph V.D) Training classes are held frequently throughout the year as needed to train new franchisees. (Franchise Agreement - Section 3(a)(iii)) We may charge you for our additional expenses incurred in retraining you or your Manager if you or your Manager must repeat training. We require no other training at this time.

Paragraphs V.B and V.D of the Master Sublicense Agreement require you and other employees to complete video training related to use of the each of the respective Licensed Articles. Section 6(s) of

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the Franchise Agreement requires that you or your Manager attend any continuing training required by future Sublicenses.

Candace Ditsch and Mary Thompson share responsibility for your training, although they have assistants who help them in this undertaking. These assistants receive extensive training before conducting training classes. The training and instructional materials utilize videos, handouts, workbook, hands-on working applications and lectures.

You or your Manager must complete the training to our satisfaction prior to opening your Shoppe. If you acquire a franchise from another franchisee, you must satisfactorily complete training before we grant final consent to the transfer and you begin to operate the Shoppe. We may waive this condition when you or your Manager have had experience in operating a Shoppe. (Franchise Agreement - Section 6(s) and Master Sublicense Agreement - Paragraph V.B)

Training Schedule

Subject	Instructional Material	Hours of Classroom Training
INTRODUCTION TO COOKIES BY DESIGN	Operations Manual	8
DECORATING (Introduction, Basics, Detail Work, Specialty Work, Licensed Articles production)	Design Manual and Holiday Design Manual	14
MIXING AND BAKING	Baking Manual	14
OPERATIONS AND SHOPPE MANAGEMENT (Overview, personnel, customer service, order forms, purchasing and inventory, time management, marketing, delivery, lobby display)	Operations Manual and Supplier Information Manual	32
COMPUTER OPERATIONS	Computer Operations Manual	12
	TOTAL	80

12. Territory

FRANCHISE AGREEMENT. We grant you a franchise to operate one Shoppe at the Premises using the System, the Licensed Marks, certain trade secrets and Confidential Information within the Primary Marketing Area. During the term of each of your Sublicenses, we grant you a sublicense to use the marks and copyrights of the Licensors in the production of Licensed Articles within the Primary Marketing Area.

The franchise relates solely to the Premises and the Shoppe located on the Premises. You have no right to construct or operate any additional, expanded or modified facilities on the Premises, nor any right to construct or operate the Franchised Business at any location other than the Premises without our written consent. We will agree to the relocation of your Shoppe provided you meet the same criteria and conditions we require of new franchisees opening Shoppes at that time, including the following:

(i) the relocated Premises must comply with CBDI Shoppe construction standards and specifications and the relocation standards and specifications in existence at that time;

(ii) all signs and other fixtures and furnishings must meet our standards and specifications in existence at that time;

(iii) your lessor must sign the consent to the Leasehold Deed of Trust and the Assignment of Lease; and

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(iv) the term of the lease must be at least equal to the remaining term of the Franchise for your Shoppe.

You may open a Satellite or Kiosk location in the Primary Marketing Area if you meet the conditions found in the Franchise Agreement and the Confidential Manuals, including obtaining our prior written consent and paying the required fees.

We generally base the size of a franchisee's Primary Marketing Area on an area with a population density of approximately 250,000 residents, up to approximately half of whom live in households with an income of over $40,500 and in which there is significant commercial, retail, medical or institutional activity. If an area has the usual density but is less affluent than usual, then we may increase the population density and geographic scope of the Primary Marketing Area, if feasible. We generally define a Primary Marketing Area by U.S. postal zip codes and, where possible, by boundaries like freeways, rivers or the limits of political subdivisions. The Primary Marketing Area does not include special venues such as theme or amusement parks, sports arenas, convention centers, airports and the like and also excludes special events of a world wide, national or regional nature such as the Olympics, State or World Fairs, the Super Bowl and similar events.

During the term of the Franchise Agreement and so long as you are not in default under the Franchise Agreement and are in compliance with all of the standards of operations, subject to certain exceptions described below, we will not establish or operate a Shoppe or use the Licensed Marks within the Primary Marketing Area nor will it license any other person to establish or operate a Shoppe or to use the Licensed Marks within the Primary Marketing Area. If you are not in compliance with all standards of operations or in default under the Franchise Agreement, we have the right to provide or permit other franchisees to provide any services or products or enter into any transactions or use or authorize or permit other franchisees to use the Licensed Marks within the Primary Marketing Area.

We retain the right, for ourself and our affiliates, to develop company-owned Shoppes in areas that are not included in any franchisee's Primary Marketing Area (called "CBDI Distribution Markets" in the Franchise Agreement), to institute and coordinate sales and deliveries of COOKIE BOUQUET®/COOKIES BY DESIGN® products through electronic commerce, to negotiate arrangements for national accounts with companies that desire deliveries within multiple Primary Marketing Areas, and to merge with or acquire companies operating similar concepts that may be located within the Primary Marketing Area. We can also use any other marks we or our affiliates develop anywhere for any reason, except as limited by the rights granted to you with respect to the use of the Licensed Marks within the Primary Marketing Area.

Except under the circumstances described in the next paragraphs, you may not solicit orders for a cookie arrangement deliverable outside of your Primary Marketing Area. If a customer calls requesting delivery outside of your Primary Marketing Area, you must either refer the customer to the franchisee located in the delivery area or take the order and pass it on to that franchisee. If no franchisee operates in the delivery area, you may make the delivery. Whether you refer the customer to the proper franchise or take the order and call it in, you receive no monetary compensation for this transfer. You may solicit, accept and deliver orders for a cookie arrangement using the trademarks and copyrights of the Licensors only if you are in good standing under the Master Sublicense Agreement.

Under limited circumstances, a franchisee may not offer one or more of the Licensed Articles. You may solicit orders and deliver orders for one or more of these Licensed Articles in that franchisee's Primary Marketing Area only with our prior written consent. This exception does not apply to any other product at this time, but may apply in the future to other products using the intellectual property of other well-known licensors, such as sports teams.

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As explained in Item 5, we have implemented a program that permits customers to order online the products offered by Shoppes, which we refer to as the Online Order Program. The Online Order Program is voluntary. However, if you do not participate in the Online Order Program, we and other franchisees who do participate in the Online Order Program may fulfill and deliver online orders in your Primary Marketing Area. Therefore, the Online Order Program may affect your sales volume within your Primary Marketing Area, even if you do not participate. We have coordinated the establishment of the Online Order Program with The MAP Group and the PAC.

Your signing of some Sublicenses offered in the future may be voluntary. In that situation, if you elect not to sign a Sublicense Agreement, you agree in the Franchise Agreement that another franchisee and we can market, sell and deliver the goods and services licensed by that Sublicense into your Primary Marketing Area without compensation to you. If you later elect to sign that Sublicense Agreement, we will notify other franchisees of your election, and that they can no longer market, sell or deliver such goods and services into your Primary Marketing Area. The purpose is to ensure that customers in your Primary Marketing Area can buy the goods and services that we and the Chain advertise are available, when you elect not to offer those goods and services.

Except as provided above and with respect to the offer of products by the Chain through electronic commerce, we will not solicit or accept orders (unless we accept an order and passes it on to you) to have cookie arrangements delivered inside your Primary Marketing Area. Except as contemplated by offers and sales through electronic commerce, we have not established and do not presently intend to establish other channels of distribution using the Licensed Marks, but reserves the right to do so. We and our affiliates also reserve the right to establish other franchises or company-owned outlets and other channels of distribution selling or leasing different products or services under different trade names and trademarks. Pursuant to the licenses with Disney, Paws, Discovery and Universal, we may only sublicense our Franchisees to use the Licensed Articles for those Sublicenses, and have no rights to distribute those Licensed Articles through any other channels of distribution.

We have not established, nor do we anticipate establishing, any other franchises or company-owned outlets or other channels of distribution selling or leasing similar products or services under different trade names or trademarks.

Your franchise to operate a Shoppe at the Premises does not depend upon the achievement of a particular sales volume. However, your option to renew the Franchise Agreement depends upon your achievement of the minimum performance standards (levels of Gross Volume of Business) described in Column II of Attachment B to the Franchise Agreement. Also, we will not permit you to sign a Development Agreement unless your sales for your existing Shoppe exceeds the minimum performance standards by 20%.

AREA DEVELOPMENT AGREEMENT. On signing of a Development Agreement, we grant to you the right to establish and operate under Franchise Agreements a specified number of Shoppes within the Defined Territory defined in the Development Agreement.

During the term of the Development Agreement and so long as you are not in default under the Development Agreement, any Franchise Agreement related to a Shoppe developed under the Development Agreement or any other agreement with us or an affiliate of ours and are in compliance with all standards of operations, we agree not to establish or operate a Shoppe or provide products and services or enter into any transaction or use the Licensed Marks in the Defined Territory, nor will we license others to establish or operate a Shoppe or authorize or permit other franchisees to provide products and services or enter into any transactions or use the Licensed Marks within the Defined Territory except as provided in Section 2(b) of the Development Agreement. Your rights to develop additional Shoppes relate solely to the Defined Territory. The Development Agreement does not contemplate or permit you

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to operate or function as a master franchisee, sub-franchisor or franchise broker (meaning that you may not franchise Shoppes to any other entity or person or delegate your duties under the Development Agreement).

We and our affiliates may at any time establish a company-owned or operated Shoppe at any location which we deem advisable and that Shoppe may use the Licensed Marks with the following one exception. If you comply with the Development Agreement, we and our affiliates agree not to open any Shoppe or use any other channel of distribution selling or leasing similar products and services within the Defined Territory. We and other franchisees that participate in the Online Order Program may solicit and deliver into your Defined Territory if you do not participate in the Online Order Program. We and our affiliates do not have any presently formulated plan or policy to operate or franchise the operation of any business or use other channels of distribution selling or leasing similar products or services under a different trade name, trademark or service mark.

We negotiate a Development Schedule with you before execution of the Development Agreement. You must open a specified number of Shoppes for business in accordance with the terms of the Development Schedule. The size of the Defined Territory varies according to the number of Shoppes to be included in the Defined Territory. In establishing the size of the Defined Territory, we take into account the number of Shoppes you desire to develop, the geographic area required in order to encompass a residential population of at least 150,000 to 250,000 multiplied by the number of Shoppes scheduled for development in the Defined Territory and the existence of any natural or political boundaries in the locale of the Defined Territory (for example, rivers, freeways or city or county boundaries) or U.S. postal zip codes, that might serve to logically define the parameters of the Defined Territory. The typical population size of the Primary Marketing Areas of the Shoppes scheduled for development within the Defined Territory may expand as we use the factors listed above to define the size of the Defined Territory or we may determine that additional Shoppes are warranted by increases in population in the Defined Territory. Your development rights within the Defined Territory depend upon your timely compliance with the requirement that you open Shoppes under Franchise Agreements within the Defined Territory in accordance with the Development Schedule. Your failure to comply with the Development Schedule constitutes an event of default under the Development Agreement. If you fail to meet the terms of the Development Schedule, you may cure this default on one occasion during the term of the Development Agreement as described in Section 4(c) of the Development Agreement by paying the balance of the initial franchise fee for the next Shoppe, and from that date until the unopened Shoppe actually opens for business, a monthly continuing fee equal to $500. If you fail to cure the first failure to comply with the Development Schedule or if a second failure to comply with the Development Schedule occurs, we may terminate your rights under the Development Agreement without additional notice to you.

If we determine that it is desirable to develop additional Shoppes in the Defined Territory after the initial term of the Development Agreement and you have timely complied with the Development Schedule and are in compliance with the terms and conditions of the Development Agreement, all Franchise Agreements and all other agreements between you and us in existence at that time, we grant you a right of first opportunity to obtain development rights to those additional Shoppes upon terms and conditions then determined by us. The terms and conditions may include a different form of Franchise Agreement with different fee structure(s), terms and performance standards and a different form of Development Agreement with an additional initial fee and different terms. Item 17 of this Offering Circular more fully describes your ability to exercise any right of first opportunity.

13. Trademarks

The following table identifies the principal trademarks and service marks that we license you to use. Each of these marks is registered on the Principal Register of the United States Patent and Trademark Office (the "Trademark Office"), and we own each of the marks exclusively. We have also

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registered or applied to register several other trademarks and service marks with the Trademark Office. Information concerning these other marks appears in Exhibit P to this Offering Circular.

Mark	Int'l Class	Registration No.	Registration Date
COOKIES BY DESIGN®	39&42	1,728,507	10/27/92
COOKIES BY DESIGN®	30	1,892,289	05/02/95
ORIGINAL COOKIE BOUQUET®	30	1,882,398	03/07/95
ORIGINAL COOKIE BOUQUET®	42	1,992,297	08/13/96
COOKIE BOUQUET®	30	1,992,298	08/13/96
COOKIE BOUQUET®	42	1,994,339	08/20/96
THE ORIGINAL COOKIE BOUQUET® and Design	42	2,082,709	07/29/97
THE ORIGINAL COOKIE BOUQUET® & Design	30	2,072,925	06/24/97
COOKIES BY DESIGN & Design (Cabinet style signage)	35	78/749,774	11/08/05
COOKIES BY DESIGN & Design (Linear channel letters)	35 '	78/749,822	11/08/05

We have filed all affidavits required to be filed by the U.S. Patent and Trademark Office. No renewals are due. Trademark authorities have issued registrations for COOKIES BY DESIGN® in the European Union, Canada, Japan, Mexico, Peru and Argentina. The appropriate authorities in Mexico have issued trademark registrations for COOKIE BOUQUET® and the old COOKIE BOUQUET® logo design. Trademark authorities in Argentina have issued a trademark registration for COOKIE BOUQUET®. Japanese and Canadian authorities have issued a trademark registration for MISCELLANEOUS DESIGN (Bear Logo).

In Mexico, an application for MISCELLANEOUS DESIGN (Bear Logo) is still pending.

There are no presently effective determinations of the United States Patent and Trademark Office, Trademark Trial and Appeal Board, the trademark administrator of any state or any court involving our principal trademarks. There are no pending infringement, opposition or cancellation proceedings or any pending material litigation involving our principal trademarks.

We do not know of any infringing uses of the COOKIES BY DESIGN® Licensed Marks that could materially affect your use of the COOKIES BY DESIGN® trademarks, service marks, trade names, logotypes or commercial symbols in the United States. Others may have established rights to use "COOKIE BOUQUET" in certain markets, which might preclude you from using the mark COOKIE BOUQUET® in those markets.

To settle a prior use dispute with Cookie Bouquets, Inc. of Columbus, Ohio ("CBI"), we agreed not to use our COOKIE BOUQUET® mark in Ohio except as part of our COOKIES BY DESIGN® Logo. CBI agreed to use its COOKIE BOUQUETS mark only in connection with its logo design, which includes a stylized font and depicts a long stem rose (the "CBI Logo"), and not to use the CBI Logo in connection with decorated cookies. CBI also agreed to use the CBI Logo outside of Ohio only in

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connection with its Internet site and a mail order business for the sale of its own products and not as the name of a retail store. Effective September 1, 2004, we and CBI modified the agreement to substitute our new logo design and to allow both parties to use "cookie bouquet" freely in lower case letters to describe their products in all geographical areas. Except as described in this and the preceding paragraph, no other agreements significantly limit our right to use any of our trademarks, service marks or trade names in any manner material to a Shoppe operator.

Sublicenses

We are parties to four license agreements with parties who license to us for use by our franchisees certain famous trademarks and graphic representations. The descriptions of the licenses and your rights and obligations under the Master Sublicense Agreement follow.

Disney License

We and Disney are parties to a Consumer Products License Agreement effective July 1, 2004 (the "Disney License") under which Disney authorizes our Shoppe operators to use certain Disney marks and certain graphic representations of its cartoon characters. We refer to the Disney marks and the graphic representations as the "Disney Licensed Articles." We are authorized to license the Disney Licensed Articles to our franchisees, and these materials are deemed to be Licensed Marks under your Franchise Agreement.

The Disney Licensed Articles include the marks WALT DISNEY® and DISNEY®, and graphic representations of the following characters (and such accompanying design elements as Disney may designate):

MICKEY MOUSE® MINNIE MOUSE®

DONALD DUCK® DAISY DUCK®

PLUTO® GOOFY® (but not SPORT GOOFY®)

The Brand Name MICKEY UNLIMITED®

WINNIE THE POOH®

PIGLET®

EEYORE®

OWL

KANGA®

The term of your Disney Sublicense Agreement (the "Disney Sublicense") depends on the term of the Disney License and the term of the franchise for your Shoppe. See Schedule 1 to the Master Sublicense Agreement. The Disney License term began July 1, 2004 and ends June 30, 2007, unless renewed. Neither Disney nor we have any obligation to renew the Disney License. In the Master Sublicense Agreement, you acknowledge that we have no liability to you if we do not renew the Disney License. You can only use the Disney Licensed Articles during the term of your Master Sublicense Agreement. If either Disney or we elect not to renew the term of the Disney License, your Disney Sublicense will terminate automatically, although the Master Sublicense Agreement will continue with respect to the Licensed Articles trademarks and copyrights. If your franchise terminates, the Disney License automatically terminates. You do not have the right to assign all or the Disney portion of the Master Sublicense at all. In the event of a sale of your franchise, a transferee must sign a new Master Sublicense Agreement, under the terms and conditions, and if, then available.

If Disney and we elect to renew the Disney License, each can revise the terms and conditions of the renewal. Therefore, the terms of any renewal of your Disney Sublicense will be subject to the terms

CHRISTOPHER ROBIN*

RABBIT

TIGGER®

GOPHER

ROO®

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and conditions of the Disney License. We can offer different terms and conditions of your Disney Sublicense upon a renewal, as will be reflected in Schedule 1 to the Master Sublicense Agreement. We can unilaterally extend the term of your Disney Sublicense if there are no changes to the terms and conditions of the Disney License.

Disney and we have certain rights under the Disney License, which include the right to inspect and audit your Shoppe to monitor your use of the Disney Licensed Articles, and Disney has a right to audit our reporting requirements to Disney. Disney or we may perform random visits to your Shoppe, place random orders for articles using the Disney Licensed Articles, and use mystery shoppers to ensure that you comply with the Disney Sublicense. If we find that you are not in compliance with the Disney Sublicense, we can suspend your rights until you are in compliance, or terminate the Disney Sublicense. We can also terminate the Disney Sublicense for continuing and repetitive noncompliance.

Garfield License

We and Paws are parties to a License Agreement effective March 1, 2003 (the "Garfield License") under which Paws authorizes us to use certain Paws marks and certain graphic representations of the cartoon characters that regularly appear in the Garfield comic strip. We refer to the Paws marks and the graphic representations as the "Garfield Licensed Articles." We are authorized to license the Garfield Licensed Articles to our franchisees, and these materials are deemed to be Licensed Marks under your Franchise Agreement.

The Garfield Licensed Articles includes graphic representations of the following characters (and such accompanying design elements as Paws may designate):

GARFIELD®

ODIE®

POOKY®

The term of your Garfield Sublicense Agreement depends on the term of the Garfield License and the term of the franchise for your Shoppe. The Garfield Sublicense may be an individual agreement or incorporated as part of a Master Sublicense Agreement. The Garfield License term began March 1, 2003 and ends December 31, 2007, unless renewed. Neither Paws nor we have any obligation to renew the Garfield License. In the Garfield Sublicense, you acknowledge that we have no liability to you if we do not renew the Garfield License. You can only use the Garfield Licensed Articles during the term of your Garfield Sublicense. If either Paws or we elect not to renew the term of the Garfield License, your Garfield Sublicense will terminate automatically. If your franchise terminates, the Garfield Sublicense automatically terminates. You do not have the right to assign the Garfield Sublicense at all. In the event of a sale of your franchise, a transferee must sign a new Garfield Sublicense, under the terms and conditions, and if, then available.

If Paws and we elect to renew the Garfield License, each can revise the terms and conditions of the renewal. Therefore, the terms of any renewal of your Garfield Sublicense will be subject to the terms and conditions of the Garfield License. We can offer different terms and conditions of your Garfield Sublicense upon a renewal. We can unilaterally extend the term of your Garfield Sublicense if there are no changes to the terms and conditions of the Garfield License.

Paws and we have certain rights under the Garfield Sublicense, which include the right to inspect and audit your Shoppe to monitor your use of the Garfield Licensed Articles, and Paws has a right to audit our reporting requirements to Paws. Paws or we may perform random visits to your Shoppe, place random orders for articles using the Garfield Licensed Articles, and use mystery shoppers to ensure that you comply with the Garfield Sublicense. If CBDI finds that you are not in compliance with the Garfield

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Sublicense, we can suspend your rights until you are in compliance, or terminate the Garfield Sublicense. We can also terminate the Garfield Sublicense for continuing and repetitive noncompliance.

Trading Spaces License

We and Discovery Licensing, Inc. ("Discovery") are parties to a Merchandise License Agreement dated December 10, 2003 (the "Trading Spaces License") under which Discovery authorizes us to use certain Discovery marks. We refer to the Discovery marks as the "Trading Spaces Licensed Articles." We are authorized to license the Trading Spaces Licensed Articles to our franchisees, and these materials are deemed to be Licensed Marks under your Franchise Agreement.

The Trading Spaces Licensed Articles includes the following marks:

TRADING SPACES®

The term of your Trading Spaces Sublicense Agreement depends on the term of the Trading Spaces License and the term of the franchise for your Shoppe. The Trading Spaces Sublicense may be an individual agreement or incorporated as part of a Master Sublicense Agreement. The Trading Spaces License term began December 10, 2003 and ends December 31, 2006, unless renewed. Neither Discovery nor we have any obligation to renew the Trading Spaces License. In the Trading Spaces Sublicense, you acknowledge that we have no liability to you if we do not renew the Trading Spaces License. You can only use the Trading Spaces Licensed Articles during the term of your Trading Spaces Sublicense. If either Discovery or we elect not to renew the term of the Trading Spaces License, your Trading Spaces Sublicense will terminate automatically. If your Franchise terminates, your Trading Spaces Sublicense will terminate automatically. You do not have the right to assign the Trading Spaces Sublicense at all. In the event of a sale of your franchise, a transferee must sign a new Trading Spaces Sublicense, under the terms and conditions then available.

If Discovery and we elect to renew the Trading Spaces License, each can revise the terms and conditions of the renewal. Therefore, the terms of any renewal of your Trading Spaces Sublicense will be subject to the terms and conditions of the Trading Spaces License. We can offer different terms and conditions of your Trading Spaces Sublicense upon a renewal. We can unilaterally extend the term of the Master Sublicense Agreement if there are no changes to the terms and conditions of the Trading Spaces License.

Discovery and we have certain rights under the Trading Spaces License, which include the right to inspect and audit your Shoppe to monitor your use of the Trading Spaces Licensed Articles, and Discovery has a right to audit our reporting requirements to Discovery. Both Discovery and we may perform random visits to your Shoppe, place random orders for articles using the Trading Spaces Licensed Articles, and use mystery shoppers to ensure that you comply with the Trading Spaces Sublicense. If we find that you are not in compliance with the Trading Spaces Sublicense, we can suspend your rights until you are in compliance, or terminate the Trading Spaces Sublicense. We can also terminate the Trading Spaces Sublicense for continuing and repetitive noncompliance.

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Universal License

We and Universal are parties to a Consumer Products License Agreement effective October 5, 2005 (the "Universal License") under which Universal authorizes our Shoppe operators to use certain Universal marks and certain graphic representations of its cartoon characters. We refer to the Universal marks and the graphic representations as the "Curious George® Licensed Articles." We are authorized to license the Curious George Licensed Articles to our franchisees, and these materials are deemed to be Licensed Marks under your Franchise Agreement.

The Universal Licensed Articles include the marks CURIOUS GEORGE®, and graphic representations of the CURIOUS GEORGE® character (and such accompanying design elements as Universal may designate).

The term of the Master Sublicense Agreement depends on the term of the Universal License and the term of the franchise for your Shoppe. The Universal Sublicense may be an individual agreement or incorporated as part of a Master Sublicense Agreement. The Universal License term began October 5, 2005 and ends December 31, 2007, unless renewed. Neither Universal nor we have any obligation to renew the Universal License. In the Universal Sublicense, you acknowledge that we have no liability to you if we do not renew the Universal License. You can only use the Universal Licensed Articles during the term of your Universal Sublicense. If either Universal or we elect not to renew the term of the Universal Sublicense, your Universal Sublicense will terminate automatically. If your franchise terminates, the Universal License will automatically terminate. You do not have the right to assign the Universal Sublicense at all. In the event of a sale of your franchise, a transferee must sign a new Universal Sublicense or a new Master Sublicense, under the terms and conditions, and if, then available.

If Universal and we elect to renew the Universal License, each can revise the terms and conditions of the renewal. Therefore, the terms of any renewal of your Universal Sublicense will be subject to the terms and conditions of the Universal License. We can offer different terms and conditions of your Universal Sublicense upon a renewal. We can unilaterally extend the term of your Universal Sublicense if there are no changes to the terms and conditions of the Universal License.

Universal and we have certain rights under the Universal License, which include the right to inspect and audit your Shoppe to monitor your use of the Universal Licensed Articles, and Universal has a right to audit our reporting requirements to Universal. Universal or we may perform random visits to your Shoppe, place random orders for articles using the Universal Licensed Articles, and use mystery shoppers to ensure that you comply with the Universal Sublicense. If we find that you are not in compliance with the Universal Sublicense, we can suspend your rights until you are in compliance, or terminate the Universal Sublicense. We can also terminate the Universal Sublicense for continuing and repetitive noncompliance.

Responsibilities with Respect to Licensed Marks and the Licensed Articles

You must monitor all uses of the trademarks, service marks and logos licensed by us, Disney, Paws, Discovery, and Universal (collectively, the "Licensed Marks"), the respective Licensors' Licensed Articles (collectively, the "Licensed Articles") and all printed materials, color combinations, design specifications, trade dress and other characteristic physical embodiments of the System (the "Indicia"). You must notify us immediately if you become aware of any unauthorized use of the Licensed Marks, any Licensed Articles or the Indicia, or any colorable variation or any other mark, name or indicia in which we, Disney, Paws, Discovery, or Universal (Disney, Paws, Discovery, and Universal, collectively, are the "Licensors") claims a proprietary interest. The Franchise Agreement does not obligate us to take affirmative action when notified of unauthorized uses, but we will take any action that we think appropriate, in our sole discretion. You will assist us, upon request and at our expense, in taking any

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legal action that we consider appropriate to halt infringing activities, but you can take no action or incur any expenses on our behalf without our prior written approval. If we undertake the defense or prosecution of any litigation related to the Licensed Marks, any Licensed Articles, the Indicia or the trade dress of the System, you agree, upon request and at our expense, to execute any documents and to carry out any acts (including serving as a sole complainant) as our legal counsel believes to be reasonably necessary to carry out this defense or prosecution, but you can take no action or incur any expenses on our behalf without our prior written approval. We have the right to control all administrative proceedings or litigation concerning our Licensed Marks or the trade dress of the System. The Licensors have the right to control all administrative proceedings or litigation concerning their respective Licensed Articles, which includes their respective Licensed Marks.

You must operate and advertise only under the names or marks we designate for use by similarly situated franchisees. You must adopt and use the Licensed Marks and Licensed Articles solely in the manner we determine and must not use the Licensed Marks and Licensed Articles to perform any activity or to incur any obligation or indebtedness that may, in any way, subject us to liability. You cannot use our trademarks, service marks or trade names in a domain name or an e-mail address without our prior consent. All use of the Licensed Marks, Licensed Articles, Indicia and domain names or websites incorporating Indicia by you will inure to our benefit, and you will not acquire any rights to the Licensed Marks, Licensed Articles, Indicia, or domain names or websites incorporating the Indicia. You must observe all laws requiring registration of trade names and assumed or fictitious names and include in any application for registration a statement that the terms of the Franchise Agreement limit your use of the Licensed Marks and Licensed Articles. You must provide us a copy of any application and other registration documents) and observe all requirements for trademark and service mark notices and copyright notices that we may require, including affixing "SM", "TM" or "®" adjacent to all Licensed Marks that you use. You must use appropriate notices of ownership, registration and copyright as we require for the Licensed Marks and the Licensed Articles. You agree not to directly or indirectly contest our or any Licensor's right to its Licensed Marks and the Licensed Articles.

You must modify or discontinue use of a trademark or service mark if we designate one or more new, modified or replacement Licensed Marks for use by you in addition to or in place of any previously designated Licensed Marks. If a majority of Franchisees then in operation approves a new, modified or replacement trade name as one of the Licensed Marks, you will have sole responsibility for all expenses or costs associated with the compliance. We will have sole responsibility for the costs of compliance for any other new, modified or replacement trade name as one of the Licensed Marks not approved by a majority of the operating Franchisees.

The Licensors have the right to terminate their respective licenses on account of defaults by our franchisees. Therefore, we must diligently enforce the provisions of the Master Sublicense Agreement and the various sublicenses granted to other franchisees (collectively, the "Sublicenses") that protect the Licensors' respective Licensed Marks and Licensed Articles. If you fail to abide by these requirements, your failure could affect the chain's right to use the Licensors' respective Licensed Marks and Licensed Articles. For purposes of the following discussion, we refer to merchandise made with the Licensors' respective Licensed Marks and Licensed Articles as "Specialty Items". Generally, the obligations you must perform include the following:

1. You and your employees who will decorate Specialty Items must complete the training that we and the Licensors require before you can offer or sell any Specialty Items. (See Item 11.)

2. You must equip your Shoppe as required to offer the Specialty Items, including stencils and cookie cutters, and you must have acquired and installed your computer equipment and software.

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3. You cannot sell Specialty Items to any other retailers or wholesalers, as defined in the Sublicenses, nor may you offer Specialty Items at places that are perceived to be discount or low cost, such as a flea market.

4. You cannot create or distribute any products embodying or bearing any artwork or other representation that the respective Licensor determines, in its reasonable discretion, is confusingly similar to any Licensor's characters or other Licensed Articles, except as the specific Sublicense permits.

5. You must reproduce the Specialty Items exactly as the Licensors have approved, as set forth in our Design Manual (a part of the Confidential Manuals), including the following:

You cannot modify the Licensed Articles of any Licensor in any way, including color or clothing.

You must comply with the standards and specifications for the Specialty Items in the Confidential Manuals, and destroy or discard any Specialty Items that do not meet these standards.

You must not sell Specialty Items outside your Primary Marketing Area (or Protected Area, if applicable), except as permitted by your Franchise Agreement. (See Item 16 below).

You cannot place photos or representations of the Specialty Items on a website operated by or on your behalf unless we have approved it in advance in writing, except by a direct link from our Website to your website.

You must use only containers, packaging, display material, promotional material and advertising material that we have first approved, and attach tags or labels that we specify.

6. You must promptly notify us in writing of any unlicensed use by third parties of the Licensed Marks or Licensed Articles, and cooperate in any action against such parties, including serving as a sole complainant or co-complainant in any action against an infringer, even if you have a recovery right against the infringer. If you recover by judgment or settlement, you must waive all claims to, and assign to us or the respective Licensor (as appropriate), the monetary relief. We or the Licensor will reimburse you for reasonable expenses incurred at their request, including reasonable attorney's fees, if the Licensor or we have requested you to retain separate legal counsel.

7. You cannot associate other characters or licensed properties, even CBDI designs, on cookie arrangements or cookies on a stick that are decorated with the Licensors' respective Licensed Marks or Licensed Articles.

8. The terms and conditions of the Sublicenses are confidential. Therefore, you cannot disclose the terms and conditions of any Sublicenses or any additional confidential information disclosed to you pursuant thereto to any third party without first obtaining our prior written consent, except to your attorneys and accountants on a need to know basis.

The Sublicenses do not obligate us or the Licensors to take affirmative action when notified of unauthorized uses of Licensed Marks or Licensed Articles. We will take any action that we or the Licensors think appropriate, in each of their sole discretion. We have the right to control all administrative proceedings or litigation concerning the Licensed Marks or trade dress of the System; the Licensors have the right to control all administrative proceedings or litigation concerning their respective Licensed Marks or Licensed Articles.

Pursuant to the Sublicenses, we indemnify you against claims and expenses, including reasonable attorneys' fees, arising from a claim that your use of any approved Licensed Marks or Licensed Articles

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infringes the copyright of a third party, including one licensed by the Licensors, with one exception. The indemnity does not include claims by anyone who has created new materials derived from the Licensed Articles and from whom you have not secured an assignment, as required by the Sublicenses. The Franchise Agreement and the Sublicenses do not obligate us or the Licensors to participate in your defense if you become a party to an administrative or judicial proceeding involving your use of the Licensed Marks, Licensed Articles or any Indicia, in an action for which neither the Licensors nor we have requested you to serve as a complainant or co-complainant.

We can terminate a Sublicense by written notice for the following acts:

1) You default under the Franchise Agreement for your Shoppe and fail to cure the default within the allotted cure period;

2) Your Franchise Agreement for the Shoppe expires or terminates for any reason;

3) If you deliver any Licensed Articles that do not conform to the approved designs in all material respects, or you deliver Licensed Articles that are not of high standard in style, appearance and quality, and free of defects in design, materials and workmanship, or that such Licensed Articles do not conform to all standards of quality and design as required by us and/or a Licensor, as such standards may be changed from time to time;

4) You fail to accurately report or pay your royalties or other payments due for the Licensed Articles on time;

5) You deliver any products or merchandise containing representations of the Licensed Marks, Licensed Articles, or other material to which a Licensor owns or has licensed to us the copyright or other proprietary rights other than as authorized in the Sublicense;

6) You deliver Licensed Articles outside your Primary Marketing Area or to retailers, wholesalers, or unauthorized sales outlets without prior written consent in violation of a Sublicense or your Franchise Agreement; (See Item 16)

7) You place or distribute any advertising or marketing materials incorporating any Licensed Marks, Licensed Articles, or other material owned or licensed to us by a Licensor without prior written consent from us.

8) You repeatedly breach the same provision of a Sublicense, even though you have cured prior breaches;

9) You make an assignment for the benefit of creditors, file a petition in bankruptcy or are adjudged bankrupt, become insolvent, or are placed in the hands of a receiver, or a similar act known by some other name or term;

10) You transfer your interest in a Sublicense in violation of the Sublicense's restrictions; or

11) You breach any other of the terms or conditions of a Sublicense and do not cure the breach within 10 days after receiving notice from us.

Any requirement in the Sublicenses that provides for termination of the Sublicense upon your bankruptcy may not be enforceable under the U.S. Bankruptcy Code (11 U.S.C. §101 et seq.).

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If we terminate the Master Sublicense Agreement, you must sell to us all cookie cutters, stencils and other specialized equipment and materials not available to the general public that you used to produced Specialty Items pursuant to the terminated Sublicense. The Franchise Agreement determines the purchase price.

We know of no infringing uses of the Licensed Marks or Licensed Articles that could materially affect your use of the Licensors' respective Licensed Marks or Licensed Articles. We are not aware of any presently effective determinations of the Trademark Office or any court, any pending infringement, opposition or cancellation proceeding or any pending material litigation involving the Licensed Marks or Licensed Articles.

Each of the above obligations apply also to your use of the Licensed Marks and the Licensed Articles on any website.

Neither the Development Agreement, the Franchise Agreement, nor the Master Sublicense Agreement provide for any form of compensation or payment to you if you lose the right to continue to use our trademarks or the Licensed Marks or Licensed Articles.

14. Patents, Copyrights and Proprietary Information

We own a mechanical patent for a display assembly for edible and non-edible objects and the method for making the devise (U.S. Patent No. 5,755,325). The patent was issued May 26, 1998 and will expire on May 26, 2018. The display assembly is essentially a plastic basket that replaces the wicker basket and plaster base used previously. We also own a mechanical patent for a display assembly for edible and non-edible objects (U.S. Patent No. 6,561,363). The patent was issued May 13, 2003 and will expire on May 13, 2023. We have abandoned a patent application we received by assignment dated January 28, 2005 for a container for edible and non-edible objects, App. No. 10/165,969, filed on June 11, 2002, and corresponding PCT/US03/18514 application. The PTO rejected the applications based on our prior patents discussed above, so we made a business decision not to pursue those applications. The current container inset used for COOKIES BY DESIGN® cookie arrangements is based on the patented design of the display assembly and made to fit inside a variety of containers.

We own copyright interests in and retain ownership of all original materials, including without limitation the following:

Each individual decorated cookie arrangement design;

Operations Manual;

Baking Manual;

Site Design and Construction Manual;

Employee Policy Manual;

Design Manual;

Sales and Assembly Manual;

Holiday Design Manuals;

Spring Design Manuals;

Cookie Cutter Design Manual Volume I;

Supplier Information Manual

Training Workbook;

Planning Effectively for the Holidays;

Determining Production Capacity; original designs for fanciful cookie arrangements;

all COOKIE CRUMBS® newsletters; all COOKIE DOUGH® newsletters;

COOKIE BOUQUET® and COOKIES BY DESIGN® radio jingles; and all brochures, advertising

and marketing materials.

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We also may provide you copyrighted materials through our websites. Although the Copyright Act does not require copyright registration in order to protect claims of ownership of materials, we have registered or applied for registration of the copyrights for the material listed in Exhibit 0 to this Offering Circular.

We claim copyright protection for the appearance of and the materials on our websites under the domain names of cookiesbydesign.com and cookiebouquet.com. The Franchise Agreement requires you to assign the domain name for your website either to us or a transferee we approve upon a transfer of the franchise or upon expiration or termination of your franchise. The various sublicenses for Licensed Articles permit you to use only photos and representations of Licensed Articles on your website that we have approved, except to the extent that we place a direct link from your website to our website.

You have the right to use the Confidential Manuals and other copyrighted materials we loan to you for the term of the Franchise Agreement. If required by law, or otherwise in its sole discretion, we will renew our copyright registrations upon expiration if possible.

You agree to observe all requirements for affixing copyright notices to any materials as we may require and to use other appropriate notices of ownership, registration and copyright required by us. You cannot incorporate our copyrighted materials into any materials you create without first securing our consent.

We claim proprietary rights in certain trade secrets and confidential information relating to producing and decorating cookies and fanciful cookie arrangements and to the general operations and promotion of the System and the Franchised Business. We authorize you to use the trade secrets and confidential information only in connection with your Franchised Business within your Primary Marketing Area. You cannot update, improve, or create new inventions or works based on the patents, copyrights, trade secrets or confidential information without assigning all rights to us pursuant to the terms of the Franchise Agreement.

Disney claims copyrights in the graphic representations of the Disney characters listed in Item 13; Paws claims copyrights in the graphic representations of the Garfield characters; Trading Spaces claims copyrights in the graphic representations of Trading Spaces proprietary names and trademarks; and Universal claims copyrights in the graphic representations of the Curious George character. The Master Sublicense Agreement restricts you from using the graphic representations on any objects other than as permitted by each of the Licensors. However, if you create or incorporate any of the graphic representations into other objects not permitted by the Master Sublicense Agreement, you must assign the copyrights to the applicable Licensor or you must secure an assignment from the person or entity that created the graphic representation.

You must monitor any unauthorized use of the patented and copyrighted materials (including the Licensors' Licensed Articles), the trade secrets and confidential information, including on the Internet, and agree to do so. You must notify us immediately if you become aware of any unauthorized use of the patented and copyrighted materials, trade secrets and confidential information or other materials in which we claim a proprietary interest or in which any Licensor claims a proprietary interest. The Franchise Agreement does not require us to take affirmative action when notified of unauthorized uses, but we will take any action that we consider appropriate. You will assist us, upon request and at our expense, in taking any legal action we consider appropriate to halt infringing activities, but you will take no action nor incur any expenses on our behalf without our prior written approval.

If we undertake the defense or prosecution of any litigation relating to patented, copyrighted or proprietary materials, or if any Licensor undertakes the defense or prosecution of any litigation relating to its Licensed Marks or Licensed Articles, you agree, on request and at our or the Licensors' expense, as

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applicable, to execute any documents and to carry out any acts (including serving as a sole complainant) and things as our legal counsel believes to be reasonably necessary to carry out this defense or prosecution, but you will take no action nor incur any expenses on our behalf or that of the Licensors without the prior written approval of the appropriate company. We have the right to control all administrative proceedings or litigation concerning our proprietary materials and the Licensors have the right to control all administrative proceedings or litigation concerning their respective Licensed Marks or Licensed Articles. The Franchise Agreement does not obligate us to participate in your defense or to indemnify you for expenses or damages if you become a party to an administrative or judicial proceeding involving the materials we license to you.

The same rights and obligations described in Item 13 with respect to the Sublicenses also apply to the Licensors' copyrighted Licensed Articles. We and the Licensors also have the same rights as described in Item 13 with respect to protection of their respective copyrights and proprietary information. We do not anticipate that the Licensors will disclose any proprietary information to us or our franchisees.

We are not aware of any infringing uses of our patented, copyrighted or other proprietary information or materials that could materially affect your use of them. We know of no infringing uses of the Licensors' respective Licensed Marks or Licensed Articles that could materially affect your use of them.

15. Obligation to Participatetn the Actual Operation of the Franchised Business

FRANCHISE AGREEMENT. At all times during the term of the Franchise Agreement either you or at least one of your employees we approve (the "Manager") must (i) have principal responsibility for the operation of the Franchised Business on a full-time, in-person basis at the Shoppe and (ii) have attended and satisfactorily completed all training, retraining or refresher training programs that we may require. You must notify us in writing at least 30 days before employing any Manager, setting forth in reasonable detail all pertinent information as to the individual's character and business background and experience. You may not employ any individual to manage the Shoppe (or any other part of the Franchised Business) on your behalf without our prior consent, based upon the standards and requirements that we may now and in the future specify. If we reject or later disapprove the Manager, we will notify you of the reasons for our disapproval. Although we have the right to protect the goodwill of the System by disapproving any Manager you employ, the Manager is not our employee for any purpose. You must obtain from your Manager an executed employee confidentiality and non-competition agreement in the form provided in the Operations Manual. That agreement prohibits disclosure by the Manager to any other person or legal entity of any confidential information. It also prohibits him/her for two years after termination of his/her employment with you from engaging in any business that carries on the same or a similar business to the Franchised Business within a 20-mile radius of the Premises or any other Shoppe in the Chain in existence on the date of his/her termination or resignation or in electronic commerce. The confidentiality and non-competition agreement executed by the Manager must expressly state that we are a third party beneficiary of the agreement. You and your Manager are also subject to confidentiality provisions of the Master Sublicense Agreement.

If you are a corporation, partnership, limited liability company or a trust and not an individual, then all principals and security or equity interest holders who hold a 20% or more equity interest in you and their spouses (as well as the principals, members, partners or security or equity interest holders in any entity holding a 20% or more interest in you) must sign a guaranty agreement (the "Guaranty of Franchisee's Undertakings" attached as Attachment B to the Franchise Agreement) guaranteeing the payment and performance of your obligations under the Franchise Agreement, the Master Sublicense Agreement and the Target Participation Agreement. All shareholders, directors, officers, members, limited or general partners of the Franchised Business or security or equity interest holders of the Franchised Business and their spouses and who are actively and regularly involved in the operations of the business must also sign a confidentiality and non-competition agreement in the form provided in the

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Operations Manual. That agreement prohibits disclosure by him/her to any other person or legal entity of any confidential information. It also prohibits him/her for two years after termination of his/her association with you from engaging in any business that carries on the same or a similar business to the Franchised Business within a 20-mile radius of the Premises or any other Shoppe in the Chain in existence on the date of his/her termination or resignation, or in electronic commerce. The confidentiality and non-competition agreement executed by the above persons must expressly state that we are a third party beneficiary of the agreement.

AREA DEVELOPMENT AGREEMENT. During the term of the Development Agreement, you must have sole and direct responsibility for and must actively and personally participate in, the operation of your Franchised Businesses. If you are a corporation or other business association, an owner holding a majority of the equity and voting control of the Franchised Business must personally participate in the direct operation of all Shoppes developed pursuant to the Development Agreement or must designate a full-time Manager responsible for your obligations under the Development Agreement (who has completed all training we require in our methods, systems and procedures for the development and operation of Shoppes and who meets the minimum standards and requirements for Managers of Shoppes defined in the Confidential Manuals). The same qualifications, standards and requirements described above for the Franchise Agreement for employing a Manager apply to employing a Manager who will operate any Franchised Business opened during the term and in accordance with the conditions of the Development Agreement.

If you are a corporation, partnership, limited liability company or trust and not an individual, then all of your principals, members, partners or security or equity interest holders who hold a 20% or more equity interest in you (as well as the principals, members, partners or security or equity interest holders in any entity holding a 20% or more interest) and their spouses must sign a guaranty agreement (the "Guaranty of Developer's Undertakings" attached as Attachment E to the Franchise Agreement) guaranteeing the payment and performance of all obligations of the "Developer" under the Development Agreement.

MASTER SUBLICENSES. You and your Manager are subject to the confidentiality provisions of the Master Sublicense Agreement and the Target Participation Agreement. The respective Licensors are third party beneficiaries of the confidentiality agreements you and your management personnel make to us. That means that Disney, Paws, Discovery and Universal can file an action against you or your management personnel if you breach your covenant of confidentiality with respect to any of the Licensed Articles. You are not a third party beneficiary to the Disney License, the Garfield License, the Trading Spaces License or the Universal License.

The Guaranty of Franchisees' Undertakings described above includes a guaranty of your performance under the Master Sublicense Agreement and any future sublicense agreement you sign.

16. Restrictions on What the Franchisee May Sell

The Franchise Agreement obligates you to offer for sale all goods and services that we may now or in the future require and restricts you to offer only those which we may now or in the future, approve and not later disapprove, as meeting our quality standards and specifications. Presently you must offer for sale fanciful cookie arrangements, decorated cookies, individual cookies on a stick and gourmet cookies using only our recipes and the ingredients which satisfy our quality standards and specifications.

We may require you or any franchisee to offer additional goods and services. There are no limits on our right to do so.

We must approve in advance the use of the Premises for any purpose or activity.

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We limit your ability to solicit customers only in so far as you may only solicit orders for delivery within your Primary Marketing Area or within an area where we have no existing Franchised Businesses and you have requested and received our prior written consent. This limitation applies to online sales through the Online Order Program and on any website you may elect to maintain that we approve. We routinely audit the books and records of our franchisees to ensure compliance with this policy. We also may audit a website you create.

The Master Sublicense Agreement requires you to offer the Licensed Articles, and restricts you from selling any other products using graphic representations that are confusingly similar to the Licensed Articles. Also see Items 13 and 14 for other restrictions relating to protection of the trademarks and copyrights of the Licensors.

You must first obtain our approval for the use on your website of any intellectual property sublicensed to you, including the Licensed Articles unless we have provided the material to you.

You cannot solicit, sell or deliver Specialty Items outside of your Primary Marketing Area, except with our prior written consent.

policies.

We routinely audit the books and records of our franchisees to ensure compliance with these

17. Renewal, Termination, Transfer and Dispute Resolution

THIS TABLE LISTS CERTAIN IMPORTANT PROVISIONS OF THE FRANCHISE AGREEMENT AND RELATED AGREEMENTS. YOU SHOULD READ THESE PROVISIONS IN THE AGREEMENTS ATTACHED TO THIS OFFERING CIRCULAR. Any requirement in the Franchise Agreement or other agreements which provides for termination of the franchise upon your bankruptcy may not be enforceable under the U.S. Bankruptcy Code (11 U.S.C. §101 et seq.).

Summary of Provisions'

Franchise Agreement

..,...	'':'■.■;'; Provision	Section in Franchise Agreement	-.■' Summary '.
A	Term of the franchise	Section 2	Initial Term equals one year.
B	Renewal or extension of the term	Section 2	If you are not in default under the Franchise Agreement and have timely complied with its terms, we automatically grant an Initial Term Extension for the lesser of 4 years or the remainder of your lease, and you may add a first Renewal Term for five years, a second Renewal Term for 10 years and a third Renewal Term for 10 years.

Capitalized terms in the "Summary" columns are defined in the applicable document.

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	Provision	" Section in Franchise ; Agreement	'■'■■■'■■■ f%: ^;:'>''^::^;: J--;v'-:Summary _:
c	Requirements for you to renew or extend	Section 2	Initial Term Extension - No default can exist under the Franchise Agreement and you must have timely complied with its terms. First, second and third Renewal Terms - You must exercise the option within the time required, must not be in default under your current Franchise Agreement, must have met or exceeded the minimum performance standards, must have complied with all provisions of the Franchise Agreement and timely paid all fees, pay the renewal fee, sign a new Franchise Agreement and sign a mutual general release.
D	Termination by you	Section 12(b)	You may terminate your franchise only by legal process resulting from our breach of the Franchise Agreement or with our consent. You must provide notice and an opportunity to cure.
E	Termination by us without "cause"	None
F	Termination by us with "cause"	Section 12	We can terminate only if you fail to cure a default that can be cured.
G	"Cause" defined curable default	Section 12	Non-payment of fees; failure to satisfactorily complete training; failure to comply with any applicable law or regulation; unauthorized sales in another franchisee's Primary Marketing Area as revealed by an inspection or audit (one opportunity to cure only) failure to provide reports, statements or returns as required; failure to perform or breach of any agreement or other requirement of the Franchise Agreement; failure to operate the Franchised Business as specified in the Confidential Manuals or abandonment.
H	"Cause" defined defaults which cannot be cured	Section 12	Non-curable defaults: Under reporting Gross Volume of Business by 5% or more as revealed by two or more audits; unauthorized sales in another franchisee's Primary Marketing Area revealed in two inspections or audits; failure to begin operation of business as required; violation of confidentiality or non-disclosure provision; material false statements or reports in the Franchise Agreement or other reports made or sent to us; violation of transfer and assignment provisions, repeated defaults even if cured; conviction of a felony; insolvency, general assignment for creditors, bankruptcy petition filed or appointment of receiver or custodian of your assets; default under any mortgage, deed of trust or lease with us or any third party covering the Franchised Business or the Premises which is not cured; default by you or any guarantor of any agreement with us (other than the Development Agreement) and failure to cure.
I	Your obligations on termination/non-renewal	Sections 10 and 13	Obligations include ceasing operation of the Franchised Business; complete de-identification; payment of amounts due; return of all manuals, trade secrets, confidential materials, copyrighted materials, our POS Computer Program software and all date generated by it, equipment and other property we own or used, developed or generated during the operation of the Franchised Business; return of specified items including all items bearing the Licensed Marks; transfer telephone listing, e-mail address using the Licensed Marks and white and yellow page advertising to us, assign to us any domain name for your website, sell to us at our option all cookie cutters, mailing pieces, brochures and equipment used in the Franchised Business. (Also see "R" below.)
J	Assignment of contract by us	Section 11 (a)	No restriction on our right to assign.

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	Provision	Section in Franchise Agreement	Summary
K	"Transfer" by you defined	Section 11	Includes any attempt to "directly or indirectly" sell, assign, transfer, convey, give away, pledge, mortgage or otherwise encumber any interest in the Franchise Agreement, the Premises or any equity or voting interest in the entity operating the Franchised Business.
L	Our approval of transfer by you	Section 11	We have the right to approve all transfers.
M	Conditions for our approval of transfer	Section 11	Conditions include qualification of new franchisee; our written approval of price, terms and conditions; all of your obligations to us fully satisfied; transfer fee paid; training satisfactorily completed; mutual general release signed by you; written assignment signed by transferee.
N	Our right of first refusal to acquire your Franchised Business	Section 11(h)	We can match any offer for your Franchised Business; if you default on your lease of the Premises, we have the right to cure any default and to assume the lease.
0	Our option to purchase vour franchise	Section 6	None other than as described in "N" immediately above.
P	Death or disability of you	Section 11(g)	Estate/personal representative must assign franchise to approved buyer within 6 months.
Q	Non-competition covenants during the term of the franchise	Section 10(a)	No involvement or ownership in a similar business, except ownership of up to 2% of shares of a business traded on a stock exchange or over-the-counter market; no disclosure of confidential information.
R	Non-competition covenants after the franchise is terminated or expires	Sections 10(b), (c) and (d)	No involvement in a similar business for two years, within the Primary Marketing Area, within 20 miles of any CBD1 franchise or by electronic commerce (including after assignment); no disclosure or use of confidential information.
S	Modification of the Franchise Agreement	Sections 7 and 17	Only by mutual written agreement, except that the Confidential Manuals may undergo unilateral change by us and you must comply with the changes.
T	Integration/merger claims	Section 22	Only the terms of the Franchise Agreement and all attachments bind the parties (subject to state law). Any other promises may not be enforceable.
U	Dispute resolution by arbitration or mediation	Section 20(b)	Except for certain claims, parties must submit all disputes to non-binding mediation and, if not resolved, to binding arbitration in Dallas. Texas.
V	Choice of forum	Section 20(b)	Dallas, Texas.
w	Choice of law	Section 20(a)	Texas law applies except for restrictive covenants governed by the laws of the state where the restrictions apply and except to the extent preempted by federal law or by the laws of the state of the Franchised Business' location.

Area Development agreement

Provision

Section in Area

Development

Agreement

■ Summary... ■

Term of the

Development

Agreement

Section 2

Negotiable based on the number of Shoppes scheduled for development; expires on the earlier of the scheduled or actual opening date of the last Shoppe.

Renewal or extension of the term

Section 2

No renewal or extension of the Development Agreement exists per se but an opportunity exists to develop additional Shoppes. If we determine it is desirable to open additional Shoppes in the Defined Territory, you have the first option to obtain development rights. Eligibility to exercise the option depends on your full compliance with the Development Agreement, compliance with all its terms in a timely manner, full compliance with the terms and conditions of all Franchise Agreements and all other agreements between you and us.

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	Provision	Section in Area Development Agreement	Summary
c	Requirements for you to renew or extend	Section 2	See "B" immediately above.
D	Termination by you	None
E	Termination by us without "cause"	None
F	Termination by us with "cause"	Sections 4 and 9	We can terminate only if you default.
G	"Cause" defined curable default	Section 4	Non-payment of fees; on one occasion you may cure a failure to open one Shoppe in accordance with the Development Schedule; failure to perform or breach of any covenant, agreement or other requirement of the Development Agreement or any other agreement between you and us.
H	"Cause" defined defaults which cannot be cured	Sections 4 and 9	Failure to open Shoppes within the Defined Territory in accordance with the Development Schedule after having exercised your one time opportunity to cure a development default under the Development Schedule; termination as a franchisee for default under any Franchise Agreement or any other agreement with us; insolvency, general assignment for creditors, bankruptcy petition filed, appointment of receiver or custodian of your assets or proceedings for a composition with creditors instituted by or against you; final judgment unsatisfied or of record for 30 days or longer (unless supersedeas bond filed); execution levied against the Franchised Business; the foreclosure or sale of real or personal property of the Franchised Business after levy by any sheriff, marshall or constable; conviction of a felony; failure to pay financial obligation within five days of notice of deficiency; violation of transfer or assignment provisions; violation of confidentiality, non-disclosure or non-compete covenants; repeated defaults even if cured.
I	Your obligations on termination/non-renewal	Sections 9(e) and 11	Stop establishment and operation of any Shoppe for which you have not executed a Franchise Agreement; maintain as confidential all our confidential information, methods of operation and any components of the System, and return the our POS Computer Program software and all data generated by it.
J	Assignment of contract by us	Section 10(a)	No restriction on our right to assign.
K	"Transfer" by you defined	Section 10(b)	A direct or indirect sale, assignment (including assignment by operation of law), transfer, conveyance, give away, pledge, mortgage or other encumbrance of any interest in the Development Agreement or any voting or equity interest in the entity holding the development rights.
L	Our approval of transfer by you	Section 10(b)	We have the right to approve any transfer.
M	Conditions for approval	Section 10(f)	Conditions include qualification of new developer, our written approval, payment of transfer fee, execution of a mutual general release by you, execution of current form of Development Agreement by new developer.
N	Our right of first refusal to acquire your rights under the Development Agreement	Section 10(h)	We can match any offer for your rights under the Development Agreement.
0	Our option to purchase your rights under the Development Agreement	None	None other than in "N" immediately above.
P	Death or disability of you	Section 10(g)	Estate/personal representative must assign the Development Agreement to approved buyer within 6 months.

Franchise Offering Circular - Page 49 1417734 2.DOC

	Provision	Section in Area Development Agreement	Summary
Q	Non-competition covenants during the term of the franchise	Section 11	No involvement or ownership in a similar business, except ownership of up to 2% of shares of a business traded on a stock exchange or over-the-counter market; no disclosure of confidential information.
R	Non-competition covenants after the franchise is terminated or expires	Section 11	No diversion of customers to a competing similar business; no involvement in a similar business for two years within the Defined Territory or within 20 miles of any CBDI franchise in existence on the termination of the Development Agreement (including after assignment); no disclosure or us of confidential information.
S	Modification of the Development Agreement	Section 13(g)	No party can modify the Development Agreement except in writing signed by us and you. Any other promises may not be enforceable.
T	Integration/merger claims	Section 13(g)	Only the terms of the Development Agreement, the Franchise Agreement and all exhibits bind the parties (subject to state law). Any other promises may not be enforceable.
U	Dispute resolution by arbitration or mediation	Section 13(b)	Must occur in Dallas, Texas.
V	Choice of forum	Section 13(b)	Dallas, Texas.
w	Choice of law	Section 13(a)	Texas law applies except for restrictive covenants governed by the laws of the state where the restrictions apply and except to the extent preempted by federal law or the laws of the state of the Franchised Business' location.

Site Agreement

	Provision	Section in Site v Agreement ;	'"[■ '.;:;■-:'^::'v;.!. ■.. Summary
A	Term of the Agreement	Section 2	Term equals 120 days.
B	Termination by you	Section 7	In the first 30 days of the term of the Agreement, you may terminate this agreement by giving written notice of termination to us.
C	Termination by us without "cause"	Section 7	In the first 30 days of the term of the Agreement, we may terminate the Site Agreement by giving written notice of termination to you.
D	Termination by us with "cause"	Section 7	Immediately upon written notice if you misrepresent any information on your application for a Franchise, you notify us that you do not intend to sign a Franchise Agreement and pay the initial fee before the Term expires, or we believe in good faith that you intend to breach the confidentiality provisions of the Site Agreement. Immediately if you fail to cure a breach of the Site Agreement after 10 days prior written notice.
E	Your obligations on termination	Section 9	Obligations include not disclosing, copying or revealing any trade secrets or confidential information for your own benefit or for the benefit of any other person, entity or organization except as permitted by the Site Agreement.
F	Choice of venue	Section 10	Dallas, Texas
G	Choice of law	Section 10	Texas law applies except for conflicts of laws provisions.

Franchise Offering Circular-Page 50 1417734 2.DOC

Form 2006

Master Sublicense Agreement

	Provision	Paragraph in Master Sublicense Agreement	Summary
■A	Term of the Disney Sublicense Term of the Garfield Sublicense Term of the Trading Spaces Sublicense Term of the Universal Sublicense	Schedule 1 Schedule 2 Schedule 3 Schedule 4	Term begins July 1, 2004 and ends June 30, 2007, unless earlier terminated by us, or automatically upon termination of the Disney License or your Franchise. Term begins March 1, 2003 and ends December 31, 2007, unless earlier terminated by us, or automatically upon termination of the Garfield License. Term begins ?? and ends December 31, 2006, unless earlier terminated by us or automatically upon termination of the Discovery License. Term begins October 5, 2005 and ends December 31, 2007 unless earlier terminated by us or automatically upon termination of the Universal License.
B	Renewal or extension of the term	N/A	Not available unless the Licensor and we renew the respective License.
C	Requirements for you to renew or extend	N/A	Contingent upon good standing of your Franchise Agreement.
D	Termination by you		You have no unilateral right to terminate. If you terminate your Franchise Agreement, the Master Sublicense Agreement automatically terminates.
E	Termination by us without "cause"	N/A
F	Termination by us with "cause"	Article XII	We can terminate if you default.
G	"Cause" defined -curable default	Paragraph XII.B	Failure to cure a breach of the Master Sublicense Agreement after 10 days written notice; failure to use the Licensed Articles as specified in the Confidential Manuals after 30 days written notice (see the Franchise Agreement).
H	"Cause" defined - defaults which cannot be cured	Paragraph XII.A	Failure to timely pay royalties, furnishing of inaccurate statements of net sales of Licensed Articles; unauthorized delivery of goods using the sublicensed marks or copyrights other than on Licensed Articles, unauthorized deliveries of Licensed Articles into another franchisee's Primary Marketing Area without our prior consent; unauthorized placement of advertising or marketing materials; repeated defaults of the same nature, even if cured; insolvency, general assignment for creditors, bankruptcy petition filed or found bankrupt or appointment of receiver, or make an unauthorized transfer of the Master Sublicense.
I	Your obligations on termination/non-renewal	Article XIII	Obligations include ceasing use of the Licensed Articles; ceasing the offer or sale of Licensed Articles; payment of amounts due; return of all manuals materials and copyrighted materials relating to the Licensed Articles, trade secrets, confidential materials, copyrighted materials, POS Computer Program software and all data generated by it; return of specified items bearing the Licensed Marks or destruction of Licensed Articles; sell to us at our option all cookie cutters, stencils, mailing pieces and brochures relating to the Licensed Articles. (Also see Item 17.r below.)
J	Assignment of contract by us	N/A
K	"Transfer" by you -	Article XV	You cannot transfer any interest in the Master Sublicense

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Form 2006

	Provision	Paragraph in Master Sublicense Agreement	Summary
	defined		Agreement, even in connection with an approved transfer.
L	Our approval of transfer by you	n/a
M	Conditions for our approval of transfer	n/a
N	Our right of first refusal to acquire your assets	n/a
0	Our option to purchase your franchise	n/a
P	Death or disability of you	n/a
Q	Non-competition covenants during the term of the Master Sublicense Agreement	N/A	However, see paragraph IX. You cannot disclose confidential information arising from the Master Sublicense Agreement.
R	Non-competition covenants after the license is terminated or expires	N/A
S	Modification of the Master Sublicense Agreement	Paragraph XVI.B	If CBDI and a Licensor amend a License Agreement, CBDI may amend the Master Sublicense Agreement accordingly unilaterally.
T	Integration/merger claims	Paragraph XVI.A	Master Sublicense Agreement is supplemental to the Franchise Agreement.
U	Dispute resolution by arbitration or mediation	Paragraph XVI.G	Governed by the equivalent provisions of the Franchise Agreement.
V	Choice of forum	Paragraph XVI.G	Governed by the equivalent provisions of the Franchise Agreement.
w	Choice of law	Paragraph XVI.G	Governed by the equivalent provisions of the Franchise Agreement.

Sales and Marketing Point of Sale Software End User License Agreement

	Provision	Paragraph in Sales and Marketing Point of Sale Software End User License Agreement	Summary
A	Term of the Sales and Marketing Point of Sale End User License Agreement	Paragraph 3	Term begins the date you accept the agreement and ends one year thereafter.
B	Renewal or extension of the term	Paragraph 3	Renewable for one year terms after paying us your Annual Maintenance Fee prior to expiration of the current term.
C	Requirements for you to renew or extend	Paragraph 3	Contingent upon paying your Annual Maintenance Fee prior to expiration of the current term.
D	Termination by you	Paragraph 10	You may terminate by providing notice to us or by destroying the SAM Software and returning all accompanying materials and all copies thereof to us.
E	Termination by us without "cause"	Paragraph 10	We may terminate by providing notice to you.
F	Termination by us with "cause"	Paragraph 10	We can terminate if you default, the Franchise Agreement and any renewals of the Franchise Agreement expire or the Franchise

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Form 2006

	Provision	Paragraph in Sales and Marketing point of Sale Software End User License Agreement	Summary
			Agreement is terminated for any reason.
G	"Cause" defined -curable default	N/A
H	"Cause" defined - defaults which cannot be cured	Paragraph 10	Franchise Agreement expires or is terminated; you fail to comply with the terms and conditions of the Sales and Marketing Point of Sale Software End User License Agreement.
I	Your obligations on termination/non-renewal	Paragraph 10	You must delete the SAM Software from all computers and computer services and return all accompanying materials and copies there of to us.
J	Assignment of contract by us		There are no restrictions on our ability to assign the contract.
K	"Transfer" by you -defined	Paragraph 1	Cannot assign the contract, contract rights, software or accompanying written materials without our consent.
L	Our approval of transfer by you	Paragraph 1	We must consent to any transfer.
M	Conditions for our approval of transfer		Approval of transfer is at our sole discretion.
N	Our right of first refusal to acquire your assets	N/A
0	Our option to purchase your rights		No refunds will be issued for partial terms.
P	Death or disability of you	N/A
Q	Non-competition covenants during the term of the Sales and Marketing Point of Sale Software and End User License Agreement	N/A
R	Non-competition covenants after the license is terminated or expires	N/A
S	Modification of the Sublicense Agreement	Paragraph 13	We may modify the agreement in our sole discretion.
T	Integration/merger claims		Sales and Marketing Point of Sale and End User License Agreement is supplemental to the Franchise Agreement.
U	Dispute resolution by arbitration or mediation	Paragraph 15	Governed by the equivalent provisions of the Franchise Agreement.
V	Choice of forum	Paragraph 15	Dallas, Texas
w	Choice of law	Paragraph 16	Texas

The following states have statutes that may supersede the Franchise Agreement and other related agreements in your relationship with us. These statutes may affect the enforceability of provisions in the agreements relating to termination; transfer; renewal; covenants not to compete; choice of law and jurisdiction; venue selection; waivers and releases of claims; injunctive relief; waiver of rights to jury trial; punitive and liquidated damages and other remedies; arbitration; and discrimination between franchisees: Arkansas Code Ann. §4-72-201 (Michie 1993); California Corp. Code §§31000- 31516 (West 1994); Cal. Bus. & Prof. Code §§ 20000-20043 (West 1994); Connecticut Gen. Stat. § 42-133e (1994); Delaware Code Ann. Tit. 6 § 2552 (1993) Hawaii Rev. Stat. § 482E-1 - 482E-12 (1993); Illinois Rev. Stat. Ch. 815 para. 705/1- 705/44 (1994); Indiana Code §§1-51 (1994); Ind. Code Ann. § 23-2-2.7 (West. 1994); Iowa Code § 523H.1 - 523H.17 (1994); Maryland 14-201 to 14-233 (1998 Repl.

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Form 2006

Vol. & Supp.2002); Michigan Comp. Laws §§ 445.1501 - 445.1545 (1994); Minnesota Stat. §§ 8OC.01 -80C.22 (1994); Minn. Stat. §§ 80C.01 -80C.14 (1994); Mississippi Code Ann. §75-24-51 (1993) Missouri Ann. Stat. § 407.400 (Vernon 1994); Nebraska Rev. Stat. § 87-401 (1993); N.J. Stat. Ann. § 56:10-1 (West 1994); N.Y. Gen. Bus. Law §§ 680-695 (1994); N.D. Cent. Code § 51-19-01 (1993); Oregon Rev. Stat. §§ 650.005- 650.085; Rhode Island Gen. Laws §§ 19-28.1-1 - 19-28.1-34 (1993); South Dakota Codified Laws Ann. §§ 37-5A-1 - 37-5A-87 (1994); Texas Rev. Civ. Stat. Ann. Art. 16.01 (1994); Virginia Code Ann. §§ 13.1-557 - 13.1-574; Washington Rev. Code §§ 19.100.010 - 19.100.940 (1994); Wisconsin Stat. §§ 553.01 - 553.78 (1996); Wis. Stat. §§ 135.01 - 135.07 (1984). These and other states may have fair practice laws and other civil statutes affecting contracts. There may also be state and federal court decisions that affect the enforcement of provisions in the Franchise Agreement, and other related agreements. Federal law may preempt these state laws and regulations with respect to arbitration.

The following states have statutes that limit our ability to restrict your activity after the Franchise Agreement has ended: California Bus. & Prof. Code, Section 16,600; Florida Stat. Section 542.33; Michigan Compiled Laws, Section 445.771 et seq.; Montana Code Section 30-14-201; North Dakota Century Code, Section 9-08-06; Oklahoma Statutes, Section 15-217-19; Washington Code, Section 19.86.030. Other states may have court decisions, laws and regulations limiting our ability to restrict your activity after the Franchise Agreement has ended.

We reserve the right to challenge the enforceability of any state law listed above that declares void or unenforceable any provision in the Franchise Agreement by bringing an appropriate legal action or by raising the claim in a legal action or arbitration that you initiate.

A provision in the Franchise Agreement that terminates this agreement on your bankruptcy may not be enforceable under Title 11, United States Code Section 101.

18. Public Figures

We do not use any public figure to promote its franchise program or chain of franchised Shoppes.

19. Earnings Claims

We do not furnish or authorize our salespersons to furnish any oral or written information concerning the actual or potential sales, costs, income or profits of a Shoppe. Actual results vary from Shoppe to Shoppe, and we cannot estimate the results of any particular franchise.

20. List of Outlets Franchised Shoppe Status Summary For Years Ended December 31,2005/2004/2003

State	Transfers	Canceled or Terminated	Not Renewed	Reacquired by Franchisor	Left the : System Other	Total From leftV Columns	Franchises Operating at Year End
Alabama	1/0/4	0/0/0	0/0/0	0/0/0	0/0/0	1/0/0	4/4/4
Arizona	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	3/3/0
Arkansas	0/0/0	0/0/0	0/0/0	0/0/0	0/1/0	0/1/0	1/1/2
California	2/3/2	0/0/0	0/0/0	0/0/0	0/0/0	3/3/2	23/23/23
Colorado	1/1/0	0/0/0	0/0/0	0/0/0	1/0/0	0/1/0	9/10/10
Connecticut	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	2/2/2
Delaware	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/1/1

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State	Transfers	Canceled or Terminated	'■" Not. _";:'; Renewed	Reacquired " ■:.^:.''.'>.:-.' ■ Franchisor	Left the System Other	Total From left Columns	Franchises Operating at Year End
Florida	2/1/2	0/0/0	0/0/0	0/0/0	0/0/0	2/1/2	23/23/21
Georgia	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	4/3/3
Hawaii	0/0/0 j	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/1/1
Idaho	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/1/1
Illinois	0/1/0	0/0/0	0/0/0	0/0/0	0/1/0	0/2/0	11/11/12
Indiana	3/2/0	1/0/0	0/0/0	0/0/0	0/1/0	4/3/0	5/6/7
Iowa	0/1/0	0/0/0	0/0/0	0/0/0	0/0/0	0/1/0	3/3/3
Kansas	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	2/2/2
Kentucky	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	3/3/3
Louisiana	0/0/1	1/0/0	0/0/0	0/0/0	0/1/0	0/1/1	5/6/7
Maryland	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	4/4/3
Massachusetts	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	3/3/3
Michigan	0/1/0	0/0/0	0/0/1	0/0/0	0/0/1	0/1/2	12/11/11
Minnesota	0/0/0	0/0/0	0/0/0	0/0/0	0/1/0	0/1/0	3/3/4
Mississippi	0/1/0	0/0/0	0/0/0	0/0/0	1/0/0	1/1/0	1/2/2
Missouri	0/0/0	2/0/0	0/0/0	0/0/0	0/0/0	2/0/0	4/6/6
Montana	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/1/1
Nebraska	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/1/1
Nevada	0/0/0	0/0/0	0/0/0	0/0/0	0/1/0	0/1/0	2/2/3
New Hampshire	1/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/0/0	2/2/2
New Jersey	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	4/4/4
New Mexico	0/0/0	0/0/0	0/0/0	0/0/0	1/0/0	1/0/0	1/2/2
New York	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	5/5/5
North Carolina	0/1/1	0/0/0	0/0/0	0/0/0	0/1/1	0/2/2	4/4/5
Ohio	0/0/0	0/0/0	0/0/0	0/0/0	1/1/0	1/1/0	13/14/15
Oklahoma	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	3/3/3
Oregon	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	2/2/2
Pennsylvania	1/0/0	0/0/0	0/0/0	0/0/0	1/1/0	2/1/0	5/6/7
South Carolina	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	3/3/3
South Dakota	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/1/1
Tennessee	1/1/0	0/0/0	0/0/0	0/0/0	1/0/0	2/1/0	6/7/7
Texas	1/4/1	0/0/0	0/0/0	0/0/0	2/0/2	3/4/3	31/33/33
Utah	1/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/0/0	4/4/4
Virginia	0/0/0	0/0/0	0/0/0	0/0/0	1/1/0	1/1/0	2/2/2
Washington	0/0/1	0/0/0	0/0/0	0/0/0	1/0/0	1/0/1	6/7/7
West Virginia	1/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/0/0	1/1/1
Wisconsin	0/0/1	0/0/0	0/0/0	0/0/0	0/0/0	0/0/1	6/6/6

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State

Transfers

Canceled or Terminated

Not Renewed

Reacquired

by Franchisor

Left the System Other

Total From left Columns

Franchises

Operating at

Year End

TOTALS

15/17/9

0/0/0

0/0/1

0/0/0

11/10/4

30/27/14

*231/242/248

*As of December 31, 2005, Franchisees had requested and received permission to close 15 Shoppes pending relocation of the Shoppes. These Shoppes are located one each in Arizona, California, Colorado, Connecticut, Florida, Louisiana, Maryland, Minnesota, Missouri, Pennsylvania, Washington, and Wisconsin and two in Texas. See the Directory of Franchisees currently in Operation at Exhibit K for more specific details.

Status of Company-Owned Shoppes For Years Ended December 31.2005/2004/2003

State	Shoppes Closed : During Year % ;::	; Shoppes Opened ; -r^: During Year f-:^;\	Total Shoppes Operating at .--s- .\; _:- Year End
Texas	0	0	0/0/0
TOTALS	0	0	0/0/0

Projected Openings For Year Ending December 31,2005

State	Franchise Agreements Signed But Not Open	Projected Franchised New Shoppes in Next Fiscal Year	Projected CBDI Owned Openings in Next ;;. Fiscal Year
Georgia	1	0	0
New York	1	0	0
Rhode Island	1	0	0

TOTALS	3	10²	0

Exhibit K contains a list of all franchisees, their names, addresses and telephone numbers. Exhibit L contains a list of names and last known home addresses of every franchisee terminated, canceled, not renewed or otherwise voluntarily or involuntarily ceased to do business during the fiscal year ended December 31, 2004 or who has not communicated with CBDI within 10 weeks of the date of this Offering Circular. We have not reacquired any Shoppes.

21. Financial Statements

The following financial statements of Cookies by Design, Inc. and MGW, Inc. (our name before January 1, 2005) are attached to this Offering Circular as Exhibit A:

Audited Statements:

Independent Auditor's Report

Balance Sheets at December 31, 2005, 2004 and 2003

Statements of Operations and Retained Earnings for the Years Ended December 31, 2005, 2004 and 2003

² We cannot estimate with accuracy the total number of franchises we will license nationally or in any particular state during our next

fiscal year. We estimate that the number approximates 10 franchises nationally based on licenses for the prior fiscal year. We do not currently actively market franchise licenses pursuant to a program, but rather responds for the most part to unsolicited requests for franchises. If and when we establish a program delineating franchise license objectives so that anticipated franchise licensing becomes reasonably predictable, we will set forth the predictions in this chart.

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1417734 2.DOC

Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003

Notes to Financial Statements

22. Contracts

We have attached to this Offering Circular the following contracts:

Exhibit B: Franchise Agreement

Attachment A: Information Regarding the Franchised Business and its Controlling

Persons Attachment B: Guaranty of Franchisee's Undertakings Attachment C: Minimum Performance Standards Attachment D: Special Agreements/State and Federal Laws Attachment E: Franchise Fee Calculation Attachment F: Leasehold Deed of Trust Attachment G: Assignment of Lease Attachment H: Financing Statement

Attachment I: End User License Agreement for CBDI/CB Website Attachment J: Orders Administration Website Participation and

License Agreement for CBDI/CB Website Attachment K: Limited Power of Attorney Attachment L: License Agreement Vanity Number and Telephone Locator Service

Exhibit C:	Area Development Agreement
Exhibit D:	Site Agreement
Exhibit E:	Master Sublicense Agreement
Exhibit G:	Promissory Note(s) and Guaranty used for Renewal Fee Financing
Exhibit H:	Member Agreement of The MAP Group
Exhibit I:	AFT Agreement
Exhibit R:	CBDI Sales and Marketing Point of Sale Software End User License Agreement
Exhibit S:	General Release

23. Receipt

You must sign two copies of the Receipt attached as Exhibit T. After signing, you keep one copy and provide the other to us. We can accept no binding agreement or any consideration from you unless you sign this receipt and fully complete the required information at least 10 business days before signing any binding agreement or the paying any consideration. You also must have had all agreements completed and ready for signature at least five business days before signing any binding agreement or paying any consideration.

COOKIES BY DESIGN, INC. REPRESENTS THAT THIS OFFERING CIRCULAR

DOES NOT KNOWINGLY OMIT ANY MATERIAL FACT

OR CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT.

Franchise Offering Circular - Page 57 Form 2006

1417734 2.DOC

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